Helmerich & Payne, Inc. Howard Weil Energy Conference March 24, 2014
A Quick Primer on Helmerich & Payne U.S. land drilling market share leader Focused on innovation and returns on capital Leader in ongoing industry land rig replacement cycle Most modern and capable land drilling fleet Strong…
Evolution of H&Ps Global Rig Fleet * Estimates include existing rigs and announced new build commitments
Innovation & Applied Technology FlexRig Computerized Controls Drillers Cabin AC Driven Systems & Integrated Top Drive 31 Satellite Communications Mechanized Tubular BOP Handling Handling Rig Move Capabilities
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…
H&P Activity as of March 24, 2014 Rigs Rigs Working/ % Available Contracted Contracted U.S. Land 320 279 87% (1) AC Drive FlexRigs 287 279 97% SCR Fleet 33 0 0% Offshore 9 8 89% International Land 29 22 76% Total 358 309 86% (2)…
H&Ps U.S. Land Fleet Activity (1) (1) Includes completed new builds pending delivery and not generating revenue days.
U.S. Land Active Rig Count BHI Rig Count
FlexRigs Delivering Drilling Efficiencies We have over 1,300 rig years of AC Drive FlexRig drilling experience. Drilled over 52 million feet in 2012 Drilled in excess of 61 million feet in 2013 Improved our footage per day by…
Delivering Safety H&P vs. Industry (IADC) U.S. Land Safety Performance (2005 2013) OSHA Recordable Injury Incidence Rates Injuries per 200,000 Man Hours IADC w/o H&P = 1.81 H&P = 0.84
Changes in Lower 48 U.S. Land Rig Count * PDS active rig count includes both PDS and Grey Wolf rigs.
Drilling Operations Outlook For the Second Quarter of Fiscal 2014 We now expect total quarterly revenue days in the U.S. land segment to increase by approximately 3 to 4% sequentially (up from our prior estimate of approximately…
Increasing International FlexRig Presence Deploying ten existing FlexRig3s from the U.S. to Argentina Five-year term contracts with YPF to work in the Vaca Muerta play in the Neuqun Province All ten rigs expected to be operating…
U.S. Land Market Trends Today Increasing market demand for AC drive rigs Slightly improving spot market pricing Continued customer focus on drilling efficiency, technology and safety Conversations with customers for additional…
The Replacement Cycle Continues As of October 2008 (Peak) As of March 2014 (1,900 Active Rigs in U.S. Land (1,730 Active Rigs in U.S. Land By Power Type) By Power Type) Note: The above estimates corresponding to rig activity are…
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. **Estimated number of all other available AC Drive rigs not including those…
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
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 Pad Capable Fleet Approximately 50% of H&Ps U.S. Land active fleet, all of which are AC drive rigs, are equipped with hydraulic skid systems. Our pad capable fleet is fully utilized. Customers continue to contract/add…
H&P Continues to Capture Market Share As of October 2008 (Peak) As of March 2014 (1,900 Active Rigs in U.S. Land) (1,730 Active Rigs in U.S. Land) Note: The above estimates corresponding to market share are derived from Rig Data.…
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…
Leading U.S. Unconventional Driller (295 H&P Contracted Land Rigs as of 3/24/2014*) * Includes 16 announced new FlexRigs with customer commitments scheduled for delivery in calendar 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.
High-Grading Continues As of March 2013 As of March 2014 (1,630 Active Rigs in U.S. Land (1,730 Active Rigs in U.S. Land By Power Type) By Power Type) Note: The above estimates corresponding to rig activity are derived from…
H&Ps New Build Program Continues H&P plans to continue a build cadence of two rigs per month through March and then increase to three rigs per month through the rest of the fiscal year. We have the flexibility to modify our…
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
U.S. Land Average Daywork Margins(1) (1) Does not include the impact of early contract termination revenue.
Ten Year Profit Comparison * 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 17.5%. ** The corresponding ROE values for the selected companies exclude certain…
Current Dividend Yields Source: Thomson Reuters. Yields calculated as of market close on March 20, 2014.
Ten-Year Relative Shareholder Return Source: Thomson Reuters as of March 20, 2014
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&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.
H&P Global Fleet Under Term Contract Number of Rigs Already Under Long-Term Contracts (Estimated Quarterly Average, Including Announced New Builds - as of 3/24/14) Segment Q2 Q3 Q4 Q1 Q2 Q3 Q4 FY14 FY14 FY14 FY15 FY15 FY15 FY15…
H&Ps International Land Operations Rig Fleet Status (as of March 24, 2014) Long-term Active Idle Total Contracts (2) Argentina 8 1 9 4 Bahrain 3 3 3 Colombia 4 3 7 2 Ecuador 5 1 6 1 Tunisia 2 2 U.A.E. 2 2 2 (1) Total 22 7 29 12…
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…
Oil vs. Natural Gas Directed Rig Count
Oil and Natural Gas Prices Oil Prices Natural Gas Prices Source: Energy Information Administration and CME
H&Ps Exposure to Oil & Liquids Estimated proportion of H&Ps active U.S. Land rigs by primary hydrocarbon target as of 3/24/14 Dry Gas Dry Gas (Long-term (Spot Contracts) Market) 3% 5%
Return on Invested Capital (ROIC) * Excludes gains from the sale of investment securities and discontinued operations. H&P's unadjusted ROIC resulted in 16.8%. ** The corresponding ROIC values for the selected companies exclude…
Land Drilling Market Valuations Source: Thomson Reuters as of March 20, 2014.
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