Helmerich & Payne, Inc. · NYSE:HP
Helmerich & Payne — Simmons & Co. International Eleventh Annual Energy Conference 2011
48 slides from Helmerich & Payne's conference presentation, Mar 2, 2011
Slide 1: Helmerich & Payne, Inc. – Simmons & Co. Energy Conference
Investor Relations Contact: Mike Drickamer – (918) 588-5190 – mike.drickamer@hpinc.com Helmerich & Payne, Inc. Simmons & Co. International Eleventh Annual Energy Conference March 3, 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: Market Observations
Market Observations Strong oil prices and the ability of H&P customers to shift their drilling targets to oil and gas liquids rich plays has been a very positive driver for service providers in the U.S. market. In previous cycles, a shift to oil drilling would have been considered a negative for H&P
Slide 4: Highest U.S. Activity Level in Company History
Highest U.S. Activity Level in Company History As of 3/2/11
Slide 5: H&P's U.S. Land Fleet; E&P Companies Prefer AC Driven Rigs
H&P’s U.S. Land Fleet (as of 3/2/11) E&P Companies Prefer AC Driven Rigs The above estimates corresponding to the total available U.S. land fleet are derived from multiple sources including Rig Data, Smith Bits and corporate filings. Only rigs with equal to or greater than 600 horsepower drawworks r
Slide 6: Driller on a Conventional Rig vs. FlexRig
Driller on a Conventional Rig vs. FlexRig™ Drawworks Brake Handle Drawworks Joystick Control 31
Slide 7: Roughnecks on a Conventional Rig vs. FlexRig
Roughnecks on a Conventional Rig vs. FlexRigTM
Slide 8: H&P and U.S. Land Fleet (by Rig Type)
H&P and U.S. Land Fleet (by Rig Type) 53% 31% 16% 20% 77% Note: The above estimates corresponding to the total available U.S. land fleet are derived from multiple sources including Rig Data, Smith Bits and corporate filings. Only rigs with equal to or greater than 600 horsepower drawworks ratings ar
Slide 9: H&P is Leading the U.S. Land New Build Effort
H&P is Leading the U.S. Land New Build Effort Refurbished rigs, built between 1940s and 1982 72% 12% 16% 16% 77% 7% Note: The above estimates corresponding to the total available U.S. fleet are derived from multiple sources including Rig Data, Smith Bits and corporate filings. Only rigs with equal t
Slide 10: H&P's Global Rig Fleet (as of 3/2/11)
H&P’s Global Rig Fleet (as of 3/2/11) * Includes 11 new FlexRigs with customer commitments scheduled for completion during calendar 2011. ** Includes 11 FlexRigs. International Land ** 24 Offshore 9 Mobile & Conventional 38 U.S. FlexRigs * 210 U.S. Land * 248 281 Total Rigs (Includes New Build Commi
Slide 11: H&P's Global Rig Fleet
H&P’s Global Rig Fleet * Estimates include existing rigs and announced new build commitments. 77 90 89 88 96 111 127 130 128 151 193 224 254 257 279 281 0 50 100 150 200 250 300 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011E* 2012E* Rigs Available Fiscal Year (Ending Sep
Slide 12: Organically Growing Active Rig Market Share
Organically Growing Active Rig Market Share Note: The above estimates corresponding to the total available U.S. land fleet are derived from multiple sources including Rig Data, Smith Bits, and corporate filings. Lower 48 U.S. Land Market Share As of February 23, 2001 Lower 48 U.S. Land Market Share
Slide 13: 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 60% 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 return of rigs from Mexico, we expec
Slide 14: H&P's Growing Exposure to Oil and Liquids
H&P’s Growing Exposure to Oil and Liquids Estimated proportion of H&P’s active U.S. Land rigs in markets primarily associated with oil, liquids rich gas, and dry gas. Oil Liquids Rich Gas Dry Gas
Slide 15: H&P's Contracted U.S. Land Fleet (as of 3/2/11)
H&P’s Contracted U.S. Land Fleet (as of 3/2/11) Note: The above numbers corresponding to H&P’s contracted U.S. land fleet include 11 pending new build FlexRigs. Eagle Ford Shale, 42 Cana Woodford, 24 Haynesville Shale, 22 Permian Basin, 23 Avalon/Bone Springs Shale, 5 Bakken Shale, 22 Marcellus Shal
Slide 16: Increasing Focus on More Difficult Drilling
Increasing Focus on More Difficult Drilling
Slide 17: Economics Shift Activity Towards Oil Drilling
Economics Shift Activity Towards Oil Drilling
Slide 18: H&P's Margin Premium
* Does not include the impact of early contract termination revenue. Technology and Quality Service Make a Difference ** Represents weighted-average rig margin per day for PTEN, NBR and UNT through Q4CY10. H&P’s Margin Premium 17
Slide 19: H&P's Utilization Premium
* Utilization is herein calculated to be average active rigs divided by estimated available marketable rigs during the period. Technology and Quality Service Make a Difference ** Represents estimated average combined utilization for PTEN, NBR and UNT in the Lower 48 through Q4CY10. H&P’s Utilization
Slide 20: H&P's Global Fleet Under Term Contracts
H&P’s Global Fleet Under Term Contracts 130 121 105 91 79 73 65 56 0 20 40 60 80 100 120 140 160 Q2FY11 Q3FY11 Q4FY11 Q1FY12 Q2FY12 Q3FY12 Q4FY12 Q1FY13 Number of Rigs Already Under Long - Term Contracts (Estimated Quarterly Average) Term Contract Status - H&P Global Fleet (Including Committed New B
Slide 21: H&P New Builds
Since March 2010, H&P has announced the construction of 31 new FlexRigs, all of which are contracted under multi-year term agreements. Having completed the construction of 20 of these 31 rigs, 11 are scheduled to be completed during calendar 2011. New build rigs will be deploying primarily to oil an
Slide 22: 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. 34 47 52 57 59 67 89 99 106 121 129 133 128 150 163 180 189 201 0 30 60 90 120 150 180 210 Avg.
