Helmerich & Payne, Inc. · NYSE:HP
Helmerich & Payne — Investor Presentation (January 2016)
42 slides from Helmerich & Payne's investor presentation, Jan 6, 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 U.S. land drilling market share leader Most modern, uniform and capable land drilling fleet Strong term contract backlog with high quality customer base Strategy focused on continued innovation, performance excellence and customer satisfaction About Helmerich & Payne (H&P)
Slide 3: H&P's Global Rig Fleet
H&P’s Global Rig Fleet * Estimates include existing rigs and new build commitments as of January 6, 2016 and exclude 17 SCR powered FlexRigs decommissioned at the end of the second quarter of fiscal 2015 and six conventional SCR rigs decommissioned at the end of fiscal 2015.
Slide 4: Organic U.S. Land Fleet Growth
Organic U.S. Land Fleet Growth * Estimates include existing rigs and announced new build commitments. 350 49
Slide 5: U.S. Land Drilling Market Conditions
U.S. Land Drilling Market Conditions Oil and gas prices remain low Rig count is now under 700 and expected to continue to decline Over 85% of active rigs are now drilling complex wells (horizontal and directional) AC drive market share continues to increase (now at 61%) Spot pricing remains soft
Slide 6: Oil and Natural Gas Prices
Oil and Natural Gas Prices Source: Energy Information Administration and Thomson Reuters. Oil Prices Natural Gas Prices
Slide 7: Drilling Activity in the U.S.
Drilling Activity in the U.S.
Slide 8: H&P's U.S. Land Activity and Pricing Comments
H&P’s U.S. Land Activity and Pricing Comments H&P’s U.S. Land segment has approximately 127 contracted rigs generating revenue as of January 6, 2016, down from 132 on December 9, 2015. Average FlexRig spot pricing is down by more than 30%, as compared to spot pricing at the peak in November 2014. Si
Slide 9: H&P Highlights
High Quality Customer Base Best-in-Class Safety Market Leader Most Advanced Fleet H&P Highlights Very Strong Balance Sheet Strong Multi-Year Backlog
Slide 10: H&P's Lead in U.S. Land AC Drive Rigs
H&P’s Lead in U.S. Land AC Drive Rigs * 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. Most Advanced Fleet
Slide 11: 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 131 FlexRig3s and 6 FlexRig4s of the 159 “Other FlexRigs” can be upgraded to Pad* FlexRigs. * Optimal for multiple-well pad drilling applications. **
Slide 12: H&P U.S. Land Fleet (Contracted Rigs as of 1/6/16)
Drawworks Horsepower FlexRig Type Rig Power Type H&P U.S. Land Fleet (Contracted Rigs as of 1/6/16) 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 13: 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 14: 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 15: H&P Gaining U.S. Land Market Share
As of October 2014 (Peak) (~1,930 Active Rigs in U.S. Land) As of October 2008 (Peak) (~1,925 Active Rigs in U.S. Land) As of December 2015 (~660 Active Rigs in U.S. Land) H&P Gaining U.S. Land Market Share Market Leader Note: The above estimates corresponding to market share are derived from Rig Da
Slide 16: U.S. Land Active Rig Count
U.S. Land Active Rig Count BHI Industry Rig Count Through Third Quarter of Calendar 2015 Market Leader
Slide 17: U.S. Land Average Daywork Margins
U.S. Land Average Daywork Margins(1) (1) Does not include the impact of early contract termination revenue. Market Leader Through Third Quarter of Calendar 2015
Slide 18: Delivering Safety – H&P vs. Industry (IADC)
Delivering Safety – H&P vs. Industry (IADC) U.S. Land Safety Performance (2005 – Sept 2015) OSHA Recordable Injury Incidence Rates Injuries per 200,000 Man Hours H&P IADC w/o H&P Best-in-Class Safety
Slide 19: 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 1/6/16. Given notifications as of 1/6/16, the Company expects to generate approximately $29 million in the f
Slide 20: 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 and corporate filings. High Quality Customer Base
Slide 21: H&P Customer Credit Ratings
H&P Customer Credit Ratings * As of September 30, 2015. Consists of 145 contracted U.S. Land rigs, 8 contracted Offshore rigs, and 15 contracted International Land rigs. Includes approximately 48 customers with active/contracted H&P rigs. ** The figures above represent H&P’s customer commitments for
Slide 22: Ongoing U.S. Land Market Trends
