Helmerich & Payne, Inc. · NYSE:HP
Helmerich & Payne — Investor Presentation (May 2023)
30 slides from Helmerich & Payne's investor presentation, May 9, 2023
Slide 1: Helmerich & Payne, Inc.
Helmerich & Payne, Inc. May 2023 Financial data as of 03/31/2023; other data as of 04/26/2023 unless otherwise noted. © 2022 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: H&P Today
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 03/31/23) o North America Solutions ~88% 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 40% in FY23(2) • Driving up revenue/day & direct margin/day: • Targeting > $30k/day in revenue/day in NAS – achieved in 1QFY23 • Targeting ~50% direct margins in NAS – achieved in 2QFY23 • Mid-teen ROIC/ROCE goal • Reducin
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: Our Approach – Customercentricity
Our Approach – Customercentricity Where we lead: What we own: How we do it: What customers want: Unconventional drilling Delivering better People, processes, Consistency in drilling outcomes automation, fleet, execution and service culture © 2022 Helmerich & Payne, Inc. All Rights Reserved. 6
Slide 7: 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 8: 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 233 169 73% ® Super-Spec FlexRig Fleet 231 167 72% Other AC-Style FlexRig 2 2 100% International Solutions 22 13 59% South America(2) 17 10 59% Super-Spec Fle
Slide 9: 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 10: 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 11: H&P Offerings Create Compelling Value Opportunities for E&Ps
H&P Offerings Create Compelling Value Opportunities for E&Ps
Slide 12: Value Proposition
Value Proposition Wellbore Quality & Placement Lower Cost Consistency at Reduced Risk • Optimize drilling economics • Drill an efficient well, reducing • Provide reliable, repeatable results to customer specifications non-productive time • Enables de-manning of 3rd-party personnel • Drill a less tor
Slide 13: 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 Under current indust
Slide 14: H&P is Built to Withstand Volatile Markets
H&P is Built to Withstand Volatile Markets
Slide 15: Fiscal 2023 Cash Projection
Fiscal 2023 Cash Projection $1,750 $1,500 $65 $400 - $450 Projecting to return $210 million in cash to shareholders Implied $25 YTD share repurchases of ~$145 million; still have $1,250 availability for accretive investment opportunities, additional share repurchases, or additional supplemental $ Mi
Slide 16: 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 (5 million share authorization for calendar 2023*) CAPITAL EXPENDITURES CASH FLOW CAPITAL • Maintenance – moves with active rig count FROM ALLOCATION
Slide 17: 2023 Supplemental Shareholder Return Plan
2023 Supplemental Shareholder Return Plan Returning 2/3 of Projected Cash Flow After Capex to Shareholders Cash Flow From Operations Less: FY2023 Planned Capex ~$400-$450MM Less: FY2023 Planned Base Dividend ~$110MM ~50%* Remaining Cash Flow as Supplemental Dividend ~$100MM ~50%* Remaining Cash Flow
Slide 18: Leading Shareholder Returns
Leading Shareholder Returns Total Cash Returned Per Share $18 Total Cash Returned Per Share 2016-2022 $15 $12 Already Leader in Providing Shareholder Returns $9 $6 Total Cash Returned Yield $3 6% Total Cash Return Yield 2016-2022 $0 5% HP SLB BKR NBR HAL PTEN FTI NOV PDS 4% 3% Supplemental Sharehold
Slide 19: Fiscal 2023 Capital Expenditures Budget
Fiscal 2023 Capital Expenditures Budget $400 - $450 Million Maintenance: ~$1.1 - $1.3 million per active rig Reactivation: ~$1.0 - $4.0 million per rig Conversion: 6 planned rig conversions; ~$7 million per rig North America Solutions ~64% International Solutions & Offshore Gulf of Mexico Corp. ~26%
Slide 20: Generating Returns at Lower Capital Intensity
Generating Returns at Lower Capital Intensity Revenue per rig back to a level where the returns generated are above cost of capital... …but at a much lower capital intensity level. *Revenue per Rig includes $0.9 million per rig ($204 million in total), $1.8 million per rig ($219 million in total), $
Slide 21: Higher Margins and Cash Flows Drive Value Creation
Higher Margins and Cash Flows Drive Value Creation 40.0 North America Solutions - Per Day (in thousands) 35.0 ➢ Cash flow leveraged to increasing margins is evident 30.0 $29.5 ➢ Lower capital intensity combined with higher direct margins translates to higher cash flow after capex 25.0 $22.6 ➢ Target
Slide 22: H&P – Compelling Energy Investment
H&P – Compelling Energy Investment 28 Energy Companies in S&P 600 Index 14 OFS, 7 E&Ps, 5 Refining & Marketing, 2 Other H&P Stands Out Balance Sheet Strength • H&P ranks in top quartile in debt-to-cap at ~16%; average ~35% Cash Returns to Shareholders • Only 8 of 28 are dividend payers of which H&P
Slide 23: Conservative Capital Structure
Conservative Capital Structure Total-Debt-to-Capitlization Ratio(1) Net Debt / LTM Cashflow from Ops(3) Total Liquidity ($MM) 4.0x $1,200 200% Liquidity as a % of Debt HP 16% 84% Total Liquidity Available 3.5x 3.4x 3.3x $1,050 175% 3.0x $900 150% PTEN 33% 67% $750 125% 2.5x $600 100% 2.0x NBR $450 7
Slide 24: 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 25: 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 26: 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 27: 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 28: 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 29: 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 30: 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 © 2022 Helmerich & Payne, Inc. All Rights Reserved. 30