Helmerich & Payne, Inc. UBS Global Oil and Gas Conference May 20-21, 2015
U.S. Land Drilling Market Conditions Low oil prices continue to depress demand levels for drilling services. There is still uncertainty in the market and our customers remain cautious, but there are some indications that the trough…
Declining Drilling Activity in the U.S.
H&Ps U.S. Land Activity and Pricing Comments H&Ps U.S. Land segment had 161 contracted rigs generating revenue as of May 15, 2015, down from 179 on March 31, 2015. H&Ps U.S. Land segment had 169 idle AC drive FlexRigs as of May…
About Helmerich & Payne (H&P) A premier land drilling contractor founded in 1920 Very strong balance sheet U.S. land drilling market share leader Most modern and capable land drilling fleet Leader in ongoing industry land rig…
H&P Highlights Very Strong High Quality Balance Sheet Focus on Customer Base Organic Growth Strong Multi-Year Market Leader Backlog Superior Most Advanced ROIC and ROE Best-in-Class Fleet Safety
H&Ps Conservative Financial Practices Conservatively managed balance sheet throughout its history Over the last 20 years, H&Ps average total-debt-to-total-capitalization ratio has been under 10%, peaking twice at 20% during that…
H&P vs. Peers Credit Statistics (As of March 31, 2015) Total-Debt-to-Total-Capitalization Ratio1 Net-Debt-to-Total-Capitalization Ratio1,2 1. Total Capitalization is defined as Total Debt plus 1. Total Capitalization is defined as…
H&Ps Global Rig Fleet * Estimates include existing rigs and new build commitments as of May 15, 2015 and exclude nine conventional rigs decommissioned at the end of fiscal 2014 and 17 SCR powered FlexRigs decommissioned at the end…
Organic U.S. Land Fleet Growth 354 49 * Estimates include existing rigs and announced new build commitments.
H&Ps U.S. Land Market Share As of October 2008 (Peak) As of May 2015 (1,900 Active Rigs in U.S. Land) (850 Active Rigs in U.S. Land) Note: The above estimates corresponding to market share are derived from Rig Data. PDS market…
U.S. Land Active Rig Count Through First Quarter of Calendar 2015 BHI Industry Rig Count
Ten Year Profit Comparison * NBRs operating income corresponds to its U.S. Lower 48, U.S. Offshore, and Alaska business units. ** PTENs operating income includes drilling operations in Canada.
H&Ps 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…
Innovation & Applied Technology FlexRig Computerized Controls Drillers Cabin AC Driven Systems & Integrated Top Drive 31 Satellite Communications Mechanized Tubular BOP Handling Handling Rig Move Capabilities
Technology & Quality Service Make a Difference (1) (3) H&Ps H&Ps Margin Utilization Premium Premium (2) (4) (1) Does not include the impact of early contract termination revenue. (2) Represents weighted-average rig margin…
Performance is Not Only About Better Rigs Our competitive advantage is also about: People Support Structure Safety Processes Experience Organizational Network Training Maintenance Culture Supply Chain
Delivering Safety H&P vs. Industry (IADC) U.S. Land Safety Performance (2005 2014) OSHA Recordable Injury Incidence Rates Injuries per 200,000 Man Hours IADC w/o H&P H&P
Safety Excellence Also Generates Savings Reduced Workers Comp and General Liability Losses per Man Hour EMR = Experience Modifier Ratio (Industry Average = 1.00)
Return on Invested Capital (ROIC) * Excludes gains from the sale of investment securities and abandonment (non-cash) charges in 4QFY14 and 2QFY15. H&P's unadjusted ROIC resulted in 13.7%. ** The corresponding ROIC values for the…
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 5/15/15. During the first and second fiscal…
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 and corporate filings.
