Helmerich & Payne, Inc. J.P. Morgan Energy Equity Conference June 26-27, 2017
About Helmerich & Payne (H&P) Very strong balance sheet Most capable land drilling fleet Market share leader in the U.S. Robust term contract backlog Operational strategy focused on continued innovation, safety, performance…
H&Ps Strong Balance Sheet (As of March 31, 2017) Total-Debt-to-Total-Capitalization Ratio1 1. Total Capitalization is defined as Total Debt plus Shareholders' Equity. Source: Company Filings.
Current Dividend Yields Source: Nasdaq IR Insight (FactSet). Yields calculated as of market close on June 19, 2017.
H&Ps Global Rig Fleet
U.S. Land Market Share Leader As of June 2017 (960 Active Rigs in U.S. Land) Note: The above estimates corresponding to market share are derived from Rig Data. Additionally, the drawworks capacity of each land rig included in the…
H&P Global Fleet Under Term Contract * The above term contract coverage excludes long-term contracts for which the Company received early contract termination notifications as of 6/26/17. Given notifications as of 6/26/17, the…
U.S. Land Drilling Market Conditions As expected, we see the rate of increase in activity slowing to a more modest pace. Rig specification requirements have been increasing during this recovery due to more complex well designs.…
U.S. Activity by Well and Rig Type 960 Active U.S. Land Rigs (June 2017) Vertical All Rigs Horiz & Dir SCR & Mech Rigs Horiz & Dir AC Drive Rigs Note: The above estimates corresponding to rig activity and rig type are…
Active AC Drive U.S. Rig Market Share (630 Rigs as of June 2017) Note: The above estimates corresponding to rig activity are derived from multiple sources including Rig Data and corporate filings. Additionally, the drawworks…
Capturing Opportunities in U.S. Land Market H&Ps total U.S. land market share (at 19%) has risen since the peak (15%) H&Ps market share has also grown in the AC drive rig segment (29%), which continues to expand H&Ps average…
H&P Uniquely Positioned Family of SolutionsTM Positioned to take market share in a strong or moderate market recovery Uniquely leveraged to provide E&P companies the rig of choice Design of the FlexRig fleet allows for a broad…
Incremental CapEx Upgrade Opportunities 7,500 psi mud circulating systems Investing in multi-well pad drilling capability Full utilization of FlexRig3 skid systems led to building additional systems to meet demand FlexRig3…
H&P U.S. Land Fleet Family of SolutionsTM 1,500 hp AC Drive FlexRigs*, including 270 Upgraded or Upgradeable to 350 Available H&P U.S. Land Rigs Rig Specifications in High Demand** * Roughly 65% are optimal for multiple-well pad…
AC Fleet Size Creates Opportunity We have greater scale than any competitor with the ability to upgrade and deploy a total of 270 FlexRigs to rig specifications in highest demand without investing in new builds. With 137 FlexRigs…
H&Ps Lead in U.S. Land AC Drive Rigs with 1,500hp Drawworks Rating and 750,000 lbs. Mast Hookload * The above estimates corresponding to U.S. lower 48 1,500 hp AC Drive fleets with a 750,000 lbs. mast hookload are derived from Rig…
H&Ps Lead in U.S. Land AC Drive Rigs with 1,500hp Drawworks Rating and 750,000 lbs. Mast Hookload 2014 Peak activity (all U.S. land rigs) * The above estimates corresponding to U.S. lower 48 1,500 hp AC Drive fleets with a…
H&Ps Lead in U.S. Land AC Drive Rigs with 1,500hp Drawworks Rating and 750,000 lbs. Mast Hookload June 2017 activity (all U.S. land rigs) 2014 Peak activity (all U.S. land rigs) * The above estimates corresponding to U.S.…
H&P U.S. Land Fleet Family of SolutionsTM 1,500 hp AC Drive FlexRigs*, including 189 Upgraded or Upgradeable to 191 Contracted H&P U.S. Land Rigs Rig Specifications in High Demand** * Roughly 85% are optimal for multiple-well pad…
U.S. Land Market Share Gains Since 2014 Peak Note: The above estimates corresponding to market share are derived from Rig Data. Additionally, the drawworks capacity of each land rig included in the above analysis was equal to or…
U.S. Land Market Share Gains Since 2016 Trough (As Every Contractors Best Rigs Competed for Work) Note: The above estimates corresponding to market share are derived from Rig Data. Additionally, the drawworks capacity of each land…
H&Ps Experience and Expertise Have the people, systems and the operational support structures to drive high performance and reliability Over 1,900 rig years of AC drive operational experience Our expertise within an integrated…
Benefits of an Integrated Model DESIGN (and redesign) CONTINUOUS IMPROVEMENT OPERATE FABRICATE (and improve) (and upgrade)
FlexRig Family of SolutionsTM - Pad Design The FlexRig3 skid system is designed to meet the requirements for standard pad drilling. Typically customers drill 2-4 wells per pad. The Walking option for the FlexRig3 is designed to meet…
H&Ps Family of SolutionsTM Matches Pad Drilling Trends % of Horizontal Wells Drilled (Permian ONLY) Source: Coras Research, LLC The H&P Family of SolutionsTM provides options that clearly match pad drilling trends.
Walking Option in FlexRig Family of SolutionsTM We have designed a new walking system for a FlexRig3 as we believe this could lead to incremental market share gains with some customers that have unique locations. The advantages of…
H&Ps U.S. Land Fleet Activity (1) (2) (1) Includes rigs on standby dayrates. (2) Includes completed new builds pending delivery and not generating revenue days.
