Helmerich & Payne, Inc. · NYSE:HP
Helmerich & Payne — Goldman Sachs Global Energy Conference 2010
27 slides from Helmerich & Payne's conference presentation, Jan 12, 2010
Slide 1: Goldman Sachs Global Energy Conference January 12-13, 2010
Investor Relations Contact: Juan Pablo Tardio – (918) 588-5383 – juanpablo.tardio@hpinc.com Helmerich & Payne, Inc. Goldman Sachs Global Energy Conference January 12-13, 2010
Slide 2: Forward-looking statements
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 three 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 2009 2010E* Rigs Available Fiscal Year (Ending Sept 30) International
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 January 11, 2010) 0 20 40 60 80 100 120 Q2FY10 Q3FY10 Q4FY10 Q1FY11 Q2FY11 Q3FY11 Q4FY11 Number of Rigs Under Long-Term Contracts (Estimated Quarterly Average) Te
Slide 6: H&P's U.S. Land Operations
Market demand and H&P’s active rig count continue to increase. Improving customer interest for both spot and term contracts. Spot pricing is beginning to improve in selected unconventional plays, especially for FlexRigs. Incremental activity is mostly geared toward prominent unconventional plays. La
Slide 7: 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, including a few rigs on standby. 116 122 127 143 147 0 20 40 60 80 100 120 140 160 Avg. Q4FY09 9
Slide 8: H&P's U.S. Land Fleet Status
H&P’s U.S. Land Fleet Status (as of January 11, 2010) * Includes four FlexRigs with signed contracts. All of the remaining 26 uncontracted FlexRigs are FlexRig4’s, which target shallower depth wells. 99 43 30 46 101 63 0 15 30 45 60 75 90 105 Under Term Spot Market Active Spot Market Stacked* Number
Slide 9: 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 10: H&P's Utilization Premium
Impact of Downturn on Utilization H&P’s Utilization 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 the period. 0% 10% 20% 30% 40% 50
Slide 11: Changes in Lower U.S. Land Rig Count
Changes in Lower 48 U.S. Land Rig Count - 80 % - 70 % - 60 % - 50 % - 40 % - 30 % - 20 % - 10 % 0 % 10 % Decline in Active U.S. Land Rigs Estimated Change Since Peak in Active U.S. Land Rigs (Smith Bits Weekly Rig Count - October 17 , 2008 to December 31 , 2009 ) NBR PTEN HP UNT U.S. Land
Slide 12: U.S. Land Footage Drilled
* NBR’s footage drilled corresponds to Nabors Drilling USA, LP. U.S. Land Footage Drilled 0 3 6 9 12 15 UNT PDS PTEN NBR* H&P Footage Drilled (in millions) U.S. Land Footage Drilled (Rig Data Driller Ranking - January 2009 to December 2009)
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: 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 15: Another Value Proposition Example – H&P vs. Competitors
Estimated Field H&P FlexRig 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 Total
Slide 16: Value added from FlexRig operations
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 17: 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 18: 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 75% 11% 14% 18% 74% 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 19: H&P and U.S. Land Fleet (by Rig Type)
H&P and U.S. Land Fleet (by Rig Type) 56% 30% 14% 22% 74% 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 to or greater than 600 horsepower drawworks ratings are con
Slide 20: U.S. Land Activity by Rig Type and Depth Rating
U.S. Land Activity by Rig Type and Depth Rating Composition & Utilization (by Rig Type) Composition & Utilization (by Depth Rating) Industry’s U.S. Land Fleet Estimates* (as of 12/31/09) * Composition & Utilization (by Rig Type) Composition & Utilization (by Depth Rating) H&P’s U.S. Land Fleet (as o
Slide 21: H&P's International Land Operations
Active Contracted Idle Total Long-term Contracts Argentina 5 4 9 4 Colombia 4 2 6 2 Ecuador 4 4 Mexico 6 6 6 Africa 1 1 2 Venezuela 11 11 Other 1 1 1 Total 20 1 18 39 13 H&P’s International Land Operations Rig Fleet Status (As of January 11, 2010) 1) Includes one rig under a long-term contract still
Slide 22: H&P's Offshore Operations
Seven of the Company’s nine offshore platform rigs are active. 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 2010, and the new Equatorial Guinea management contract is expected to fully ramp-up during the s
Slide 23: 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 24: 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 25: 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 26: 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 27: End of Presentation
End of Presentation HELMERICH & PAYNE, ING.
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