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Meetings with Investors – Helmerich & Payne Inc.

Helmerich & Payne Inc. · Feb 7, 2018 · 63 slides

Investor presentation from the Shale Experts oil & gas presentation and slide database. Every page is imaged and its text indexed for search across operators, plays, basins and time.

Slides

  1. Meetings with Investors – Helmerich & Payne Inc. – slide 1
    Helmerich & Payne, Inc. Meetings with Investors February 7-8, 2018
  2. Meetings with Investors – Helmerich & Payne Inc. – slide 2
    U.S. Land Drilling Market Conditions Higher oil prices boding well for increasing drilling demand and continuing dayrate improvement Customer level of interest in putting additional rigs to work has increased since our most recent…
  3. Meetings with Investors – Helmerich & Payne Inc. – slide 3
    Second Fiscal Quarter H&P Outlook (As of February 7, 2018) Drilling Operations Outlook for 2Q of Fiscal 2018 Compared to 1Q of Fiscal 2018 U.S. Land Segment Revenue days now expected to increase by approximately 2% (representing a 4%…
  4. Meetings with Investors – Helmerich & Payne Inc. – slide 4
    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…
  5. Meetings with Investors – Helmerich & Payne Inc. – slide 5
    H&Ps Strong Balance Sheet (As of September 30, 2017) Total-Debt-to-Total-Capitalization Ratio1 1. Total Capitalization is defined as Total Debt plus Shareholders' Equity. Source: Company Filings.
  6. Meetings with Investors – Helmerich & Payne Inc. – slide 6
    Current Dividend Yields 4% 3% Dividend Yield (%) 2% 1% 0% HP NBR PTEN PDS UNT Source: Nasdaq IR Insight (FactSet). Yields calculated as of market close on February 2, 2018.
  7. Meetings with Investors – Helmerich & Payne Inc. – slide 7
    H&Ps Global Rig Fleet 450 Offshore 390 395 396 396 400 374 International Land 340 350 U.S. Land 320 Rigs Available 281 300 U.S. Land Super-Spec** 254 257 224 250 193 200 151 127 130 128 150 111 96 100 50 0 2001…
  8. Meetings with Investors – Helmerich & Payne Inc. – slide 8
    U.S. Land Market Share Leader As of January 2018 (1,000 Active Rigs in U.S. Land) 24% 18% Estimated Market Share 12% 6% 0% HP PTEN NBR PDS UNT Note: The above estimates corresponding to market share are derived…
  9. Meetings with Investors – Helmerich & Payne Inc. – slide 9
    H&P Global Fleet Under Term Contract Term Contract Status - H&P Global Fleet* (As of 1/25/18) 110 U.S. Land Already Under Long-Term Contracts 100 90 International Land (Estimated Annual Average) Offshore 80 Number of…
  10. Meetings with Investors – Helmerich & Payne Inc. – slide 10
    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.
  11. Meetings with Investors – Helmerich & Payne Inc. – slide 11
    Super-Spec* Rigs Rapidly Gain Market Share 1,000 41% Super-Spec* as a % of Active US Land Rigs (BHI North American Rotary Rig Count) Number of Active U.S. Land Rigs 750 38% 500 35% 250 32% U.S. Land Rig Count…
  12. Meetings with Investors – Helmerich & Payne Inc. – slide 12
    U.S. Activity by Well and Rig Type 1,000 Active U.S. Land Rigs (January 2018) Vertical Wells Being Drilled 7% Horizontal or Vertical Directional Wells Being Drilled with SCR or All Rigs Mechanical Rigs 26% Horiz & Dir SCR &…
  13. Meetings with Investors – Helmerich & Payne Inc. – slide 13
    Active AC Drive U.S. Rig Market Share (680 Rigs as of January 2018) Other Land Drillers HP 27% 30% PDS 8% NBR PTEN 15% 20% Note: The above estimates corresponding to rig activity are derived from multiple sources…
