Helmerich & Payne, Inc. · NYSE:HP
Helmerich & Payne — 4th Annual Johnson Rice Energy Conference 2012
46 slides from Helmerich & Payne's conference presentation, Oct 1, 2012
Slide 1: Helmerich & Payne, Inc. 4th Annual Johnson Rice Energy Conference
Helmerich & Payne, Inc. 4th Annual Johnson Rice Energy Conference October 2-3, 2012
Slide 2: Forward-looking Statements
Statements within this presentation are “forward-looking statements” within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934, and are based on current expectations and assumptions that are subject to risks and uncertainties. All statements other than statements of hi
Slide 3: Note on FlexRigs under construction
* Includes 16 announced new FlexRigs under construction with customer commitments as of September 28, 2012 that are scheduled for completion during fiscal 2012 and fiscal 2013.
Slide 4: Topics Today
Comments on U.S. land market conditions Growing shareholder value through FlexRig® innovation Market share leader in AC drive rigs and active rigs Unconventional plays shape the drilling landscape The rig replacement cycle continues Topics Today
Slide 5: U.S. Land Industry Rig Count
U.S. Land Industry Rig Count 2,200 € 5 3 oO 2 oe 3 : § o $ = 1 eS 8 8.8. B88 1 Qunoo Bry Auejoy uesuewy YON IHe) S6]¥ PueT ’S'N eANOY Jo JeqUINN
Slide 6: Comments on Today's U.S. Land Market
Comments on Today’s U.S. Land Market AC drive rigs are still experiencing strong utilization levels 98% of H&P’s active rigs are AC drive rigs H&P’s rig count and spot pricing continue to slightly soften Our position is strengthened by: Long-term contract coverage Spot rigs are high quality and liqu
Slide 7: Lead, Innovation, Expand Market Share, Satisfy Customers, Drive Well Costs Down
Lead Innovation Expand Market Share Satisfy Customers Drive Well Costs Down
Slide 8: Innovation & Applied Technology
Innovation & Applied Technology AC Driven Systems & Integrated Top Drive Mechanized Tubular Handling Computerized Controls BOP Handling Driller’s Cabin Satellite Communications Rig Move Capabilities
Slide 9: The FlexRig Difference: Key Advantages
The FlexRig Difference: Key Advantages Increased drilling productivity and reliability Variable frequency (AC) drives with increased precision and measurability Computerized electronic driller that more precisely controls weight on bit, rotation and pressure Designed to move quickly from well to wel
Slide 10: A Value Proposition Example – H&P vs. Competitors
A Value Proposition Example – H&P vs. Competitors Estimated Estimated Peer H&P FlexRig3 Conventional Fit-for-purpose Average Average Average 2012 (Spot Market) (Spot Market) (Spot Market) 1. Drilling days 20 13 9 Other days 3 3 3 Moving days 7 4 3 Total rig revenue days per well 30 20 15 2. Drilling
Slide 11: Organic U.S. Land Fleet Growth
Organic U.S. Land Fleet Growth * Estimates include existing rigs and announced new build commitments. 304 49
Slide 12: H&P's New Build Advantages
H&P’s New Build Advantages We have been improving and honing the process for over 10 years, prompting our assertion that we build a better rig for less Safety is our first priority, followed by a relentless focus on strong execution and performance in the field Exceptional fleet uniformity Extensive
Slide 13: Building a New FlexRig
Lean Manufacturing New Electrical Systems Test Assembly and Outfitting Unitizing Packages Fabricating New Structures Processing Raw Materials Building a New FlexRig® Commissioning / Delivery
Slide 14: Technology & Quality Service Make a Difference
Technology & Quality Service Make a Difference (1) Does not include the impact of early contract termination revenue. (2) Represents weighted-average rig margin per day for PTEN, NBR and UNT. (3) Utilization is herein calculated to be average active rigs divided by estimated available marketable rig
Slide 15: Most Profitable Driller in U.S. Land Business
Most Profitable Driller in U.S. Land Business (2) PTEN’s operating income includes drilling operations in Canada. (1) NBR’s operating income corresponds to its U.S. Lower 48 Land Drilling segment. (2) (1)
Slide 16: Five-Year Relative Shareholder Return
Five-Year Relative Shareholder Return Source: Thomson Financial as of September 25, 2012
Slide 17: H&P's Lead in U.S. Land AC Drive Rigs
H&P’s Lead in U.S. Land AC Drive Rigs Note: The above estimates corresponding to U.S. lower 48 AC Drive fleets and new build commitments are derived from Rig Data and corporate filings.
Slide 18: AC Drive U.S. Rig Market Share
AC Drive U.S. Rig Market Share (~600 Rigs) Note: The above estimates corresponding to market share are derived from multiple sources including Rig Data, Smith Bits, and corporate filings.
