Helmerich & Payne, Inc. · NYSE:HP
Helmerich & Payne — Barclays Capital CEO Energy-Power Conference 2010
47 slides from Helmerich & Payne's conference presentation, Sep 15, 2010
Slide 1: Helmerich & Payne, Inc. Barclay's Capital CEO Energy-Power Conference
Investor Relations Contact: Mike Drickamer – (918) 588-5190 – mike.drickamer@hpinc.com Helmerich & Payne, Inc. Barclay’s Capital CEO Energy-Power Conference September 16, 2010
Slide 2: Forward-looking information disclaimer
The information contained within this presentation is forward looking and involves risks and uncertainties that could significantly impact expected results. A discussion of these risks and uncertainties is contained in the “Risk Factors” and “Management’s Discussion & Analysis of Results of Operatio
Slide 3: Market Observations
Realities of a segmented market will shape the land drilling landscape. Customers will continue to rely on drilling efficiencies to offset cost pressures and weak natural gas prices. The Company’s industry leading manufacturing effort reflects our customers’ future drilling intentions. Market Observ
Slide 4: H&P's Global Rig Fleet
H&P’s Global Rig Fleet * Includes 13 new rigs with customer commitments scheduled for completion by early to mid calendar 2011. ** Includes 16 FlexRigs, one of which will be deployed from the U.S. to Bahrain during the first fiscal quarter of 2011. International Land ** 29 Offshore 9 Mobile & Conven
Slide 5: 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 96 111 127 130 128 151 193 224 254 258 269 0 50 100 150 200 250 300 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010E* 2011E* Rigs Available Fiscal Year (Ending Sept 30) Int
Slide 6: 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 74% 11% 15% 17% 75% 8% 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 7: H&P and U.S. Land Fleet (by Rig Type)
H&P and U.S. Land Fleet (by Rig Type) 55% 30% 15% 22% 74% 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 8: H&P's Global Fleet Under Term Contracts
H&P’s Global Fleet Under Term Contracts * Includes delayed new builds which are expected to generate revenue but not revenue days. 124 124 105 94 79 68 63 58 0 20 40 60 80 100 120 140 Q4FY10 Q1FY11 Q2FY11 Q3FY11 Q4FY11 Q1FY12 Q2FY12 Q3FY12 Number of Rigs Already Under Long-Term Contracts (Estimated
Slide 9: H&P Taking Market Share
*Represents average active rigs for PTEN, NBR and UNT. H&P Taking Market Share As of 9/16/10 -60% -40% -20% 0% 20% 40% 60% 80% 100% 120% Q1CY05 Q2CY05 Q3CY05 Q4CY05 Q1CY06 Q2CY06 Q3CY06 Q4CY06 Q1CY07 Q2CY07 Q3CY07 Q4CY07 Q1CY08 Q2CY08 Q3CY08 Q4CY08 Q1CY09 Q2CY09 Q3CY09 Q4CY09 Q1CY10 Q2CY10 Change in
Slide 10: Technology and Quality Service Make a Difference
Technology and Quality Service Make a Difference Utilization Premium Rig Margin Premium **** Represents estimated average combined utilization for PTEN, NBR and UNT in the Lower 48. *** Utilization is herein calculated to be average active rigs divided by estimated available marketable rigs during t
Slide 11: 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. - $50 $50 $150 $250 $350 $450 PTEN* UNT NBR** HP Operating Income (Millions) U.S. Land Drilling Operating
Slide 12: Peer Group Estimated Return on Equity
Peer Group Estimated Return on Equity 0% 2% 4% 6% 8% 10% PDS PTEN NBR H&P ROE Analyst Estimates Fiscal Year 2010 Return on Equity (Source: First Call Consensus September 13 , 2010 )
