Helmerich & Payne, Inc. · NYSE:HP
Helmerich & Payne — Non-Deal Roadshow (May 2011)
54 slides from Helmerich & Payne's roadshow presentation, May 24, 2011
Slide 1: Helmerich & Payne, Inc. Meetings with Investors
Helmerich & Payne, Inc. Meetings with Investors May 24, 2011
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. For information regarding risks and uncert
Slide 3: Fleet footnote: new FlexRigs under construction
* Includes 17 new FlexRigs under construction with customer commitments and scheduled for completion during calendar 2011.
Slide 4: Lead Innovation, Expand Market Share, Drive Well Costs Down
Lead Innovation Expand Drive Well Market Share Costs Down we Satisfy Customers
Slide 5: Activity as of May 24, 2011
Activity as of May 24, 2011 Rigs Working/ Contracted 210 7 17 234 17 251 Rigs Available 242 9 24 275 17 292 % Contracted 87% 78% 71% 85% U.S. Land Offshore International Land Total FlexRig Construction Total Fleet
Slide 6: Highest U.S. Activity Level in Company History
Highest U.S. Activity Level in Company History As of 5/24/11
Slide 7: Leading U.S. Unconventional Driller
(227 H&P Contracted Land Rigs as of 5/24/11*) Leading U.S. Unconventional Driller * Includes 17 new FlexRigs with customer commitments scheduled for completion during calendar 2011.
Slide 8: 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 in markets primarily associated with oil, liquids rich gas, and dry gas.
Slide 9: Organic U.S. Land Fleet Growth
Organic U.S. Land Fleet Growth * Estimates include existing rigs and announced new build commitments. 259 49
Slide 10: H&P U.S. Land Fleet by Power Type
H&P U.S. Land Fleet by Power Type* * Includes New Build Commitments.
Slide 11: Lower U.S. Land Market Share Ten Years Ago
As of May 11, 2001 Lower 48 U.S. Land Market Share Active Rig Market Share – Ten Years Ago Note: The above estimates corresponding to U.S. land rig market share are derived from Smith Bits S.T.A.T.S..
Slide 12: Lower U.S. Land Market Share, Organically Growing
As of May 13, 2011 Lower 48 U.S. Land Market Share Organically Growing Active Rig Market Share Note: The above estimates corresponding to U.S. land rig market share are derived from Smith Bits S.T.A.T.S..
Slide 13: AC Drive U.S. Rig Market Share
AC Drive U.S. Rig Market Share (~450 Rigs) Note: The above estimates corresponding to market share are derived from multiple sources including Rig Data, Smith Bits, and corporate filings.
Slide 14: Technology & Quality Service Make a Difference: Margin Premium
Technology & Quality Service Make a Difference * Does not include the impact of early contract termination revenue. ** Represents weighted-average rig margin per day for PTEN, NBR and UNT through Q1CY11. H&P’s Margin Premium
Slide 15: Technology & Quality Service Make a Difference: Utilization Premium
Technology & Quality Service Make a Difference * Utilization is herein calculated to be average active rigs divided by estimated available marketable rigs during the period. ** Represents estimated average combined utilization for PTEN, NBR and UNT in the Lower 48 through Q1CY11. H&P’s Utilization P
Slide 16: Most Profitable Driller in U.S. Land Business
Most Profitable Driller in U.S. Land Business * PTEN’s operating income includes drilling operations in Canada. ** NBR’s operating income corresponds to its U.S. Lower 48 Land Drilling segment.
Slide 17: H&P New Builds
H&P New Builds Total of 45 new builds announced during last twelve months Delivering new FlexRigs at the rate of three per month since January 2011 Encouraging conversations continue...
Slide 18: What is a "New Build" Land Rig?
What is a “New Build” Land Rig? New – having recently come into existence, of dissimilar origin (as compared to old or existing), and of superior quality. Merriam-Webster Dictionary
Slide 19: How Does H&P Define a "New Build" Land Rig?
How Does H&P Define a “New Build” Land Rig? A new build rig consists of all new structures and equipment for the purpose of: Eliminating legacy issues Achieving Safety-by-Design Maximizing drilling efficiency Improvement of ergonomics for rig site personnel Packaging of components for enhanced mobil
Slide 20: Building a New FlexRig
Lean Manufacturing New Electrical Systems Test Assembly and Outfitting Unitizing Packages Fabricating New Structures Processing Raw Materials Building a New FlexRig Commissioning / Delivery
Slide 21: H&P Global Fleet Under Term Contract
H&P Global Fleet Under Term Contract
Slide 22: Innovation & Applied Technology
Innovation & Applied Technology AC Driven Systems & Integrated Top Drive Mechanized Tubular Handling Computerized Controls BOP Handling Driller’s Cabin Satellite Communications Rig Move Capabilities 31
Slide 23: Driller on a Conventional Rig vs. FlexRig
Driller on a Conventional Rig vs. FlexRig™
Slide 24: Roughnecks on a Conventional Rig vs. FlexRig
Roughnecks on a Conventional Rig vs. FlexRig™
Slide 25: 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 26: Performance Is Not Only About Better Rigs
Performance Is Not Only About Better Rigs It’s also about: People Safety Experience Training Culture Maintenance Processes Supply Chain Organizational Network Support Structure
Slide 27: Delivering Safety – H&P vs. Industry (IADC)
Delivering Safety – H&P vs. Industry (IADC) H&P 1Q11 = 1.04 IADC 2010 = 3.44 DAFWR = Days Away From Work Rate (Industry 1QCY11 Average = 0.76)
Slide 28: Customer Satisfaction Index
Source: EnergyPoint Research, Inc. Customer Satisfaction Index 10 = “Highly Satisfied”, 1 = “Highly Dissatisfied”
Slide 29: Market Trends Favor H&P
Market Trends Favor H&P Drilling today involves more complex well designs. Customers continue to focus on efficiency and technology to achieve lower total well costs. Customers are increasingly sensitive in terms of safety and environmental protection.
