Helmerich & Payne, Inc. 2014 Citi Global Energy and Utilities Conference May 13, 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…
U.S. Land Active Rig Count BHI Industry Rig Count
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
Evolution of H&Ps Global Rig Fleet * Estimates include existing rigs and announced new build commitments.
H&P Activity as of May 13, 2014 Rigs Rigs Working/ % Available Contracted Contracted U.S. Land 327 289 88% (1) AC Drive FlexRigs 294 288 98% SCR Fleet 33 1 3% (2) Offshore 9 8 89% International Land 31 24 77% Total 367 321 87%…
U.S. Land Market Trends Today Stronger than expected oil and gas prices for 2014 Increasing proportion of horizontal wells with longer laterals and pad drilling requirements Increasing market demand for AC drive rigs Slightly…
H&Ps U.S. Land Fleet Activity (1) (1) Includes completed new builds pending delivery and not generating revenue days.
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
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
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…
The Replacement Cycle Continues As of October 2008 (Peak) As of May 2014 (1,900 Active Rigs in U.S. Land (1,780 Active Rigs in U.S. Land By Power Type) By Power Type) Note: The above estimates corresponding to rig activity are…
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…
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…
H&Ps Pad Capable Fleet Roughly half of H&Ps U.S. Land active rigs are equipped with hydraulic skid systems. Our pad capable fleet is fully utilized. Customers continue to contract/add skid systems to existing FlexRigs.
H&P Continues to Capture Market Share As of October 2008 (Peak) As of May 2014 (1,900 Active Rigs in U.S. Land) (1,780 Active Rigs in U.S. Land) Note: The above estimates corresponding to market share are derived from Rig Data.…
Leading U.S. Unconventional Driller (306 H&P Contracted Land Rigs as of 5/13/14*) * Includes 17 announced new FlexRigs with customer commitments scheduled for delivery in fiscal 2014 and fiscal 2015.
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.
H&Ps New Build Program Continues Plan to build three rigs per month through at least the remainder of the fiscal year. Flexibility to increase our production cadence and our capital spares capacity. This approach has allowed us…
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 May 8, 2014.
Ten-Year Relative Shareholder Return Source: Thomson Reuters as of May 8, 2014
In Summary: H&Ps long term strategy for growing shareholder value: Innovation Technology Safety and operational excellence Customer satisfaction
Additional References
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…
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…
Changes in Lower 48 U.S. Land Rig Count * PDS active rig count includes both PDS and Grey Wolf rigs.
High-Grading Continues As of May 2013 As of May 2014 (1,610 Active Rigs in U.S. Land (1,780 Active Rigs in U.S. Land By Power Type) By Power Type) Note: The above estimates corresponding to rig activity are derived from multiple…
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 5/13/14) Segment Q3 Q4 Q1 Q2 Q3 Q4 Q1 FY14 FY14 FY15 FY15 FY15 FY15 FY16…
H&Ps International Land Operations Rig Fleet Status (as of May 13, 2014) Active In-Transit Idle Total Long-term Contracts Argentina 8 1 9 4 Bahrain 3 3 3 Colombia 4 1 3 8 1 Ecuador 5 1 6 1 Mozambique 1 1 Tunisia 2 2 U.A.E. 2 2 2 (1)…
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 5/13/14 Dry Gas Dry Gas (Long-term (Spot Contracts) Market) 3% 3%
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 May 8, 2014.
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