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Meetings With Investors – Helmerich & Payne Inc.

Helmerich & Payne Inc. · May 16, 2018 · 67 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 May 2018
  2. Meetings With Investors – Helmerich & Payne Inc. – slide 2
    Presentation Outline Market conditions H&Ps long term strategy Most capable and uniform land drilling fleet Family of SolutionsTM Market share leader in the U.S. Technology driven wellbore quality and accuracy Very strong…
  3. Meetings With Investors – Helmerich & Payne Inc. – slide 3
    Drilling Market Conditions Higher oil prices boding well for increasing drilling demand and improving dayrates Customer level of interest in putting additional rigs to work continues to increase Additional demand for super-spec…
  4. Meetings With Investors – Helmerich & Payne Inc. – slide 4
    H&Ps Long Term Strategy Innovation Technology Safety, operational excellence and reliability Customer satisfaction Financial strength
  5. Meetings With Investors – Helmerich & Payne Inc. – slide 5
    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…
  6. Meetings With Investors – Helmerich & Payne Inc. – slide 6
    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…
  7. Meetings With Investors – Helmerich & Payne Inc. – slide 7
    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…
  8. Meetings With Investors – Helmerich & Payne Inc. – slide 8
    CapEx Upgrade Opportunities 7,500 psi mud circulating systems Multi-well pad drilling capability Third mud pump 25,000+ ft setback capability Increased mud volume capability Other customer specific upgrades
  9. Meetings With Investors – Helmerich & Payne Inc. – slide 9
    Competitive Benefits of Uniform FlexRig Fleet Uniform fleet creates adaptive environment to reach maximum efficiency for people, equipment and technology Uniform fleet is critical in increasingly complex basins providing consistent…
  10. Meetings With Investors – Helmerich & Payne Inc. – slide 10
    Most Capable & Uniform Fleet Creates Opportunity (As of May 16, 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…
  11. Meetings With Investors – Helmerich & Payne Inc. – slide 11
    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…
  12. Meetings With Investors – Helmerich & Payne Inc. – slide 12
    H&P U.S. Land Fleet Family of SolutionsTM (As of May 16, 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) Potential…
  13. Meetings With Investors – Helmerich & Payne Inc. – slide 13
    Active AC Drive U.S. Rig Market Share (720 Rigs as of May 2018) Other Land Drillers HP 28% 30% PDS 8% PTEN NBR 20% 14% Note: The above estimates corresponding to rig activity are derived from multiple sources including…
  14. Meetings With Investors – Helmerich & Payne Inc. – slide 14
    U.S. Land Market Share Leader As of May 2018 (1,080 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 from…
  15. Meetings With Investors – Helmerich & Payne Inc. – slide 15
    U.S. Land Market Share Gains Since 2014 Peak 6.0% from October 2014 to May 2018 U.S. Land Market Share Gains 4.0% 2.0% 0.0% HP PDS PTEN* NBR -2.0% Note: The above estimates corresponding to market share are…
  16. Meetings With Investors – Helmerich & Payne Inc. – slide 16
    Leading U.S. Unconventional Driller (218 H&P Contracted Land Rigs est. for 5/16/18) Mississippian, 2 Woodbine, 1 Niobrara Shale, 4 Other Gas (Dry and Utica Shale, 5 Liquids Rich), 1 Marcellus Shale, 6 Piceance Basin, 7 Bakken…
  17. Meetings With Investors – Helmerich & Payne Inc. – slide 17
    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
  18. Meetings With Investors – Helmerich & Payne Inc. – slide 18
    Customer Satisfaction Matters H&P has been rated 1st in total customer satisfaction for TEN YEARS IN A ROW* Value creation for the customer is not only driven by having the right rig. It is also driven by service; the ability of…
  19. Meetings With Investors – Helmerich & Payne Inc. – slide 19
    Benefits of an Integrated Model DESIGN (and redesign) CONTINUOUS IMPROVEMENT OPERATE FABRICATE (and improve) (and upgrade)
  20. Meetings With Investors – Helmerich & Payne Inc. – slide 20
    H&P Adding to the Family of Solutions Wellbore Quality and Accuracy Critical to Extracting Value from Shale Assets Recent MOTIVE and MagVAR acquisitions create a powerful platform and compelling value opportunity for E&P companies…
  21. Meetings With Investors – Helmerich & Payne Inc. – slide 21
    Challenge: Inconsistent Directional Drilling Drilling Performance Varies Widely Increased Tortuosity of Wellbores Poor Drilling Accuracy Missed Targets Downhole Tool Failures Late Target Changes at Landing These inefficiencies…
  22. Meetings With Investors – Helmerich & Payne Inc. – slide 22