  14. Meetings with Investors – Helmerich & Payne Inc. – slide 14
    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 FlexRig fleet allows for broad range…
  15. Meetings with Investors – Helmerich & Payne Inc. – slide 15
    CapEx Upgrade Opportunities 7,500 psi mud circulating systems Investing in multi-well pad drilling capability FlexRig3 skid systems FlexRig3 walking systems Third mud pump 25,000+ ft setback capability Increased mud volume…
  16. Meetings with Investors – Helmerich & Payne Inc. – slide 16
    H&P U.S. Land Fleet Family of SolutionsTM (As of January 25, 2018) 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** Other (56)…
  17. Meetings with Investors – Helmerich & Payne Inc. – slide 17
    AC Fleet Size Creates Opportunity (As of January 25, 2018) Greater scale than any competitor; ability to upgrade and deploy a total of 270 FlexRigs in U.S. Land segment to rig specifications in highest demand without investing in…
  18. Meetings with Investors – Helmerich & Payne Inc. – slide 18
    H&Ps Lead in U.S. Land AC Drive Rigs with 1,500hp Drawworks Rating and 750,000 lbs. Mast Hookload 320 Estimated Number of AC Drive Land Rigs in Idle 280 U.S. with 1,500 hp Drawworks Rating Active and 750k lbs. Mast…
  19. Meetings with Investors – Helmerich & Payne Inc. – slide 19
    H&Ps Lead in U.S. Land AC Drive Rigs with 1,500hp Drawworks Rating and 750,000 lbs. Mast Hookload 320 Estimated Number of AC Drive Land Rigs in Idle 280 U.S. with 1,500 hp Drawworks Rating Active and 750k lbs. Mast…
  20. Meetings with Investors – Helmerich & Payne Inc. – slide 20
    H&Ps Lead in U.S. Land AC Drive Rigs with 1,500hp Drawworks Rating and 750,000 lbs. Mast Hookload 320 Estimated Number of AC Drive Land Rigs in Idle 280 U.S. with 1,500 hp Drawworks Rating Active and 750k lbs. Mast…
  21. Meetings with Investors – Helmerich & Payne Inc. – slide 21
    Industrys Super-Spec* and Upgradable Utilization * AC drive FlexRigs with 1,500 hp drawworks and 750,000 hookload ratings that do not already have 7,500 psi mud circulating systems and multiple-well pad drilling systems (herein…
  22. Meetings with Investors – Helmerich & Payne Inc. – slide 22
    H&P U.S. Land Fleet Family of SolutionsTM (As of January 25, 2018) 1,500 hp AC Drive FlexRigs*, including 199 Upgraded or Upgradeable to 206 Contracted H&P U.S. Land Rigs Rig Specifications in High Demand** Other (7) Potential…
  23. Meetings with Investors – Helmerich & Payne Inc. – slide 23
    U.S. Land Market Share Gains Since 2014 Peak 6.0% 5.0% from October 2014 to January 2018 U.S. Land Market Share Gains 4.0% 3.0% 2.0% 1.0% 0.0% HP PDS PTEN* NBR -1.0% Note: The above estimates…
  24. Meetings with Investors – Helmerich & Payne Inc. – slide 24
    H&Ps Experience and Expertise People, systems and the operational support structures in place to drive high performance and reliability 2,000+ rig years of AC drive operational experience Expertise within an integrated business…
  25. Meetings with Investors – Helmerich & Payne Inc. – slide 25
    Benefits of an Integrated Model DESIGN (and redesign) CONTINUOUS IMPROVEMENT OPERATE FABRICATE (and improve) (and upgrade)
  26. Meetings with Investors – Helmerich & Payne Inc. – slide 26
    FlexRig Family of SolutionsTM - Pad Design FlexRig3 skid system is designed to meet the requirements for standard pad drilling. Typically customers drill 2-4 wells per pad. FlexRig5 skid system is a bi-directional design, with the…
  27. Meetings with Investors – Helmerich & Payne Inc. – slide 27
    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.
