Helmerich & Payne, Inc. Barclays 2014 CEO Energy-Power Conference September 4, 2014
About 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 balance sheet
H&Ps Global Rig Fleet * Estimates include existing rigs and announced new build commitments as of September 3, 2014.
H&P Activity as of September 3, 2014 Rigs Rigs Working/ % Available Contracted Contracted U.S. Land 335 291 87% (1) AC Drive FlexRigs 302 290 96% SCR Fleet 33 1 3% Offshore 9 9 100% International Land 35 28 80% Total 379 328 87%…
U.S. Land Active Rig Count Through Second Quarter of Calendar 2014 BHI Industry Rig Count
H&P Continues to Capture Market Share As of October 2008 (Peak) As of August 2014 (1,900 Active Rigs in U.S. Land) (1,900 Active Rigs in U.S. Land) Note: The above estimates corresponding to market share are derived from Rig Data.…
Leading U.S. Unconventional Driller (335 H&P Contracted Land Rigs as of 9/3/14*) * Includes 44 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 equal to or greater than 600 horsepower.
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 technology providing precise control and increased capability Computerized electronic driller more…
Technology & Quality Service Make a Difference (1) (3) H&Ps H&Ps Margin Utilization Premium Premium (2) (4) (1) Does not include the impact of early contract termination revenue. (2) Represents weighted-average rig margin…
Organic U.S. Land Fleet Growth 373 49 * Estimates include existing rigs and announced new build commitments.
Ten Year Profit Comparison * NBRs operating income corresponds to its U.S. Lower 48, U.S. Offshore and Alaska business units. ** PTENs operating income includes drilling operations in Canada.
General Market Comments The replacement cycle continues. U.S. land market trends continue to benefit H&P. International land markets are slowly evolving. Our operational outlook for the fourth fiscal quarter remains unchanged.
The Replacement Cycle Continues As of October 2008 (Peak) As of August 2014 (1,900 Active Rigs in U.S. Land (1,900 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…
Ongoing U.S. Land Market Trends 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…
Unconventional Plays Shaping Landscape Well Complexity is increasing: Horizontal and directional wells make up about 80% of wells drilled in the U.S. Extended reach laterals progressively longer Multi-well pad drilling gaining…
Increasing Focus on More Difficult Drilling
Active U.S. Land Rigs by Rig Type 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 rig…
Growth / Decline in U.S. Lower 48 Rig Activity As of 9/3/14 *Represents average active rigs for NBR, PTEN, and UNT.
Announcing Additional New Build FlexRigs Announcing long-term contracts for nine new FlexRigs in the U.S. Contracts announced this fiscal year for a total of 83 new FlexRigs, 39 of which have already been delivered Now building…
Growing Shareholder Value Lead Innovation Expand Drive Well Market Share Costs Down Satisfy Customers
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
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
FlexRigs Delivering Drilling Efficiencies We have over 1,400 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…
Return on Equity * Including gains from the sale of investment securities and discontinued operations, H&P's corresponding ROE resulted in 15.4%. ** The corresponding ROE values for the selected companies exclude certain…
Current Dividend Yields Source: Thomson Reuters. Yields calculated as of market close on August 26, 2014.
Ten-Year Relative Shareholder Return Source: Thomson Reuters as of August 26, 2014
In Summary: H&Ps long term strategy for growing shareholder value: Innovation Technology Safety and operational excellence Customer satisfaction
Additional References
A Value Proposition Example H&P vs. Competitors Permian Basin Horizontal Well Estimated Estimated Peer H&P FlexRig3 Conventional Rig AC Rig Average (Spot Market) 1. Drilling days 15.4 12.1 Other days No Data 3.0 3.0 Moving days 4.0…
H&Ps U.S. Land Fleet Activity (1) (1) Includes completed new builds pending delivery and not generating revenue days.
Distribution of Announced New Builds Of the 83 new build FlexRigs announced so far during this fiscal year, 33 are going to the Permian, 18 to the Oklahoma Woodford, 15 to the Eagle Ford, five to the Tuscaloosa Marine Shale, four…
H&Ps Pad Capable Fleet (As of September 3, 2014) 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…
H&P Global Fleet Under Term Contract Number of Rigs Already Under Long-Term Contracts (Estimated Quarterly Average, Including Announced New Builds - as of 9/3/14) Segment Q4 Q1 Q2 Q3 Q4 Q1 Q2 FY14 FY12 FY15 FY15 FY15 FY16 FY16…
H&Ps International Land Operations Rig Fleet Status (as of September 3, 2014) Active In-Transit Idle Total Argentina 7 5 1 13 Bahrain 3 3 Colombia 5 3 8 Ecuador 5 1 6 Mozambique 1 1 Tunisia 2 2 U.A.E. 2 2 Total 23 5 7 35
U.S. Land Average Daywork Margins(1) (1) Does not include the impact of early contract termination revenue.
Return on Invested Capital (ROIC) * Excludes gains from the sale of investment securities and discontinued operations. H&P's unadjusted ROIC resulted in 14.7%. ** The corresponding ROIC values for the selected companies exclude…
Land Drilling Market Valuations Source: Thomson Reuters as of August 26, 2014.
Changes in Lower 48 U.S. Land Rig Count * PDS active rig count includes both PDS and Grey Wolf rigs.
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.
Oil and Natural Gas Prices 16 160 Henry Hub Spot 14 West Texas Intermediate Spot 140 U.S. Dollars per Million British Thermal Units 12 120 U.S. Dollars per Barrel 10 100 8 80 Oil Prices 6 60 4 40 2 20 Natural…
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