Helmerich & Payne, Inc. · NYSE:HP
Helmerich & Payne — Susquehanna 2012 Energy & Resources Conference
40 slides from Helmerich & Payne's conference presentation, May 7, 2012
Slide 1: Susquehanna 2012 Energy & Resources Conference
Helmerich & Payne, Inc. Susquehanna 2012 Energy & Resources Conference May 8, 2012
Slide 2: Forward-looking Statements
Statements within this presentation are “forward-looking statements” within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934, and are based on current expectations and assumptions that are subject to risks and uncertainties. All statements other than statements of hi
Slide 3: H&P at a glance: rigs, assets, employees
* Includes 34 announced new FlexRigs under construction with customer commitments as of April 26, 2012 that are scheduled for completion during fiscal 2012 and fiscal 2013. 399 drilling Rigs ~$Billion in Assests ~9,300 Employees ~9% Debt/Cap
Slide 4: H&P's Global Rig Fleet
H&P’s Global Rig Fleet * Estimates include existing rigs and announced new build commitments.
Slide 5: Five-Year Relative Shareholder Return
Five-Year Relative Shareholder Return Source: Yahoo! Finance as of May 4, 2012
Slide 6: Expand Market Share, Lead Innovation, Satisfy Customers
Expand Market Share Lead Innovation Satisfy Customers Drive Well Costs Down
Slide 7: Most Profitable Driller in U.S. Land Business
Most Profitable Driller in U.S. Land Business (2) PTEN’s and operating income includes drilling operations in Canada. (1) NBR’s operating income corresponds to its U.S. Lower 48 Land Drilling segment. (2) (1) U.S. Land Drilling Operating Income 12 Months Ended March 31,2012 Operating Income (Million
Slide 8: Organic U.S. Land Fleet Growth
Organic U.S. Land Fleet Growth * Estimates include existing rigs and announced new build commitments. 301 49
Slide 9: Highest U.S. Activity Level in Company History
Highest U.S. Activity Level in Company History As of 4/26/12 growth / Decline in U.S. Lowet 48 Average Rig Activity Change in Average Active Rigs Quarterly Average
Slide 10: U.S. Land Market Share Ten Years Ago
As of April 26, 2002 Lower 48 U.S. Land Market Share Active Rig Market Share – Ten Years Ago Note: The above estimates are derived from Smith Bits S.T.A.T.S.
Slide 11: U.S. Land Market Share, Organically Growing
As of April 27, 2012 Lower 48 U.S. Land Market Share Organically Growing Active Rig Market Share Note: The above estimates are derived from Smith Bits S.T.A.T.S.
Slide 12: Market Trends Favor H&P
Market Trends Favor H&P The transition towards oil and liquids-rich-gas directed drilling continues, along with a clear trend towards more complex well designs and faster cycle times. H&P is fortunate to have a customer roster with substantial multi-year drilling inventory capable of shifting target
Slide 13: The Ongoing Gas to Oil Transition
The Ongoing Gas to Oil Transition U.S. Rig Activity by Hydrocarbon Target Number of Active U.S. Rigs (BHI North American Rotary Rig Count)
Slide 14: Increasing Focus on More Difficult Drilling
Increasing Focus on More Difficult Drilling U.S. Rig Activity by Drilling Type Percentage of Active U.S. Rigs (BHI North American Rotary Rig Count)
Slide 15: H&P vs. Industry U.S. Land Customer Base
H&P vs. Industry U.S. Land Customer Base Note: The above estimates corresponding to the active rig fleet in the U.S. are derived from multiple sources including Rig Data, Smith Bits, and corporate filings. H&P U.S. Land Activity Estimated Customer Distribution (April 2012) Industry U.S. Land Activit
Slide 16: Recordable Injuries per 1-MM Feet Drilled in 2011
Recordable Injuries per 1-MM Feet Drilled in 2011 by the Largest U.S. Land Drilling Contractors Note: Injury data taken from IADC ASP Program. Footage data taken from Land Rig Newsletter. 11.7 9.1 5.2 2.2
Slide 17: The Replacement Cycle Continues
The Replacement Cycle Continues AC drive rigs are best positioned to make the transition in the U.S. From 2010 to 2011, H&P’s average footage per day increased over ten percent, and already in 2012, we have seen average footage per day increase another ten percent. While FlexRigs continue to rise to
Slide 18: An Undersupply of AC Drive Rigs
An Undersupply of AC Drive Rigs Note: The above estimates corresponding to rig activity are derived from multiple sources including Rig Data, Smith Bits, and corporate filings. (~1,850 Active Rigs in the U.S. By Power Type)
Slide 19: H&P's Lead in U.S. Land AC Drive Rigs
H&P’s Lead in U.S. Land AC Drive Rigs Note: The above estimates corresponding to U.S. lower 48 AC Drive fleets and new build commitments are derived from Rig Data and corporate filings. Estimated Number of AC Drive Land Rigs in U.S.
