Helmerich & Payne, Inc. · NYSE:HP
Helmerich & Payne — Investor Presentation (February 2017)
43 slides from Helmerich & Payne's investor presentation, Feb 8, 2017
Slide 1: 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 2: About Helmerich & Payne (H&P)
Very strong balance sheet Most capable land drilling fleet Market share leader in the U.S. Robust term contract backlog Operational strategy focused on continued innovation, safety, performance excellence, reliability and customer satisfaction About Helmerich & Payne (H&P)
Slide 3: H&P's Strong Balance Sheet
H&P’s Strong Balance Sheet (As of September 30, 2016) 1. Total Capitalization is defined as Total Debt plus Shareholders' Equity. Total-Debt-to-Total-Capitalization Ratio1 Source: Company Filings.
Slide 4: Current Dividend Yields
Current Dividend Yields Source: Thomson Reuters. Yields calculated as of market close on February 3, 2017.
Slide 5: H&P's Global Rig Fleet
H&P’s Global Rig Fleet * Estimates include existing rigs and announced new build commitments.
Slide 6: U.S. Land Market Share Leader
U.S. Land Market Share Leader Note: The above estimates corresponding to market share are derived from Rig Data. Additionally, the drawworks capacity of each land rig included in the above analysis was equal to or greater than 600 horsepower. As of January 2017 (~730 Active Rigs in U.S. Land)
Slide 7: H&P Global Fleet Under Term Contract
H&P Global Fleet Under Term Contract The above term contract coverage excludes long-term contracts for which the Company received early contract termination notifications as of 2/8/17. Given notifications as of 2/8/17, the Company expects to generate approximately $6 million in the second fiscal qua
Slide 8: 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. The category “Large Operators” includes majors and large independent E&P operators.
Slide 9: U.S. Land Drilling Market Conditions
U.S. Land Drilling Market Conditions The outlook has been improving, and there is greater optimism in the market. The level of demand for contract drilling services has been rapidly increasing. Customer well designs are increasingly more complex and require high quality, high performing AC drive rig
Slide 10: Drilling Activity in the U.S.
Drilling Activity in the U.S.
Slide 11: U.S. Land Horizontal and Directional Activity
Note: The above estimates corresponding to horizontal and directional rig activity by power type are derived from multiple sources including Rig Data and corporate filings. Additionally, the drawworks capacity of each land rig included in the above analysis was greater than or equal to 600 horsepowe
Slide 12: The Replacement Cycle: Customer Adoption
The Replacement Cycle: Customer Adoption Next ~90 E&P Operators (~385 Active Rigs by Power Type) Top 10 E&P Operators (~175 Active Rigs by Power Type) Remaining E&P Operators (~170 Active Rigs by Power Type) Top 10 E&P Operators Next ~90 E&P Operators Remaining E&P Operators They represent the 10 mo
Slide 13: The Replacement Cycle Continues
As of October 2014 (Peak) (~1,930 Active Rigs in U.S. Land By Power Type) The Replacement Cycle Continues As of October 2008 (Peak) (~1,925 Active Rigs in U.S. Land By Power Type) As of January 2017 (~730 Active Rigs in U.S. Land By Power Type) Note: The above estimates corresponding to rig activity
Slide 14: H&P's Lead in U.S. Land 1,500 hp AC Drive Rigs
H&P’s Lead in U.S. Land 1,500 hp AC Drive Rigs * The above estimates corresponding to U.S. lower 48 1,500 hp AC Drive fleets are derived from Rig Data and corporate filings. ** Estimated number of all other available AC Drive rigs not including those owned by HP, NBR, PTEN, and PDS.
