Helmerich & Payne, Inc. · NYSE:HP
Helmerich & Payne — Howard Weil 39th Annual Energy Conference 2011
54 slides from Helmerich & Payne's conference presentation, Mar 28, 2011
Slide 1: Howard Weil 39th Annual Energy Conference
Helmerich & Payne, Inc. Howard Weil 39th Annual Energy Conference March 28-29, 2011
Slide 2: 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. For information regarding risks and uncert
Slide 3: H&P Basics
H&P Basics 284 Drilling Rigs* $6 Billion Market Cap 7,500 Employees 10% Debt/Cap * Includes 14 new FlexRigs with customer commitments scheduled for completion during calendar 2011.
Slide 4: Growing Shareholder Value
Growing Shareholder Value Lead Innovation Drive Well Costs Down Satisfy Customers Expand Market Share
Slide 5: Five-Year Relative Shareholder Return
Five-Year Relative Shareholder Return Source: Yahoo! Finance as of March 23, 2011
Slide 6: Lower U.S. Land Market Share Organically Growing Active Rig Market Share
As of March 18. 2011 Lower 48 U.S. Land Market Share Organically Growing Active Rig Market Share Note: The above estimates corresponding to U.S. land rig market share are derived from Smith Bits S.T.A.T.S..
Slide 7: Technology & Quality Service Make a Difference: Margin Premium
Technology & Quality Service Make a Difference * Does not include the impact of early contract termination revenue. ** Represents weighted-average rig margin per day for PTEN, NBR and UNT through Q4CY10. H&P’s Margin Premium
Slide 8: Technology & Quality Service Make a Difference: Utilization Premium
Technology & Quality Service Make a Difference * Utilization is herein calculated to be average active rigs divided by estimated available marketable rigs during the period. ** Represents estimated average combined utilization for PTEN, NBR and UNT in the Lower 48 through Q4CY10. H&P’s Utilization P
Slide 9: Most Profitable Driller in U.S. Land Business
Most Profitable Driller in U.S. Land Business * PTEN’s operating income includes drilling operations in Canada. ** NBR’s operating income corresponds to its U.S. Lower 48 Land Drilling segment.
Slide 10: Peer Group Estimated Return on Equity
Peer Group Estimated Return on Equity Analyst Estimates Fiscal Year 2011 Return on Equity (Source: First Call Consensus March 24, 2011)
Slide 11: Economics Shift Activity Towards Oil Drilling
Economics Shift Activity Towards Oil Drilling
Slide 12: H&P's Growing Exposure to Oil & Liquids
H&P’s Growing Exposure to Oil & Liquids Estimated proportion of H&P’s active U.S. Land rigs in markets primarily associated with oil, liquids rich gas, and dry gas.
Slide 13: Increasing Focus on More Difficult Drilling
Increasing Focus on More Difficult Drilling
Slide 14: [LOGO]
[LOGO]
Slide 15: Rig Activity as of March 28, 2011
Activity as of March 28, 2011 Rigs Working/ Contracted 205 7 15 227 14 241 Rigs Available 237 9 24* 270 14 284 % Contracted 86% 78% 63% 84% U.S. Land Offshore International Land Total FlexRig Construction Total Fleet * One FlexRig is currently mobilizing to Bahrain.
Slide 16: Highest U.S. Activity Level in Company History
Highest U.S. Activity Level in Company History
Slide 17: Organic U.S. Land Fleet Growth
Organic U.S. Land Fleet Growth * Three conventional rigs were sold during the second fiscal quarter of 2011. Estimates include existing rigs and announced new build commitments.
Slide 18: AC Drive U.S. Rig Market Share
AC Drive U.S. Rig Market Share (~450 Rigs) Note: The above estimates corresponding to market share are derived from multiple sources including Rig Data, Smith Bits, and corporate filings.
Slide 19: Rigs Active in the U.S. Land Market by Power Type
Rigs Active (~1,700) in the U.S. Land Market (by Power Type) Note: The above estimates corresponding to rig activity are derived from multiple sources including Rig Data, Smith Bits, and corporate filings.
Slide 20: Six Additional New Builds
Six Additional New Builds Customer commitments for six additional FlexRigs with term contracts Total of 37 new builds announced during last twelve months Delivering new FlexRigs at the rate of three per month since January 2011 Encouraging conversations continue...
Slide 21: H&P Global Fleet Under Term Contract
H&P Global Fleet Under Term Contract Term Contract Status - H&P Global Fleet (Including Committed New Builds)
Slide 22: What is a "New Build" Land Rig?
What is a “New Build” Land Rig? New – having recently come into existence, of dissimilar origin (as compared to old or existing), and of superior quality. Merriam-Webster Dictionary
Slide 23: How Does H&P Define a "New Build" Land Rig?
How Does H&P Define a “New Build” Land Rig? A new build rig consists of all new structures and equipment for the purpose of: Eliminating legacy issues Achieving Safety-by-Design Maximizing drilling efficiency Improvement of ergonomics for rig site personnel Packaging of components for enhanced mobil
Slide 24: Processing Raw Materials
Processing Raw Materials How Does H&P Define a “New Build” Land Rig?
Slide 25: A New Build is All New!