    Directional Complexity/Velocity Trend Extended Reach S-Well Horizontal Turnazontal SPEED AND COMPLEXITY CONTINUOUSLY INCREASING Industry Attempting to Hire Artists, Need to Convert Art Into Science 23
  23. Meetings With Investors – Helmerich & Payne Inc. – slide 23
    Motive Bit Guidance System Bit Guidance is a completely new approach to directional drilling, enabling repeatable execution of High Quality Wellbores by: Completely Automating ALL of the Following Tasks: Data Analysis Real-Time…
  24. Meetings With Investors – Helmerich & Payne Inc. – slide 24
    MOTIVE Drilling Technologies, Inc. MOTIVE is the industry leader in the use of cognitive computing to guide the directional drilling process. Motive has commercially drilled more than 5 million feet across all of the major U.S. shale…
  25. Meetings With Investors – Helmerich & Payne Inc. – slide 25
    Value Driven AutomationTM Real-Time Economic Driven Decisions Millions of potential options are considered by Guidance System to find the optimal convergence back to the well plan. Convergence Planner considers costs and value…
  26. Meetings With Investors – Helmerich & Payne Inc. – slide 26
    Challenge: Sensor Error Accumulates Objective Reality Accurate Placement/Spacing Critical to Maximize Well Economics 27
  27. Meetings With Investors – Helmerich & Payne Inc. – slide 27
    Accurate Wellbore Placement Matters - Reservoir: Optimal drainage - Completions: Controlling hydraulic communication - Geology: Better data for geological mapping - Regulatory: Greater confidence wells are within boundaries -…
  28. Meetings With Investors – Helmerich & Payne Inc. – slide 28
    Magnetic Variation Services 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…
  29. Meetings With Investors – Helmerich & Payne Inc. – slide 29
    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…
  30. Meetings With Investors – Helmerich & Payne Inc. – slide 30
    H&P / Motive / MagVAR Strategic Value 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…
  31. Meetings With Investors – Helmerich & Payne Inc. – slide 31
    24/7 Technical and Performance Solutions Center of Excellence MagVAR Real-Time Center Tulsa, OK Denver, CO Staffed by Technicians & Drillers Staffed by Engineers Motive Command Center Dallas, TX Staffed by Directional Drillers
  32. Meetings With Investors – Helmerich & Payne Inc. – slide 32
    H&Ps Strong Balance Sheet (As of March 31, 2018) Total-Debt-to-Total-Capitalization Ratio1 HP PTEN UNT PDS NBR 0% 10% 20% 30% 40% 50% 60% 70% 1. Total Capitalization is defined as Total Debt plus Shareholders'…
  33. Meetings With Investors – Helmerich & Payne Inc. – slide 33
    H&P Global Fleet Under Term Contract Term Contract Status - H&P Global Fleet* (As of 5/16/18) 130 120 U.S. Land Already Under Long-Term Contracts 110 International Land (Estimated Annual Average) 100 Offshore 90 Number of…
  34. Meetings With Investors – Helmerich & Payne Inc. – slide 34
    H&P Winning Strategy FlexRig Fleet and a Digital Platform Most Capable and Uniform Fleet Growing Market Share Meeting Wellbore Quality & Accuracy Challenges Strong Balance Sheet Robust Backlog
  35. Meetings With Investors – Helmerich & Payne Inc. – slide 35
  36. Meetings With Investors – Helmerich & Payne Inc. – slide 36
    Additional References
  37. Meetings With Investors – Helmerich & Payne Inc. – slide 37
    Third Fiscal Quarter H&P Outlook (As of April 26, 2018) Drilling Operations Outlook for 3Q of Fiscal 2018 Compared to 2Q of Fiscal 2018 U.S. Land Segment Revenue days expected to increase by approximately 7% Average rig revenue per…
  38. Meetings With Investors – Helmerich & Payne Inc. – slide 38
    H&P Activity as of May 16, 2018 Rigs Rigs Working/ % Available Contracted Contracted U.S. Land 350 218 62% AC Drive FlexRigs 348 (1) 218 63% (2) SCR Fleet 2 0 0% Offshore 8 6 75% International Land 38 19 50% Total Fleet 396 243…
  39. Meetings With Investors – Helmerich & Payne Inc. – slide 39
    H&Ps U.S. Land Fleet Activity 330 300 297 Number of Active H&P U.S. Land Rigs 270 240 233 218 210 179 200 207 191 183 180 161 153 147 150 158 134 98 102 118 127 87 120 111 109 117 87 91 87 90 128 104 60 118 84…
  40. Meetings With Investors – Helmerich & Payne Inc. – slide 40
    H&Ps International Land Operations Rig Fleet Status (as of May 16, 2018) Long-term (1) Contracted Idle Total Contracts (3) Argentina 16 3 19 10 Bahrain 1 2 3 Colombia 2 6 8 Ecuador 6 6 U.A.E. 2 2 (2) Total 19 19 38 10 (1)…
  41. Meetings With Investors – Helmerich & Payne Inc. – slide 41
    U.S. Activity by Well and Rig Type 1,080 Active U.S. Land Rigs (May 2018) Vertical Wells Being Drilled 8% Horizontal or Vertical Directional Wells Being All Rigs Drilled with SCR or Mechanical Rigs Horiz & Dir 27% SCR & Mech…