Slide 19: Our FlexRig New Build Efforts
Our FlexRig New Build Efforts We are the most active driller in the U.S. land market as a result of our very significant lead in the growing segment of advanced technology AC drive rigs. We have continued to make new build deliveries on time and on budget, including nine new FlexRigs since our last
Slide 20: H&P Activity as of September 28, 2012
H&P Activity as of September 28, 2012 Rigs Working/ Contracted 230 8 26 264 16 280 Rigs Available 288 9 29 326 16 342 % Contracted 80% 89% 90% 81% U.S. Land Offshore International Land Total FlexRig Construction Total Fleet Includes announced new build commitments. (1)
Slide 21: H&P U.S. Land Fleet by Power Type
H&P U.S. Land Fleet by Power Type SCR Rigs 2% (230 Active Rigs in the U.S. By Power Type)
Slide 22: H&P's U.S. Land Fleet Activity
H&P’s U.S. Land Fleet Activity Active rigs on term (in blue) generated both revenue and revenue days. Includes completed new builds that were waiting on operators and which generated revenue but did not generate revenue days. (1) (2)
Slide 23: H&P's Advanced Technology Footprint
H&P’s Advanced Technology Footprint (230 Active Rigs in the U.S. By Power Type)
Slide 24: H&P Global Fleet Under Term Contract
H&P Global Fleet Under Term Contract
Slide 25: H&P vs. Industry U.S. Land Customer Base
H&P vs. Industry U.S. Land Customer Base Note: The above estimates corresponding to the active rig fleet in the U.S. are derived from multiple sources including Rig Data, Smith Bits, and corporate filings.
Slide 26: Active Rig Market Share - Ten Years Ago
Lower 48 U.S. Land Market Share Active Rig Market Share - Ten Years Ago Note: The above estimates are derived from Smith Bits As of September 20, 2002
Slide 27: Organically Growing Active Rig Market Share
Lower 48 U.S. Land Market Share Organically Growing Active Rig Market Share Note: The above estimates are derived from Smith Bits As of September 21, 2012
Slide 28: Unconventional Plays Shaping Landscape
Unconventional Plays Shaping Landscape Well complexity is increasing: Technology solutions that provide safe, environmentally sound and efficient operations are required by contractors to be competitive Extended reach laterals progressively longer Multi-well pad drilling gaining acceptance in more a
Slide 29: Increasing Focus on More Difficult Drilling
Increasing Focus on More Difficult Drilling
Slide 30: The Ongoing Gas to Oil Transition...
The Ongoing Gas to Oil Transition...
Slide 31: H&P's Growing Exposure to Oil & Liquids
Dry Gas (Long-term Contracts) 4% H&P’s Growing Exposure to Oil & Liquids Estimated proportion of H&P’s active U.S. Land rigs by primary hydrocarbon target as of 9/28/12 Includes one rig with a contract expiring during the quarter ending 12/31/12. Approximately one-fourth of rigs in this category are
Slide 32: The Replacement Cycle Continues
The Replacement Cycle Continues AC drive rigs are best positioned to make the transition. Older, underperforming rigs are more likely to be sidelined. Since the 2008-2009 downturn, approximately 300 rigs have permanently stacked, and about 70% of these were mechanical rigs. Advanced technology AC dr
Slide 33: An Undersupply of AC Drive Rigs
An Undersupply of AC Drive Rigs (~1,750 Active Rigs in the U.S. By Power Type) Note: The above estimates corresponding to rig activity are derived from multiple sources including Rig Data, Smith Bits, and corporate filings. Additionally, the drawworks capacity of each land rig included in the above
Slide 34: 2008 Peak Rig Count by Power Type
Week Ended October 4, 2008 By Power Type 2008 Peak Rig Count (~1,925) - U.S. Land Note: The above estimates corresponding to rig activity are derived from multiple sources including Rig Data, Smith Bits, and corporate filings. Additionally, the drawworks capacity of each land rig included in the abo
Slide 35: Current Rig Count by Power Type
Week Ended September 21, 2012 By Power Type Current Rig Count (~1,750) - U.S. Land Note: The above estimates corresponding to rig activity are derived from multiple sources including Rig Data, Smith Bits, and corporate filings. Additionally, the drawworks capacity of each land rig included in the ab
Slide 36: Our New Build Opportunities
Our New Build Opportunities We do not believe that the replacement cycle is over, and our approach will be to make sure that our supply chain is ready to respond to incremental demand on a timely basis. Commodity price volatility and our customers’ desire to stay within 2012 budgets has resulted in
Slide 37: Performance is Not Only About Better Rigs
Performance is Not Only About Better Rigs It’s also about: People Safety Experience Training Culture Support Structure Processes Organizational Network Maintenance Supply Chain
Slide 38: Recordable Injuries per 1-MM Feet Drilled in 2011
Note: Injury data taken from IADC ASP Program. Footage data taken from Land Rig Newsletter. 11.7 9.1 5.2 2.2 Recordable Injuries per 1-MM Feet Drilled in 2011 by the Largest U.S. Land Drilling Contractors
Slide 39: Performance is Not Only About Better Rigs
Performance is Not Only About Better Rigs It’s also about: People Safety Experience Training Culture Support Structure Processes Organizational Network Maintenance Supply Chain
Slide 40: H&P Competitive Advantages
H&P Competitive Advantages Our people, processes and FlexRig technology create a very important competitive advantage for the Company. Our value proposition will continue to be directed toward delivering compelling performance for our customers and shareholders. The shift to drilling more complex un
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Slide 42: Additional References
ry eet Additional References
Slide 43: Changes in Lower U.S. Land Rig Count
Changes in Lower 48 U.S. Land Rig Count * PDS’ active rig count includes both PDS and GW rigs.
Slide 44: H&P's Global Rig Fleet
H&P’s Global Rig Fleet * Estimates include existing rigs and announced new build commitments.
Slide 45: H&P's International Land Operations Rig Fleet Status
Active Contracted Idle Total Long-term Contracts Argentina 6 3 9 5 Bahrain 4 4 4 Colombia 7 7 2 Ecuador 5 5 Tunisia 2 2 U.A.E. 2 2 2 Total 26 3 29 13 H&P’s International Land Operations Rig Fleet Status (as of September 28, 2012) (1) 13 of 16 FlexRigs, included in the international fleet of 29 rigs,
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