A New Build is All New! Commissioning / Testing / Delivery
Slide 26: Increasing Capex Level
Increasing Capex Level Increasing fiscal 2011 capital spending estimate to $850 million Expect to fully fund capital spending from continuing operations
Slide 27: Innovation & Applied Technology
Innovation & Applied Technology AC Driven Systems & Integrated Top Drive Mechanized Tubular Handling Computerized Controls BOP Handling Driller’s Cabin Satellite Communications Rig Move Capabilities
Slide 28: Driller on a Conventional Rig vs. FlexRig
Driller on a Conventional Rig vs. FlexRig™
Slide 29: Roughnecks on a Conventional Rig vs. FlexRig
Roughnecks on a Conventional Rig vs. FlexRig™
Slide 30: Performance Is Not Only About Better Rigs
Performance Is Not Only About Better Rigs It’s also about: People Safety Experience Training Culture Maintenance Processes Supply Chain Organizational Network Support Structure
Slide 31: Leading U.S. Unconventional Driller
(219 H&P Contracted Land Rigs as of 3/28/11*) Leading U.S. Unconventional Driller * Includes 14 new FlexRigs with customer commitments scheduled for completion during calendar 2011.
Slide 32: End of Presentation
End of Presentation
Slide 33: Additional References
Additional References
Slide 34: H&P's U.S. Land Operations
H&P’s U.S. Land Operations While natural gas will still be critical to the future domestic energy picture and to our business, nearly two-thirds of H&P’s U.S. land fleet is drilling for oil and gas liquids, as compared to a more traditional dry gas target. Driven by incremental new builds and the re
Slide 35: H&P's U.S. Land Fleet Activity
H&P’s U.S. Land Fleet Activity ** Includes delayed new builds (in gray) which generated revenue but did not generate revenue days. * Active rigs on term (in blue) generated both revenue and revenue days.
Slide 36: Six Additional New Builds
Six Additional New Builds Since our latest earnings release and conference call in late January, H&P has signed contracts to build and operate six additional FlexRigs. This increases to 37 the number of new builds announced during the last twelve months, all of which are contracted under multi-year
Slide 37: H&P's Offshore Operations
H&P’s Offshore Operations Seven of the Company’s nine offshore platform rigs remain active, including two under long-term contracts. The number of revenue days during the second fiscal quarter of 2011 are expected to increase approximately five percent sequentially. Average rig margin per day is exp
Slide 38: H&P's International Land Operations
H&P’s International Land Operations While the Company will benefit from FlexRigs going back to work in the U.S. at higher margins than they would have earned in Mexico, segment operating income for the international segment during the second fiscal quarter will be negatively impacted by ceasing oper
Slide 39: H&P's International Land Operations Rig Fleet Status
H&P’s International Land Operations Active Contracted Idle Total Long-term Contracts Argentina 4 5 9 4 Bahrain 2 1 3 3 Colombia 5 1 6 2 Ecuador 2 2 4 Tunisia 1 1 2 Total 14 1 9 24 9 Rig Fleet Status (as of March 28, 2011) 1) One FlexRig is currently mobilizing to Bahrain. 2) 9 of 11 FlexRigs, includ
Slide 40: Increasing Capex Level
Increasing Capex Level As a result of the additional new build commitments, H&P’s capital spending estimate corresponding to fiscal 2011 increases from $750 million to $850 million. We expect to fully fund the above capital spending estimate from existing cash and from cash to be provided by operati
Slide 41: Increasing Focus on More Difficult Drilling
Increasing Focus on More Difficult Drilling
Slide 42: H&P U.S. Land Fleet by Power Type
H&P U.S. Land Fleet by Power Type* * Includes New Build Commitments.
Slide 43: Total Industry Available U.S. Land Fleet by Power Type
Total Industry Available U.S. Land Fleet (by Power Type) Note: The above estimates corresponding to the available rig fleet in the U.S. are derived from multiple sources including Rig Data, Smith Bits, and corporate filings.
Slide 44: A Value Proposition Example – H&P vs. Competitors
A Value Proposition Example – H&P vs. Competitors Estimated Estimated Peer H&P FlexRig3 Conventional Fit-for-purpose Average Average Average 2010 (Spot Market) (Spot Market) (Spot Market) 1. Drilling days 20 14 10 Completion days 3 3 3 Moving days 7 4 3 Total rig revenue days per well 30 21 16 2. Dr
Slide 45: FlexRig3 – Performance Sample
FlexRig3 – Performance Sample 30% Improvement 50% Improvement
Slide 46: FlexRig4 – Performance Sample
FlexRig4 – Performance Sample 42% Improvement 22% Improvement
Slide 47: FlexRig3 – Performance Sample
* Represents the customer’s fastest reported Bakken Shale well before deploying a H&P FlexRig. FlexRig3 – Performance Sample
Slide 48: FlexRig3 – Performance Sample
FlexRig3 – Performance Sample 48% Improvement 30% Improvement
Slide 49: FlexRig4M – Performance Sample
FlexRig4M – Performance Sample 29 % Improvement 58 % Improvement
Slide 50: FlexRig4S – Performance Sample
FlexRig4S – Performance Sample 32% Improvement 68% Improvement
Slide 51: Delivering Safety – H&P vs. Industry (IADC)
Delivering Safety – H&P vs. Industry (IADC) H&P 1Q11 = 1.04 IADC 2010 = 3.44
Slide 52: Safety Excellence Also Generates Savings
Safety Excellence Also Generates Savings Reduced Workers Comp and General Liability Losses per Man Hour EMR = Experience Modifier Ratio (Industry Average = 1.00)
Slide 53: Customer Satisfaction Index
Source: EnergyPoint Research, Inc. Customer Satisfaction Index 10 = “Highly Satisfied”, 1 = “Highly Dissatisfied”
Slide 54: End of Document
End of Document
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