Helmerich & Payne, Inc. · NYSE:HP
Helmerich & Payne — EnerCom and NASDAQ Oilservice Conference III (February 2005)
36 slides from Helmerich & Payne's conference presentation, Feb 16, 2005
Slide 1: February 2005 EnerCom and NASDAQ Oilservice Conference III
February 2005 EnerCom and NASDAQ Oilservice Conference III
Slide 2: Forward-looking information
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 Company's Form 10-K filed with the Securities and Exchange Commission on Dece
Slide 3: What Is Different About This Cycle
1st time since 1920, H&P is a pure play driller. Increased our rig fleet by 45%. 50 new FlexRigs have established the new performance standard for the industry. Potential for an up cycle that is prolonged and less volatile. We remain financially strong and well positioned. What Is Different About Th
Slide 4: The Three Distinct Markets of H&P's Rig Fleet
International Platform Conventional FlexRigs Rig Fleet 27 11 29 61 The Three Distinct Markets Of H&P's Rig Fleet 128 Total Rigs February 2005
Slide 5: Rig Fleet Increase of 45% Since 2000
Rig Fleet Increase Of 45% Since 2000 2000 2001 2002 2003 2004 2005 Rig Fleet Size 88 96 111 128 131 128 45% Increase
Slide 6: U.S. Land Cash Margin Per Rig Day
U.S. Land Cash Margin Per Rig Day
Slide 7: Common Stock Total Return Index
Common Stock Total Return Index 10/20/2004 - 2/14/2005 First Quarter Earnings Announced 4th Quarter and Fiscal Year Earnings Announced
Slide 8: U.S. Land Operations
U.S. Land Operations 12/1/2003 3/1/2004 6/1/2004 9/1/2004 12/1/2004 operating profit 6455000 5747000 9487000 13856000 25588000 12/1/2003 3/1/2004 6/1/2004 9/1/2004 12/1/2004 Margin Per Day 3414 3186 3644 4223 5563 Utilization 0.81 0.86 0.89 0.92 0.92
Slide 9: Baker Hughes U.S. Rig Count
Baker Hughes U.S. Rig Count January 3, 1997 - February 11, 2005
Slide 10: U.S. Offshore Operations
U.S. Offshore Operations 12/1/2003 3/1/2004 6/1/2004 9/1/2004 12/1/2004 Operating Profit 4212000 3880000 3820000 -47540000 4168000 Without Impairment 4000000 12/1/2003 3/1/2004 6/1/2004 9/1/2004 12/1/2004 Margin Per Day 14986 14163 11608 10400 11542 Utilization 0.42 0.42 0.52 0.54 0.56
Slide 11: Baker Hughes International Rig Count
Baker Hughes - International Rig Count January 1997 - January 2005
Slide 12: International Operations
International Operations 12/1/2003 3/1/2004 6/1/2004 9/1/2004 12/1/2004 Operating Profit 3640000 1555000 1746000 5185000 6197000 12/1/2003 3/1/2004 6/1/2004 9/1/2004 12/1/2004 Margin Per Day 5690 5204 4250 6007 5862 Utilization 0.53 0.51 0.53 0.57 0.71
Slide 13: Net Income
FY01 FY02 FY03 FY04 FY05 80.467 53.706 17.873 4.359 77.597 35.441 15.947 -11.987 77.597 35.441 15.947 19.953 70 19.953 HELMERICH & PAYNE, INC. NET INCOME * * Net income excluding impairment charge, equity income, gains from sale of portfolio, and (in 2005) the sale of two land rigs. First Quarter FY
Slide 14: EPS Sensitivity
EPS Sensitivity * US Land Annual EPS Increases $1000 Average Revenue & Margin Per Day Increase .37 US Platform 1 Additional Rig Working A Full Year .07 International Utilization Increasing By 5 Percentage Points .03 * Using 1Q05 Earning & Statistics As Baseline See Forward Looking Statement Disclaim
Slide 15: FlexRig3 Project Return Estimates and ROIC
0% 5% 10% 15% 20% 25% 30% 35% $4,000 $5,000 $6,000 $7,000 $8,000 $9,000 $10,000 $11,000 Average Rig Margin per Day FlexRig3 Project Return Estimates Actual 12 mos. FY2004 Cash On Cash Returns Actual 1st Qtr FY2005 Financial ROIC Actual Feb.17, 2005
Slide 16: What's Next For H&P?
Focus on improving the Company's total return on invested capital. Leverage our experience in rig design, construction, and field execution into additional opportunities. Look for international market expansion where operators place greater value on improved drilling efficiencies and overall perform
Slide 17: Helmerich & Payne, Inc.
HELMERICH & PAYNE, IN!
Slide 18: Rig Locations
101 U.S. Rigs 27 International Rigs 128 Total H&P Rigs 7 Management Contracts Rig Locations South America Venezuela 10/12 Colombia 2/2 Ecuador 8/8 Bolivia 0/2 Argentina 2/2 GOM 5/11 U.S. Land 84/90 California Equatorial Guinea Russia Hungary - Rig 168 (In Transit to U.S.)
