Helmerich & Payne, Inc. · NYSE:HP
Helmerich & Payne — Investor Presentation (October 2016)
38 slides from Helmerich & Payne's investor presentation, Oct 4, 2016
Slide 1: 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 2: About Helmerich & Payne (H&P)
Very strong balance sheet Most capable land drilling fleet Market share leader in the U.S. Robust term contract backlog Operational strategy focused on continued innovation, safety, performance excellence, reliability and customer satisfaction. About Helmerich & Payne (H&P)
Slide 3: H&P's Strong Balance Sheet
H&P’s Strong Balance Sheet (As of June 30, 2016) 1. Total Capitalization is defined as Total Debt plus Shareholders' Equity. Total-Debt-to-Total-Capitalization Ratio1 Source: Company Filings.
Slide 4: Current Dividend Yields
Current Dividend Yields Source: Thomson Reuters. Yields calculated as of market close on September 30, 2016.
Slide 5: H&P's Global Rig Fleet
H&P’s Global Rig Fleet * Estimates include existing rigs and announced new build commitments.
Slide 6: H&P U.S. Land Fleet – Family of Solutions
FlexRig Type Rig Power Type H&P U.S. Land Fleet – Family of Solutions Pad* AC Drive FlexRigs Drawworks Horsepower Most Advanced Fleet ** Approximately 123 FlexRig3s and 6 FlexRig4s of the 151 “Other FlexRigs” can be upgraded to Pad* FlexRigs. * Optimal for multiple-well pad drilling applications. **
Slide 7: U.S. Land Market Share Leader
U.S. Land Market Share Leader Note: The above estimates corresponding to market share are derived from Rig Data. Additionally, the drawworks capacity of each land rig included in the above analysis was equal to or greater than 600 horsepower. Market Leader As of September 2016 (~530 Active Rigs in U
Slide 8: H&P Global Fleet Under Term Contract
H&P Global Fleet Under Term Contract Strong Backlog The above term contract coverage excludes long-term contracts for which the Company received early contract termination notifications as of 10/4/16. Given notifications as of 10/4/16, the Company expects to generate approximately $30 million in the
Slide 9: 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. The category “Large Operators” includes majors and large independent E&P operators.
Slide 10: U.S. Land Drilling Market Conditions
U.S. Land Drilling Market Conditions Some E&P companies have announced budget increases and rig count additions, but many still remain on the sidelines. The U.S. land active rig count has significantly increased over the last few months. Shale customers have high expectations, and well complexity is
Slide 11: Drilling Activity in the U.S.
Drilling Activity in the U.S.
Slide 12: U.S. Land Horizontal and Directional Activity
Note: The above estimates corresponding to horizontal and directional rig activity by power type are derived from multiple sources including Rig Data and corporate filings. Additionally, the drawworks capacity of each land rig included in the above analysis was greater than or equal to 600 horsepowe
Slide 13: The Replacement Cycle: Customer Adoption
The Replacement Cycle: Customer Adoption Next ~75 E&P Operators (~245 Active Rigs by Power Type) Top 10 E&P Operators (~130 Active Rigs by Power Type) Remaining E&P Operators (~155 Active Rigs by Power Type) Top 10 E&P Operators Next ~75 E&P Operators Remaining E&P Operators They represent the 10 mo
Slide 14: Replacement Cycle Expected to Continue
As of October 2014 (Peak) (~1,930 Active Rigs in U.S. Land By Power Type) Replacement Cycle Expected to Continue As of October 2008 (Peak) (~1,925 Active Rigs in U.S. Land By Power Type) As of September 2016 (~530 Active Rigs in U.S. Land By Power Type) Note: The above estimates corresponding to rig
Slide 15: H&P's Lead in U.S. Land 1,500 hp AC Drive Rigs
H&P’s Lead in U.S. Land 1,500 hp AC Drive Rigs Most Advanced Fleet * The above estimates corresponding to U.S. lower 48 1,500 hp AC Drive fleets are derived from Rig Data and corporate filings. ** Estimated number of all other available AC Drive rigs not including those owned by HP, NBR, PTEN, and P
Slide 16: H&P Very Well Positioned to Gain Share
H&P Very Well Positioned to Gain Share Market Leader Note: The above estimates are derived from multiple sources including Rig Data and corporate filings. Idle 1,500 hp AC Drive Land Rigs (as of September 2016)
Slide 17: H&P's U.S. Land Fleet Activity
H&P’s U.S. Land Fleet Activity (1) Includes rigs on standby dayrates. Includes completed new builds pending delivery and not generating revenue days. (2)
Slide 18: Leading U.S. Unconventional Driller
Leading U.S. Unconventional Driller (98 H&P Contracted Land Rigs as of 10/4/16*) * Includes 2 announced new FlexRigs with customer commitments scheduled for delivery in calendar 2016.
Slide 19: H&P U.S. Land Fleet (Contracted Rigs)
Drawworks Horsepower FlexRig Type Rig Power Type H&P U.S. Land Fleet (Contracted Rigs as of 10/4/16) Most Advanced Fleet ** Pad* AC Drive FlexRigs * Optimal for multiple-well pad drilling applications. ** Most of the “Other FlexRigs” can be upgraded to Pad* FlexRigs.
