Helmerich & Payne, Inc. · NYSE:HP
Helmerich & Payne — Credit Suisse 2013 Energy Summit
47 slides from Helmerich & Payne's conference presentation, Feb 5, 2013
Slide 1: Helmerich & Payne, Inc. Credit Suisse 2013 Energy Summit
Helmerich & Payne, Inc. Credit Suisse 2013 Energy Summit February 6-7, 2013
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: * As of January 31, 2013, includes announced new FlexRigs with customer commitments and
* As of January 31, 2013, includes 5 announced new FlexRigs with customer commitments and pending to be delivered during fiscal 2013.
Slide 4: H&P's Global Rig Fleet
H&P’s Global Rig Fleet * Estimates include existing rigs and announced new build commitments.
Slide 5: The U.S. Land Market Today
The U.S. Land Market Today There is a growing sense within the industry that the rig count has bottomed and that it will increase by one hundred rigs or so during 2013. Customers remain deliberate with their capital spending and discriminating with the service providers they engage. In a world where
Slide 6: H&P New Builds
H&P New Builds Delivered 48 new FlexRigs during calendar 2012. Announced orders for three additional FlexRigs on January 31, 2013. Five announced new builds pending delivery in fiscal 2013. Now delivering new FlexRigs at the rate of approximately two per month. Some conversations with customers cont
Slide 7: 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 8: What a Difference a Year Makes
What a Difference a Year Makes As of January 2012 (~1,900 Active Rigs in the U.S. By Power Type) As of January 2013 (~1,600 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 f
Slide 9: Lower U.S. Land Market Share – Ten Years Ago
As of January 24, 2003 Lower 48 U.S. Land Market Share Active Rig Market Share – Ten Years Ago Note: The above estimates corresponding to U.S. land rig market share are derived from Smith Bits S.T.A.T.S.
Slide 10: Lower U.S. Land Market Share
As of January 25, 2013 Lower 48 U.S. Land Market Share Organically Growing Active Rig Market Share Note: The above estimates corresponding to U.S. land rig market share are derived from Smith Bits S.T.A.T.S.
Slide 11: 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 12: Record Profits During Industry Slowdown
Record Profits During Industry Slowdown * PTEN’s operating income includes drilling operations in Canada. ** NBR’s operating income corresponds to its U.S. Lower 48 Land Drilling segment.
Slide 13: Five-Year Relative Shareholder Return
Five-Year Relative Shareholder Return Source: Thomson Financial as of January 30, 2013
Slide 14: [LOGO]
[LOGO]
Slide 15: Growing Shareholder Value
Growing Shareholder Value Expand Market Share Lead Innovation Drive Well Costs Down Satisfy Customers
Slide 16: 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 17: Delivering Safety – H&P vs. Industry
IADC 3Q12 = 1.92 H&P MANHOURS = 17.4 MM H&P 4Q12 = 0.78 Delivering Safety – H&P vs. Industry (IADC) U.S. Land Safety Performance (1994 – 2012) OSHA Recordable Injury Incidence Rates
Slide 18: 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 19: 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 20: Increasing Focus on More Difficult Drilling
Increasing Focus on More Difficult Drilling
Slide 21: Leading U.S. Unconventional Driller
(248 H&P Contracted Land Rigs as of 1/31/13*) Leading U.S. Unconventional Driller * Includes announced new FlexRigs with customer commitments scheduled for delivery in fiscal 2013.
Slide 22: 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. High efficiency rigs continue to displace mechanical and SCR rigs. H&P is fortunate to have a customer roster with substantial multi-year drilling in
Slide 23: AC Rigs Continue to Gain Market Share
AC Rigs Continue to Gain Market Share 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 analysis was greater than 600 horsepower.
Slide 24: 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 25: Active AC Drive U.S. Rig Market Share
Active AC Drive U.S. Rig Market Share Note: The above estimates corresponding to market share are derived from multiple sources including Rig Data, Smith Bits, and corporate filings. (~575 Rigs as of January 2013)
Slide 26: H&P Activity as of January 31, 2013
H&P Activity as of January 31, 2013 Rigs Working/ Contracted 243 243 0 8 22 273 5 278 Rigs Available 296 261 35 9 29 334 5 339 % Contracted 82% 93% 0% 89% 76% 82% U.S. Land AC Drive FlexRigs SCR Fleet Offshore International Land Total FlexRig Construction Total Fleet Includes announced new build com
Slide 27: H&P's U.S. Land Fleet Activity
H&P’s U.S. Land Fleet Activity (1) (2) (1) Active rigs on term (in blue) generated both revenue and revenue days. (2) Includes completed new builds pending delivery and not generating revenue days.
Slide 28: 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 29: 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 30: 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
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End of Presentation
Slide 32: Additional References
Additional References
Slide 33: H&P's U.S. Land Operations
H&P’s U.S. Land Operations We expect total revenue days in the U.S. land segment to be relatively flat between the first and second fiscal quarter of 2013. Quarterly average rig revenue per day is expected to decline slightly, by less than 1%, from the first to the second fiscal quarter of 2013. In
Slide 34: H&P Global Fleet Under Term Contract
H&P Global Fleet Under Term Contract
Slide 35: 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 36: H&P's Offshore Operations
H&P’s Offshore Operations Eight of the Company’s nine offshore platform rigs are expected to remain active throughout the second fiscal quarter of 2013. The number of revenue days during the second fiscal quarter of 2013 is expected to decrease by approximately two percent as compared to the first f
Slide 37: H&P's International Land Operations
H&P’s International Land Operations Of the 29 rigs assigned to international operations, 22 are active and two rigs are expected to resume operations soon. Total revenue days during the second fiscal quarter are expected to be down by approximately ten percent from the first fiscal quarter of 2013.
Slide 38: H&P's International Land Operations Rig Fleet Status
Active Idle Total Long-term Contracts Argentina 5 4 9 5 Bahrain 3 1 4 3 Colombia 5 2 7 2 Ecuador 5 5 1 Tunisia 2 2 2 U.A.E. 2 2 2 Total 22 7 29 15 H&P’s International Land Operations Rig Fleet Status (as of January 31, 2013) (1) 14 of 16 FlexRigs, included in the international fleet of 29 rigs, are
Slide 39: Favorable Market Trends for FlexRigs
Favorable Market Trends for FlexRigs AC drive rigs replacing SCR and mechanical rigs More customers high-grading their fleets Increasing well complexity Expectation to drill more wells with fewer rigs Focus on drilling efficiency, technology and safety
Slide 40: 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 41: Current Rig Count By Power Type
Week Ended January 25, 2013 By Power Type Current Rig Count (~1,600) - 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 abov
Slide 42: Oil and Natural Gas Prices
Oil and Natural Gas Prices Source: Energy Information Administration Oil Prices Natural Gas Prices
Slide 43: U.S. Rig Activity by Hydrocarbon Target
U.S. Rig Activity by Hydrocarbon Target
Slide 44: H&P's Exposure to Oil & Liquids
Dry Gas (Long-term Contracts) 3% H&P’s Exposure to Oil & Liquids Estimated proportion of H&P’s active U.S. Land rigs by primary hydrocarbon target as of 1/31/13 Dry Gas (Spot Market) 1% Includes 2 rigs with term contracts expiring in the quarter ending 3/31/13. (1)
Slide 45: 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 46: 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
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