Helmerich & Payne, Inc. · NYSE:HP
Helmerich & Payne — Capital One Southcoast Energy Conference 2009
37 slides from Helmerich & Payne's conference presentation, Dec 8, 2009
Slide 1: Capital One Southcoast Energy Conference
Investor Relations Contact: Juan Pablo Tardio – (918) 588-5383 – juanpablo.tardio@hpinc.com Helmerich & Payne, Inc. Capital One Southcoast Energy Conference December 8, 2009
Slide 2: The information contained within this presentation is forward looking and involves risks and uncertainties
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: H&P's Global Rig Fleet
H&P’s Global Rig Fleet 261 Total Rigs (Includes New Build Commitments) Offshore * Includes four new rigs with previously announced customer commitments scheduled for completion by April 2010. ** Includes 15 FlexRigs. U.S. Land 213* U.S. FlexRigs 175* Mobile & Conventional 38 9 International Land 39*
Slide 4: 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 96 111 127 130 128 151 193 224 254 261 0 50 100 150 200 250 300 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009E* 2010E* Rigs Available Fiscal Year (Ending Sept 30) Internationa
Slide 5: 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. (as of December 1, 2009) 0 20 40 60 80 100 120 Q1FY10 Q2FY10 Q3FY10 Q4FY10 Q1FY11 Q2FY11 Q3FY11 Q4FY11 Number of Rigs Under Long - Term Contracts (Estimated Quarterly Av
Slide 6: Encouraging Market Indicators
Higher commodity prices Improving rig counts and bidding activity Operators high-grading their fleets FlexRigs attracting new customers Increasing opportunities globally Encouraging Market Indicators
Slide 7: Continuing Concerns
Natural gas storage Economic recovery Winter temperatures and heating demand Activity required to offset declining production Impact of increasing shale gas potential LNG import potential Continuing Concerns
Slide 8: H&P's U.S. Land Operations
H&P’s active rig count continues to increase. Spot dayrates appear to have stabilized. Larger FlexRigs are now approaching full utilization. Five FlexRig3 rigs (used for international bidding) have been transferred back to the U.S. Land segment, and three of the five are already contracted. Incremen
Slide 9: H&P's U.S. Land Fleet Status
H&P’s U.S. Land Fleet Status (Estimated for December 8, 2009) 95 36 40 39 97 73 0 10 20 30 40 50 60 70 80 90 100 Under Term Spot Market Active Spot Market Stacked Number of H&P Rigs Highly Mobile Conventional FlexRigs
Slide 10: 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 11: U.S. Land Footage Drilled
* NBR’s footage drilled corresponds to Nabors Drilling USA, LP. U.S. Land Footage Drilled 0 2 4 6 8 10 12 14 UNT PDS PTEN NBR* H&P Footage Drilled (in millions) U.S. Land Footage Drilled (Rig Data Driller Ranking - January 2009 to November 2009)
Slide 12: H&P's Margin Premium
** Represents weighted-average rig margin per day for PTEN, NBR and UNT in the Lower 48. * Does not include the impact of early contract termination revenue. Technology and Quality Service Make a Difference H&P’s Margin Premium $4,000 $6,000 $8,000 $10,000 $12,000 $14,000 $16,000 Q1CY05 Q2CY05 Q3CY0
Slide 13: 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. $0 $100 $200 $300 $400 $500 $600 UNT PTEN* NBR** HP Operating Income (Millions) U.S. Land Drilling Operati
Slide 14: H&P is Leading the U.S. Land Retooling Effort
H&P is Leading the U.S. Land Retooling Effort Refurbished rigs, built between 1940s and 1982 AC Driven New Builds Other New Builds Conventional Rigs Total Available U.S. Land Fleet (Estimates) (~2,450 Rigs) AC Driven (FlexRig 3 & 4) Other New Builds (FlexRig 1 & 2) Conventional Rigs H&P's Available
Slide 15: H&P's Capex Estimate for Fiscal 2010
Given improving market conditions, we have increased our fiscal 2010 capital expenditures estimate by $40 million to $265 million. With this capex increase, the flexibility to control and adapt our manufacturing effort allows us to extend it through the rest of fiscal 2010. This represents a signifi
Slide 16: H&P's International Land Operations
Active Contracted Idle Total Long-term Contracts Argentina 5 4 9 4 Colombia 5 1 6 2 Ecuador 4 4 Mexico 6 6 6 Africa 1 1 2 Venezuela 11 11 Other 1 1 1 Total 21 2 16 39 13 H&P’s International Land Operations Rig Fleet Status (Estimated for December 8, 2009) 1) Includes one rig under a long-term contra
Slide 17: H&P's Offshore Operations
Seven of the Company’s offshore platform rigs are active and two are idle. One of the two rigs that are currently idle has good work prospects for fiscal 2010. Two of the seven active rigs are under long-term contracts. Our two U.S. based management contracts are expected to remain active in fiscal
Slide 18: Market Trends Favor H&P
Drilling is becoming more challenging and highly-capable rigs are expected to be in short supply Growing focus on technology-based solutions that enable lower total well costs Increasing safety and environmental sensitivity Unconventional plays are the most economically viable and tend to require hi
Slide 19: 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 H&P Peer A Peer B Peer C
Slide 20: Peer Group Return on Equity
Peer Group Return on Equity * NBR’s, PTEN’s and UNT's calculations exclude charges that were a result of asset retirements and impairments, including ceiling test write-downs. 0% 3% 6% 9% 12% 15% PTEN UNT NBR HP Estimated ROE Return on Equity* 12 Months Ended September 30, 2009
Slide 21: End of Presentation
End of Presentation HELMERICH & PAYNE, ING.
