Helmerich & Payne, Inc. · NYSE:HP
Helmerich & Payne — Capital One Southcoast Energy Conference 2010
42 slides from Helmerich & Payne's conference presentation, Dec 7, 2010
Slide 1: Helmerich & Payne, Inc. Capital One Southcoast Energy Conference
Investor Relations Contact: Mike Drickamer – (918) 588-5190 – mike.drickamer@hpinc.com Helmerich & Payne, Inc. Capital One Southcoast Energy Conference December 8, 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: Market Observations
Market Observations The unconventional oil and gas plays require mostly horizontal and/or directional drilling, enabling better and more cost-effective reservoir performance. More complex drilling favors FlexRigs as they are a catalyst for drilling efficiencies and improved safety performance. Absen
Slide 4: Highest U.S. Activity Level in Company History
*Represents average active rigs for PTEN, NBR and UNT. Highest U.S. Activity Level in Company History As of 12/8/10 - 65% - 55% - 45% - 35% - 25% - 15% - 5% 5% 15% 25% 35% 45% 55% 65% 75% 85% 95% 105% 115% 125% Q1CY05 Q2CY05 Q3CY05 Q4CY05 Q1CY06 Q2CY06 Q3CY06 Q4CY06 Q1CY07 Q2CY07 Q3CY07 Q4CY07 Q1CY0
Slide 5: E&P Companies Prefer AC Driven Rigs
H&P’s U.S. Land Fleet (as of 12/8/10) E&P Companies Prefer AC Driven Rigs The above estimates corresponding to the total available U.S. land 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
Slide 6: Driller on a Conventional Rig vs. FlexRig
Driller on a Conventional Rig vs. FlexRig™ Drawworks Brake Handle Drawworks Joystick Control
Slide 7: Roughnecks on a Conventional Rig vs. FlexRig
Roughnecks on a Conventional Rig vs. FlexRigTM
Slide 8: H&P and U.S. Land Fleet (by Rig Type)
H&P and U.S. Land Fleet (by Rig Type) 53% 31% 16% 21% 76% Note: The above estimates corresponding to the total available U.S. land 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 ar
Slide 9: H&P's Global Rig Fleet
H&P’s Global Rig Fleet (as of 12/8/10) * Includes 11 new rigs with customer commitments scheduled for completion during the first three quarters of fiscal 2011. ** Includes 15 FlexRigs, one of which will be deployed from the U.S. to Bahrain during the third fiscal quarter of 2011. Also includes four
Slide 10: H&P's Global Rig Fleet Growth
H&P’s Global Rig Fleet * Estimates include existing rigs and announced new build commitments. 77 90 89 88 96 111 127 130 128 151 193 224 254 257 273 0 50 100 150 200 250 300 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011E* Rigs Available Fiscal Year (Ending Sept 30) Inter
Slide 11: Organically Growing Active Rig Market Share
Organically Growing Active Rig Market Share Note: The above estimates corresponding to the total available U.S. land fleet are derived from multiple sources including Rig Data, Smith Bits, and corporate filings. Lower 48 U.S. Land Market Share As of December 1, 2000 Lower 48 U.S. Land Market Share A
Slide 12: H&P's U.S. Land Operations
High levels of utilization for AC driven rigs across the industry, and especially for FlexRigs, continue to support premium dayrates. We expect an increase in average rig activity, or total quarterly revenue days, from the fourth fiscal quarter of 2010 to the first fiscal quarter of 2011 of approxim
Slide 13: H&P's Contracted U.S. Land Fleet
H&P’s Contracted U.S. Land Fleet (as of 12/8/10) Note: The above numbers corresponding to H&P’s contracted U.S. land fleet include one delayed new build which generates revenue but does not generate revenue days and 11 pending new build FlexRigs. Eagle Ford Shale, 35 Permian Basin, 24 Haynesville Sh
Slide 14: Technology and Quality Service Make a Difference
Technology and Quality Service Make a Difference Utilization Premium Rig Margin 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 t
Slide 15: H&P's Global Fleet Under Term Contracts
H&P’s Global Fleet Under Term Contracts 128 121 109 95 79 69 63 56 0 16 32 48 64 80 96 112 128 144 Q1FY11 Q2FY11 Q3FY11 Q4FY11 Q1FY12 Q2FY12 Q3FY12 Q4FY12 Number of Rigs Already Under Long-Term Contracts (Estimated Quarterly Average) Term Contract Status - H&P Global Fleet (Including Committed New B
Slide 16: H&P New Builds
Since 2005, we have announced the construction of 163 new FlexRigs, including 23 since March 2010. All of these rigs were contracted under multi-year term agreements that generated favorable returns. Having completed construction of 12 of the 23 rigs announced since March 2010, we currently have 11
Slide 17: 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. 34 47 52 57 58 60 89 99 106 120 126 130 128 150 163 180 185 191 0 25 50 75 100 125 150 175 200 A
Slide 18: H&P's International Land Operations
Our second FlexRig in Bahrain has commenced operations and we recently announced a contract for a third FlexRig to commence operations in Bahrain during the third fiscal quarter of 2011. Two of the six rigs previously assigned to the Company’s operations in Mexico have already returned to the U.S. a
Slide 19: H&P's International Land Operations Rig Fleet Status
