Helmerich & Payne, Inc. Credit Suisse Energy Summit February 7-8, 2012
H&P Basics 334 Drilling Rigs* 5 Billion in Assets 8,700 Employees 9% Debt/Cap * Includes 40 announced new FlexRigs under construction with customer commitments as of January 31, 2012 that are scheduled for completion during fiscal…
A Remarkable Transformation
The U.S. Land Market Today Oil-directed drilling has been on a steady march up, while dry gas drilling has lost ground. Although the gas-directed count may accelerate its decline trend, the fallout should be partially or fully…
Increasing Focus on More Difficult Drilling
An Undersupply of AC Drive Rigs (1,850 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.
H&Ps Growing Exposure to Oil & Liquids Estimated proportion of H&Ps active U.S. Land rigs by primary hydrocarbon target. Less than 10% of H&Ps rigs are targeting dry gas in the spot market.
H&Ps 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.
The Replacement Cycle Continues AC drive rigs are best positioned to make the transition. Older, underperforming rigs are more likely to be sidelined. High efficiency rigs continue to displace mechanical and SCR rigs. H&P is…
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.
Organic U.S. Land Fleet Growth 299 49 * Estimates include existing rigs and announced new build commitments.
Active Rig Market Share Ten Years Ago Lower 48 U.S. Land Market Share As of January 25, 2002 Note: The above estimates corresponding to U.S. land rig market share are derived from Smith Bits S.T.A.T.S..
Organically Growing Active Rig Market Share Lower 48 U.S. Land Market Share AsAs ofof January 27, 2001 March 16, 2012 Note: The above estimates corresponding to U.S. land rig market share are derived from Smith Bits S.T.A.T.S..
Highest U.S. Activity Level in Company History As of 1/31/12
Most Profitable Driller in U.S. Land Business * PTENs operating income includes drilling operations in Canada. ** NBRs operating income corresponds to its U.S. Lower 48 Land Drilling segment.
Five-Year Relative Shareholder Return Source: Yahoo Finance as of February 1, 2012
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
Technology & Quality Service Make a Difference H&Ps Margin Premium * Does not include the impact of early contract termination revenue. ** Represents weighted-average rig margin per day for PTEN, NBR and UNT through Q3CY11.
Technology & Quality Service Make a Difference H&Ps Utilization Premium * Utilization is herein calculated to be average active rigs divided by estimated available marketable rigs during the period. ** Represents estimated…
Activity as of January 31, 2012 Rigs Rigs Working/ % Available Contracted Contracted U.S. Land 259 236 91% Offshore 9 7 78% International Land 26 22 85% Total 294 265 90% FlexRig Construction* 40 40 Total Fleet 334 305 * Includes…
H&P Global Fleet Under Term Contract
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…
Leading U.S. Unconventional Driller (276 H&P Contracted Land Rigs as of 1/31/12*) * Includes announced new FlexRigs with customer commitments scheduled for completion in fiscal 2012 and fiscal 2013.
H&Ps 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…
H&P New Builds Total of 74 new builds announced over the past 13 months Delivering new FlexRigs at the rate of four per month As of January 31, 2012, 40 announced new builds left to deliver in fiscal 2012 and fiscal 2013…
A Few Performance Metrics on FlexRigs Over the last 13 months we have completed and deployed 43 new FlexRigs on time and on budget. These 43 newly commissioned FlexRigs were able to deliver safety performance during the first year…
Performance is Not Only About Better Rigs Its also about: People Support Structure Safety Processes Experience Organizational Network Training Maintenance Culture Supply Chain
End of Presentation
Additional References
H&Ps U.S. Land Operations Driven primarily by incremental new builds, we expect total revenue days in the U.S. land segment to increase between two and three percent from the first to the second fiscal quarter of 2012. Quarterly…
H&Ps U.S. Land Fleet Activity (3) (1) (2) (1) Active rigs on term (in blue) generated both revenue and revenue days. (2) Includes completed new builds that were waiting on operators and which generated revenue but did not…
H&Ps Offshore Operations Seven of the Companys nine offshore platform rigs remain active, including two under long-term contracts. The Trinidad rig is returning to the U.S. and is expected to stack at the end of the second fiscal…
H&Ps International Land Operations Of the 26 rigs assigned to international operations, 20 are currently active and an additional two are contracted and in transit to new projects. Total revenue days during the second fiscal…
H&Ps International Land Operations Rig Fleet Status (as of January 31, 2012) Long-term Active Contracted Idle Total Contracts Argentina 5 3 8 4 Bahrain 4 4 4 (1) Colombia 5 1 1 7 2 (2) Ecuador 4 1 5 Tunisia 2 2 (3) Total 20 2 4…
Oil Related Drilling Increasingly Complex
Increasing Focus on More Difficult Drilling
Economics Shift Activity Towards Oil Drilling
H&P U.S. Land Fleet by Power Type* * Includes New Build Commitments.
Total Industry Available U.S. Land Fleet (by Power Type) Note: The above estimates corresponding to the available rig fleet in the U.S. are derived from multiple sources including Rig Data, Smith Bits, and corporate filings.
How Does H&P Define a New Build Land Rig A new build rig consists of all new structures and equipment for the purpose of: Eliminating legacy issues Achieving Safety-by-Design Maximizing drilling efficiency Improvement of ergonomics…
Building a New FlexRig Processing Raw Materials Fabricating New Lean Manufacturing Structures Commissioning / Delivery Test Assembly and Unitizing Packages Outfitting New Electrical Systems
Driller on a Conventional Rig vs. FlexRig
Roughnecks on a Conventional Rig vs. FlexRig
A Value Proposition Example H&P vs. Competitors Estimated Estimated Peer H&P FlexRig3 Conventional Fit-for-purpose Average Average Average 2011 (Spot Market) (Spot Market) (Spot Market) 1. Drilling days 20 11 9 Other days 3 3 3…
FlexRig3 Performance Sample FlexRig3 Bakken Shale Note: Information from third party well database provider
FlexRig3 Performance Sample FlexRig3 Eagle Ford Shale Note: Information from third party well database provider
FlexRig3 Performance Sample FlexRig3 Cana Woodford Shale Note: Information from third party well database provider
FlexRig4 Performance Sample FlexRig4 Permian Basin Note: Information from third party well database provider
Delivering Safety H&P vs. Industry (IADC) U.S. Land Safety Performance (1994 2011) OSHA Recordable Injury Incidence Rates INJURIES PER 200,000 MANHOURS MANHOURS WORKED (MM) 10 16 H&P MANHOURS = 9 15.2 MM 14 8 12 7 6 10 5 8 4…
Safety Excellence Also Generates Savings Reduced Workers Comp and General Liability Losses per Man Hour EMR = Experience Modifier Ratio (Industry Average = 1.00)
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