H&P Customer Credit Ratings Number of Active H&P Rigs* Number of Contracted Rig-Years** (Working for Corresponding Customers) (3.9 Billion H&P Backlog) * As of March 31, 2015. Consists of 179 contracted U.S. Land rigs, 8…
Underlying U.S. Land Market Trends Unconventional plays continue to shape the landscape. AC drive rigs are best suited for more complex horizontal drilling. Multiple wells being drilled from a single pad. Customers continue to…
Increasing Focus on More Difficult Drilling
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, Smith Bits, and corporate filings.…
The Replacement Cycle Continues As of May 2015 (850 Active Rigs in U.S. Land By Power Type) As of October 2008 (Peak) As of October 2014 (Peak) (1,925 Active Rigs in U.S. Land By Power Type) (1,930 Active Rigs in U.S. Land By…
U.S. Activity by Well and Rig Type 850 Active U.S. Land Rigs (May 2015) Vertical All Rigs Horiz & Dir Horiz & Dir AC Drive Rigs SCR & Mech Rigs Note: The above estimates corresponding to rig activity and rig type are derived…
U.S. Activity by Well and Rig Type 850 Active U.S. Land Rigs (May 2015) Vertical All Rigs Horiz & Dir Horiz & Dir AC Drive Rigs SCR & Mech Rigs Note: The above estimates corresponding to rig activity and rig type are derived…
New Build FlexRigs 40 new FlexRigs are scheduled to be completed during fiscal 2015 and six during early fiscal 2016 All 46 of the above new FlexRigs are supported with multi-year term contracts that are expected to generate…
H&Ps Long Term Strategy Innovation Technology Safety and operational excellence Customer satisfaction Financial strength
Additional References
Third Quarter H&P Operations Outlook (Latest Update: 4/23/15) Drilling Operations Outlook for 3Q of Fiscal 2015 Compared to 2Q of Fiscal 2015 U.S. Land Segment Revenue days expected to decrease by roughly 32% Average rig revenue…
H&P Activity as of May 15, 2015 Rigs Rigs Working/ % Available Contracted Contracted U.S. Land 338 161 48% (1) (2) AC Drive FlexRigs 330 161 49% SCR Fleet 8 0 0% Offshore 9 8 89% International Land 40 20 50% Total 387 189 49% (3)…
H&Ps U.S. Land Fleet Activity (1) (1) Includes completed new builds pending delivery and not generating revenue days.
Leading U.S. Unconventional Driller (177 H&P Contracted Land Rigs as of 5/15/15*) * Includes 16 announced new FlexRigs with customer commitments scheduled for delivery in calendar 2015 and first half calendar 2016.
H&Ps International Land Operations Rig Fleet Status (as of May 15, 2015) Long-term Active In-Transit Idle Total Contracts(1) Argentina 13 6 19 10 Bahrain 1 2 3 1 Colombia 2 6 8 1 Ecuador 2 4 6 Tunisia 2 2 U.A.E. 2 2 (2) Total…
H&P Global Fleet Under Term Contract Number of Rigs Already Under Long-Term Contracts* (Estimated Quarterly Average, Including Announced New Builds - as of 5/15/15) Segment Q3 Q4 Q1 Q2 Q3 Q4 Q1 FY15 FY15 FY16 FY16 FY16 FY16 FY17…
H&Ps 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…
The Value Proposition: The Power of Efficiency Theoretical 20% Efficiency 40% Efficiency Base Case Improvement Improvement 1. Drilling days average 13.5 10.8 8.1 Other days average 5.0 4.0 3.0 Moving days average (several multi-well…
Ten-Year Relative Shareholder Return Source: Thomson Reuters as of May 18, 2015.
Land Drilling Market Valuations Source: Thomson Reuters as of May 18, 2015.
Return on Equity * Excludes gains from the sale of investment securities and abandonment (non-cash) charges in 4QFY14 and 2QFY15. H&P's unadjusted ROE resulted in 14.7%. ** The corresponding ROE values for the selected companies…
Current Dividend Yields Source: Thomson Reuters. Yields calculated as of market close on May 18, 2015.
Oil and Natural Gas Prices Oil Prices Natural Gas Prices Source: Energy Information Administration and Thomson Reuters
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