Slide 13: H&P's U.S. Land Operations
Dayrates continue to improve as FlexRig utilization currently stands at 100%. We continue to expect an increase of ten percent or more in average rig activity, or total quarterly revenue days, from the third to the fourth fiscal quarter of 2010. Quarterly average rig revenue per day (excluding the i
Slide 14: 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 54 56 58 89 99 106 112 119 125 128 150 163 170 177 184 0 25 50 75 100 125 150 175 200 A
Slide 15: H&P's U.S. Land Fleet Status
H&P’s U.S. Land Fleet Status 125 55 126 58 34 0 25 50 75 100 125 150 Under Term Spot Market Active Spot Market Stacked Number of H&P Rigs Highly Mobile Conventional FlexRigs
Slide 16: H&P's U.S. Land Fleet Composition & Utilization
H&P’s U.S. Land Fleet (as of 9/16/10)* * Includes operator requested new build delivery delays, which generate revenue but not revenue days. Estimated U.S. Land Activity by Rig Type The above estimates corresponding to the total available U.S. land fleet are derived from multiple sources including R
Slide 17: H&P New Builds
Since March 2010, we have announced the construction of 19 new FlexRigs, all of which are contracted under multi-year term agreements. Having completed the construction of six of these 19 rigs, we currently have 13 left to be completed through early to mid calendar 2011. New build rigs will be deplo
Slide 18: 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 19: Driller on a Conventional Rig vs. FlexRig
Driller on a Conventional Rig vs. FlexRig™ Drawworks Brake Handle Drawworks Joystick Control 31
Slide 20: Hookload
Hookload 112.9 kibs ‘AutoDrill are } Power @ o74n Block Posn Elev Posn 04] 0: ‘HighTravel Limit: << 97.68 High Stop Point 7 Setpoint es Setpoint
Slide 21: Roughnecks on a Conventional Rig vs. FlexRig
Roughnecks on a Conventional Rig vs. FlexRig
Slide 22: 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 January 7, 2000 Lower 48 U.S. Land Market Share As
Slide 23: H&P's International Land Operations
We continue to expect quarterly activity (or revenue days) for the segment to sequentially increase by about five percent from the third to the fourth fiscal quarter of 2010. Our first FlexRig in the Middle East is currently working under a long-term contract. We expect to mobilize a second FlexRig
Slide 24: International Land Operations Rig Fleet Status
Active Contracted Idle Total Long-term Contracts Argentina 5 4 9 4 Bahrain 1 1 2 2 Colombia 5 1 6 2 Ecuador 4 4 Mexico 6 6 6 Tunisia 2 2 Total 23 1 5 29 14 H&P’s International Land Operations Rig Fleet Status (as of September 16, 2010) Some rigs in Mexico are expected to transfer back to the U.S. du
Slide 25: H&P's Offshore Operations
Seven of the Company’s nine offshore platform rigs remain active, including two under long-term contracts. Currently, one of the Company’s seven active platform rigs is being impacted by the deepwater moratorium by way of a reduced standby rate. As we transition from the third to the fourth fiscal q
Slide 26: Market Trends Favor H&P
Growing focus on technology-based solutions that enable lower total well costs Unconventional plays are the most economically viable and tend to require highly-capable rigs Drilling is becoming more challenging and highly-capable rigs are expected to be in short supply Increasing safety and environm
Slide 27: End of Presentation
End of Presentation HELMERICH & PAYNE, ING.