  42. Meetings With Investors – Helmerich & Payne Inc. – slide 42
    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%…
  43. Meetings With Investors – Helmerich & Payne Inc. – slide 43
    U.S. Land Horizontal and Directional Activity (990 Rigs as of May 2018) Legacy Rigs 29% AC Drive Rigs 71% Note: The above estimates corresponding to rig activity are derived from multiple sources including Rig Data and…
  44. Meetings With Investors – Helmerich & Payne Inc. – slide 44
    U.S. Land Horizontal and Directional Activity (As of May 2018) 80% Percentage of Active U.S. Land Rigs Drilling Horizontal and Directional Well Paths 70% 60% 50% 40% 30% 20% AC Drive Rigs SCR Rigs 10% Mechanical…
  45. Meetings With Investors – Helmerich & Payne Inc. – slide 45
    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
  46. Meetings With Investors – Helmerich & Payne Inc. – slide 46
    Unconventional Drilling in the Permian (As of May 2018) 500 125 H&P H&Ps Active Rigs in the Permian Basin Total Active Rigs in the Permian Basin Horizontal / Directional 400 Vertical 100 300 75 200 50 100 25…
  47. Meetings With Investors – Helmerich & Payne Inc. – slide 47
    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
  48. Meetings With Investors – Helmerich & Payne Inc. – slide 48
    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…
  49. Meetings With Investors – Helmerich & Payne Inc. – slide 49
    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…
  50. Meetings With Investors – Helmerich & Payne Inc. – slide 50
    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…
  51. Meetings With Investors – Helmerich & Payne Inc. – slide 51
    Center of Excellence Tulsa, OK 24/7 Technical and Performance Solutions: Support Structure Data Analysis Best Practices
  52. Meetings With Investors – Helmerich & Payne Inc. – slide 52
    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…
  53. Meetings With Investors – Helmerich & Payne Inc. – slide 53
    H&P U.S. Land Fleet Family of SolutionsTM (As of May 16, 2018) 1,500 hp AC Drive FlexRigs*, including 210 Upgraded or Upgradeable to 218 Contracted H&P U.S. Land Rigs Rig Specifications in High Demand** Other (8) Potential 3,000…
  54. Meetings With Investors – Helmerich & Payne Inc. – slide 54
    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…
  55. Meetings With Investors – Helmerich & Payne Inc. – slide 55
    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 first quarter…
  56. Meetings With Investors – Helmerich & Payne Inc. – slide 56
    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…
  57. Meetings With Investors – Helmerich & Payne Inc. – slide 57
    H&P Very Well Positioned to Gain Share Idle 1,500 hp AC Drive Land Rigs (as of May 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 PTEN** PDS…
  58. Meetings With Investors – Helmerich & Payne Inc. – slide 58
    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.
  59. Meetings With Investors – Helmerich & Payne Inc. – slide 59
    The Replacement Cycle Continues As of May 2018 (1,080 Active Rigs in U.S. Land By Power Type) Mechanical Rigs 16% SCR Rigs 18% AC Drive Rigs 66% As of October 2008 (Peak) As of October 2014 (Peak) (1,925 Active Rigs in…
  60. Meetings With Investors – Helmerich & Payne Inc. – slide 60
    The Replacement Cycle: Customer Adoption U.S. Land Market (as of May 2018) Top 10 E&P Operators Next 140 E&P Operators Remaining E&P Operators (250 Active Rigs by Power Type) (640 Active Rigs by Power Type) (190 Active Rigs by Power…
  61. Meetings With Investors – Helmerich & Payne Inc. – slide 61
    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…
  62. Meetings With Investors – Helmerich & Payne Inc. – slide 62
    H&P Global Fleet Under Term Contract Number of Rigs Already Under Long-Term Contracts* (Estimated Quarterly Average - as of 5/16/18) Segment Q3 Q4 Q1 Q2 Q3 Q4 Q1 FY18 FY18 FY19 FY19 FY19 FY19 FY20 U.S. Land 125.3 106.1 92.2 54.6…
  63. Meetings With Investors – Helmerich & Payne Inc. – slide 63
    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…
  64. Meetings With Investors – Helmerich & Payne Inc. – slide 64
    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…
  65. Meetings With Investors – Helmerich & Payne Inc. – slide 65
    Ten-Year Relative Shareholder Return 300% HP NBR PTEN UNT PDS 200% 100% 0% Source: Nasdaq IR Insight (FactSet) as of May 10, 2018.
  66. Meetings With Investors – Helmerich & Payne Inc. – slide 66
    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 May 10, 2018.
  67. Meetings With Investors – Helmerich & Payne Inc. – slide 67
    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 May 10, 2018.

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