Slide 30: Additional References
ry eet Additional References
Slide 31: Five-Year Relative Shareholder Return
Five-Year Relative Shareholder Return Source: Yahoo! Finance as of May 19, 2011
Slide 32: Peer Group Estimated Return on Equity
Peer Group Estimated Return on Equity
Slide 33: H&P's Global Rig Fleet
H&P’s Global Rig Fleet * Estimates include existing rigs and announced new build commitments.
Slide 34: H&P's U.S. Land Operations
H&P’s U.S. Land Operations The major shift across the industry towards oil and liquids rich plays is increasingly employing unconventional drilling techniques to conventional reservoirs. Basins that were historically characterized by shallow, vertical well paths are now seeing a greater number of dr
Slide 35: H&P's U.S. Land Fleet Activity
H&P’s U.S. Land Fleet Activity ** Includes delayed new builds (in red) which generated revenue but did not generate revenue days. * Active rigs on term (in blue) generated both revenue and revenue days.
Slide 36: H&P's Offshore Operations
H&P’s Offshore Operations Seven of the Company’s nine offshore platform rigs remain active, including two under long-term contracts. The number of revenue days during the third fiscal quarter of 2011 is expected to decrease approximately two percent sequentially. Average rig margin per day is expect
Slide 37: H&P's International Land Operations
H&P’s International Land Operations Segment operating income for the international segment during the third fiscal quarter is expected to be negatively impacted by disruptions in Tunisia and Argentina. Total revenue days during the third fiscal quarter are expected to increase by two to three percen
Slide 38: H&P's International Land Operations Rig Fleet Status
H&P’s International Land Operations Active Contracted Idle Total Long-term Contracts Argentina 4 5 9 4 Bahrain 3 3 3 Colombia 5 1 6 2 Ecuador 4 4 Tunisia 1 1 2 Total 17 7 24 9 Rig Fleet Status (as of May 24, 2011) 1) 9 of 11 FlexRigs, included in the international fleet of 24 rigs, are under long-te
Slide 39: Rigs Active in the U.S. Land Market
Rigs Active (~1,700) in the U.S. Land Market Note: The above estimates corresponding to rig activity are derived from multiple sources including Rig Data, Smith Bits, and corporate filings. (By Power Type)
Slide 40: Total Industry Available U.S. Land Fleet
Total Industry Available U.S. Land Fleet (by Power Type) Note: The above estimates corresponding to the available rig fleet in the U.S. are derived from multiple sources including Rig Data, Smith Bits, and corporate filings.
Slide 41: A Cyclical Business
A Cyclical Business — BHI U.S. Land Rig Count 2,000 1,800 1,600 1,400 4,200 1,000
Slide 42: Crude Oil & Natural Gas Prices
Crude Oil & Natural Gas Prices Source: Energy Information Administration, Short-term Energy Outlook as of 5/10/11. Crude Oil Natural Gas
Slide 43: Economics Shift Activity Towards Oil Drilling
Economics Shift Activity Towards Oil Drilling
Slide 44: Increasing Focus on More Difficult Drilling
Increasing Focus on More Difficult Drilling
Slide 45: Increasing Focus on More Difficult Drilling
Increasing Focus on More Difficult Drilling
Slide 46: 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 2010 (Spot Market) (Spot Market) (Spot Market) 1. Drilling days 20 14 10 Completion days 3 3 3 Moving days 7 4 3 Total rig revenue days per well 30 21 16 2. Dr
Slide 47: FlexRig3 – Performance Sample
FlexRig3 – Performance Sample 30% Improvement 50% Improvement
Slide 48: FlexRig4 – Performance Sample
FlexRig4 – Performance Sample 42% Improvement 22% Improvement
Slide 49: FlexRig3 – Performance Sample
* Represents the customer’s fastest reported Bakken Shale well before deploying a H&P FlexRig. FlexRig3 – Performance Sample
Slide 50: FlexRig3 – Performance Sample
FlexRig3 – Performance Sample 48% Improvement 30% Improvement
Slide 51: FlexRig4M – Performance Sample
FlexRig4M – Performance Sample 29 % Improvement 58 % Improvement
Slide 52: FlexRig4S – Performance Sample
FlexRig4S – Performance Sample 32% Improvement 68% Improvement
Slide 53: Safety Excellence Also Generates Savings
Safety Excellence Also Generates Savings Reduced Workers Comp and General Liability Losses per Man Hour EMR = Experience Modifier Ratio (Industry Average = 1.00)
Slide 54: End of Document
End of Document