Helmerich & Payne, Inc. · NYSE:HP
Helmerich & Payne — Investor Presentation (March 2022)
26 slides from Helmerich & Payne's investor presentation, Mar 4, 2022
Slide 1: March 2022
MARCH 2022 Financial data as of 12/31/2021; other data as of 1/31/2022 unless otherwise noted.
Slide 2: Forward-Looking Statements
FORWARD-LOOKING STATEMENTS This presentation contains forward-looking statements within the meaning of securities laws. All statements other than statements of historical facts included in this presentation, including without limitation, statements regarding our future financial position, business s
Slide 3: Founded in 1920: H&P overview and segments
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 solutions as well as technological innovation. H&P operates in 3 segments (% of Revenue) o North America Solutions ~84% ma
Slide 4: Why H&P in Current Market Conditions?
WHY H&P IN CURRENT MARKET CONDITIONS? Industry leader in U.S. land drilling Leading evolution of commercial model in order to better align economic benefits and outcomes At the forefront of drilling automation creating compelling value opportunities for customers Strong balance sheet and ability to
Slide 5: H&P's Winning Strategy
H&P’S WINNING STRATEGY GLOBAL DRILLING SOLUTIONS PROVIDER Evolve commercial model to customer centered and value driven Continue to lead industry in technology automation adoption and differentiation International expansion Cost and cash management – manage for structurally smaller industry Adapt to
Slide 6: Differentiated from Land Drilling Peers
DIFFERENTIATED FROM LAND DRILLING PEERS Strategic advantages – innovation, economies of scale, operational efficiency, financial flexibility and risk reduction Changing the commercial model – H&P provides distinctive value to customers Uniform design of FlexRig fleet • Highly trained workforce • Saf
Slide 7: 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, but economic life is ~30 years • Major rig assemblies – mast and substructure, have long economic lives (~30 years) • Major rig components – well
Slide 8: H&P Global Rig Fleet
H&P GLOBAL RIG FLEET Rigs Rigs % Available Contracted (1) Contracted U.S. Land 236 164 69% Super-Spec FlexRigs 230 162 70% Upgradeable AC FlexRigs 4 0 0% Other AC-Style FlexRigs 2 2 100% International Land 28 6 21% Argentina 20 4 20% Bahrain 3 1 33% Colombia 5 1 20% Offshore 7 4 57% Total Fleet 271
Slide 9: The Debate Is H&P Rig vs Non-H&P Rig
THE DEBATE IS H&P RIG VS NON-H&P RIG NOT WALKING VS SKIDDING • When a rig is drilling, it does not matter if it US Industry Rig Count by Rig Type is a skidding rig or walking rig – 700 performance matters Enverus USL Rig Count 600 Market share loss/gain • Since August 2020*, H&P skidding FlexRig 500
Slide 10: International Expansion
INTERNATIONAL EXPANSION Benefits of Allocating Capital Internationally Diversification from U.S. and outlet for super- spec FlexRig capacity • Exporting U.S. rigs for appropriately scaled opportunities offers growth outside of U.S. Ability to have positive impact on overall Company financial returns
Slide 11: H&P's Offerings Create Compelling Value Opportunities for E&Ps
HaP'S OFFERINGS CREATE COMPELLING WALUE OPPORTUNITIES FOR E&Ps
Slide 12: Value Proposition
VALUE PROPOSITION WELLBORE QUALITY LOWER COST CONSISTENCY AT AND PLACEMENT REDUCED RISK • Optimize drilling economics • Drill an efficient well, reducing • Provide reliable, repeatable results to customer specifications non-productive time • Enables de-manning of 3rd-party • Drill a less tortuous we
Slide 13: H&P Drilling Solutions
H&P DRILLING SOLUTIONS ADDRESSING INDUSTRY CHALLENGES THROUGH AUTOMATION Oil and gas industry is still heavily dependent on human decision making to design, execute, and optimize oil and gas extraction. INDUSTRY CHALLENGE H&P AUTOMATION SOLUTION Human Decisions and Execution = Art Converts Art to Sc
Slide 14: Drilling Solutions Value Proposition