Slide 23: 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 operations in Mexico. Total revenue days
Slide 24: International Land Operations Rig Fleet Status
Active Contracted Idle Total Long-term Contracts Argentina 5 4 9 4 Bahrain 2 1 3 3 Colombia 5 1 6 2 Ecuador 2 2 4 Tunisia 2 2 Total 16 1 7 24 9 H&P’s International Land Operations Rig Fleet Status (as of March 2, 2011) One FlexRig is currently mobilizing to Bahrain. 9 of 11 FlexRigs, included in the
Slide 25: 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 expected to increase by 15 to
Slide 26: Market Trends Favor H&P
Customers continue to focus on efficiency to achieve lower total well costs. Drilling today involves more complex well designs. Increasing safety and environmental sensitivity Market Trends Favor H&P
Slide 27: End of Presentation
End of Presentation HELMERICH & PAYNE, ING.
Slide 28: Additional References
Additional References:
Slide 29: New Builds – H&P's FlexRig Program
New Builds – H&P’s FlexRig Program The FlexRig Difference: Key Advantages Increased drilling productivity and reliability Variable frequency (AC) drives with increased precision and measurability Computerized electronic driller that precisely controls weight on bit, rotation and pressure Designed to
Slide 30: 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. Drilling contractor dayrate $17,500 $23,000 $25,000
Slide 31: A Strong Field Organization
Performance is not only about better rigs It’s also about: People Safety Experience Training Culture Supply chain Maintenance Processes Organizational network Support structure A Strong Field Organization
Slide 32: Delivering Safety – H&P vs. Industry (IADC)
U.S. Land Safety Performance (1994 – 2010) OSHA Recordable Injury Incidence Rates H&P 2010 = 1.08 IADC 2010 = 3.44 INJURIES PER 200,000 MANHOURS MANHOURS WORKED (MM) Delivering Safety – H&P vs. Industry (IADC) 31
Slide 33: 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 34: Customer Satisfaction Index
Source: EnergyPoint Research, Inc. Customer Satisfaction Index 10 = “Highly Satisfied”, 1 = “Highly Dissatisfied”
Slide 35: 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 36: Leader in New Ideas & Applied Technology
AC Driven Systems & Integrated Top Drive Mechanized Tubular Handling Computerized Controls BOP Handling Driller’s Cabin Satellite Communications Rig Move Capabilities Leader in New Ideas & Applied Technology 31
Slide 37: FlexRig3 – Performance Sample
* Represents the customer’s fastest reported Bakken Shale well before deploying a H&P FlexRig. FlexRig3 – Performance Sample 59% Improvement 45% Improvement
Slide 38: FlexRig3 – Performance Sample
31% Improvement 50% Improvement FlexRig3 – Performance Sample
Slide 39: FlexRig4 – Performance Sample
FlexRig4 – Performance Sample 42% Improvement 22% Improvement
Slide 40: FlexRig3 – Performance Sample
45% Improvement 30% Improvement FlexRig3 – Performance Sample
Slide 41: FlexRig4M – Performance Sample
FlexRig4M – Performance Sample 33 % Improvement 58 % Improvement
Slide 42: FlexRig4S – Performance Sample
FlexRig4S – Performance Sample 35% Improvement 68% Improvement
Slide 43: Improving Rig Counts: U.S. Land, International Land
Improving Rig Counts U.S. Land International Land 42
Slide 44: Unconventional Natural Gas Production Growing
Alaska Shale Gas Offshore Other Onshore (Includes Tight Sands) Projections History TCF Source: Energy Information Administration Annual Energy Outlook 2010 with projections to 2035. Unconventional Natural Gas Production Growing Coalbed Methane 0 2 4 6 8 10 12 14 16 1990 1995 2000 2008 2015 2020 2025
Slide 45: Increasing Focus on More Difficult Drilling
Increasing Focus on More Difficult Drilling
Slide 46: Oil Related Drilling Increasingly Complex
Oil Related Drilling Increasingly Complex
Slide 47: Crude Oil & Natural Gas Prices
Crude Oil & Natural Gas Prices Source: Energy Information Administration, Short-term Energy Outlook as of 2/8/11. Crude Oil Natural Gas 46
Slide 48: End of Document
End of Document HELMERICH & PAYNE, ING.
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