  28. Meetings with Investors – Helmerich & Payne Inc. – slide 28
    U.S. Land Market Share Gains Since 2016 Trough (As Every Contractors Best Rigs Competed for Work) from May 2016 to January 2018 4.0% U.S. Land Market Share Gains 3.0% 2.0% 1.0% 0.0% HP PDS PTEN* NBR -1.0%…
  29. Meetings with Investors – Helmerich & Payne Inc. – slide 29
    H&Ps U.S. Land Fleet Activity 330 300 297 Number of Active H&P U.S. Land Rigs 270 240 233 206 191 200 210 179 183 180 161 153 147 150 158 134 98 102 109 87 120 111 109 117 87 91 87 90 128 104 60 118 84 73 72…
  30. Meetings with Investors – Helmerich & Payne Inc. – slide 30
    Ongoing U.S. Land Market Trends Unconventional plays continue to shape the landscape Increasingly complex well designs, including longer laterals and more challenging drilling requirements Ongoing trend toward more complex wells…
  31. Meetings with Investors – Helmerich & Payne Inc. – slide 31
    Leading U.S. Unconventional Driller (206 H&P Contracted Land Rigs as of 1/25/18) Other Gas (Dry and Liquids Rich), 3 Niobrara Shale, 4 Mississippian, 1 Utica Shale, 5 Woodbine, 1 Marcellus Shale, 5 Bakken Shale, 6 Piceance…
  32. Meetings with Investors – Helmerich & Payne Inc. – slide 32
    Unconventional Drilling in the Permian (As of January 2018) 500 100 H&P H&Ps Active Rigs in the Permian Basin Total Active Rigs in the Permian Basin Horizontal / Directional 400 Vertical 80 300 60 200 40 100…
  33. Meetings with Investors – Helmerich & Payne Inc. – slide 33
    Increasing Focus on More Difficult Drilling U.S. Rig Activity by Drilling Type 100% Vertical Drilling 90% Horizontal or Directional Drilling (BHI North American Rotary Rig Count) 80% Percentage of Active U.S. Rigs 70%…
  34. Meetings with Investors – Helmerich & Payne Inc. – slide 34
    U.S. Land Horizontal and Directional Activity (As of January 2018) 80% Percentage of Active U.S. Land Rigs Drilling 70% Horizontal and Directional Well Paths 60% 50% 40% 30% 20% AC Drive Rigs SCR Rigs 10%…
  35. Meetings with Investors – Helmerich & Payne Inc. – slide 35
    The Replacement Cycle: Customer Adoption U.S. Land Market (as of January 2018) Top 10 E&P Operators Next 130 E&P Operators Remaining E&P Operators (230 Active Rigs by Power Type) (600 Active Rigs by Power Type) (170 Active Rigs by…
  36. Meetings with Investors – Helmerich & Payne Inc. – slide 36
    The Replacement Cycle Continues As of January 2018 (1,000 Active Rigs in U.S. Land By Power Type) Mechanical Rigs 15% SCR Rigs 17% AC Drive Rigs 68% As of October 2008 (Peak) As of October 2014 (Peak) (1,925 Active Rigs…
  37. Meetings with Investors – Helmerich & Payne Inc. – slide 37
    U.S. Land Horizontal and Directional Activity (925 Rigs as of January 2018) Legacy Rigs 28% AC Drive Rigs 72% Note: The above estimates corresponding to rig activity are derived from multiple sources including Rig Data and…
  38. Meetings with Investors – Helmerich & Payne Inc. – slide 38
    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
  39. Meetings with Investors – Helmerich & Payne Inc. – slide 39
    Center of Excellence Tulsa, OK 24/7 Technical and Performance Solutions: Support Structure Data Analysis Best Practices
  40. Meetings with Investors – Helmerich & Payne Inc. – slide 40
    H&P Adding to the Family of Solutions Recent MOTIVE and MagVAR acquisitions create a powerful software platform and compelling value opportunity for E&P companies Offers flexibility to select best technology regardless of drilling…
  41. Meetings with Investors – Helmerich & Payne Inc. – slide 41
    MOTIVE Drilling Technologies, Inc. MOTIVEs proprietary Bit Guidance System is a unique directional drilling technology. Industry leader in the use of cognitive computing to guide the directional drilling process Algorithm-driven…
  42. Meetings with Investors – Helmerich & Payne Inc. – slide 42
    MOTIVE Case Study Industry Problem: Higher than expected drilling and lifting costs due to the inability to consistently follow a prescribed well path and to hit and stay within the targets identified collectively by the operators…
  43. Meetings with Investors – Helmerich & Payne Inc. – slide 43
    MagVAR MagVAR is a leading provider of MWD geomagnetic referencing and survey quality management Real-time center serving active horizontal rigs drilling in North America Utilized for over 40 E&P companies 3,000+ wells analyzed and…
  44. Meetings with Investors – Helmerich & Payne Inc. – slide 44