Slide 22: Additional References
Additional References:
Slide 23: 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 24: Another Value Proposition Example – H&P vs. Competitors
Estimated Field H&P FlexRig4 Competitor Average Late 2009 (Spot Market) (Spot Market) 1. Drilling days 28 18 Completion days 2 2 Moving days 4 3 Total rig revenue days per well 34 23 2. Drilling contractor dayrate $13,500 $17,500 Operator’s other intangible $15,000 $15,000 cost per day estimate Tota
Slide 25: Another Value Proposition Example – H&P vs. Competitors
Value added from FlexRig operations Significant H&P dayrate premium Increased wells per rig per year: 5 wells Early production: Incremental wells on production Lowest total well cost Another Value Proposition Example – H&P vs. Competitors
Slide 26: 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 27: FlexRig3 – Performance Sample
59% Improvement 44% Improvement FlexRig3 – Performance Sample * Represents the customer’s fastest reported Bakken Shale well before deploying a H&P FlexRig. *
Slide 28: FlexRig4M – Performance Sample
FlexRig4M – Performance Sample 46% Improvement 61% Improvement
Slide 29: FlexRig3 Performance
Highlights of FlexRig3s 1. Field performance vs. customers’ planned drill curves 2818 complete wells as of October 21, 2009 1681 wells (60%) under or on 932 wells (33%) over 205 wells had no planned curves 2. 83% of FlexRig3s are currently drilling directional, more technically difficult wells. Flex
Slide 30: FlexRig4 Performance
Highlights of FlexRig4s 1. Field performance vs. customers’ planned drill curves 3278 complete wells as of October 21, 2009 2112 wells (65%) under or on 910 wells (28%) over 256 wells had no planned curves 2. 80% of FlexRig4s are currently drilling directional, more technically difficult wells. Flex
Slide 31: 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 32: 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 33: Crude Oil & Natural Gas Prices
Crude Oil & Natural Gas Prices Source: Energy Information Administration, Short-term Energy Outlook as of 11/17/2009. 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 Intermediat
Slide 34: Crude Oil & Natural Gas Futures
Crude Oil & Natural Gas Futures Source: New York Mercantile Exchange (NYMEX) as of 11/30/2009. Crude Oil Natural Gas $0 $2 $4 $6 $8 $10 $12 $0 $20 $40 $60 $80 $100 $120 Henry Hub Futures Contract - Dollars per MMBtu WTI Futures Contract - Dollars per Barrel Monthly Futures Contract Crude Oil (West T
Slide 35: FlexRigs in Demand for More Difficult Wells
FlexRigs in Demand for More Difficult Wells Includes FlexRigs 0% 20% 40% 60% 80% 100% Land Rigs, Industry Wide FlexRigs Percentage of Applicable Rig Fleet Active Land Rigs Drilling Horizontal or Directional Wells (Data Source: Smith International, Inc. - S.T.A.T.S. - 11/27/09)
Slide 36: Increasing Focus on More Difficult Drilling
Increasing Focus on More Difficult Drilling 69% 25% 27% 35% 42% 49% 53% 21% 76% 0 400 800 1200 1600 2003 2004 2005 2006 2007 2008 Peak Trough Nov-09 Number of Active Rigs (Smith Bits S.T.A.T.S.) Sample Week in April During Each Prior Year Active Rigs in U.S. Land Drilling for Natural Gas Horizontal
Slide 37: End of Document
End of Document HELMERICH & PAYNE, ING.
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