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, PDS, and UNT. H&P’s Margin Premium (1) (2) Most Advanced Fleet
Slide 21: Performance is Not Only About Better Rigs
Performance is Not Only About Better Rigs Our competitive advantage is also about: People Safety Experience Training Culture Support Structure Processes Organizational Network Maintenance Supply Chain
Slide 22: Ongoing U.S. Land Market Trends
Ongoing U.S. Land Market Trends Unconventional plays continue to shape the landscape. Well designs are increasingly complex, including longer laterals and more challenging drilling requirements. Customers continue to focus on safety, efficiency, technology, and reliable drilling performance. AC driv
Slide 23: Increasing Focus on More Difficult Drilling
Increasing Focus on More Difficult Drilling
Slide 24: H&P's Long Term Strategy
H&P’s Long Term Strategy Innovation Technology Safety, operational excellence and reliability Customer satisfaction Financial strength
Slide 25: H&P's Long Term Strategy
| H&P’s Long Term Strategy > Innovation > Technology > Safety, operational excellence and reliability > Customer satisfaction > Financial strength
Slide 26: Estimated H&P Activity as of October 4, 2016
Estimated H&P Activity as of October 4, 2016 Rigs Working/ Contracted 96 96 0 7 16 119 Rigs Available 348 346 2 9 38 395 2 397 % Contracted 28% 28% 0% 78% 42% 30% U.S. Land AC Drive FlexRigs SCR Fleet Offshore International Land Total FlexRig Construction Total Fleet (3) (1) (2) 56% are FlexRigs tha
Slide 27: H&P's Lead in U.S. Land AC Drive Rigs
H&P’s Lead in U.S. Land AC Drive Rigs Most Advanced Fleet * The above estimates corresponding to U.S. lower 48 AC Drive fleets are derived from Rig Data and corporate filings. ** Estimated number of all other available AC Drive rigs not including those owned by HP, NBR, PTEN, and PDS.
Slide 28: U.S. Activity by Well and Rig Type
U.S. Activity by Well and Rig Type Note: The above estimates corresponding to rig activity and rig type are derived from multiple sources including Rig Data and corporate filings. Additionally, the drawworks capacity of each land rig included in the above analysis was equal to or greater than 600 ho
Slide 29: H&P U.S. Land Fleet (Idle Rigs)
H&P U.S. Land Fleet (Idle Rigs as of 10/4/16) Pad* AC Drive FlexRigs Drawworks Horsepower Most Advanced Fleet ** * Optimal for multiple-well pad drilling applications. ** Most of the “Other FlexRigs” can be upgraded to Pad* FlexRigs. FlexRig Type Rig Power Type
Slide 30: H&P's International Land Operations
Contracted Idle Total Long-term Contracts Argentina 11 8 19 10 Bahrain 1 2 3 Colombia 2 6 8 1 Ecuador 6 6 U.A.E. 2 2 2 Total 16 22 38 13 H&P’s International Land Operations Rigs on term contract that have greater than or equal to 180 days remaining. Some of the 10 contracted rigs in Argentina are on
Slide 31: Number of Rigs Already Under Long-Term Contracts
Number of Rigs Already Under Long-Term Contracts* (Estimated Quarterly Average, Including Announced New Builds - as of 10/4/16) H&P Global Fleet Under Term Contract Segment Q4 Q1 Q2 Q3 Q4 Q1 Q2 FY16 FY17 FY17 FY17 FY17 FY18 FY18 U.S. Land 67.5 66.4 65.9 63.1 53.3 47.1 37.7 International Land 14.0 14
Slide 32: The FlexRig Difference: Key Advantages
The FlexRig Difference: Key Advantages Increased drilling productivity and reliability Variable frequency AC technology providing precise control and increased capability Computerized electronic driller more precisely controls down-hole parameters FlexRig designs are suited for both efficient well t
Slide 33: The Value Proposition: The Power of Efficiency
Theoretical 20% Efficiency 40% Efficiency Base Case Improvement Improvement 1. Drilling days average 13.5 10.8 8.1 Other days average 5.0 4.0 3.0 Moving days average (several multi-well pads) 1.5 1.2 0.9 Total rig days per well 20.0 16.0 12.0 Efficiency (Reduced Well Cycle Time) - 20% 40% 2. Drillin
Slide 34: Ten-Year Relative Shareholder Return
Ten-Year Relative Shareholder Return Source: Thomson Reuters as of September 30, 2016.
Slide 35: Land Drilling Market Valuations
Land Drilling Market Valuations Source: Thomson Reuters as of September 30, 2016.
Slide 36: Oil vs. Natural Gas Directed Rig Count
Oil vs. Natural Gas Directed Rig Count
Slide 37: Oil and Natural Gas Prices
Oil and Natural Gas Prices Source: Energy Information Administration and Thomson Reuters. Oil Prices Natural Gas Prices
Slide 38: Oil and Natural Gas Prices
—Henry Hub Spot —West Texas Intermediate Spot |} $140 sto | = Oil Prices U.S. Dollars per Million British Thermal Units $4 $2 $20 Natural Gas Prices Soi tg; SP PP DS Ras A wo © 6 Pr PP SBP E A et eal Daily Prices Source: Energy Information Administration and Thomson Reuters.
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