Helmerich & Payne, Inc. · NYSE:HP
Helmerich & Payne — Investor Presentation (September 2016)
41 slides from Helmerich & Payne's investor presentation, Sep 7, 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 Most capable land drilling fleet Market share leader in the U.S. Robust term contract backlog Operational strategy focused on continued innovation, safety, performance excellence, reliability and customer satisfaction. About Helmerich & Payne (H&P)
Slide 3: H&P's Strong Balance Sheet (As of June 30, 2016)
H&P’s Strong Balance Sheet (As of June 30, 2016) 1. Total Capitalization is defined as Total Debt plus Shareholders' Equity. Total-Debt-to-Total-Capitalization Ratio1 Source: Company Filings.
Slide 4: Current Dividend Yields
Current Dividend Yields Source: Thomson Reuters. Yields calculated as of market close on September 2, 2016.
Slide 5: H&P's Global Rig Fleet
H&P’s Global Rig Fleet * Estimates include existing rigs and announced new build commitments.
Slide 6: 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 123 FlexRig3s and 6 FlexRig4s of the 151 “Other FlexRigs” can be upgraded to Pad* FlexRigs. * Optimal for multiple-well pad drilling applications. **
Slide 7: U.S. Land Market Share Leader
U.S. Land Market Share Leader Note: The above estimates corresponding to market share are derived from Rig Data. Additionally, the drawworks capacity of each land rig included in the above analysis was equal to or greater than 600 horsepower. Market Leader As of August 2016 (~510 Active Rigs in U.S.
Slide 8: H&P Global Fleet Under Term Contract: Strong Backlog
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 9/7/16. Given notifications as of 9/7/16, the Company expects to generate approximately $30 million in the f
Slide 9: 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. The category “Large Operators” includes majors and large independent E&P operators. High Quality Customer Base
Slide 10: U.S. Land Drilling Market Conditions
U.S. Land Drilling Market Conditions Over 1,400 rigs have been idled in the U.S. and tens-of-thousands of industry participants have been laid off. The impact has been pervasive. Nevertheless, as oil and gas prices recover, the market is displaying some early signs of optimism. Some E&P companies ha
Slide 11: Drilling Activity in the U.S.
Drilling Activity in the U.S.
Slide 12: 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 and corporate filings. Additionally, the drawworks capacity of each land rig included in the above analysis was greater than or equal to 600 horsepowe
Slide 13: Land Drilling Market Share Changes
Land Drilling Market Share Changes (From May 2016 Through August 2017) A larger proportion of small and private operators have put rigs back to work since the May 2016 trough. As a consequence: Lower horsepower, non-AC Drive rigs have gone back to work at a more rapid pace than AC Drive rigs thus fa
Slide 14: The Replacement Cycle: Customer Adoption
The Replacement Cycle: Customer Adoption Next ~75 E&P Operators (~235 Active Rigs by Power Type) Top 10 E&P Operators (~120 Active Rigs by Power Type) Remaining E&P Operators (~155 Active Rigs by Power Type) Top 10 E&P Operators Next ~75 E&P Operators Remaining E&P Operators They represent the 10 mo
Slide 15: Replacement Cycle Expected to Continue
As of October 2014 (Peak) (~1,930 Active Rigs in U.S. Land By Power Type) Replacement Cycle Expected to Continue As of October 2008 (Peak) (~1,925 Active Rigs in U.S. Land By Power Type) Note: The above estimates corresponding to rig activity are derived from multiple sources including Rig Data and
Slide 16: H&P's Lead in U.S. Land 1,500 hp AC Drive Rigs
H&P’s Lead in U.S. Land 1,500 hp AC Drive Rigs Most Advanced Fleet * 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.
Slide 17: 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 92 contracted rigs generating revenue, including 88 rigs generating revenue days as of September 7, 2016 (~13% of the 88 rigs remained idle and on standby dayrates). Average FlexRig spot pricing is in the mid-tee
Slide 18: H&P Very Well Positioned to Gain Share
H&P Very Well Positioned to Gain Share Market Leader Note: The above estimates are derived from multiple sources including Rig Data and corporate filings.
