Helmerich & Payne, Inc. 2013 Barclays CEO Energy-Power Conference September 12-13, 2013
A Quick Primer on Helmerich & Payne U.S. land drilling market share leader Leader in ongoing industry land rig replacement cycle Most modern and capable land drilling fleet Strong balance sheet Focused on innovation and returns…
Evolution of H&Ps Global Rig Fleet 96 Rigs 338 Rigs (Before AC Drive Rigs) U.S. Land 300 International Land 29 Offshore 9 September 2001 September 2013
The Drilling Market Today Our operational outlook for the fourth fiscal quarter remains unchanged. Assuming commodity prices hold, we expect some improved traction in U.S. land active rig count. Absent overall improvement, we…
Oil and Natural Gas Prices Oil Prices Natural Gas Prices Source: Energy Information Administration
U.S. Land Active Rig Count
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…
The Replacement Cycle Continues As of October 2008 (Peak) As of August 2013 (1,900 Active Rigs in the U.S. (1,625 Active Rigs in the U.S. By Power Type) By Power Type) Note: The above estimates corresponding to rig activity are…
H&Ps Lead in U.S. Land AC Drive Rigs Note: The above estimates corresponding to U.S. lower 48 AC Drive fleets are derived from Rig Data and corporate filings.
U.S. Land Average Daywork Margins(1) (1) Does not include the impact of early contract termination revenue.
Record Profits During Industry Slowdown * PTENs operating income includes drilling operations in Canada. ** NBRs operating income corresponds to its U.S. Lower 48, U.S. Offshore, and Alaska business units.
Return on Equity * The corresponding ROE values for the selected companies exclude certain extraordinary, non-recurring charges.
Current Dividend Yields Source: Thomson Financial. Yields calculated as of market close on September 5, 2013.
Ten-Year Relative Shareholder Return Source: Thomson Financial as of September 5, 2013
Land Drilling Market Valuations Source: Thomson Financial as of September 5, 2013.
Growing Shareholder Value Lead Innovation Expand Drive Well Market Share Costs Down Satisfy Customers
H&Ps FlexRig Advantage The FlexRig Difference: Key Advantages Increased drilling productivity and reliability Variable frequency (AC) drives with increased precision and measurability Computerized electronic driller that more…
Innovation & Applied Technology Computerized Controls Drillers Cabin AC Driven Systems & Integrated Top Drive 31 Satellite Communications Mechanized Tubular BOP Handling Handling Rig Move Capabilities
A Value Proposition Example H&P vs. Competitors South Texas 18,000 ft. measured depth Estimated Estimated Peer H&P FlexRig3 Conventional Fit-for-purpose Average Average Average 2013 (Spot Market) (Spot Market) (Spot Market) 1.…
FlexRigs Delivering Drilling Efficiencies We have over 1,200 rig years of AC Drive FlexRig drilling experience. Drilled over 52 million feet in 2012 Drilled in excess of 40 million feet in first eight months of 2013 Improved our…
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 (1994 May 13) OSHA Recordable Injury Incidence Rates INJURIES PER 200,000 MANHOURS MANHOURS WORKED (MM) IADC w/o H&P = 1.86 H&P = 0.62
H&P Continues to Capture Market Share As of October 2008 (Peak) As of August 2013 (1,900 Active Rigs in the U.S.) (1,625 Active Rigs in the U.S.) Note: The above estimates corresponding to market share are derived from Rig Data.…
Favorable Market Trends Continue for FlexRigs Customer focus on drilling efficiency, technology and safety Expectation to drill more wells with fewer rigs AC drive rigs replacing SCR and mechanical rigs More customers…
High-Grading is Accelerating As of August 2012 As of August 2013 (1,770 Active Rigs in the U.S. (1,625 Active Rigs in the U.S. By Power Type) By Power Type) Note: The above estimates corresponding to rig activity are derived from…
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.
Unconventional Plays Shaping Landscape Well Complexity is increasing: Horizontal and directional wells make up over 75% of wells drilled in the U.S. Extended reach laterals progressively longer Multi-well pad drilling gaining…
Increasing Focus on More Difficult Drilling
Leading U.S. Unconventional Driller (249 H&P Contracted Land Rigs as of 9/4/13*) * Includes announced new FlexRigs with customer commitments scheduled for completion in calendar 2013.
Active Rig Count Unconventional Drilling Growth in Permian Note: The above estimates are derived from Rig Data. Additionally, the drawworks capacity of each land rig included in the above analysis was greater than 600 horsepower.
H&Ps Pad Capable Fleet H&P has a total of 116 pad capable FlexRigs, all of which are AC drive rigs. Our pad capable fleet is fully utilized. In addition, we continue to add new pad capable FlexRigs and have customer interest…
FlexRigs Leading in Pad Drilling Efforts AC Drive FlexRigs lead in pad drilling efforts in U.S. Land FlexRig3 first pad application in 2004 FlexRig4 was the first bi-directional land drilling design FlexRig5 is the latest…
H&P Activity as of September 4, 2013 Rigs Rigs Working/ % Available Contracted Contracted U.S. Land 300 248 83% AC Drive FlexRigs 267 248 93% SCR Fleet 33 0 0% Offshore 9 8 89% International Land 29 25 86% Total 338 281 83% (1)…
H&Ps U.S. Land Fleet Activity (1) (1) Includes completed new builds pending delivery and not generating revenue days.
U.S. Land Market Trends Spot market pricing is firm. We continue to enter into additional term contracts with customers. We are encouraged by recent customer discussions indicating a potential increase in activity through…
H&Ps New Build Program Continues We are positioned to quickly respond to opportunities and take advantage of an improving market landscape. H&P plans to continue a build cadence of two rigs per month through the rest of the…
In Summary: H&Ps long term strategy for growing shareholder value: Innovation Technology Safety and operational excellence Customer satisfaction
Additional References
H&Ps U.S. Land Operations (As of July 26, 2013) Expected total quarterly revenue days in the U.S. land segment to be flat to down approximately 1% during the fourth fiscal quarter of 2013 as compared to the third fiscal quarter of…
H&Ps Offshore Operations (As of July 26, 2013) Expected eight of the Companys nine offshore platform rigs to remain active throughout the fourth fiscal quarter of 2013. Expected the number of revenue days during the fourth fiscal…
H&Ps International Land Operations (As of July 26, 2013) Expected revenue days during the fourth fiscal quarter to be up by approximately 5% as compared to the third fiscal quarter of 2013. Expected average rig margin per day to…
H&P Global Fleet Under Term Contract Number of Rigs Already Under Long-Term Contracts (Estimated Quarterly Average, Including Announced New Builds - as of 9/4/13) Segment Q4 Q1 Q2 Q3 Q4 Q1 Q2 FY13 FY14 FY14 FY14 FY14 FY15 FY15…
H&Ps International Land Operations Rig Fleet Status (as of September 4, 2013) Long-term Active Contracted Idle Total Contracts Argentina 6 2 1 9 4 Bahrain 3 3 3 Colombia 6 1 7 2 Ecuador 6 6 Tunisia 2 2 1 U.A.E. 2 2 2 (1) Total 25 2…
H&Ps Exposure to Oil & Liquids Estimated proportion of H&Ps active U.S. Land rigs by primary hydrocarbon target as of 9/4/13 Dry Gas Dry Gas (Long-term (Spot Contracts) Market) 4% 3%
Oil vs. Natural Gas Directed Rig Count
Changes in Lower 48 U.S. Land Rig Count * PDS active rig count includes both PDS and Grey Wolf rigs.
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