Slide 28: Additional References
Additional References:
Slide 29: U.S. Land Safety Performance
U.S. Land Safety Performance (1994 – 2Q10) OSHA Recordable Injury Incidence Rates H&P July ’10 = 0.94 IADC 2Q10 = 3.28 INJURIES PER 200,000 MANHOURS MANHOURS WORKED (MM) Delivering Safety – H&P vs. Industry (IADC) MANHOURS = 8.9 MM 0 2 4 6 8 10 12 14 16 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 0
Slide 30: 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) $0.00 $0.50 $1.00 $1.50 $2.00 $2.50 $0.00 $0.50 $1.00 $1.50 $2.00 $2.50 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 C
Slide 31: Customer Satisfaction Index
Source: EnergyPoint Research, Inc. * Trailing four quarters average * * Customer Satisfaction Index 10 = “Highly Satisfied”, 1 = “Highly Dissatisfied” * * * 1.00 2.00 3.00 4.00 5.00 6.00 7.00 8.00 9.00 10.00 2006 Q1 2009 Q2 2009 Q3 2009 Q4 2009 Q1 2010 HP Peer A Peer B Peer C
Slide 32: 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 33: A Value Proposition Example – H&P vs. Competitors
Estimated Estimated Peer H&P FlexRig3 Conventional Fit-for-purpose Average Average Average Mid 2010 (Spot Market) (Spot Market) (Spot Market) 1. Drilling days 26 14 11 Completion days 2 2 2 Moving days 5 4 3 Total rig revenue days per well 33 20 16 2. Drilling contractor dayrate $15,500 $21,500 $24,
Slide 34: 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 35: FlexRig3 – Performance Sample
* Represents the customer’s fastest reported Bakken Shale well before deploying a H&P FlexRig. FlexRig3 – Performance Sample 59% Improvement 47% Improvement
Slide 36: FlexRig4M – Performance Sample
FlexRig4M – Performance Sample 21% Improvement 52% Improvement
Slide 37: FlexRig4 – Performance Sample
FlexRig4 – Performance Sample 42% Improvement 22% Improvement
Slide 38: FlexRig4S – Performance Sample
FlexRig4S – Performance Sample 39% Improvement 16% Improvement
Slide 39: Improving Rig Counts
Improving Rig Counts U.S. Land International Land 0 300 600 900 1,200 1,500 1,800 2,100 2,400 0 300 600 900 1,200 1,500 1,800 2,100 2,400 Monthly Average Baker Hughes U.S. Land and MI Swaco International Land Rig Counts MI Swaco International Land Rig Count BHI U.S. Land Rig Count
Slide 40: 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 (May 2010). Unconventional Natural Gas Production Growing Coalbed Methane 0 2 4 6 8 10 12 14 16 1990 1995 2000 2008 201
Slide 41: Increasing Focus on More Difficult Drilling
Increasing Focus on More Difficult Drilling 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Percentage of Active U.S. Rigs (BHI North American Rotary Rig Count) Week Ended U.S. Rig Activity by Drilling Type Vertical Drilling Horizontal or Directional Drilling
Slide 42: Increasing Focus on More Difficult Drilling
Increasing Focus on More Difficult Drilling 28% 31% 37% 43% 51% 68% 80% 69% 53% 0 400 800 1200 1600 2004 2005 2006 2007 2008 2009 Sep - 10 Trough (2009) Peak (2008) Number of Active Rigs (Smith Bits S.T.A.T.S.) Annual Average During Each Prior Year Active Rigs in U.S. Land Drilling for Natural Gas H
Slide 43: Oil Related Drilling Also Increasingly Complex
Oil Related Drilling Also Increasingly Complex 36% 39% 31% 33% 40% 41% 55% 42% 41% 0 100 200 300 400 500 600 2004 2005 2006 2007 2008 2009 Sep - 10 Peak (2008) Trough (2009) Number of Active Rigs (Smith Bits S.T.A.T.S.) Annual Average During Each Prior Year Active Rigs in U.S. Land Drilling for Oil
Slide 44: Changes in Lower U.S. Land Rig Count
Changes in Lower 48 U.S. Land Rig Count * PDS’s active rig count includes both PDS and GW rigs. - 40% - 30% - 20% - 10% 0% HP U.S. Land PDS* PTEN NBR UNT Change in Rig Count Estimated Change Since Peak in Active U.S. Land Rigs (Smith Bits Weekly Rig Count - October 17, 2008 to September 10, 2010)
Slide 45: Crude Oil & Natural Gas Prices
Crude Oil & Natural Gas Prices Source: Energy Information Administration, Short-term Energy Outlook as of 9/8/2010. Crude Oil Natural Gas $0 $2 $4 $6 $8 $10 $12 $14 $0 $20 $40 $60 $80 $100 $120 $140 U.S. Dollars per Thousand Cubic Feet U.S. Dollars per Barrel Monthly Average West Texas Intermediate
Slide 46: H&P's Contracted U.S. Land Fleet
H&P’s Contracted U.S. Land Fleet (as of 9/16/10) Note: The above numbers corresponding to H&P’s contracted U.S. land fleet include two delayed new builds which generate revenue but do not generate revenue days and 13 pending new build FlexRigs. Eagle Ford Shale, 26 Haynesville Shale, 25 Bakken Shale
Slide 47: End of Document
End of Document HELMERICH & PAYNE, ING.
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