Slide 19: H&P's U.S. Land Fleet Activity
H&P’s U.S. Land Fleet Activity (1) Includes rigs on standby dayrates. Includes completed new builds pending delivery and not generating revenue days. (2)
Slide 20: Leading U.S. Unconventional Driller
Leading U.S. Unconventional Driller (94 H&P Contracted Land Rigs as of 9/7/16*) * Includes 2 announced new FlexRigs with customer commitments scheduled for delivery in calendar 2016.
Slide 21: H&P U.S. Land Fleet (Contracted Rigs)
Drawworks Horsepower FlexRig Type Rig Power Type H&P U.S. Land Fleet (Contracted Rigs as of 9/7/16) 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 22: 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 23: 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 24: Ongoing U.S. Land Market Trends
Ongoing U.S. Land Market Trends Unconventional plays continue to shape the landscape. Well designs are increasingly complex, including longer laterals and more challenging drilling requirements. Customers continue to focus on safety, efficiency, technology, and reliable drilling performance. AC driv
Slide 25: Increasing Focus on More Difficult Drilling
Increasing Focus on More Difficult Drilling
Slide 26: H&P's Long Term Strategy
H&P’s Long Term Strategy Innovation Technology Safety, operational excellence and reliability Customer satisfaction Financial strength
Slide 27: H&P's Long Term Strategy
| H&P’s Long Term Strategy > Innovation > Technology > Safety, operational excellence and reliability > Customer satisfaction > Financial strength
Slide 28: Fourth Fiscal Quarter H&P Outlook
Fourth Fiscal Quarter H&P Outlook Drilling Operations Outlook for 4Q of Fiscal 2016 Compared to 3Q of Fiscal 2016 U.S. Land Segment Revenue days expected to increase by roughly 3% to 7% Average rig revenue per day expected to be roughly $24,000 (excluding the impact from early termination revenue) A
Slide 29: Estimated H&P Activity as of September 7, 2016
Estimated H&P Activity as of September 7, 2016 Rigs Working/ Contracted 92 92 0 7 16 115 Rigs Available 348 346 2 9 38 395 2 397 % Contracted 26% 27% 0% 78% 42% 29% U.S. Land AC Drive FlexRigs SCR Fleet Offshore International Land Total FlexRig Construction Total Fleet (3) (1) (2) 56% are FlexRigs t
Slide 30: H&P's Lead in U.S. Land AC Drive Rigs
H&P’s Lead in U.S. Land AC Drive Rigs Most Advanced Fleet * 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.
Slide 31: 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 and corporate filings. Additionally, the drawworks capacity of each land rig included in the above analysis was equal to or greater than 600 ho
Slide 32: H&P U.S. Land Fleet (Idle Rigs)
H&P U.S. Land Fleet (Idle Rigs as of 9/7/16) 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. FlexRig Type Rig Power Type
Slide 33: H&P's International Land Operations
Contracted Idle Total Long-term Contracts Argentina 11 8 19 10 Bahrain 1 2 3 1 Colombia 2 6 8 1 Ecuador 6 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. Some of the 10 contracted rigs in Argentina are
Slide 34: Number of Rigs Already Under Long-Term Contracts
Number of Rigs Already Under Long-Term Contracts* (Estimated Quarterly Average, Including Announced New Builds - as of 9/7/16) H&P Global Fleet Under Term Contract Segment Q4 Q1 Q2 Q3 Q4 Q1 Q2 FY16 FY17 FY17 FY17 FY17 FY18 FY18 U.S. Land 67.5 66.3 65.5 62.1 52.2 47.0 37.5 International Land 14.0 14.
Slide 35: 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 36: 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 37: Ten-Year Relative Shareholder Return
Ten-Year Relative Shareholder Return Source: Thomson Reuters as of September 2, 2016.
Slide 38: Land Drilling Market Valuations
Land Drilling Market Valuations Source: Thomson Reuters as of September 2, 2016.
Slide 39: Oil vs. Natural Gas Directed Rig Count
Oil vs. Natural Gas Directed Rig Count
Slide 40: Oil and Natural Gas Prices
Oil and Natural Gas Prices Source: Energy Information Administration and Thomson Reuters. Oil Prices Natural Gas Prices
Slide 41: Natural Gas Prices
= w* | Henry Hub Spot West Texas Interme Natural Gas Prices DES ee ee Daily Prices Source: Energy Information Administration and Thomson Reuters. te Spot be 0 Oe EF Go pe os ” U.S. Dollars per Barrel
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