Slide 15: H&P's Lead in U.S. Land 1,500 hp AC Drive Rigs
H&P’s Lead in U.S. Land 1,500 hp AC Drive Rigs * The above estimates corresponding to U.S. lower 48 1,500 hp AC Drive fleets with a 750,000 lbs. mast hookload are derived from Rig Data and corporate filings. ** Estimated number of all other available AC Drive rigs not including those owned by HP, PT
Slide 16: Capturing Opportunities in U.S. Land Market
Capturing Opportunities in U.S. Land Market H&P’s total U.S. land market share (at ~18%) continues to rise since the peak H&P’s market share is also growing in the AC drive rig segment (~27%), which continues to rapidly expand 2017 capital expenditures increased in response to sharp improvement in c
Slide 17: Active AC Drive U.S. Rig Market Share
(~480 Rigs as of January 2017) Active AC Drive U.S. Rig Market Share Note: The above estimates corresponding to rig activity are derived from multiple sources including Rig Data and corporate filings. Additionally, the drawworks capacity of each land rig included in the above analysis was greater th
Slide 18: H&P Uniquely Positioned – Family of Solutions
H&P Uniquely Positioned – Family of SolutionsTM Positioned to take market share in a strong or moderate market recovery Uniquely leveraged to provide E&P companies the rig of choice Design of the FlexRig fleet allows for a broad range of rig upgrades
Slide 19: Incremental CapEx Upgrade Opportunities
Incremental CapEx Upgrade Opportunities 7,500 psi mud circulating systems Multiple-well pad drilling capability Building additional FlexRig3 skid systems FlexRig3 prototype walking system Third mud pump 25,000+ ft setback capability Increased mud volume capability Other customer specific upgrades
Slide 20: H&P U.S. Land Fleet – Family of Solutions
* Roughly 60% are optimal for multiple-well pad drilling applications. H&P U.S. Land Fleet – Family of SolutionsTM 1,500 hp AC Drive FlexRigs*, including 270 Upgraded or Upgradeable to Rig Specifications in High Demand** 350 Available H&P U.S. Land Rigs ** AC drive FlexRigs with 1,500 hp drawworks a
Slide 21: H&P's Experience and Expertise
H&P’s Experience and Expertise Have the people, systems and the operational support structures to drive top performance and reliability Over 1,900 rig years of AC drive operational experience Expertise in designing, building and now upgrading the fleet provides the best value solution for the custom
Slide 22: H&P Very Well Positioned to Gain Share
H&P Very Well Positioned to Gain Share Note: The above estimates are derived from multiple sources including Rig Data and corporate filings. * Includes ~145 FlexRigs that have been or can be upgraded to what some industry followers refer to as “super-spec” rigs. ** Estimated number of idle 1,500 hp
Slide 23: H&P's U.S. Land Fleet Activity
H&P’s U.S. Land Fleet Activity (1) Includes rigs on standby dayrates. Includes completed new builds pending delivery and not generating revenue days. (2)
Slide 24: Leading U.S. Unconventional Driller
Leading U.S. Unconventional Driller (142 H&P Contracted Land Rigs as of 2/8/17)
Slide 25: Ongoing U.S. Land Market Trends
Ongoing U.S. Land Market Trends Unconventional plays continue to shape the landscape. Well designs are increasingly complex, including longer laterals and more challenging drilling requirements. Customers continue to focus on safety, efficiency, technology, and reliable drilling performance. AC driv
Slide 26: Increasing Focus on More Difficult Drilling
Increasing Focus on More Difficult Drilling
Slide 27: Performance is Not Only About Better Rigs
Performance is Not Only About Better Rigs Our competitive advantage is also about: People Safety Experience Training Culture Support Structure Processes Organizational Network Maintenance Supply Chain
Slide 28: Center of Excellence – Tulsa, OK
