Helmerich & Payne, Inc. · NYSE:HP
Helmerich & Payne — Investor Presentation (September 2023)
27 slides from Helmerich & Payne's investor presentation, Sep 1, 2023
Slide 1: Helmerich & Payne, Inc.
Helmerich & Payne, Inc. September 2023 Financial data as of 06/30/2023; other data and year-to-date references are as of 07/26/2023 unless otherwise noted. © 2023 Helmerich & Payne, Inc. All Rights Reserved. 1
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: Helmerich & Payne
Helmerich & Payne H&P is recognized as the industry leader in unconventional drilling solutions as well as technological innovation. H&P TODAY H&P operates in 3 segments (% of revenue at 06/30/23) o North America Solutions ~89% market leader in U.S. Founded IN 1920 o International Solutions o Offsho
Slide 4: Focused on Enhancing Returns: Current Highlights
Current Highlights • Increased NAS direct margins(1) over 100% in FY22(2) and 46% in FY23(2) • Driving up revenue/day & direct margin/day: • Target of > $30k/day in revenue/day in NAS achieved in 1QFY23 • Mid-teen ROIC/ROCE goal • Reducing capital intensity on revenue generated • Returning cash to s
Slide 5: H&P's Winning Strategy
H&P’s Winning Strategy Global Drilling Solutions Provider • Focus on Customercentricity • Evolve commercial model to be customer centered and value driven • Continue to lead industry in technology automation adoption and differentiation • International expansion • Maintain capital focus • Continued
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 workfor
Slide 7: H&P Global Rig Fleet
H&P Global Rig Fleet Super-Spec Rigs Represent 99% of Total NAS Fleet Rigs Rigs % (1) Available Contracted Contracted North America Solutions 233 149 64% ® Super-Spec FlexRig Fleet 231 147 64% Other AC-Style FlexRig 2 2 100% International Solutions 22 13 59% South America(2) 17 10 59% Super-Spec Fle
Slide 8: 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® drilling rig, but economic life is ~30 years • Major rig assemblies – mast and substructure, have long economic lives (~30 years) • Major rig comp
Slide 9: Percent of Rigs to Customers
Drilling Contractors’ E&P Clients H&P’s customers hold long lives of high-quality inventory Drilling Contractors' E&P Clients o H&P has the largest percentage 70% of rig fleet with super majors and Percent of Rigs to Customers 60% Exposure to large E&P’s; those customers Supermajors & tend to have m
Slide 10: Evolving Commercial Model
Evolving Commercial Model H&P has a long track record of providing value to customers: • The commercial model must evolve to ensure a reasonable rate of return • Current day-rate model does not adequately compensate for value being derived in well cost savings and productivity gains • Incorporating
Slide 11: Performance Not Rate Impactful to Well Cost
Performance Not Rate Impactful to Well Cost Estimated Total Well Costs o Drilling costs are not synonymous with rig rates ̶ other drilling costs (OCTG, Mud, Bits and Directional) more impactful to overall well cost Rig Tie-In 8% o H&P’s rigs, technology and crews help provide E&Ps the first ~10% opp
Slide 12: Benefits of Allocating Capital Internationally
Benefits of Allocating Capital Internationally Taking industry leading unconventional drilling expertise, consisting of rigs, technology, people and processes, to emerging unconventional plays around the globe ➢ Diversification from U.S. and outlet for super-spec FlexRig® fleet capacity • Exporting
Slide 13: Steppingstones – International Unconventional Drilling
Steppingstones – International Unconventional Drilling ▪ Recent rig awards and operations, while relatively small, represent paths towards larger unconventional drilling growth opportunities ▪ Received a one rig award with Saudi Aramco • First time the Company has contracted a rig in Saudi Arabia •
Slide 14: Fiscal 2023 Cash Projection
Fiscal $1,750 2023 Cash Projection Projecting to return ~$202 million in cash to shareholders $1,500 $70 $400 YTD share repurchases of ~$249 million; still have Implied $25 availability for accretive investment opportunities $1,250 and additional share repurchases $ Millions $1,000 $104 ~$98 $249 $7