Slide 20: Technology & Quality Service Make a Difference
Technology & Quality Service Make a Difference (1) Does not include the impact of early contract termination revenue. (2) Represents weighted-average rig margin per day for PTEN, NBR and UNT. (3) Utilization is herein calculated to be average active rigs divided by estimated available marketable rig
Slide 21: H&P New Builds
H&P New Builds Total of 210 new build FlexRigs completed since January 2006. Delivering new FlexRigs at the rate of approximately four per month. As of April 26, 2012, 34 announced new builds remained under construction to be delivered in fiscal 2012 and fiscal 2013 Although the level of inquiries h
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Slide 23: Additional References
ry eet Additional References
Slide 24: H&P Activity as of April 26, 2012
H&P Activity as of April 26, 2012 Rigs Working/ Contracted 239 6 22 267 2 34 303 Rigs Available 268 9 26 303 2 34 339 % Contracted 89% 67% 85% 88% U.S. Land Offshore International Land Total Completed Pending Deployment FlexRig Construction Total Fleet (3) Includes one idle FlexRig that is expected
Slide 25: H&P's U.S. Land Operations
H&P’s U.S. Land Operations We expect total revenue days in the U.S. Land segment to increase by approximately two percent from the second to the third fiscal quarter of 2012. Quarterly average rig revenue per day is expected to improve slightly, by as much as $200 per day from the second to the thir
Slide 26: H&P's U.S. Land Fleet Activity
H&P’s U.S. Land Fleet Activity (1) Active rigs on term (in blue) generated both revenue and revenue days. (2) Includes completed new builds that were waiting on customers and which generated revenue but did not generate revenue days. (1) (2) Number of Active H&P U.S. Land Rigs
Slide 27: Leading U.S. Unconventional Driller
(273 H&P Contracted Land Rigs as of 4/26/12*) Leading U.S. Unconventional Driller * Includes announced new FlexRigs with customer commitments scheduled for completion in fiscal 2012 and fiscal 2013.
Slide 28: H&P Global Fleet Under Term Contract
H&P Global Fleet Under Term Contract term Contract Status - H&P Global Fleet (Including Announced New Builds) Number of Rigs Already Under Long-Term Contracts (Estimated Quarterly Average)
Slide 29: H&P's Offshore Operations
H&P’s Offshore Operations Six of the Company’s nine offshore platform rigs remain active, including two under long-term contracts. One of the stacked rigs is expected to go back to work in May, and a second stacked rig is expected to go back to work in the fourth fiscal quarter of 2012. The number o
Slide 30: H&P's International Land Operations
H&P’s International Land Operations Of the 26 rigs assigned to international operations, 20 are currently active and two additional rigs are contracted and waiting to begin new projects in the fourth fiscal quarter of 2012. Additionally, two recently-completed new build FlexRig3s and an idle U.S. La
Slide 31: H&P's International Land Operations Rig Fleet Status
H&P’s International Land Operations Active Contracted Idle Total Long-term Contracts Argentina 4 1 3 8 4 Bahrain 4 4 4 Colombia 5 1 1 7 2 Ecuador 5 5 Tunisia 2 2 Total 20 2 4 26 10 Rig Fleet Status (as of April 26, 2012) April 26, 2012 rig count excludes three additional FlexRig3s that are expected
Slide 32: Economics Shift Activity Towards Oil Drilling
Economics Shift Activity Towards Oil Drilling U..S. Rig Activity by Hydrocarbon Target Percentage of Active U.S. Rigs (BHI North American Rotary Rig Count)
Slide 33: H&P's Growing Exposure to Oil & Liquids
H&P’s Growing Exposure to Oil & Liquids Estimated proportion of H&P’s active U.S. Land rigs by primary hydrocarbon target (1) Oil and liquids-rich gas percentage includes a small number of contracted rigs that are moving or will soon move from dry gas plays. (2) Includes rigs in the spot market and
Slide 34: AC Drive U.S. Rig Market Share
AC Drive U.S. Rig Market Share (~500 Rigs) Note: The above estimates corresponding to market share are derived from multiple sources including Rig Data, Smith Bits, and corporate filings.
Slide 35: H&P U.S. Land Fleet by Power Type
H&P U.S. Land Fleet by Power Type* * Includes New Build Commitments. Marketed Fleet Active/Contracted Fleet
Slide 36: H&P's New Build Advantages
H&P’s New Build Advantages We have been improving and honing the process for over 10 years, prompting our assertion that we build a better rig for less Safety is our first priority, followed by a relentless focus on strong execution and performance in the field Exceptional fleet uniformity Extensive
Slide 37: The FlexRig Difference: Key Advantages
The FlexRig Difference: Key Advantages Increased drilling productivity and reliability Variable frequency (AC) drives with increased precision and measurability Computerized electronic driller that more precisely controls weight on bit, rotation and pressure Designed to move quickly from well to wel
Slide 38: Performance is Not Only About Better Rigs
Performance is Not Only About Better Rigs It’s also about: People Safety Experience Training Culture Support Structure Processes Organizational Network Maintenance Supply Chain
Slide 39: A Value Proposition Example – H&P vs. Competitors
A Value Proposition Example – H&P vs. Competitors Estimated Estimated Peer H&P FlexRig3 Conventional Fit-for-purpose Average Average Average 2011 (Spot Market) (Spot Market) (Spot Market) 1. Drilling days 20 11 9 Other days 3 3 3 Moving days 7 5 3.5 Total rig revenue days per well 30 19 15.5 2. Dril
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