Center of Excellence – Tulsa, OK Support Structure Data Analysis Best Practices 24/7 Technical and Performance Solutions:
Slide 29: H&P's Long Term Strategy
H&P’s Long Term Strategy Innovation Technology Safety, operational excellence and reliability Customer satisfaction Financial strength
Slide 30: H&P's Long Term Strategy
| H&P’s Long Term Strategy > Innovation > Technology > Safety, operational excellence and reliability > Customer satisfaction > Financial strength
Slide 31: Second Fiscal Quarter H&P Outlook
Second Fiscal Quarter H&P Outlook (As of January 26, 2017) Drilling Operations Outlook for 2Q of Fiscal 2017 Compared to 1Q of Fiscal 2017 U.S. Land Segment Revenue days expected to increase by roughly 30% to 35% Average rig revenue per day expected to be roughly $22,400 (excluding the impact from e
Slide 32: Estimated H&P Activity as of February 8, 2017
Estimated H&P Activity as of February 8, 2017 Rigs Working/ Contracted 142 142 0 7 8 157 Rigs Available 350 348 2 9 38 397 % Contracted 41% 41% 0% 78% 21% 40% U.S. Land AC Drive FlexRigs SCR Fleet Offshore International Land Total
Slide 33: H&P's Margin Premium
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, PDS, and UNT. H&P’s Margin Premium (1) (2)
Slide 34: H&P's Lead in U.S. Land AC Drive Rigs
H&P’s Lead in U.S. Land AC Drive Rigs * The above estimates corresponding to U.S. lower 48 AC Drive fleets are derived from Rig Data and corporate filings. ** Estimated number of all other available AC Drive rigs not including those owned by HP, NBR, PTEN, and PDS.
Slide 35: U.S. Activity by Well and Rig Type
U.S. Activity by Well and Rig Type Note: The above estimates corresponding to rig activity and rig type are derived from multiple sources including Rig Data and corporate filings. Additionally, the drawworks capacity of each land rig included in the above analysis was equal to or greater than 600 ho
Slide 36: H&P's International Land Operations
Contracted Idle Total Long-term Contracts Argentina 5 14 19 5 Bahrain 1 2 3 Colombia 2 6 8 Ecuador 6 6 U.A.E. 2 2 Total 8 30 38 5 H&P’s International Land Operations Rigs on term contract that have greater than or equal to 180 days remaining. 5 of 25 FlexRigs, included in the international fleet of
Slide 37: Number of Rigs Already Under Long-Term Contracts
Number of Rigs Already Under Long-Term Contracts* (Estimated Quarterly Average, Including Announced New Builds - as of 2/8/17) H&P Global Fleet Under Term Contract Segment Q2 Q3 Q4 Q1 Q2 Q3 Q4 FY17 FY17 FY17 FY18 FY18 FY18 FY18 U.S. Land 85.6 81.6 68.7 61.3 46.0 37.5 31.0 International Land 7.0 6.0
Slide 38: H&P's FlexRig Advantage
The FlexRig Difference: Key Advantages Increased drilling productivity and reliability Variable frequency AC technology providing precise control and increased capability Computerized electronic driller more precisely controls down-hole parameters FlexRig designs are suited for both efficient well t
Slide 39: Ten-Year Relative Shareholder Return
Ten-Year Relative Shareholder Return Source: Thomson Reuters as of February 3, 2017.
Slide 40: Land Drilling Market Valuations
Land Drilling Market Valuations Source: Thomson Reuters as of February 3, 2017.
Slide 41: Oil vs. Natural Gas Directed Rig Count
Oil vs. Natural Gas Directed Rig Count
Slide 42: Oil and Natural Gas Prices
Oil and Natural Gas Prices Source: Energy Information Administration and Thomson Reuters. Oil Prices Natural Gas Prices
Slide 43: Oil and Natural Gas Prices
Oil and Natural Gas Prices $16 | Henry Hub Spot ‘West Texas interme sia } $12 4 $10 - Oil Prices U.S. Dollars per Barrel U.S. Dollars per Million British Thermal Units $6 + $60 $44 $40 4 nC - Natural Gas Prices $0 + So | $0 FFP PO WO WO oe a ah oo WO oe PPA ISA EB KAS ee Daily Prices: Source: Energy
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