Helmerich & Payne, Inc. Goldman Sachs Global Energy Conference January 9-10, 2018
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 September 30, 2017) Total-Debt-to-Total-Capitalization Ratio1 1. Total Capitalization is defined as Total Debt plus Shareholders' Equity. Source: Company Filings.
Current Dividend Yields 5% 4% Dividend Yield (%) 3% 2% 1% 0% HP NBR PTEN PDS UNT Source: Nasdaq IR Insight (FactSet). Yields calculated as of market close on January 2, 2018.
H&Ps Global Rig Fleet *The U.S. Land Super-Spec portion of the 2018E global rig fleet is as of 1/9/2018. The Company plans to upgrade additional rigs to super-spec status throughout 2018.
U.S. Land Market Share Leader As of December 2017 (990 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…
H&P Global Fleet Under Term Contract Term Contract Status - H&P Global Fleet* (As of 1/9/18) 100 U.S. Land Already Under Long-Term Contracts 90 International Land 80 (Estimated Annual Average) Offshore 70 Number of…
U.S. Land Drilling Market Conditions Recent oil price improvements could provide opportunities for increased drilling demand and dayrate improvement. Additional demand for super-spec rigs as the replacement cycle persists and well…
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.
Super-Spec* Rigs Rapidly Gaining 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…
U.S. Activity by Well and Rig Type 990 Active U.S. Land Rigs (December 2017) Vertical Wells Being Drilled 8% Horizontal or Directional Vertical Wells Being Drilled with All Rigs SCR or Mechanical Rigs 25% Horiz & Dir SCR &…
Active AC Drive U.S. Rig Market Share (670 Rigs as of December 2017) Other Land Drillers HP 27% 30% PDS 8% PTEN NBR 20% 15% Note: The above estimates corresponding to rig activity are derived from multiple sources…
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…
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…
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** Other (56) Potential Upgraded Upgrade (169)…
AC Fleet Size Creates Opportunity Greater scale than any competitor; ability to upgrade and deploy a total of 270 FlexRigs to rig specifications in highest demand without investing in new builds. 101 upgradeable FlexRigs remaining…
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…
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…
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…
Industrys Super-Spec* and Upgradable Utilization 56% 78% Utilization Utilization Idle Active Idle Active 600 Estimated Number of AC Drive Land Rigs in U.S. with 1,500 hp Drawworks Rating and 750k lbs. 500 96% Utilization…
H&P U.S. Land Fleet Family of SolutionsTM 1,500 hp AC Drive FlexRigs*, including 197 Upgraded or Upgradeable to 204 Contracted H&P U.S. Land Rigs Rig Specifications in High Demand** Other (7) Potential 3,000 hp Upgrade SCR…
U.S. Land Market Share Gains Since 2014 Peak 6.0% 5.0% from October 2014 to December 2017 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…
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…
Benefits of an Integrated Model DESIGN (and redesign) CONTINUOUS IMPROVEMENT OPERATE FABRICATE (and improve) (and upgrade)
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…
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.
U.S. Land Market Share Gains Since 2016 Trough (As Every Contractors Best Rigs Competed for Work) from May 2016 to December 2017 4.0% U.S. Land Market Share Gains 3.0% 2.0% 1.0% 0.0% HP PDS PTEN* NBR Note: The…
H&Ps U.S. Land Fleet Activity 330 300 297 Number of Active H&P U.S. Land Rigs 270 240 233 210 200 204 179 191 183 180 161 153 147 150 158 134 98 103 103 87 120 111 109 117 87 91 87 90 128 104 60 118 84 73 72 67…
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. Customers continue to focus on safety,…
Leading U.S. Unconventional Driller (204 H&P Contracted Land Rigs as of 1/9/18) Other Gas (Dry and Liquids Rich), 3 Marcellus Shale, 4 Mississippian, 1 Niobrara Shale, 4 Woodbine, 1 Utica Shale, 5 Bakken Shale, 6 Piceance…
Unconventional Drilling in the Permian (As of December 2017) 500 100 H&P Horizontal / Directional H&Ps Active Rigs in the Permian Basin Total Active Rigs in the Permian Basin 400 Vertical 80 300 60 200 40 100…
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%…
U.S. Land Horizontal and Directional Activity (As of December 2017) 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%…
The Replacement Cycle: Customer Adoption U.S. Land Market (as of December 2017) Top 10 E&P Operators Next 125 E&P Operators Remaining E&P Operators (220 Active Rigs by Power Type) (585 Active Rigs by Power Type) (185 Active Rigs by…
The Replacement Cycle Continues As of December 2017 (990 Active Rigs in U.S. Land By Power Type) Mechanical Rigs 15% SCR Rigs 18% AC Drive Rigs 67% As of October 2008 (Peak) As of October 2014 (Peak) (1,925 Active Rigs in…
U.S. Land Horizontal and Directional Activity (905 Rigs as of December 2017) Legacy Rigs 27% AC Drive Rigs 73% Note: The above estimates corresponding to rig activity are derived from multiple sources including Rig Data and…
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
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…
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…
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…
MagVAR MagVAR is a leading provider of MWD geomagnetic referencing and survey quality management Real-time center serving over 180 active horizontal rigs drilling in North America Utilized for over 40 E&P companies 3,000+ wells…
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…
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
Tax Cuts and Job Act The lower federal income tax rate of 21% (down from 35%) is expected to favorably impact our future after-tax cash flows and profits Our deferred income tax liability (currently at around 1.3 billion) will be…
Estimated H&P Activity as of January 9, 2018 Rigs Rigs Working/ % Available Contracted Contracted U.S. Land 350 204 58% AC Drive FlexRigs 348 (1) 204 59% (2) SCR Fleet 2 0 0% Offshore 8 5 63% International Land 38 17 45% Total…
H&P Global Fleet Under Term Contract Number of Rigs Already Under Long-Term Contracts* (Estimated Quarterly Average - as of 1/9/18) Segment Q2 Q3 Q4 Q1 Q2 Q3 Q4 FY18 FY18 FY18 FY19 FY19 FY19 FY19 U.S. Land 94.7 80.4 65.5 55.7 28.6…
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…
H&Ps International Land Operations Rig Fleet Status (as of January 9, 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)…
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 (December 2017) (December 2017) Small & Private Operators Small &…
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 360 320 280 of AC Drive Land Rigs in U.S.* 240 Estimated Number 200 160 120 80 40 0 HP NBR PTEN** PDS All Others*** AC Drive Rigs (existing as of third quarter…
H&Ps Lead in U.S. Land AC Drive Rigs with 1,500hp Drawworks Rating 360 Estimated Number of AC Drive Land Rigs in U.S. 320 with 1,500 hp Drawworks Rating* 280 240 200 160 120 80 40 0 HP PTEN** NBR PDS All…
H&P Very Well Positioned to Gain Share Idle 1,500 hp AC Drive Land Rigs (as of December 2017) 140 Estimated Number of AC Drive Land Rigs in U.S. 120 with 1,500 hp Drawworks Rating 100 80 60 40 20 0 HP* NBR…
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
Ten-Year Relative Shareholder Return 400% HP NBR PTEN UNT 300% PDS 200% 100% 0% Source: Nasdaq IR Insight (FactSet) as of January 2, 2018.
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 January 2, 2018.
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
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 6 Oil Prices 60 4 40 2 20…
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