DRILLING SOLUTIONS VALUE PROPOSITION MORE THAN DRILLING A HOLE IN THE GROUND….VALUE OVER THE LIFE OF THE WELL DRILLING COMPLETIONS PRODUCTION Primary Focus Drilling Time & Cost Human decisions and execution — variable, inconsistent and at times costly and unfavorable outcomes • Poor well quality and
Slide 15: Enabling Industry Profitability
ENABLING INDUSTRY PROFITABILITY AUTOMATING THE WELLBORE MANUFACTURING PROCESS EARLY ADOPTERS & INNOVATORS OF WELLBORE MANUFACTURING Focus • Cost of well viewed over well life-cycle • Digital technologies used to improve wellbore quality, placement, and consistency • Greater well efficiencies and val
Slide 16: Evolving Commercial Model
EVOLVING COMMERCIAL MODEL H&P has a long track record of providing value Under current industry norms, incorporating to customers, the commercial model must more services and solutions into a rig day- evolve to ensure a reasonable rate of return rate model is a losing proposition in the long- term f
Slide 17: H&P Is Built to Withstand Volatile Markets
HaP IS BUILT TO WITHSTAND VOLATILE MARKETS
Slide 18: Fiscal 2022 Cash Projection Waterfall
FISCAL 2022 CASH PROJECTION WATERFALL $600 $570 $500 Implied $400-$450 $400 $ Millions $300 $250-$270 $25 $200 $108 $45 $100 $25 $77 $5-$20 $16 $0 (1) (2) (2) (3) (2) (3) (3) (4) (2) 9/30/21 Capex ADNOC rigs Dividend FYTD Share Cash Cash Non-cash Asset CFFO 9/30/22 Cash make ready repurchases taxes
Slide 19: H&P's Commitment to Capital Allocation
H&P’S COMMITMENT TO CAPITAL ALLOCATION RETURNS TO SHAREHOLDERS • Dividends • Share repurchases • Exploring further possibilities CAPITAL EXPENDITURES CASH FLOW CAPITAL • Maintenance – moves with FROM OPERATIONS ALLOCATION active rig count • Upgrades - walking conversions based on demand • Internatio
Slide 20: Conservative Capital Structure
CONSERVATIVE CAPITAL STRUCTURE CAPITAL EMPLOYED ($MM) LIQUIDITY AVAILABLE ($MM) $1,375 250% HP Liquidity as a % of Debt Total Liquidity Available $1,100 200% PTEN $825 150% $550 100% NBR $275 50% PDS* $0 0% HP PTEN NBR PDS* $0 $1,000 $2,000 $3,000 $4,000 Cash & ST Investments Revolver Availability T
Slide 21: Conservative Capital Structure
CONSERVATIVE CAPITAL STRUCTURE (1) TOTAL-DEBT-TO-TOTAL-CAPITALIZATION RATIO DEBT MATURITY SCHEDULE (IN MILLIONS) $1,000 $900 HP $800 $118 $364 $700 $600 $510 PTEN $349 $500 $400 $767 PDS $300 $700 $575 $550 $200 $390 $400 $100 $287 NBR $105 $0 0% 20% 40% 60% 80% 100% 2022 2023 2024 2025 2026 2027 20
Slide 22: Rooted in Our Core Values
ROOTED IN OUR CORE VALUES DO THE RIGHT THING H&P continues to refine and evolve its sustainability strategy. Implementing, executing and monitoring the strategy is multi-faceted, spanning across various disciplines within our Company. It is incumbent on us to understand and control the environmental
Slide 23: Improving Lives Through Affordable and Responsible Energy
IMPROVING LIVES TROUGH AFFORDABLE AND RESPONSIBLE ENERGY We are focused on understanding our impacts and ultimately developing strategies rooted in our core values to manage them. ENVIRONMENT SOCIAL GOVERNANCE • Environmental Stewardship • Health & Safety • Board Oversight • Geothermal Investments •
Slide 24: H&P Inaugural Sustainability Report
H&P INAUGURAL SUSTAINABILITY REPORT ISSUED DECEMBER 2021 Highlights • Environmental management and oversight practices • Strong use of data to report over 40 environmental metrics, including emissions data • Environmental goal setting • 2021 was the first year we included an Environmental Actively C
Slide 25: H&P Investment Thesis
H&P INVESTMENT THESIS INDUSTRY LEADER AS A DRILLING SOLUTIONS PROVIDER • Largest, Uniform and Most Capable Fleet • Consistent Operational Excellence (Safety, Customer Satisfaction, Reliability) • Technology and Innovation Leader • Financial Position and Strength • Differentiated Business Partner FIN
Slide 26: Helmerich & Payne, Inc. – Thank You
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
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