Helmerich & Payne, Inc. · NYSE:HP
Helmerich & Payne — Investor Presentation (September 2019)
29 slides from Helmerich & Payne's investor presentation, Sep 19, 2019
Slide 1: Meetings with Investors September 2019
HELMERICH & PAYNE, INC. Meetings with Investors September 2019 Data as of 9/4/2019 unless otherwise noted.
Slide 2: Forward-Looking Statements
Forward‐Looking Statements Forward Looking Statements This presentation contains forward-looking statements within the meaning of the securities laws. Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts. They often include words or
Slide 3: H&P Investment Thesis
H&P Investment Thesis Industry Leader in U.S. Land Drilling • FlexRig® Fleet Poised for Continued Market Share Gains • Most Capable and Uniform Fleet Outperformed OSX in 8 Out of Last 10* Years • Consistent Operational Excellence (Safety, Customer Satisfaction, Reliability) • Financial Position
Slide 4: H&P Today
H&P Today Founded in 1920, H&P is the industry’s most trusted drilling partner. Committed to operational excellence and conservative financial discipline, H&P is the recognized industry leader in drilling as well as technological innovation. We are a global drilling company based in Tulsa, OK wi
Slide 5: H&P's Winning Strategy
H&P’s Winning Strategy Today’s Focus Points Execute as the dominant U.S. land driller Continue to lead industry in technology and innovation bringing value to customers Grow international business opportunistically Maintain cash flow generating offshore exposure Maintain and build upon a s
Slide 6: H&P Global Rig Fleet
H&P Global Rig Fleet Rigs Rigs % Available Contracted(3) Contracted U.S. Land 299 200 67% AC Drive FlexRigs 297 200 67% Super-spec(1) 232 190 82% Upgradeable 45 5 11% Other 20 5 25% 3,000 hp SCR Rigs 2 0 0% International Land 31 18 58% Argentina(2) 20 16 80% Bahrain 2 2 100% Colombia 7 0 0% U.A.E 2
Slide 7: Competitive Benefits of Uniform Fleet
Competitive Benefits of Uniform Fleet Uniform fleet creates adaptive environment to reach maximum efficiency for people, equipment and technology Uniform fleet provides consistent and reliable operations in increasingly complex basins Uniform fleet has greater scale than any competitor; abilit
Slide 8: Differentiated from Land Drilling Peers
Differentiated from Land Drilling Peers Leading U.S. market share • Approximately 21%* of U.S. land fleet, ~40%* of super-spec fleet Distinctively situated as the incremental supplier of super-spec rigs • Leveraging position in terms of super-spec supply and pricing Uniquely positioned to prov
Slide 9: The Replacement Cycle Continues
The Replacement Cycle Continues AC Rigs Continue to be the Preferred Choice of Unconventional Drilling 1,150 80% Legacy style rigs (SCR & Mechanical) YTD increase struggle to compete as well complexity of ~600 bps 1,075 78% increases; ~700 basis point decrease in market share during the last 12 mo
Slide 10: Super-Spec Rigs More Resilient
Super‐Spec Rigs More Resilient Unconventional drilling is more efficient with, and often times requires, the use of super-spec rigs 1,050 Mech. Rigs 900 Super-spec rigs comprise ~60% of the SCR Rigs total rigs drilling unconventional wells and 750 ~80% of the AC-drive rigs working today Other AC R
Slide 11: Evolving Commercial Model
Evolving Commercial Model As H&P demonstrates value creation through operations and safety, and makes investments in technologies and upgrades, the contract model terms must evolve to ensure a reasonable rate of return Current dayrate model does not adequately compensate the industry for additio
Slide 12: Leading U.S. Unconventional Driller
Leading U.S. Unconventional Driller Resource Play (# Rigs, Market Share) (4, 90%) (5, 17%) (1, 7%) 9 (7, 18%) (9, 17%) (10, 20%) 5 1 7 4 (21, 31%) (111, 25%) 21 111 10 32 (32, 42%) Leading market share in the 3 most active U.S. basins, Broad exposure to U.S. unconventional basins evidence of str
Slide 13: Strong Returns and Market Share Growth
Strong Returns and Market Share Growth H&P has a higher quality of earnings with a greater number of super-spec rigs that are in demand Unmatched competitive edge – largest super- spec and upgradeable rig fleet in the industry Capital stewardship evident over time with H&P making better invest
Slide 14: Super-Spec and Upgradable Utilization
Super‐Spec and Upgradable Utilization Super-Spec Specifications Industry Super-Spec Utilization AC drive 1,500 hp drawworks 750,000 lb hookload rating 7,500 psi mud circulating system Multiple-well pad capable Additional capabilities, including third mud pumps, 25,000’ setback, increased
Slide 15: Super-Spec Upgrade Program
Super‐Spec Upgrade Program H&P’s Super-Spec Upgrades 250 225 Upgrades provide foundation for significant cash flow generation 200 175 H&P has invested capital to grow the fleet size of its super-spec rigs faster and larger than competitors 150 125 Over 40% super-spec market share with 232 supe
