Helmerich & Payne, Inc. · NYSE:HP
Helmerich & Payne — Investor Presentation (February 2016)
41 slides from Helmerich & Payne's investor presentation, Feb 9, 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 U.S. land drilling market share leader Most modern, uniform and capable land drilling fleet Strong term contract backlog with high quality customer base Strategy focused on continued innovation, performance excellence and customer satisfaction About Helmerich & Payne (H&P)
Slide 3: H&P's Global Rig Fleet
H&P’s Global Rig Fleet * Estimates include existing rigs and new build commitments as of February 9, 2016.
Slide 4: Organic U.S. Land Fleet Growth
Organic U.S. Land Fleet Growth * Estimates include existing rigs and announced new build commitments. 350 49
Slide 5: U.S. Land Drilling Market Conditions
U.S. Land Drilling Market Conditions Oil and gas prices remain low, forcing E&P companies to further reduce drilling budgets U.S. land active rig count is now at levels not seen since 1999 (<600) Market is not expected to improve in the first calendar quarter of 2016 Industry is experiencing dramati
Slide 6: Oil and Natural Gas Prices
Oil and Natural Gas Prices Source: Energy Information Administration and Thomson Reuters. Oil Prices Natural Gas Prices
Slide 7: Drilling Activity in the U.S.
Drilling Activity in the U.S.
Slide 8: 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 had approximately 121 contracted rigs generating revenue as of January 28, 2016, down from 127 on January 6, 2016. Average FlexRig spot pricing is down by more than 30%, as compared to spot pricing at the peak in November 2014, an
Slide 9: H&P's Lead in U.S. Land AC Drive Rigs
H&P’s Lead in U.S. Land AC Drive Rigs * 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. Most Advanced Fleet
Slide 10: 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 131 FlexRig3s and 6 FlexRig4s of the 159 “Other FlexRigs” can be upgraded to Pad* FlexRigs. * Optimal for multiple-well pad drilling applications. **
Slide 11: 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 1/28/16) 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 12: 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 13: 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 14: H&P Gaining U.S. Land Market Share
As of October 2014 (Peak) (~1,930 Active Rigs in U.S. Land) As of October 2008 (Peak) (~1,925 Active Rigs in U.S. Land) As of January 2016 (~570 Active Rigs in U.S. Land) H&P Gaining U.S. Land Market Share Market Leader Note: The above estimates corresponding to market share are derived from Rig Dat
Slide 15: H&P Positioned to Continue to Gain Share
H&P Positioned to Continue to Gain Share ~410 Idle 1,500 hp AC Drive Rigs in U.S. Land (January 2016) Market Leader Note: The above estimates are derived from multiple sources including Rig Data, Smith Bits, and corporate filings. Additionally, the drawworks capacity of each land rig with AC drive p
Slide 16: U.S. Land Active Rig Count
U.S. Land Active Rig Count BHI Industry Rig Count Through Fourth Quarter of Calendar 2015 Market Leader
Slide 17: U.S. Land Average Daywork Margins
U.S. Land Average Daywork Margins(1) (1) Does not include the impact of early contract termination revenue. Market Leader Through Fourth Quarter of Calendar 2015
Slide 18: H&P Global Fleet Under Term Contract
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 1/28/16. Given notifications as of 1/28/16, the Company expects to generate over $78 million in the second f
Slide 19: 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 and corporate filings. High Quality Customer Base
Slide 20: Ongoing U.S. Land Market Trends
Ongoing U.S. Land Market Trends Unconventional plays continue to shape the landscape. AC drive rigs are best suited for more complex horizontal drilling. Customers continue to focus on drilling efficiency, technology and safety. Multiple wells being drilled from a single pad. The replacement cycle i
Slide 21: Increasing Focus on More Difficult Drilling