    Well Placement is Critical MagVAR services reduce standard surveying uncertainty by 50-60%, increasing horizontal well economics while reducing risk. Precise well placement enables maximum reservoir drainage More accurate positional…
  45. Meetings with Investors – Helmerich & Payne Inc. – slide 45
    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…
  46. Meetings with Investors – Helmerich & Payne Inc. – slide 46
    H&Ps Long Term Strategy Innovation Technology Safety, operational excellence and reliability Customer satisfaction Financial strength
  47. Meetings with Investors – Helmerich & Payne Inc. – slide 47
    Additional References
  48. Meetings with Investors – Helmerich & Payne Inc. – slide 48
    H&P Activity as of January 25, 2018 Rigs Rigs Working/ % Available Contracted Contracted U.S. Land 350 206 59% AC Drive FlexRigs 348 (1) 206 59% (2) SCR Fleet 2 0 0% Offshore 8 5 63% International Land 38 17 45% Total Fleet 396 228…
  49. Meetings with Investors – Helmerich & Payne Inc. – slide 49
    H&P Global Fleet Under Term Contract Number of Rigs Already Under Long-Term Contracts* (Estimated Quarterly Average - as of 1/25/18) Segment Q2 Q3 Q4 Q1 Q2 Q3 Q4 FY18 FY18 FY18 FY19 FY19 FY19 FY19 U.S. Land 104.1 91.4 74.1 63.7…
  50. Meetings with Investors – Helmerich & Payne Inc. – slide 50
    U.S. Land Average Rig Expense per Day * Excludes extraordinary items mentioned in a particular quarters press release (e.g. lawsuit settlement charges). ** Estimated average rig expense per day for operating rigs only excludes…
  51. Meetings with Investors – Helmerich & Payne Inc. – slide 51
    H&Ps International Land Operations Rig Fleet Status (as of January 25, 2018) Long-term (1) Contracted Idle Total Contracts (3) Argentina 16 3 19 10 Bahrain 1 2 3 Colombia 8 8 Ecuador 6 6 U.A.E. 2 2 (2) Total 17 21 38 10 (1)…
  52. Meetings with Investors – Helmerich & Payne Inc. – slide 52
    H&P vs. Industry U.S. Land Customer Base H&P Industry U.S. Land Activity U.S. Land Activity Estimated Customer Distribution Estimated Customer Distribution (January 2018) (January 2018) Small & Private Operators Small &…
  53. Meetings with Investors – Helmerich & Payne Inc. – slide 53
    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…
  54. Meetings with Investors – Helmerich & Payne Inc. – slide 54
    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…
  55. Meetings with Investors – Helmerich & Payne Inc. – slide 55
    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…
  56. Meetings with Investors – Helmerich & Payne Inc. – slide 56
    H&Ps Lead in U.S. Land AC Drive Rigs 360 320 of AC Drive Land Rigs in U.S.* 280 240 Estimated Number 200 160 120 80 40 0 HP NBR PTEN** PDS All Others*** AC Drive Rigs (existing as of third quarter…
  57. Meetings with Investors – Helmerich & Payne Inc. – slide 57
    H&Ps Lead in U.S. Land AC Drive Rigs with 1,500hp Drawworks Rating 360 Estimated Number of AC Drive Land Rigs in 320 U.S. with 1,500 hp Drawworks Rating* 280 240 200 160 120 80 40 0 HP PTEN** NBR PDS All…
  58. Meetings with Investors – Helmerich & Payne Inc. – slide 58
    H&P Very Well Positioned to Gain Share Idle 1,500 hp AC Drive Land Rigs (as of January 2018) 140 Estimated Number of AC Drive Land Rigs in U.S. with 1,500 hp Drawworks Rating 120 100 80 60 40 20 0 HP* NBR…
  59. Meetings with Investors – Helmerich & Payne Inc. – slide 59
    Drilling Activity in the U.S. BHI U.S. Land Rig Count 2,500 (BHI North American Rotary Rig Count) Number of Active U.S. Land Rigs 2,000 1,500 1,000 500 0
  60. Meetings with Investors – Helmerich & Payne Inc. – slide 60
    Ten-Year Relative Shareholder Return 400% HP NBR PTEN UNT 300% PDS 200% 100% 0% Source: Nasdaq IR Insight (FactSet) as of February 2, 2018.
  61. Meetings with Investors – Helmerich & Payne Inc. – slide 61
    Land Drilling Market Valuations 8,000 7,000 6,000 Market Capitalization 5,000 (Millions) 4,000 3,000 2,000 1,000 0 HP PTEN NBR UNT PDS Source: Nasdaq IR Insight (FactSet) as of February 2, 2018.
  62. Meetings with Investors – Helmerich & Payne Inc. – slide 62
    Oil vs. Natural Gas Directed Rig Count 2,500 Total Active Rigs Rigs Drilling for Oil (BHI North American Rotary Rig Count) Rigs Drilling for Gas 2,000 Number of Active U.S. Rigs 1,500 1,000 500 0
  63. Meetings with Investors – Helmerich & Payne Inc. – slide 63
    Oil and Natural Gas Prices 16 160 Henry Hub Spot U.S. Dollars per Million British Thermal Units 14 West Texas Intermediate Spot 140 12 120 U.S. Dollars per Barrel 10 100 8 80 Oil Prices 6 60 4 40 2 20…

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