Ongoing U.S. Land Market Trends Unconventional plays continue to shape the landscape. Well designs are increasingly complex, including longer laterals and more challenging drilling requirements. Customers continue to focus on…
Leading U.S. Unconventional Driller (191 H&P Contracted Land Rigs as of 6/26/17)
Unconventional Drilling in the Permian (As of June 2017) 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 or equal to 600…
Increasing Focus on More Difficult Drilling
U.S. Land Horizontal and Directional Activity (As of June 2017) Note: The above estimates corresponding to horizontal and directional rig activity by power type are derived from multiple sources including Rig Data and corporate…
The Replacement Cycle: Customer Adoption U.S. Land Market (as of June 2017) Top 10 E&P Operators Next 120 E&P Operators Remaining E&P Operators (210 Active Rigs by Power Type) (550 Active Rigs by Power Type) (200 Active Rigs by Power…
The Replacement Cycle Continues As of June 2017 (960 Active Rigs in U.S. Land By Power Type) As of October 2008 (Peak) As of October 2014 (Peak) (1,925 Active Rigs in U.S. Land By Power Type) (1,930 Active Rigs in U.S. Land By…
AC Drive Gains Share with Relatively Flat Rig Count (Historical Example: January 2013 January 2014) Source: The above estimates corresponding to AC Drive market share are derived from Rig Data.
U.S. Land Horizontal and Directional Activity (865 Rigs as of June 2017) Note: The above estimates corresponding to rig activity are derived from multiple sources including Rig Data and corporate filings. Additionally, the…
Performance Is Not Only About Better Rigs Our competitive advantage is also about: People Uniform Fleet Size & Scale Safety Operational Support Network Experience Processes/Data Training Maintenance Culture Supply Chain
Center of Excellence Tulsa, OK 24/7 Technical and Performance Solutions: Support Structure Data Analysis Best Practices
Acquisition of MOTIVE Drilling Technologies, Inc. Completed acquisition of MOTIVE for 75 million on June 2, 2017, plus up to 25 million in potential earnout payments based on future performance. MOTIVEs proprietary Bit Guidance…
Acquisition of MOTIVE (Continued) We have a strong and longstanding technology and innovation focus that has been an important part of our organization for many years. Motive is an exciting example of that opportunistic…
H&P / Motive Strategic Integration Technology Leaders: H&P Provides- Industry Leader for High Performance Rigs Largest and Most Standardized AC rig Fleet/Platform Solutions for Controls & Automation Market Share Leader in US Land…
Customer Satisfaction Matters Value creation for the customer is not only driven by having the right rig. It is also driven by service; the ability of an organization to deliver top performance with that rig. Better service…
H&Ps Long Term Strategy Innovation Technology Safety, operational excellence and reliability Customer satisfaction Financial strength
Additional References
Estimated H&P Activity as of June 26, 2017 Rigs Rigs Working/ % Available Contracted Contracted U.S. Land 350 191 55% AC Drive FlexRigs 348 191 55% (1) SCR Fleet 2 0 0% Offshore 8 6 75% International Land 38 14 37% Total 396 211…
H&P Global Fleet Under Term Contract Number of Rigs Already Under Long-Term Contracts* (Estimated Quarterly Average, Including Announced New Builds - as of 6/26/17) Segment Q3 Q4 Q1 Q2 Q3 Q4 Q1 FY17 FY17 FY18 FY18 FY18 FY18 FY19…
H&Ps International Land Operations Rig Fleet Status (as of June 26, 2017) Long-term Contracted Idle Total Contracts (1) Argentina 10 9 19 10 Bahrain 1 2 3 Colombia 3 5 8 Ecuador 6 6 U.A.E. 2 2 (2) Total 14 24 38 10 (1) Rigs…
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. The category Large Operators includes majors and large…
H&Ps FlexRig Advantage The FlexRig Difference: Key Advantages Increased drilling productivity and reliability Variable frequency AC technology providing precise control and increased capability Computerized electronic driller more…
The Value Proposition: The Power of Efficiency Theoretical 20% Efficiency 40% Efficiency Base Case Improvement Improvement 1. Drilling days average 13.5 10.8 8.1 Other days average 5.0 4.0 3.0 Moving days average (several multi-well…
Technology & Quality Service Make a Difference (1) H&Ps Margin Premium (2) (1) Does not include the impact of early contract termination revenue. (2) Represents weighted-average rig margin per day for PTEN, NBR, PDS, and…
H&Ps Lead in U.S. Land AC Drive Rigs * The above estimates corresponding to U.S. lower 48 AC Drive fleets are derived from Rig Data and corporate filings. ** Values for PTEN include AC drive rigs recently acquired from Seventy…
H&Ps Lead in U.S. Land AC Drive Rigs with 1,500hp Drawworks Rating * The above estimates corresponding to U.S. lower 48 AC Drive fleets are derived from Rig Data and corporate filings. ** Values for PTEN include AC drive rigs…
H&P Very Well Positioned to Gain Share Idle 1,500 hp AC Drive Land Rigs (as of June 2017) Note: The above estimates are derived from multiple sources including Rig Data and corporate filings. * Includes 90 FlexRigs that have been…
Drilling Activity in the U.S.
Ten-Year Relative Shareholder Return Source: Nasdaq IR Insight (FactSet) as of June 19, 2017.
Land Drilling Market Valuations Source: Nasdaq IR Insight (FactSet) as of June 19, 2017.
Oil vs. Natural Gas Directed Rig Count
Oil and Natural Gas Prices Oil Prices Natural Gas Prices Source: Energy Information Administration and Nasdaq IR Insight (FactSet).
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