Active Contracted Idle Total Long-term Contracts Argentina 5 4 9 4 Colombia 5 1 6 2 Ecuador 4 4 Mexico 4 4 4 Tunisia 2 2 Bahrain 2 1 3 3 Total 22 1 5 28 13 H&P’s International Land Operations Rig Fleet Status (as of December 8, 2010) The four rigs assigned to the Company’s operations in Mexico are e
Slide 20: H&P's Offshore Operations
Seven of the Company’s nine offshore platform rigs remain active, including two under long-term contracts. We expect total revenue days for the first fiscal quarter of 2011 to be essentially flat as compared to the fourth fiscal quarter of 2010. Excluding the ~$2,000 per day benefit to average daily
Slide 21: Market Trends Favor H&P
E&P Companies require technology-based solutions that enable lower total well costs Unconventional plays tend to be horizontal and/or directional wells (i.e. more complex well designs) As drilling becomes more complex, AC drive rigs should be expected to remain in short supply Increasing safety and
Slide 22: Additional References
Additional References:
Slide 23: H&P is Leading the U.S. Land New Build Effort
H&P is Leading the U.S. Land New Build Effort Refurbished rigs, built between 1940s and 1982 74% 10% 16% 17% 76% 7% 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 24: 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 25: A Value Proposition Example – H&P vs. Competitors
Estimated Estimated Peer H&P FlexRig3 Conventional Fit-for-purpose Average Average Average Mid 2010 (Spot Market) (Spot Market) (Spot Market) 1. Drilling days 26 14 11 Completion days 2 2 2 Moving days 5 4 3 Total rig revenue days per well 33 20 16 2. Drilling contractor dayrate $15,500 $21,500 $24,
Slide 26: 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 27: U.S. Land Safety Performance
U.S. Land Safety Performance (1994 – Nov’10) OSHA Recordable Injury Incidence Rates H&P Nov ’10 = 1.07 IADC 3Q10 = 3.31 INJURIES PER 200,000 MANHOURS MANHOURS WORKED (MM) Delivering Safety – H&P vs. Industry (IADC) 26 MANHOURS = 10.7 MM 0 2 4 6 8 10 12 14 16 94 95 96 97 98 99 00 01 02 03 04 05 06 07
Slide 28: 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) $0.00 $0.50 $1.00 $1.50 $2.00 $2.50 $0.00 $0.50 $1.00 $1.50 $2.00 $2.50 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 C
Slide 29: 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 Q4 2009 Q1 2010 HP Peer A Peer B Peer C
Slide 30: 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 UNT PTEN* NBR** HP Operating Income (Millions) U.S. Land Drilling Operating Income
Slide 31: Leader in New Ideas & Applied Technology
AC Driven Systems & Integrated Top Drive Mechanized Tubular Handling Computerized Controls BOP Handling Driller’s Cabin Satellite Communications Rig Move Capabilities Leader in New Ideas & Applied Technology
Slide 32: FlexRig3 – Performance Sample
* Represents the customer’s fastest reported Bakken Shale well before deploying a H&P FlexRig. FlexRig3 – Performance Sample 59% Improvement 47% Improvement
Slide 33: FlexRig4M – Performance Sample
FlexRig4M – Performance Sample 21% Improvement 52% Improvement
Slide 34: FlexRig4 – Performance Sample
FlexRig4 – Performance Sample 42% Improvement 22% Improvement
Slide 35: FlexRig4S – Performance Sample
FlexRig4S – Performance Sample 39% Improvement 16% Improvement
Slide 36: Improving Rig Counts
Improving Rig Counts U.S. Land International Land 0 300 600 900 1,200 1,500 1,800 2,100 2,400 2,700 0 300 600 900 1,200 1,500 1,800 2,100 2,400 2,700 Monthly Average Baker Hughes U.S. Land and MI Swaco International Land Rig Counts MI Swaco International Land Rig Count BHI U.S. Land Rig Count
Slide 37: Unconventional Natural Gas Production Growing
Alaska Shale Gas Offshore Other Onshore (Includes Tight Sands) Projections History TCF Source: Energy Information Administration Annual Energy Outlook 2010 with projections to 2035 (May 2010). Unconventional Natural Gas Production Growing Coalbed Methane 0 2 4 6 8 10 12 14 16 1990 1995 2000 2008 201
Slide 38: 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 39: Increasing Focus on More Difficult Drilling (Gas)
Increasing Focus on More Difficult Drilling 28% 31% 37% 43% 51% 68% 82% 53% 69% 0 400 800 1200 1600 2004 2005 2006 2007 2008 2009 Dec-10 Peak (2008) Trough (2009) Number of Active Rigs (Smith Bits S.T.A.T.S.) Annual Average During Each Prior Year Active Rigs in U.S. Land Drilling for Natural Gas Hor
Slide 40: Oil Related Drilling Also Increasingly Complex
Oil Related Drilling Also Increasingly Complex 36% 39% 31% 33% 40% 41% 55% 42% 41% 0 50 100 150 200 250 300 350 400 450 500 550 600 650 2004 2005 2006 2007 2008 2009 Dec-10 Peak (2008) Trough (2009) Number of Active Rigs (Smith Bits S.T.A.T.S.) Annual Average During Each Prior Year Active Rigs in U.
Slide 41: Crude Oil & Natural Gas Prices
Crude Oil & Natural Gas Prices Source: Energy Information Administration, Short-term Energy Outlook as of 11/9/2010. Crude Oil Natural Gas $0 $2 $4 $6 $8 $10 $12 $14 $0 $20 $40 $60 $80 $100 $120 $140 U.S. Dollars per Thousand Cubic Feet U.S. Dollars per Barrel Monthly Average West Texas Intermediate
Slide 42: End of Document
End of Document HELMERICH & PAYNE, ING.
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