Helmerich & Payne, Inc. Bank of America Merrill Lynch 2013 Global Energy Conference November 21-22, 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 343 Rigs (Before AC Drive Rigs) U.S. Land 305 International Land 29 Offshore 9 November 2001 November 2013
The Drilling Market Today We have seen encouraging signs in the market, as evidenced by the 13 new build orders with long term contracts that we have recently announced. We continue to have conversations with customers for…
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…
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 November 2013 (1,900 Active Rigs in the U.S. (1,640 Active Rigs in the U.S. By Power Type) By Power Type) Note: The above estimates corresponding to rig activity are…
High-Grading is Accelerating As of November 2012 As of November 2013 (1,630 Active Rigs in the U.S. (1,640 Active Rigs in the U.S. By Power Type) By Power Type) Note: The above estimates corresponding to rig activity are derived…
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.
H&P Continues to Capture Market Share As of October 2008 (Peak) As of November 2013 (1,900 Active Rigs in the U.S.) (1,640 Active Rigs in the U.S.) Note: The above estimates corresponding to market share are derived from Rig Data.…
New Builds Since the beginning of fiscal 2014, we have announced term contracts with five customers to build and operate 13 incremental FlexRigs in the U.S. These new contracts are expected to generate attractive economic…
H&P Activity as of November 14, 2013 Rigs Rigs Working/ % Available Contracted Contracted U.S. Land 305 257 84% AC Drive FlexRigs 272 257 94% SCR Fleet 33 0 0% Offshore 9 8 89% International Land 29 23 79% Total 343 288 84% (1)…
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 (266 H&P Contracted Land Rigs as of 11/14/13*) * Includes 9 announced new FlexRigs with customer commitments scheduled for delivery in calendar 2013 and 2014.
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.
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.…
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…
U.S. Land Market Trends Firm spot market pricing Increasing well complexity Continued customer focus on drilling efficiency, technology and safety Expectation to drill more wells with fewer rigs AC drive rigs replacing SCR…
U.S. Land Active Rig Count
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 * 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 November 19, 2013.
Ten-Year Relative Shareholder Return Source: Thomson Financial as of November 19, 2013
Land Drilling Market Valuations Source: Thomson Financial as of November 19, 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
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.…
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 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
H&Ps Pad Capable Fleet Approximately 50% of H&Ps active feet, 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 pad capable…
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 Global Fleet Under Term Contract Number of Rigs Already Under Long-Term Contracts (Estimated Quarterly Average, Including Announced New Builds - as of 11/14/13) 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 November 14, 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 11/14/13 Dry Gas Dry Gas (Long-term (Spot Contracts) Market) 4% 3%
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