Helmerich & Payne, Inc. · NYSE:HP
Helmerich & Payne — Barclays Capital CEO Energy-Power Conference 2012
59 slides from Helmerich & Payne's conference presentation, Sep 6, 2012
Slide 1: Helmerich & Payne, Inc. Barclays Capital CEO Energy-Power Conference
Helmerich & Payne, Inc. Barclays Capital CEO Energy-Power Conference September 6, 2012
Slide 2: [LOGO]
[LOGO]
Slide 3: 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 4: A Quick Primer on Helmerich & Payne
A Quick Primer on Helmerich & Payne Primarily focused on the contract drilling business with approximately 10,000 employees Provides services for oil and gas companies on a dayrate basis Market share leader with the most modern and capable fleet in the U.S. land drilling business Three primary segme
Slide 5: Balance Sheet Strength
Source: Thomson Financial Balance Sheet Strength As of June 30, 2012 Debt / Equity
Slide 6: Well Positioned in the U.S. Land Market
Well Positioned in the U.S. Land Market While both oil and gas prices have recovered some lately, the $100 question focuses on what happens next, particularly in terms of the future price of oil. The volatility and uncertainty appear to be weighing on the minds of our customers, impacting their budg
Slide 7: H&P Global Fleet Under Term Contract
H&P Global Fleet Under Term Contract
Slide 8: 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 9/4/12 Includes one rig with a contract expiring during the quarter ending 12/31/12. Approximately one-fourth of rigs in this category are
Slide 9: H&P U.S. Land Fleet by Power Type
H&P U.S. Land Fleet by Power Type SCR Rigs 1% (236 Active Rigs in the U.S. By Power Type)
Slide 10: H&P's Advanced Technology Footprint
H&P’s Advanced Technology Footprint
Slide 11: Oil and Natural Gas Prices
Oil and Natural Gas Prices Source: Energy Information Administration Oil Prices Natural Gas Prices
Slide 12: U.S. Land Industry Rig Count
U.S. Land Industry Rig Count 5 3 8 2 4 = z 4 g 3 Fd i > Eee IE Sasa ttt Wien Ts a er = N Gunod Bry Arejoy UesHEWY YON IHa) ‘s6ia pue ‘s'n eAnoy Jo JoqUNN
Slide 13: Our New Build Efforts
Our New Build Efforts We are not only the most active driller in the U.S. land market, but also continue to have a 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 six new FlexRigs since
Slide 14: 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 15: Organic U.S. Land Fleet Growth
Organic U.S. Land Fleet Growth * Estimates include existing rigs and announced new build commitments. 304 49
Slide 16: 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 17: Expand Market Share, Lead Innovation, Satisfy Customers
Expand Market Share Lead Innovation Satisfy Customers Drive Well Costs Down
Slide 18: Lower U.S. Land 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 August 30, 2002
Slide 19: 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 August 31, 2012
Slide 20: 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 21: Five-Year Relative Shareholder Return
Five-Year Relative Shareholder Return Source: Thomson Financial as of September 4, 2012
Slide 22: [LOGO]
[LOGO]
Slide 23: H&P Activity as of September 4, 2012
H&P Activity as of September 4, 2012 Rigs Working/Contracted 236 8 26 270 19 289 Rigs Available 285 9 29 323 19 342 % Contracted 83% 89% 90% 84% U.S. Land Offshore International Land Total FlexRig Construction Total Fleet Includes announced new build commitments. (1)
Slide 24: U.S. Land Market Conditions
U.S. Land Market Conditions Increasing well complexity and greater focus on technology and safety continue to favor advanced technology AC drive rigs. About two thirds of our active rigs are under term contracts and 97% of our rigs in the spot market are advanced technology AC FlexRigs. Nonetheless,
Slide 25: 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 26: 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 27: 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 28: Current Rig Count by Power Type
Week Ended August 17, 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 above
Slide 29: 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 30: 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 31: Leading U.S. Unconventional Driller
(255 H&P Contracted Land Rigs as of 9/4/12*) Leading U.S. Unconventional Driller * Includes announced new FlexRigs with customer commitments scheduled for completion in fiscal 2012 and fiscal 2013.
Slide 32: 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 33: 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 34: 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 35: 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 36: 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
Slide 37: End of Presentation
End of Presentation
Slide 38: Additional References
ry eet Additional References
Slide 39: H&P's Offshore Operations
H&P’s Offshore Operations Our offshore operations outlook for the fourth fiscal quarter remains unchanged. Seven of the Company’s nine offshore platform rigs remain active, and one of the two stacked rigs began mobilizing in August. In the fourth fiscal quarter, we expect revenue days to increase by
Slide 40: H&P's International Land Operations
H&P’s International Land Operations Our international land operations outlook for the fourth fiscal quarter remains unchanged. Of the 29 rigs assigned to international operations, 25 are currently active. Total revenue days during the fourth fiscal quarter are expected to increase five to ten percen
Slide 41: H&P's International Land Operations Rig Fleet Status
Active Contracted Idle Total Long-term Contracts Argentina 5 1 3 9 5 Bahrain 4 4 4 Colombia 7 7 2 Ecuador 5 5 Tunisia 2 2 U.A.E. 2 2 2 Total 25 1 3 29 13 H&P’s International Land Operations Rig Fleet Status (as of September 4, 2012) One contracted rig is currently moving to location. (2) 13 of 16 Fl
Slide 42: 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 31
Slide 43: Lean Manufacturing: 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 44: Driller on a Conventional Rig vs. FlexRig
Driller on a Conventional Rig vs. FlexRig™
Slide 45: Roughnecks on a Conventional Rig vs. FlexRig
Roughnecks on a Conventional Rig vs. FlexRig™
Slide 46: 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 47: FlexRig3 – Selected Performance Sample: Bakken Shale
FlexRig3 – Selected Performance Sample Note: Information from third party well database provider FlexRig3 Bakken Shale
Slide 48: FlexRig3 – Eagle Ford Shale Performance Sample
FlexRig3 Eagle Ford Shale FlexRig3 – Selected Performance Sample Note: Information from third party well database provider
Slide 49: FlexRig3 – Cana Woodford Shale Performance Sample
FlexRig3 Cana Woodford Shale FlexRig3 – Selected Performance Sample Note: Information from third party well database provider
Slide 50: FlexRig4 – Permian Basin Performance Sample
FlexRig4 Permian Basin FlexRig4 – Selected Performance Sample Note: Information from third party well database provider
Slide 51: Delivering Safety – H&P vs. Industry (IADC)
Delivering Safety – H&P vs. Industry (IADC) U.S. Land Safety Performance (1994 – 2012) OSHA Recordable Injury Incidence Rates H&P Aug. 2012 = 0.89 IADC 2Q12 = 2.05
Slide 52: 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 53: 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 54: The Ongoing Gas to Oil Transition...
The Ongoing Gas to Oil Transition...
Slide 55: Economics Shift Activity Towards Oil Drilling
Economics Shift Activity Towards Oil Drilling
Slide 56: Increasing Focus on More Difficult Drilling
Increasing Focus on More Difficult Drilling
Slide 57: Oil Related Drilling Increasingly Complex
Oil Related Drilling Increasingly Complex
Slide 58: Increasing Focus on More Difficult Drilling
Increasing Focus on More Difficult Drilling
Slide 59: End of Document
End of Document
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