Slide 16: HPT – Helmerich & Payne Technologies
HPT – Helmerich & Payne Technologies Adding Value Through Automation: Wellbore Quality, Accuracy & Efficiency H&P Technologies develops, promotes and commercializes software technology offerings that create a compelling value opportunity for E&P companies Motive’s Bit Guidance System® helps to ena
Slide 17: Traditional Directional Drilling Challenges
Traditional Directional Drilling Challenges Wellbore Quality Without Motive With Motive Well Design Difficult to Achieve Improved Accuracy • Poor drilling accuracy • Well drilled to plan • Missed targets/pay zones • Higher production Planned Without MOTIVE Trajectory MOTIVE Result Inconsistent
Slide 18: Wellbore Quality Matters
Wellbore Quality Matters Tortuosity Adversely Affects Overall Well Economics Tortuosity is the amount of bends and twists in a well often referred to as doglegs; unwanted tortuosity is detrimental to well economics. Tortuosity increases pipe fatigue and downhole tool wear and failure Increases d
Slide 19: MagVAR Survey Correction
MagVAR Survey Correction Wellbore Accuracy Why is Wellbore Placement Critical? Reservoir: Directly impacts well performance by increasing the reservoir volume exposed to stimulation; optimal drainage, more frac wings Completions: improving hydraulic communication, reduce parent/child interferenc
Slide 20: FlexApps Enhancing Well Efficiency
FlexApps™ Enhancing Well Efficiency FlexApps (software as a service offered through HPT): FlexTorque™ hardware and software designed to decrease downhole drilling vibrations leading to increased drilling efficiencies and increased bit and downhole tool life. FlexConnect™ software optimizes slip-
Slide 21: AutoSlide: The Next Evolutionary Step in Drilling Automation
AutoSlide The Next Evolutionary Step in Drilling Automation Uses machine learning and automation to interface with FlexRig control systems to perform slide drilling automatically via computer control (vs. traditional human control) Single button execution - fully autonomous sliding with no human
Slide 22: Value Driven Automation
Value Driven AutomationTM Converting Art to Science Through acquisitions and internal R&D, H&P has developed an Autonomous Drilling PlatformTM that optimizes and automates total well execution All technologies are not created equal H&P solutions not only use machine learning to drive economic-
Slide 23: Opportunistic International Growth
Opportunistic International Growth Important line of business for H&P • 8% of company’s total active rig count • Adds diversification, long-term contracting and growth opportunities, especially with unconventional shale growth International business has historically had a different value proposi
Slide 24: Established Offshore Business
Established Offshore Business Legacy Gulf of Mexico business for H&P • Drilling offshore since 1968 • Assets consist of platform drilling rigs • Today requires relatively little capex • Yields free cash flow supporting other segments Long operational track record Niche business line in the Gul
Slide 25: Strong Financial Foundation & Returns
Strong Financial Foundation & Returns Total-Debt-to-Total-Capitalization Ratio1 Dividends Paid (Fiscal 2009 – Current) $350 ~$2 billion returned to shareholders in the HP No debt maturity until fiscal 2025 form of dividends during the past 10 years $300 $250 PTEN $200 $150 PDS $100 Dividends Paid $M
Slide 26: Strong Term Backlog
Strong Term Backlog Term Contract Status – H&P Global Fleet U.S. Land Term Contract Revenues Rigs Under 137.9 120.6 91.7 76.5 62.1 44.1 18.9 11.0 10.0 Term Contracts Source: Company Filings © HELMERICH & PAYNE, INC. 2019 25
Slide 27: Free Cash Flow Generation Snapshot
Free Cash Flow Generation Snapshot Super‐Spec Investments Provide Solid Footing Estimate of Cash Flow Generated per Active U.S. FlexRig ~204* Avg. Active rigs H&P has invested in U.S. Land super-spec upgrades which are the highest utilized rig Revenue/day* $25,500 class Opex/day* ($14,600) Using
Slide 28: Why H&P in Current Market Conditions?
Why H&P in Current Market Conditions? U.S. Land industry leader with dominant position Important to be adaptable in volatile markets Majority of rig releases during 2019 have been related to E&P budgeted rig demand and not dayrate pricing levels H&P rig count expected to decline sequentially
Slide 29: Thank you for your interest in H&P
Helmerich & Payne, Inc. Thank you for your interest in H&P. Our stock is traded on the NYSE, ticker symbol ‐ HP For more information please visit our website at www.hpinc.com or contact: Dave Wilson, CFA, CPA Director of Investor Relations 918‐588‐5190, investor.relations@hpinc.com
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