Slide 15: H&P's Commitment to Capital Allocation
H&P’s Commitment to Capital Allocation RETURNS TO SHAREHOLDERS • Established base dividend • Supplemental dividends • Opportunistic share repurchases (7 million share authorization for calendar 2023*) CAPITAL EXPENDITURES CASH FLOW CAPITAL • Maintenance – moves with active rig count FROM ALLOCATION
Slide 16: 2023 Supplemental Shareholder Return Plan – Executing Well
2023 Supplemental Shareholder Return Plan – Executing Well • Fiscal year to date, H&P has returned approximately $451 million of capital to shareholders – $104M base dividend, $98M supplemental dividend, $249M in share repurchases • Maintaining flexibility in both the amount of and method used (base
Slide 17: Leading Shareholder Returns
Leading Shareholder Returns Total Cash Returned Per Share CY16-23YTD Total Cash Returned / Share CY16-23YTD $21 $18 $15 Already Leader in Providing Shareholder Returns $12 $9 Total Cash Returned Yield $6 CY16-23YTD $3 7% Total Cash Return Yield CY16-23YTD $0 6% HP SLB BKR NBR HAL PTEN FTI PDS NOV 5%
Slide 18: Return on Invested Capital
Targeting Returns Above Cost of Capital 16% 14% 2023E ~ 13% 2024E 2008-14 12% 11% ~ 12% Return on Invested Capital 10% cost of capital • Targeting mid-teens ROIC/ROCE 8% • Focus remains on achieving returns in excess of cost of capital 6% • Committed to maintain economically 4% sustainable operation
Slide 19: H&P – Compelling Energy Investment
H&P – Compelling Energy Investment 28 Energy Companies in S&P 600 Index 14 OFS, 7 E&Ps, 5 Refining & Marketing, 2 Other H&P Stands Out Balance Sheet Strength • H&P ranks in top quartile in debt-to-cap at ~17%; average ~38% Cash Returns to Shareholders • Only 8 of 28 are dividend payers of which H&P
Slide 20: Conservative Capital Structure
Conservative Capital Structure Total-Debt-to-Capitlization Ratio(1) Net Debt / LTM Cashflow from Ops(3) Total Liquidity ($MM) 3.5x $1,200 200% 3.1x Liquidity as a % of Debt HP 17% 83% Total Liquidity Available 3.0x $1,050 175% $900 150% 2.5x 2.3x PTEN 32% 68% $750 125% 2.0x $600 100% NBR 81% 19% 1.5
Slide 21: Rooted in Our Core Values: Do the Right Thing
Helmerich & Payne 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
Slide 22: Reducing Carbon Footprint – Operating and Investing
Reducing Carbon Footprint – Operating and Investing OPERATING • Drilling efficiencies – operational and technological expertise • Engine management – optimizing engine output to operational power demand • Alternative power sources for customers – natural gas, high-line electrical, battery INVESTING
Slide 23: Improving Lives Through Efficient and Responsible Energy
Improving Lives Through Efficient and Responsible Energy WE ARE FOCUSED ON UNDERSTANDING OUR IMPACTS AND ULTIMATELY DEVELOPING STRATEGIES ROOTED IN OUR CORE VALUES TO MANAGE THEM ENVIRONMENTAL SOCIAL GOVERNANCE • Environmental Stewardship • Health & Safety • Board Oversight • Geothermal Investments
Slide 24: H&P Sustainability Report
H&P Sustainability Report Issued December 2022 Highlights – Provides: • Environmental management and oversight practices • Strong use of data to report over 40 environmental metrics, including Scope 1 & 2 emissions data • Includes quantitative scenario analysis to test risks and opportunities • Envi
Slide 25: H&P CO2 Emissions
H&P CO2 Emissions 25,000 75 • H&P has a history of taking thoughtful and 20,000 Emissions per kilometer 70 methodical approaches to solving drilled declining problems and working with customers to (in metric tons C02e) optimize solutions (in kilometers) 15,000 65 • H&P scope 1 and 2 CO2e emissions p
Slide 26: H&P Investment Thesis
H&P Investment Thesis INDUSTRY LEADER AS AN UNCONVENTIONAL 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 Busi
Slide 27: Thank You for Your Interest in H&P
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 © 2023 Helmerich & Payne, Inc. All Rights Reserved. 27
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