Helmerich & Payne, Inc. · NYSE:HP
Helmerich & Payne — Investor Presentation (September 2018)
24 slides from Helmerich & Payne's investor presentation, Sep 4, 2018
Slide 1: Safe Harbor Statement
Safe Harbor Statement 2 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 current facts. They often include words or va
Slide 2: H&P Investment Thesis
3 H&P Investment Thesis Industry Leader in U.S. Land Drilling FlexRig® Fleet Poised for Continued Market Share Gains Most Capable and Uniform Fleet Outperformed OSX in 8 Out of Last 10* Years Consistent Operational Excellence (Safety, Customer Satisfaction, Reliability) Financial Position and Streng
Slide 3: H&P Today
4 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 drilling company based in Tulsa, OK with
Slide 4: Today's Focus Points: H&P's Winning Strategy
5 Today’s Focus Points H&P’s Winning Strategy Execute as the dominant U.S. land driller Grow international business opportunistically Maintain cash flow generating offshore exposure Continue to lead industry in technology and innovation bringing value to customers Maintain and build upon a solid fin
Slide 5: H&P Global Rig Fleet
6 H&P Global Rig Fleet See description of “super-spec” rig later in the slide deck. Note: Of the 6 super-spec rigs temporarily idle, 4 have commitments to return to work over the next several weeks as the operators’ schedules allow. 10 of 25 FlexRigs, included in the international fleet of 38 rigs,
Slide 6: Competitive Benefits of Uniform Fleet
7 Competitive Benefits of Uniform Fleet Uniform fleet creates adaptive environment to reach maximum efficiency for people, equipment and technology Uniform fleet is critical in increasingly complex basins providing consistent and reliable operations Uniform fleet has greater scale than any competito
Slide 7: Differentiated from Land Drilling Peers
8 Differentiated from Land Drilling Peers Leading U.S. market share with significant growth trajectory Approximately 20%* of U.S. land fleet, over 40%* of super-spec fleet, and over 60%* of idle upgradeable rigs Distinctively situated as the incremental supplier of super-spec rigs Leveraging positio
Slide 8: Dominant U.S. Land Driller
9 Dominant U.S. Land Driller As of August 2018 (~1,095 Active Rigs in U.S. Land) Source: RigData. The drawworks capacity of each land rig included in the above analysis was equal to or greater than 600 horsepower. 24% 18% 12% 6% 0% HP PTEN NBR PDS
Slide 9: Leading U.S. Unconventional Driller
10 Leading U.S. Unconventional Driller 8 5 7 118 39 7 34 3 6 1 Leading market share in the 3 most active U.S. basins Market share evidence of strong customer demand for H&P FlexRigs Broad exposure to U.S. unconventional basins Well positioned and able to quickly respond to changes in basin demand Re
Slide 10: H&P Leads in U.S. Land AC Drive
11 With 1,500hp Drawworks & 750,000 lb. Hookload H&P Leads in U.S. Land AC Drive Rigs August 2018 activity (all U.S. land rigs) 2014 peak activity (all U.S. land rigs) H&P has a higher quality of earnings with a greater number of super-spec rigs that are in demand Unmatched competitive edge – super-
Slide 11: Super-Spec and Upgradable Utilization
12 Super-Spec and Upgradable Utilization Super-Spec Specifications AC drive 1,500 hp drawworks 750,000 lb hookload rating 7,500 psi mud circulating system Multiple-well pad capable Additional capabilities, including third mud pumps, 25,000’ setback, increased mud volume, etc. may also be included to
Slide 12: Super-Spec Upgrade Program
13 Super-Spec Upgrade Program Upgrades Generate High Returns Skidding Upgrade: Cost of upgrade ~ $2-$3 million Roughly 65% of upgrades in fiscal 2018 Full after-tax payback 12 to 18 months Walking Upgrade/Conversion: Cost of upgrade ~ $8 million Roughly 35% of upgrades in fiscal 2018 Full after-tax
Slide 13: Opportunistic International Growth
14 Opportunistic International Growth Important line of business for H&P 9% 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 proposition/
Slide 14: Established Offshore Business
15 Established Offshore Business Legacy business for H&P Drilling offshore since 1968 Today requires relatively little capex Yields free cash flow supporting other segments Long operational track record Niche business line in the Gulf of Mexico with few competitors Maintain utilization and cash flow
Slide 15: Extracting Higher Value from Shale Assets
16 Extracting Higher Value from Shale Assets Wellbore Quality & Accuracy Recent MOTIVE and MagVAR acquisitions create a powerful platform and compelling value opportunity for E&P companies Offers flexibility to select best technology regardless of drilling contractor Brings new level of accuracy to
Slide 16: MOTIVE Drilling Technologies
17 MOTIVE Drilling Technologies MOTIVE is the industry leader in the use of cognitive computing to guide the directional drilling process. MOTIVE has commercially drilled more than 8 million feet on over 600 wells across all of the major U.S. shale plays and Canada and has been issued 15 US Patents.
Slide 17: Magnetic Variation Services
18 Magnetic Variation Services MagVAR is a leading provider of MWD geomagnetic referencing and survey quality management Real-time center serving active horizontal rigs drilling in North America Utilized for over 40 E&P companies 3,000+ wells analyzed and corrected MagVAR’s services: Correct for MWD
Slide 18: The Next Evolutionary Step in Drilling Automation
19 The Next Evolutionary Step in Drilling Automation H&P FlexRig AutoSlideSM Standardizes highest quality well paths by providing automated and optimized slide execution with no human dependency Searches for optimal parameters in real-time to increase ROP and accuracy Adapts to different downhole fo
Slide 19: Strong Financial Foundation & Returns
Strong Financial Foundation & Returns Total-Debt-to-Total-Capitalization Ratio1 Dividends Paid (Fiscal 2008 – Current) HP No debt maturity until fiscal 2025 $350 Over $1.5 billion returned to $300 shareholders in the form of dividends during the past 10 years PTEN $250 UNT $200 $150 PDS $100 NBR $50
Slide 20: Strong Term Backlog
Strong Term Backlog Term Contract Status – H&P Global Fleet U.S. Land Term Contract Revenues 140 120 U.S. Land International Land Offshore $800 $700 $1.1 billion in term 100 $600 revenue backlog $500 80 $400 60 $300 40 $200 20 $100 0 FY18 FY19 FY20 $0 4Q18 FY19 FY20 Source: Company Filings. Term Con
Slide 21: Drilling Market Conditions
22 Drilling Market Conditions Crude oil prices are roughly 30% higher than they were when many E&Ps set their 2018 capex budgets Higher oil prices boding well for increasing drilling demand and improving dayrates Customer level of interest in putting additional rigs to work continues to increase Add
Slide 22: Why H&P?
23 Why H&P? U.S. Land industry leader with dominant position poised for future gains Stock performance supported by operational excellence, financial strength and technological innovations Fiscal discipline leads to superior returns, strong balance sheet and ability to return cash to shareholders Co
Slide 23: 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.
Slide 24: Slide 24
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