Helmerich & Payne, Inc. · NYSE:HP
Helmerich & Payne — Lehman Brothers 2005 CEO Energy/Power Conference
30 slides from Helmerich & Payne's conference presentation, Sep 8, 2005
Slide 1: Lehman Brothers 2005 CEO Energy/Power Conference
Helmerich "&"#038; Payne, Inc. Lehman Brothers 2005 CEO Energy/Power Conference September 8, 2005 NYSE Stock Symbol: HP Common Dividend: $0.33 Average Basic Shares Outstanding: 51 Million Internet Address: www.hpinc.com Investor Relations Contacts: Doug Fears, CFO 918.588.5208 doug.fears@hpinc.com J
Slide 2: Forward-looking information disclaimer
The information contained within this presentation is forward looking and involves risks and uncertainties that could significantly impact expected results. A discussion of these risks and uncertainties is contained in the Company's Form 10-K filed with the Securities and Exchange Commission on Dece
Slide 3: What Is Different About This Cycle
Potential for an up cycle that is prolonged and less volatile. First up cycle for H"&"#038;P as a pure play driller. 25 new FlexRigs scheduled for construction. Increase in rig fleet of 72% from 2000 to 2006. 50 new FlexRigs have established the new performance standard for the industry. What Is Dif
Slide 4: The Three Distinct Markets Of H&P's Rig Fleet (September 2005)
International Platform Conventional FlexRigs Rig Fleet 27 11 28 62 The Three Distinct Markets Of H&P’s Rig Fleet 128 Total Rigs September 2005
Slide 5: The Three Distinct Markets Of H&P's Rig Fleet (September 2006)
The Three Distinct Markets Of H"&"P’s Rig Fleet International 27 US Land 90 Conventional 28 Mobile FlexRigs 87 153 Total Rigs September 2006
Slide 6: H&P Rig on Customer's Platform Before and After Hurricane Katrina
H"&"#038;P Rig 201 on Customer's Platform Before and After Hurricane Katrina
Slide 7: What is so distinctive about the FlexRig?
What is so distinctive about the FlexRig?
Slide 8: FlexRigs Strategically Positioned
FlexRigs Strategically Positioned "&"#060; 6,000' 6,001' - 18,000' 18,001' - 20,000' "&"#062; 20,000' 1% 1% 25% 1% 3% 8% 88% 73% Well Depth Source: Smith International, Inc. May 1992 through May 2005 Active U.S. Land Drilling Rigs
Slide 9: Leader in New Ideas & Applied Technology
Leader in New Ideas "&"#038; Applied Technology Integrated Top Drive Mechanized Tubular Handling VFD AC Drawworks BOP Handling V-ICIS eD Controls Communications
Slide 10: H&P's Organizational Support Structure
H“&”#038;P’s Organizational Support Structure
Slide 11: Move from Deep to Mid-Depth Land Rigs
FY1997 1998 1999 2000 2001 2002 2003 2004 2005 2006E 18 - 25,000'+ 15 15 15 16 18 22 22 21 20 20 8 - 18,000' (Mobile "&"#038; FlexRigs 1, 2 "&"#038; 3) 15 21 25 23 31 44 61 69 70 73 6 - 12,000' (FlexRig4) 22 Move from Deep to Mid-Depth Land Rigs
Slide 12: U.S. Land Cash Flow Margin and Rig Count
mB. Land Cash Flow Margin Baker Hughes U8.Land Rig Count Cash Flow Margin Per Rev. Day GELS TE ESHA IAGO IT SISOS EY & BLO DM MGV EEE EI ELL OR OEE OEE EE EEE ETE EE ESS
Slide 13: FlexRig3 Project Return Estimates
FlexRig3 Project Return Estimates Baseline FlexRig4 ROIC Annualized FlexRig3 ROIC
Slide 14: Technology and Quality Service Make a Difference
Technology and Quality Service Make a Difference
Slide 15: EPS & CFPS - Street Estimates
Source: Thomson Financial August 3, 2005 EPS "&"#038; CFPS - Street Estimates
Slide 16: New Build Inflection Point
New Build Inflection Point: How did we get here? Where are we going? The line of demarcation.
