Helmerich & Payne, Inc. · NYSE:HP
Helmerich & Payne — Investor Presentation (September 2024)
21 slides from Helmerich & Payne's investor presentation, September 2024
Slide 1: Helmerich & Payne, Inc.
Helmerich & Payne, Inc. September 2024 Financial data as of 6/30/2024; other data and year-to-date references are as of 07/24/2024 unless otherwise noted. © 2024 Helmerich & Payne, Inc. All Rights Reserved. 1
Slide 2: Forward-Looking Statements
Forward-Looking Statements This presentation contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended. All statements other than statements of historical facts included in this
Slide 3: Helmerich & Payne
Helmerich & Payne H&P is recognized as an industry leader in unconventional drilling solutions as well as technological innovation. H&P TODAY H&P operates in 3 segments (% of revenue in Fiscal 2023) o North America Solutions ~88% market leader in U.S. Founded IN 1920 o International Solutions o Offs
Slide 4: Focused on Enhancing Returns: Current Highlights
Current Highlights • Striving to generate returns above cost of capital through the cycles • Achieved in fiscal 2023 • Driving up revenue/day & direct margin/day(1): • Target of > $35k/day in revenue/day in NAS • Mid-teen ROIC/ROCE goal • Reducing capital intensity on revenue generated • Returning c
Slide 5: H&P's Winning Strategy
H&P’s Winning Strategy Global Drilling Solutions Provider • Focus on Customercentricity • Evolve commercial model to be customer centered and value driven • Continue to be an industry leader in technology automation adoption and differentiation • International expansion • Maintain capital allocation
Slide 6: Differentiated from U.S. Land Drilling Peers
Differentiated from U.S. Land Drilling Peers • Strategic advantages – innovation, economies of scale, operational efficiency, financial flexibility, and risk reduction • Evolving the commercial model – performance contracts • Uniform design of FlexRig® fleet in U.S. • Highly trained workforce • Safe
Slide 7: H&P Global Rig Fleet
H&P Global Rig Fleet Super-Spec Rigs Represent 99% of Total NAS Fleet Pro Forma for Recent Current Middle East Awards Rigs Rigs % (Export)/ Rigs Rigs % Available Active(1) Contracted (2) Import Available Contracted Contracted North America Solutions 232 148 64% (7) 225 148 66% ® Super-Spec FlexRig F
Slide 8: U.S. Capacity of Readily Available Super-Spec Rigs Has Decreased
U.S. Capacity of Readily Available Super-Spec Rigs Has Decreased (Pre-Pandemic) Utilization for Readily Available ~630 available Super-Spec Rigs Remains Healthy super-spec rigs (January 2023) ~540 active super-specs ▪ ~90 super-spec rigs have not worked during past 2+ years; it could take the indust
Slide 9: Benefits of Long Economic Life Assets
Benefits of Long Economic Life Assets Long economic life exceeds accounting life • Weighted average accounting life is 15 years for a super-spec FlexRig® drilling rig, but economic life is ~30 years • Major rig assemblies – mast and substructure, have long economic lives (~30 years) • Major rig comp
Slide 10: Percent of Rigs to Customers
Drilling Contractors’ E&P Clients H&P’s customers hold long lives of high-quality inventory Drilling Contractors' E&P Clients o H&P has the largest percentage 70% of rig fleet with super majors and Percent of Rigs to Customers 60% Exposure to large E&P’s; those customers Supermajors & tend to have m
Slide 11: Evolving Commercial Model – Providing Value with Performance
Evolving Commercial Model – Providing Value with Performance H&P has a long track record of providing value to customers: • The commercial model must evolve to ensure a reasonable rate of return for H&P • Historically, day-rate model does not adequately compensate for value being derived in well cos
Slide 12: Rig Performance is More Impactful to Well Cost than Rig Rates
Rig Performance is More Impactful to Well Cost than Rig Rates Estimated Total Well Costs o Drilling costs are not synonymous with rig rates ̶ other drilling costs (OCTG, Mud, Bits and Directional) more impactful to overall well cost Rig Tie-In 8% o H&P’s rigs, technology and crews help provide E&Ps
Slide 13: KCA Deutag Acquisition - Creating a Global Leader in Onshore Drilling
KCA Deutag Acquisition - Creating a Global Leader in Onshore Drilling Enhances Scale and Geographic Diversification - Leading Positions in the U.S. and Middle East Strengthens Cash Flow Stability and Durability through a Robust Contract Backlog, Supported by a Blue-Chip Customer Base Immediately Acc
Slide 14: Transaction Overview
Transaction Overview • H&P to acquire KCA Deutag (“KCAD”) for $1.9725Bn in cash Purchase Price & Transaction • Transaction to be funded with cash on hand and new borrowings Structure • Fully committed financing package to acquire KCAD equity and refinance existing KCAD debt • Immediately accretive t
Slide 15: About KCA Deutag: A Leading Driller in the Middle East
About KCA Deutag: A Leading Driller in the Middle East Business Overview Core Middle East Land Drilling and Offshore Contract Services Comprise ~95% of KCAD 2023 Operating EBITDA (1) Land Operations • Core Middle East Countries: Saudi Arabia, Oman and Kuwait Offshore Contract Services • 63 rigs in C
Slide 16: H&P's Commitment to Capital Allocation
H&P’s Commitment to Capital Allocation STRONG FINANCIAL POSITION • Commitment to maintaining investment grade credit ratings (leverage of less than 2.0 times) • Promptly delever with free cash flow post close of KCA Deutag acquisition • Net leverage of ~1.7x at closing with focus on reaching at or b
Slide 17: Leading Shareholder Returns
Leading Shareholder Returns Total Cash Returned Per Share CY16-CY24 YTD Total Cash Returned / Share CY16-24YTD $24 $21 $18 $15 Already Leader in Providing Shareholder Returns $12 $9 Total Cash Returned Yield $6 CY16-CY24 YTD 7% $3 Total Cash Return Yield CY16-24YTD 6% $0 HP SLB BKR HAL NBR PTEN FTI
Slide 18: H&P – Compelling Energy Investment
H&P – Compelling Energy Investment 27 Energy Companies in S&P 600 Index 13 OFS, 7 E&Ps, 5 Refining & Marketing, 2 Other H&P Stands Out Balance Sheet Strength • H&P ranks in top quartile in debt-to-cap at ~16%; average ~40% Cash Returns to Shareholders • Only 11 of 27 are dividend payers of which H&P
Slide 19: H&P Sustainability Report
H&P Sustainability Report Issued December 2023 Highlights – Provides: • Environmental management and oversight practices • Strong use of data to report over 40 environmental metrics, including Scope 1 & 2 emissions data • Quantitative scenario analysis for use in strategy development • Environmental
Slide 20: H&P Investment Thesis
H&P Investment Thesis AN INDUSTRY LEADER AS A DRILLING SOLUTIONS PROVIDER • With KCA Deutag Acquisition H&P Becomes Global Leader in Onshore Drilling – Significant Presence in U.S. and Middle East • Consistent Operational Excellence (Safety, Customer Satisfaction, Reliability) • A Technology and Inn
Slide 21: Thank You for Your Interest in H&P
Helmerich & Payne, Inc. Thank You for Your Interest in H&P For more information, please visit our website at www.helmerichpayne.com Contact: Dave Wilson, CFA, CPA VP of Investor Relations 918-588-5190, investor.relations@hpinc.com NYSE : HP © 2024 Helmerich & Payne, Inc. All Rights Reserved. 21
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