Helmerich & Payne, Inc. Capital One Southcoast 6th Annual Energy Conference December 7, 2011
H&P Basics 331 Drilling Rigs* 5 Billion in Assets 8,700 Employees 10% Debt/Cap * Includes 47 new FlexRigs (under construction as of 11/17/11) with customer commitments and scheduled for completion during fiscal 2012 and fiscal 2013.
H&Ps Global Rig Fleet * Estimates include existing rigs and announced new build commitments.
Growing Shareholder Value Lead Innovation Expand Drive Well Market Share Costs Down Satisfy Customers
Five-Year Relative Shareholder Return Source: Yahoo Finance as of November 21, 2011
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.
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…
Organic U.S. Land Fleet Growth 297 49 * Estimates include existing rigs and announced new build commitments.
Changes in Lower 48 U.S. Land Rig Count
Changes in Lower 48 U.S. Land Rig Count * PDS active rig count includes both PDS and GW rigs.
Leading U.S. Unconventional Driller (275 H&P Contracted Land Rigs as of 11/17/11*) * Includes new FlexRigs with customer commitments scheduled for completion by the first fiscal quarter of 2013.
Highest U.S. Activity Level in Company History As of 11/17/11
Active Rig Market Share Ten Years Ago Lower 48 U.S. Land Market Share As of November 16, 2001 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 November March 16,18, 2011 2001 Note: The above estimates corresponding to U.S. land rig market share are derived from Smith Bits S.T.A.T.S..
Market Trends Favor H&P Drilling today involves more complex well designs directed at oil and liquid rich plays. Customers continue to focus on efficiency and technology to achieve lower total well costs. Major customers are…
Increasing Focus on More Difficult Drilling
Economics Shift Activity Towards Oil Drilling
H&Ps Growing Exposure to Oil & Liquids Estimated proportion of H&Ps active U.S. Land rigs by primary hydrocarbon target.
The New Build Replacement Cycle Continues Industry is undersupplied with high performance AC drive rigs With reportedly over 150 mechanical rigs retired in 2011, it is increasingly clear that older rigs are not well suited for…
Rigs Active (1,900) in the U.S. Land Market (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 Lead in U.S. AC Drive Rig Offering 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.
AC Drive U.S. Rig Market Share (500 Rigs) Note: The above estimates corresponding to market share are derived from multiple sources including Rig Data, Smith Bits, and corporate filings.
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…
H&P New Builds Total of 71 new builds announced since January 2011 Delivering new FlexRigs at the rate of four per month As of November 17, 2011, 47 new builds left to deliver in fiscal 2012 and 2013 10 delivery slots remain…
In Summary Industry is undersupplied with AC drive rigs H&P has built over 180 new AC rigs since January 2006 and has over 40% of the U.S. land AC drive market share H&P remains the most profitable driller in the U.S. land…
Additional References:
Activity as of November 17, 2011 Rigs Rigs Working/ % Available Contracted Contracted U.S. Land 250 228 91% Offshore 9 7 78% International Land 25 20 80% Total 284 255 90% FlexRig Construction 47 47 Total Fleet 331 302
H&Ps U.S. Land Operations (As of November 17, 2011) Industry rig counts and spot pricing remain strong. Driven primarily by incremental new builds, we expect total revenue days in the U.S. land segment to increase by…
H&Ps U.S. Land Fleet Activity * Active rigs on term (in blue) generated both revenue and revenue days. ** Includes completed new builds that were waiting on customers and which generated revenue but did not generate revenue days.
H&P Global Fleet Under Term Contract (As of November 17, 2011)
H&Ps Offshore Operations (As of November 17, 2011) Seven of the Companys nine offshore platform rigs remain active, including two under long-term contracts. The number of revenue days during the first fiscal quarter of 2012 is…
H&Ps International Land Operations (As of November 17, 2011) Of the 25 rigs assigned to international operations, 19 are currently active including nine under long-term contracts. Additionally, a fourth FlexRig on a term contract…
H&Ps International Land Operations Rig Fleet Status (as of November 17, 2011) Long-term Active Contracted Idle Total Contracts Argentina 5 4 9 4 Bahrain (1) 3 1 4 4 Colombia 5 1 6 2 Ecuador 4 4 Tunisia 2 2 Total 19 1 5 25 10 (2)…
Oil Related Drilling Increasingly Complex
Increasing Focus on More Difficult Drilling
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.
H&P U.S. Land Fleet by Power Type* * Includes New Build Commitments.
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…
Performance is Not Only About Better Rigs Its also about: People Support Structure Safety Processes Experience Organizational Network Training Maintenance Culture Supply Chain
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 Completion days 3 3…
Customer Satisfaction Index 10 = Highly Satisfied, 1 = Highly Dissatisfied HP Peer A Peer B Peer C 10.00 9.00 8.00 7.00 6.00 5.00 4.00 3.00 2.00 1.00 2006 2009 2010 Q2 2011* Source: EnergyPoint Research, Inc. *…
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