Ongoing U.S. Land Market Trends Unconventional plays continue to shape the landscape. AC drive rigs are best suited for more complex horizontal drilling. Customers continue to focus on drilling efficiency, technology and safety. Multiple wells being drilled from a single pad. The replacement cycle i
Slide 23: Increasing Focus on More Difficult Drilling
Increasing Focus on More Difficult Drilling
Slide 24: 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, Smith Bits, and corporate filings. Additionally, the drawworks capacity of each land rig included in the above analysis was greater than or equal to
Slide 25: The Replacement Cycle: Customer Adoption
The Replacement Cycle: Customer Adoption Next 90 E&P Operators (~350 Active Rigs by Power Type) Top 10 E&P Operators (~175 Active Rigs by Power Type) Remaining E&P Operators (~135 Active Rigs by Power Type) Top 10 E&P Operators Next 90 E&P Operators Remaining E&P Operators They represent the 10 most
Slide 26: The Replacement Cycle Continues
As of October 2014 (Peak) (~1,930 Active Rigs in U.S. Land By Power Type) The Replacement Cycle Continues As of October 2008 (Peak) (~1,925 Active Rigs in U.S. Land By Power Type) As of December 2015 (~660 Active Rigs in U.S. Land By Power Type) Note: The above estimates corresponding to rig activit
Slide 27: H&P's Long Term Strategy
H&P’s Long Term Strategy Innovation Technology Safety and operational excellence Customer satisfaction Financial strength
Slide 28: H&P's Long Term Strategy
|, H&P’s Long Term Strategy > Innovation > Technology > Safety and operational excellence > Customer satisfaction Financial strength
Slide 29: H&P Activity as of January 6, 2016
H&P Activity as of January 6, 2016 Rigs Working/ Contracted 127 127 0 8 16 151 Rigs Available 346 344 2 9 38 393 4 397 % Contracted 37% 37% 0% 89% 42% 38% U.S. Land AC Drive FlexRigs SCR Fleet Offshore International Land Total FlexRig Construction Total Fleet 54% are FlexRigs that are optimal for mu
Slide 30: H&P's U.S. Land Fleet Activity
H&P’s U.S. Land Fleet Activity (1) (1) Includes completed new builds pending delivery and not generating revenue days.
Slide 31: H&P U.S. Land Fleet (Idle Rigs as of 1/6/16)
FlexRig Type Rig Power Type H&P U.S. Land Fleet (Idle Rigs as of 1/6/16) 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.
Slide 32: Leading U.S. Unconventional Driller
Leading U.S. Unconventional Driller * Includes 4 announced new FlexRigs with customer commitments scheduled for delivery in the second quarter of fiscal 2016. (131 H&P Contracted Land Rigs as of 1/6/16*)
Slide 33: 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, Smith Bits, and corporate filings. Additionally, the drawworks capacity of each land rig included in the above analysis was equal to or greate
Slide 34: H&P's International Land Operations
Active Idle Total Long-term Contracts Argentina 11 8 19 10 Bahrain 1 2 3 1 Colombia 1 7 8 1 Ecuador 1 5 6 U.A.E. 2 2 2 Total 16 22 38 14 H&P’s International Land Operations Rigs on term contract that have greater than or equal to 180 days remaining. 13 of 25 FlexRigs, included in the international f
Slide 35: H&P Global Fleet Under Term Contract
Number of Rigs Already Under Long-Term Contracts* (Estimated Quarterly Average, Including Announced New Builds - as of 1/6/16) H&P Global Fleet Under Term Contract Segment Q2 Q3 Q4 Q1 Q2 Q3 Q4 FY16 FY16 FY16 FY17 FY17 FY17 FY17 U.S. Land 89.9 84.1 79.3 75.1 70.6 63.4 54.9 International Land 14.0 14.
Slide 36: 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 37: 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 38: Ten-Year Relative Shareholder Return
Ten-Year Relative Shareholder Return Source: Thomson Reuters as of January 4, 2016.
Slide 39: Land Drilling Market Valuations
Land Drilling Market Valuations Source: Thomson Reuters as of January 4, 2016.
Slide 40: Current Dividend Yields
Current Dividend Yields Source: Thomson Reuters. Yields calculated as of market close on January 4, 2016.
Slide 41: Oil vs. Natural Gas Directed Rig Count
Oil vs. Natural Gas Directed Rig Count
Slide 42: Oil vs. Natural Gas Directed Rig Count
Oil vs. Natural Gas Directed Rig Count | 2,500 —Total Active Rigs —Rigs Drilling for Oi! Rigs Drilling for Gas 2,000 1,500 1,000 500 Number of Active U.S. Rigs (BHI North American Rotary Rig Count)
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