Helmerich & Payne, Inc. · NYSE:HP
Helmerich & Payne — Investor Presentation (October 2022)
29 slides from Helmerich & Payne's investor presentation, Oct 18, 2022
Slide 1: Helmerich & Payne, Inc. October 2022
Helmerich & Payne, Inc. October 2022 Financial data as of 6/30/2022; other data as of 9/30/2022 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 drilling solutions as well as technological innovation. H&P TODAY H&P operates in 3 segments (% of revenue at 6/30/22) o North America Solutions ~88% market leader in U.S. Founded IN 1920 o International Solutions o Offshore Gulf of Mexic
Slide 4: Focused on Enhancing Returns: Current Highlights
Current Highlights • Increased NAS rig count ~33% in 1HFY22 • Substantially increasing NAS direct margins(1) in 2HFY22 (2) • Driving up revenue/day: • Targeting ~50% direct margins(1) in NAS with increasing pricing • Double-digit ROIC/ROCE goal • Returning cash to shareholders: • Plans to provide in
Slide 5: H&P's Winning Strategy
H&P’s Winning Strategy Global Drilling Solutions Provider • Evolve commercial model to be customer centered and value driven • Continue to lead industry in technology automation adoption and differentiation • International expansion • Maintain capital discipline • Continued focus on cost management
Slide 6: 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 7: H&P Global Rig Fleet
H&P Global Rig Fleet Super-Spec Rigs Represent Super-Spec Rigs Represent 97% of Total Land Fleet 97% of Total Land Fleet Rigs Rigs % Available Contracted (1) Contracted U.S. Land 236 176 75% Super-Spec FlexRig® Fleet 230 174 76% Upgradeable AC FlexRig 4 0 0% Other AC-Style FlexRig 2 2 100% Internati
Slide 8: 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 9: International Expansion
International Expansion Benefits of Allocating Capital Internationally • Diversification from U.S. and outlet for super-spec FlexRig® fleet capacity • Exporting U.S. rigs for appropriately scaled opportunities offers growth outside of U.S. • Ability to have positive impact on overall Company financi
Slide 10: H&P Offerings Create Compelling Value Opportunities for E&Ps
H&P Offerings Create Compelling Value Opportunities for E&Ps
Slide 11: 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 12: Addressing Industry Challenges Through Automation
H&P Drilling Solutions Addressing Industry Challenges Through Automation The oil and gas industry is still heavily dependent on human decision making to design, execute, and optimize oil and gas extraction. H&P INDUSTRY CHALLENGE AUTOMATION SOLUTION Human Decisions and Execution = Art Converts Art t
Slide 13: Drilling Solutions Value Proposition
Drilling Solutions Value Proposition More than drilling a hole in the ground… Value over the life of the well Drilling Completions Production Primary Focus Drilling Time & Cost Human decisions and execution — variable, inconsistent and at times costly and unfavorable outcomes • Poor well quality and
Slide 14: 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 15: H&P is Built to Withstand Volatile Markets
H&P is Built to Withstand Volatile Markets
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 CAPITAL EXPENDITURES CASH FLOW CAPITAL • Maintenance – moves with active rig count FROM ALLOCATION • Reactivation of idle rigs based on demand OPERATI
Slide 17: 2023 Supplemental Shareholder Return Plan
2023 Supplemental Shareholder Return Plan Cashflow From Operations Less: FY2023 Planned Capex ~$425-$475MM Less: FY2023 Planned Base Dividend ~$110MM ~50%* Remaining Cashflow as Supplemental Dividend ~$100MM ~50%* Remaining Cashflow: Share Repurchases, More Supplemental Dividends or Other Investment
Slide 18: Leading Shareholder Returns
Leading Shareholder Returns Total Cash Returned Per Share $16 Total Cash Returned Per Share 2016-2021 $12 Already Leader in Providing Shareholder Returns $8 $4 Total Cash Returned Yield $0 6% HP SLB BKR HAL PTEN FTI NOV NBR* PDS* Total Cash Return Yield 2016-2021 5% 4% Supplemental Shareholder Retur
Slide 19: Fiscal 2023 Capital Expenditures Budget
Fiscal 2023 Capital Expenditures Budget $425 - $475 Million Maintenance: Upper target of 192 rigs; ~$1.1 - $1.3 million per active rig Reactivation: Up to 16 rig reactivations based on demand (includes reactivation of 6 planned conversions); ~$1.0 - $4.0 million per rig North America Solutions ~66%
Slide 20: Generating Returns at Lower Capital Intensity
Generating Returns at Lower Capital Intensity Revenue Per Rig $14 Revenue per Rig $Millions $13 $12 Revenue per rig back $11 to a level where the $10 returns generated are $9 above cost of capital... $8 $7 2014 2015 2016 2017 2018 2019 2020 2021 2022E 2023E 40% 35% Capex as % of Revenue 30% …but at
Slide 21: H&P – Compelling Energy Investment
H&P – Compelling Energy Investment 28 Energy Companies in S&P 600 Index 14 OFS, 7 E&Ps, 5 Refining & Marketing, 2 Other H&P Stands Out Balance Sheet Strength • H&P ranks in top quartile in debt-to-cap at 17%; average 42% Cash Returns to Shareholders • Only 9 of 28 are dividend payers of which H&P is
Slide 22: Conservative Capital Structure
Conservative Capital Structure Total-Debt-to-Capitlization Ratio(1) Net Debt / LTM Cashflow from Ops(3) Total Liquidity ($MM) 7.0x $1,200 200% 6.3x Liquidity as a % of Debt Total Liquidity Available HP 17% 83% 6.0x $1,050 175% 5.6x $900 150% 5.0x $750 125% PTEN 35% 65% 4.0x 3.7x $600 100% $450 75% 3
Slide 23: 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 24: 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 25: Improving Lives Through Affordable and Responsible Energy
Improving Lives Through Affordable 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 26: H&P Inaugural Sustainability Report
H&P Inaugural Sustainability Report Issued December 2021 Highlights – Provides: • Environmental management and oversight practices • Strong use of data to report over 40 environmental metrics, including Scope 1 & 2 emissions data • Environmental goal setting • Environmental Actively C.A.R.E. Goal (2
Slide 27: H&P CO2 Emissions
H&P CO2 Emissions Normalized by Distance Drilled FY 2018 FY 2019 FY 2020 FY 2021 75 25 • H&P has a history of taking thoughtful and methodical approaches to solving 70 20 problems and working with customers to optimize solutions 65 15 • H&P scope 1 and 2 CO2e emissions per 60 10 kilometer drilled ha
Slide 28: H&P Investment Thesis
H&P Investment Thesis INDUSTRY LEADER AS A 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 Business Partner FIN
Slide 29: 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. 29
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