Increasing Focus on More Difficult Drilling
Slide 22: 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, Smith Bits, and corporate filings. Additionally, the drawworks capacity of each land rig included in the above analysis was greater than or equal to
Slide 23: The Replacement Cycle: Customer Adoption
The Replacement Cycle: Customer Adoption Next 90 E&P Operators (~310 Active Rigs by Power Type) Top 10 E&P Operators (~155 Active Rigs by Power Type) Remaining E&P Operators (~105 Active Rigs by Power Type) Top 10 E&P Operators Next 90 E&P Operators Remaining E&P Operators They represent the 10 most
Slide 24: The Replacement Cycle Continues
As of October 2014 (Peak) (~1,930 Active Rigs in U.S. Land By Power Type) The Replacement Cycle Continues As of October 2008 (Peak) (~1,925 Active Rigs in U.S. Land By Power Type) As of January 2016 (~570 Active Rigs in U.S. Land By Power Type) Note: The above estimates corresponding to rig activity
Slide 25: H&P's Long Term Strategy
H&P’s Long Term Strategy Innovation Technology Safety and operational excellence Customer satisfaction Financial strength
Slide 26: H&P's Long Term Strategy
|, H&P’s Long Term Strategy > Innovation > Technology > Safety and operational excellence > Customer satisfaction Financial strength
Slide 27: Second Fiscal Quarter H&P Operations Outlook
Second Fiscal Quarter H&P Operations Outlook Drilling Operations Outlook for 2Q of Fiscal 2016 Compared to 1Q of Fiscal 2016 U.S. Land Segment Revenue days expected to decrease by roughly 20% Average rig revenue per day expected to be roughly flat (excluding the impact from early termination revenue
Slide 28: H&P Activity as of January 28, 2016
H&P Activity as of January 28, 2016 Rigs Working/ Contracted 121 121 0 8 14 143 Rigs Available 347 345 2 9 38 394 3 397 % Contracted 35% 35% 0% 89% 37% 36% U.S. Land AC Drive FlexRigs SCR Fleet Offshore International Land Total FlexRig Construction Total Fleet 54% are FlexRigs that are optimal for m
Slide 29: H&P's U.S. Land Fleet Activity
H&P’s U.S. Land Fleet Activity (1) (1) Includes completed new builds pending delivery and not generating revenue days.
Slide 30: H&P U.S. Land Fleet (Idle Rigs)
FlexRig Type Rig Power Type H&P U.S. Land Fleet (Idle Rigs as of 1/28/16) 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.
Slide 31: Leading U.S. Unconventional Driller
Leading U.S. Unconventional Driller * Includes 3 announced new FlexRigs with customer commitments scheduled for delivery in fiscal 2016. (124 H&P Contracted Land Rigs as of 1/28/16*)
Slide 32: 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, Smith Bits, and corporate filings. Additionally, the drawworks capacity of each land rig included in the above analysis was equal to or greate
Slide 33: H&P's International Land Operations
Active Idle Total Long-term Contracts Argentina 10 9 19 10 Bahrain 1 2 3 1 Colombia 1 7 8 1 Ecuador 6 6 U.A.E. 2 2 2 Total 14 24 38 14 H&P’s International Land Operations Rigs on term contract that have greater than or equal to 180 days remaining. 13 of 25 FlexRigs, included in the international fle
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 1/28/16) H&P Global Fleet Under Term Contract Segment Q2 Q3 Q4 Q1 Q2 Q3 Q4 FY16 FY16 FY16 FY17 FY17 FY17 FY17 U.S. Land 87.2 81.1 76.5 75.0 70.7 63.8 54.9 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 February 5, 2016.
Slide 38: Land Drilling Market Valuations
Land Drilling Market Valuations Source: Thomson Reuters as of February 5, 2016.
Slide 39: Current Dividend Yields
Current Dividend Yields Source: Thomson Reuters. Yields calculated as of market close on February 5, 2016.
Slide 40: Oil vs. Natural Gas Directed Rig Count
Oil vs. Natural Gas Directed Rig Count
Slide 41: Oil vs. Natural Gas Directed Rig Count
Count Oil vs. Natural Gas Directed Rig —Rigs Drilling for Gas ‘Total Active Rigs —Rigs Drilling for Oi! 100 1,500 1,000 500 (qunog Bry Arejoy uesHeUy YON IHa) sBrd ‘S'N eAnoy Jo JequiNN
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