Slide 17: Slide 17
Slide 18: Rig Locations: U.S. and International Rigs
101 U.S. Rigs 27 International Rigs 128 Total H"&"#038;P Rigs 25 U.S. Construction 3 Management Contracts Rig Locations South America Venezuela 9/12 Colombia 2/2 Ecuador 8/8 Bolivia 1/1 Argentina 2/2 Chile 1/1 GOM 7/11 U.S. Land 87/90 California Equatorial Guinea
Slide 19: Rig Status as of September 2005
Rig Status as of 1 September 2005 Rigs Available 62 28 11 27 128 Rigs Working/ Contracted 62 25 8 24 119 % Activity 100% 89% 73% 89% 93% U.S. Land, FlexRig "&"#038; Mobile U.S. Land, Conventional U.S. Platform International Land Total Management Contracts: U.S. GOM "&"#038; CA Equatorial Guinea Tota
Slide 20: New Build Program
New Build Program 22 FlexRig4s and 3 FlexRig3 new-builds Expect outstanding financial returns Strong validation for FlexRig value proposition Operator benefits: Significant total drilling costs savings Accelerated well delivery and production Enhanced safety and environmental sensitivity
Slide 21: Segment Outlook - Offshore, U.S. GOM
Increasing platform rig demand and supply Operating leverage available for potential recovery Rig management contract opportunities Segment Outlook - Offshore, U.S. GOM Steady, Good Potential
Slide 22: Segment Outlook - International
Venezuela - 9 rigs are working. 3 rigs available with strong prospects. Colombia - Both rigs working. Should continue for FY05. Ecuador - All eight rigs working. Strong market. Bolivia/Argentina - All four committed. Chile - New contract. Segment Outlook - International Recovering! Highest Activity
Slide 23: H&P is the Leader in Field Performance
Innovative technology Reduced move times Reliability Drilling performance H"&"#038;P is the Leader in Field Performance
Slide 24: H&P FlexRig3 Downtime Performance
June 2002 - July 2005 H"&"#038;P FlexRig3 Downtime Performance
Slide 25: FlexRig3 Highlights of Rigs
FlexRig3 Highlights of Rigs 210 - 241 1. Field Performance vs. customer's planned drill curves ? 838 complete wells as of 1 September 2005 ? 485 wells (65%) under ? 31 wells (4%) on ? 227 wells (31%) over 2. 53% of FlexRig3s are currently drilling directional, more technically difficult wells.
Slide 26: Example of Best Value: H&P FlexRig3 East Texas
Example of Best Value: H"&"#038;P 213 FlexRig3 Example of Best Value: H"&"#038;P 213 FlexRig3 East Texas
Slide 27: Best Value - Reduced Well Cycle Time
Best Value - Reduced Well Cycle Time Estimated Field H"&"#038;P R213 1. Average Sep 05 Drilling days 13 7.7 Completion days 2 2 Moving days 5 3 Well cycle in days 20 12.7 2. Contractor rate/day $16,500 $20,500 Operator's other intangible cost per day estimate $9,500 $9,500 Operator's daily "spread"
Slide 28: Best Value Reduced Well Cycle Time
Best Value Reduced Well Cycle Time 3. Added value from FlexRig3 operations Lowest total well cost Increased wells per rig per year: 28.7 wells vs. 18.3 wells Early production: Incremental wells on production 10.4 wells / yr Improved efficiency of operator's organization
Slide 29: Example of Best Value: H&P FlexRig3s Rocky Mountains
Example of Best Value: H"&"#038;P FlexRig3s Example of Best Value: H"&"#038;P FlexRig3s Rocky Mountains
Slide 30: Why Do We Favor a New Build Strategy?
Safety Efficiency The future is about applying better ideas New appreciation of H"&"#038;P's value proposition Outstanding financial returns Why Do We Favor a New Build Strategy?
Helmerich & Payne — Lehman Brothers 2005 CEO Energy/Power Conference on 6ix