Slide 19: Rig Status as of February 2005
Rig Status as of 17 February 2005 Rigs Available 61 29 11 27 128 Rigs Working/ Contracted 61 23 5 22 111 % Activity 100% 79% 45% 81% 87% U.S. Land, FlexRig & Mobile U.S. Land, Conventional U.S. Platform International Land Total Management Contracts: U.S. GOM & CA Equatorial Guinea Russia Total Rigs
Slide 20: Segment Outlook - U.S. Land
Segment Outlook - U.S. Land Sustained rig demand Potential for continuing dayrate increases Growing customer focus on safety and performance Exploit H&P's competitive advantages Strong and Improving!
Slide 21: Move from Deep to Mid-Depth Land Rigs
1997 1998 1999 2000 2001 2002 2003 2004 Rigs 18,000' + 15 15 15 16 18 22 22 21 Rigs 8 - 18,000' 15 21 25 23 31 44 61 69 Move from Deep to Mid-Depth Land Rigs
Slide 22: Total M&S — U.S. Land
Total M&S — U.S. Land Average Annual Rate of Growth: 6.1% 1994-2002 3,000 2,500 <> 2,000 Average Annual Rate of Growth: -4.5% | 4 599 2002-2005 01 ‘ 1,000 500 oO ca = s Ps is s rs HELMERICH & PAYNE, ING.
Slide 23: Segment Outlook - Offshore, U.S. GOM
Steady platform rig demand and supply Continues to be a rewarding business (Outstanding performance, reasonable ROI) Operating leverage available for potential recovery Rig management contract opportunities Segment Outlook - Offshore, U.S. GOM Steady, Good Potential
Slide 24: Segment Outlook - International
Venezuela - Nine rigs are working. Tenth rig has LOI. Colombia - Two rigs working. Should continue for FY05. Ecuador - Eight rigs working. Hungary - As forecast, R168 completed work December 04. Returning to U.S. Bolivia/Argentina - One rig working. One rig has LOI. Two stacked rigs likely to resume
Slide 25: Russia
Russia H&P now six months into assistance contract for four Russia rigs. Early Results of Assistance Team: ? Good relationship with customer. ? Steep learning curve for Russian & artic environment. ? Improving field performance. ? FlexRig concepts offer meaningful possibilities. 3. Growing interest
Slide 26: Why Do Operators Select H&P Rigs?
H&P is the leader in: Well and personnel safety Field performance Best value Why Do Operators Select H&P Rigs?
Slide 27: OSHA Recordable Injuries Per 200,000 Manhours Worked
5.53 <65%> a 182) <48%> 0.85 iaDG H&P apc «H&P U.S. LAND U.S. OFFSHORE OSHA Recordable Injuries Per 200,000 Manhours Worked HELMERICH & PAYNE, ING.
Slide 28: H&P is the Leader in Field Performance
Innovative technology Reduced move times Reliability Drilling performance H&P is the Leader in Field Performance
Slide 29: Apply New Ideas & Technology
Apply New Ideas & Technology Integrated Top Drive Mechanized Tubular Handling VFD AC Drawworks BOP Handling V-ICIS eD Controls Communications
Slide 30: H&P Land Rig Moves 1998 to 2004
H&P Land Rig Moves 1998 to 2004 1200 HP Mobile Rigs 1500 HP FlexRigs 1000 HP 1500 HP 2000 HP 3000 HP Average Rig Move Days 2.39 3.31 5.75 7.27 8.27 10.38 # moves 723 1150 266 158 130 89 Conventional Rigs (Rig move time: Time from rig release on last well to spud of next well including time to rig do
Slide 31: H&P FlexRig3 Downtime Performance
June 2002 - January 2005 FlexRigs Contracted Downtime Percentage H&P FlexRig3 Downtime Performance
Slide 32: Highlights of FlexRig3 Field Performance
Highlights of Rigs 210 - 241 1. Field Performance vs. customer's planned drill curves ? 578 complete wells to date ? 381 wells (66%) under ? 26 wells (5%) on ? 171 wells (29%) over 2. 40% of FlexRig3s are currently drilling directional, more technically difficult wells. FlexRig3
Slide 33: Example of Best Value: H&P FlexRig3
Example of Best Value: H&P 213 FlexRig3
Slide 34: Best Value - Reduced Well Cycle Time
Best Value - Reduced Well Cycle Time Average of best Best of Competition H&P R213 in field to Aug 02 Dec 04 Jan 05 Drilling days 21 9.5 7.5 Completion days 2 2 2 Moving days 6 5 3 Well cycle in days 29 16.5 12.5 2. Contractor rate/day $8,000 $12,000 $15,500 Operator's other intangible cost per day e
Slide 35: Best Value Reduced Well Cycle Time
Best Value Reduced Well Cycle Time 3. Added value from FlexRig3 operations Lowest total well cost Increased wells per rig per year: 1st Year: 18 wells vs. 12.5 wells Wells 28 - 54: 29 wells vs. 12.5 wells Early production: Incremental wells on production 1st Year: 5.5 wells / yr Wells 28 - 54: 16.5
Slide 36: Why We Are Optimistic About The Future?
Expanded rig fleet provides greater leverage Returning idle international and offshore rigs to work provides upside Achieve historic advantage of higher utilization rates and margins Value proposition becomes more compelling in an improving market Why We Are Optimistic About The Future?
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