Helmerich & Payne, Inc. Capital One Southcoast, Inc. 2013 Energy Conference December 12, 2013
A Quick Primer on Helmerich & Payne U.S. land drilling market share leader Focused on innovation and returns on capital Leader in ongoing industry land rig replacement cycle Most modern and capable land drilling fleet Strong…
Evolution of H&Ps Global Rig Fleet 96 Rigs 345 Rigs (Before AC Drive Rigs) U.S. Land 307 International Land 29 Offshore 9 December 2001 December 2013
Announcing Five Additional New Builds Five incremental FlexRigs with multi-year term contracts with two customers in the U.S. Since the beginning of fiscal 2014, we have now announced term contracts for 18 new FlexRigs with six…
H&Ps Global Rig Fleet * Estimates include existing rigs and announced new build commitments
H&P Activity as of December 11, 2013 Rigs Rigs Working/ % Available Contracted Contracted U.S. Land 307 261 85% AC Drive FlexRigs 274 261 95% SCR Fleet 33 0 0% Offshore 9 8 89% International Land 29 23 79% Total 345 292 85% (1)…
H&Ps U.S. Land Fleet Activity (1) (1) Includes completed new builds pending delivery and not generating revenue days.
H&Ps U.S. Land Operations Drilling Operations Outlook for the First Quarter of Fiscal 2014 We now expect total quarterly revenue days to increase by approximately 4% (up from our prior estimate of 3%) during the first fiscal quarter…
H&Ps Offshore Operations Drilling Operations Outlook for the First Quarter of Fiscal 2014 We continue to expect the number of revenue days during the first fiscal quarter of 2014 to be flat as compared to the fourth fiscal quarter…
H&Ps International Land Operations Drilling Operations Outlook for the First Quarter of Fiscal 2014 We still expect revenue days during the first fiscal quarter to decline by approximately 10% as compared to the fourth fiscal…
U.S. Land Active Rig Count BHI Rig Count
Changes in Lower 48 U.S. Land Rig Count * PDS active rig count includes both PDS and Grey Wolf rigs.
The Replacement Cycle Continues As of October 2008 (Peak) As of December 2013 (1,900 Active Rigs in U.S. Land (1,670 Active Rigs in U.S. Land By Power Type) By Power Type) Note: The above estimates corresponding to rig activity…
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…
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
H&P Continues to Capture Market Share As of October 2008 (Peak) As of December 2013 (1,900 Active Rigs in U.S. Land) (1,670 Active Rigs in U.S. Land) Note: The above estimates corresponding to market share are derived from Rig…
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
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.
FlexRigs Delivering Drilling Efficiencies We have approximately 1,300 rig years of AC Drive FlexRig drilling experience. Drilled over 52 million feet in 2012 Drilled in excess of 56 million feet through November 2013 Improved…
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 Nov 2013) OSHA Recordable Injury Incidence Rates INJURIES PER 200,000 MANHOURS MANHOURS WORKED (MM) H&P MANHOURS = 18.0 MM IADC w/o H&P = 1.79 H&P…
U.S. Land Market Trends Firm spot market pricing. Continued customer focus on drilling efficiency, technology and safety. We believe that differentiated performance delivers tangible value and will be rewarded accordingly. We…
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…
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.…
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&Ps Pad Capable Fleet Approximately 50% of H&Ps U.S. Land active fleet, all of which are AC drive rigs, are equipped with hydraulic pad systems. Our pad capable fleet is fully utilized. In addition, we continue to add new…
High-Grading is Accelerating As of December 2012 As of December 2013 (1,630 Active Rigs in U.S. Land (1,670 Active Rigs in U.S. Land By Power Type) By Power Type) Note: The above estimates corresponding to rig activity are…
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.
Leading U.S. Unconventional Driller (273 H&P Contracted Land Rigs as of 12/11/13*) * Includes 12 announced new FlexRigs with customer commitments scheduled for delivery in calendar 2013 and 2014.
H&Ps New Build Program Continues H&P plans to continue a build cadence of two rigs per month through the rest of the fiscal year. We have the flexibility to increase our production cadence depending on market demand. We…
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 * Including gains from the sale of investment securities and discontinued operations, H&P's corresponding ROE resulted in 17.8%. ** The corresponding ROE values for the selected companies exclude certain…
Current Dividend Yields Source: Thomson Financial. Yields calculated as of market close on December 5, 2013.
Ten-Year Relative Shareholder Return Source: Thomson Financial as of December 5, 2013
In Summary: H&Ps long term strategy for growing shareholder value: Innovation Technology Safety and operational excellence Customer satisfaction
Additional References
Growing Shareholder Value Lead Innovation Expand Drive Well Market Share Costs Down Satisfy Customers
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.…
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 Global Fleet Under Term Contract Number of Rigs Already Under Long-Term Contracts (Estimated Quarterly Average, Including Announced New Builds - as of 12/11/13) Segment Q1 Q2 Q3 Q4 Q1 Q2 Q3 FY14 FY14 FY14 FY14 FY15 FY15 FY15…
H&Ps International Land Operations Rig Fleet Status (as of December 11, 2013) Long-term Active Idle Total Contracts Argentina 8 1 9 5 Bahrain 2 1 3 2 Colombia 5 2 7 2 Ecuador 5 1 6 1 Tunisia 1 1 2 U.A.E. 2 2 2 (1) Total 23 6 29…
Oil vs. Natural Gas Directed Rig Count
Oil and Natural Gas Prices Oil Prices Natural Gas Prices Source: Energy Information Administration
H&Ps Exposure to Oil & Liquids Estimated proportion of H&Ps active U.S. Land rigs by primary hydrocarbon target as of 12/11/13 Dry Gas Dry Gas (Long-term (Spot Contracts) Market) 4% 3%
Land Drilling Market Valuations Source: Thomson Financial as of December 5, 2013.
U.S. Land Average Daywork Margins(1) (1) Does not include the impact of early contract termination revenue.
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