Helmerich & Payne, Inc. · NYSE:HP
Helmerich & Payne — Goldman Sachs Global Energy Conference January 2020
28 slides from Helmerich & Payne's conference presentation, Jan 3, 2020
Slide 1: Goldman Sachs Global Energy Conference January 2020
HELMERICH & PAYNE, INC. Data as of 11/14/2019 unless otherwise noted. Goldman Sachs Global Energy Conference January 2020
Slide 2: Forward-Looking Statements
© HELMERICH & PAYNE, INC. 2020 1 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 cur
Slide 3: H&P Investment Thesis
© HELMERICH & PAYNE, INC. 2020 H&P Investment Thesis » Industry Leader in U.S. Land Drilling • FlexRig ® Fleet Poised for Continued Market Share Gains • Most Capable and Uniform Fleet • Consistent Operational Excellence (Safety, Customer Satisfaction, Reliability) • Financial Position and Strength •
Slide 4: H&P Today
© HELMERICH & PAYNE, INC. 2020 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 drillin
Slide 5: H&P's Winning Strategy
© HELMERICH & PAYNE, INC. 2020 Today’s Focus Points H&P’s Winning Strategy » 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 exposur
Slide 6: H&P Global Rig Fleet
© HELMERICH & PAYNE, INC. 2020 H&P Global Rig Fleet (1) Four of the 16 active rigs are being leased (i.e. H&P is not crewing and managing the rigs), and as such the average rig marg in per day for those four rigs is lower than our average rig margin per day in the segment. (2) Rig count as of 11/14/
Slide 7: Competitive Benefits of Uniform Fleet
© HELMERICH & PAYNE, INC. 2020 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 sc
Slide 8: Differentiated from Land Drilling Peers
© HELMERICH & PAYNE, INC. 2020 Differentiated from Land Drilling Peers » Leading U.S. market share • Approximately 23% * of U.S. land fleet, ~37% * of super - spec fleet » Distinctively situated as the incremental supplier of super - spec rigs • Leveraging position in terms of super - spec supply an
Slide 9: The Replacement Cycle Continues
© HELMERICH & PAYNE, INC. 2020 71% 73% 75% 77% 79% 81% 83% 800 850 900 950 1,000 1,050 1,100 1,150 % of Unconventional Wells Drilled with AC Rigs Total # of Lower - 48 Active Rigs L48 Active Rig Count (left side) % of Unconventional Wells Drilled with AC Rigs (right side) 8 The Replacement Cycle Con
Slide 10: Super-Spec Rigs More Resilient
© HELMERICH & PAYNE, INC. 2020 9 Super - Spec Rigs More Resilient » Unconventional drilling is more efficient with, and often times requires, the use of super - spec rigs » Super - spec rigs comprise ~65% of the total rigs drilling unconventional wells and ~80% of the AC - drive rigs working today »
Slide 11: Super-Spec Rig Utilization Varies by Basin
© HELMERICH & PAYNE, INC. 2020 Super - Spec Rig Utilization Varies by Basin 10 » H&P is the market share leader (~37% of all active super - spec rigs are FlexRigs ) » Industry super - spec utilization rates are strong in regions where H&P has significant penetration Source: RigData , data as of 12/5
Slide 12: Evolving Commercial Model
© HELMERICH & PAYNE, INC. 2020 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 always adequate
Slide 13: Leading U.S. Unconventional Driller
© HELMERICH & PAYNE, INC. 2020 Permian Eagle Ford Woodford Haynesville Bakken Niobrara Piceance Marcellus Utica 6 5 3 113 32 9 16 3 3 Leading U.S. Unconventional Driller » Leading market share in the most active U.S. basins, evidence of strong customer demand for H&P FlexRigs » Diversified customer
Slide 14: Strong Returns and Market Share Growth
© HELMERICH & PAYNE, INC. 2020 0% 5% 10% 15% 20% 25% HP PTEN* NBR PDS 12/19 12/19 12/19 12/19 Lower - 48 Market Share Market Share ( Oct - 14 Peak Rig Count) Market Share (Dec - 19) 10/14 10/14 10/14 10/14 Strong Returns and Market Share Growth » H&P has a higher quality of earnings with a greater n
Slide 15: 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 14 » Motive’s Bit Guidance System® helps to
Slide 16: Wellbore Quality: Motive Bit Guidance
Planned Trajectory Without MOTIVE Traditional Directional Drilling Challenges » Well Design Difficult to Achieve • Poor drilling accuracy • Missed targets/pay zones » Inconsistent Practices • Increased tortuosity • P oor hole quality • Low rate of penetration • Completion issues » Human Made Drillin
Slide 17: Wellbore Quality Matters
Wellbore Quality Matters Tortuosity Adversely Affects Overall Well Economics » Tortuosity increases pipe fatigue and downhole tool wear and failure » Increases drag when drilling and running casing » Increases drill - string fatigue when rotating » Reduces buckling resistance in drill pipe » Impedes
Slide 18: MagVAR Survey Correction
MagVAR Survey Correction » 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 interference » Geology : better mapping improves prospectivity
Slide 19: FlexApps
© HELMERICH & PAYNE, INC. 2020 FlexApps ™ 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. » FlexOscillator 2.0™ rig cont
Slide 20: AutoSlide
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 huma
Slide 21: Value Driven Automation
Value Driven Automation TM Converting Art to Science » Through acquisitions and internal R&D, H&P has developed an Autonomous Drilling Platform TM that optimizes and automates total well execution » All technologies are not created equal » H&P solutions not only use machine learning to drive economi
Slide 22: International Land
© HELMERICH & PAYNE, INC. 2020 » 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 propositi
Slide 23: Established Offshore Business
© HELMERICH & PAYNE, INC. 2020 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 »
Slide 24: Strong Financial Foundation & Returns
© HELMERICH & PAYNE, INC. 2020 Strong Financial Foundation & Returns Total - Debt - to - Total - Capitalization Ratio 1 Dividends Paid (Fiscal 2009 – Current) » Solid balance sheet stewardship with lowest debt load among peers » Investment grade rating of BBB+/Baa1 2 » Free cash flow available to bo
Slide 25: Strong Term Backlog
© HELMERICH & PAYNE, INC. 2020 130.5 Strong Term Backlog Term Contract Status – H&P Global Fleet U.S. Land Term Contract Revenues Source: Company Filings 24 Average Rigs Working Fixed Term Contracts 102.9 81.3 63.7 43.3 18.6 12.9 12.0 0 25 50 75 100 FY20 FY21 FY22 Number of Rigs Already Under Long -
Slide 26: Super-Spec Investments Provide Solid Footing
© HELMERICH & PAYNE, INC. 2020 Super - Spec Investments Provide Solid Footing Free Cash Flow Generation Snapshot 25 » H&P has invested in U.S. Land super - spec upgrades which are the highest utilized rig class » Using current quarter Revenue and Opex guidance, the U.S. Land segment alone generates
Slide 27: Why H&P in Current Market Conditions?
© HELMERICH & PAYNE, INC. 2020 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 related to E&P budgeted rig demand and not dayrate pricing levels ▪ Expect 2020 activity to b
Slide 28: Thank you for your interest in H&P
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 Helmerich & Payne, Inc.
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