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Meetings with Investors – Helmerich & Payne Inc.

Helmerich & Payne Inc. · Feb 5, 2015 · 51 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 February 4-5, 2015
  2. Meetings with Investors – Helmerich & Payne Inc. – slide 2
    U.S. Land Drilling Market Conditions Given low oil prices, drilling activity and spot pricing have significantly declined in the U.S. The total rig count reduction thus far has been more swift than many expected. Rig count…
  3. Meetings with Investors – Helmerich & Payne Inc. – slide 3
    Declining Drilling Activity in the U.S.
  4. Meetings with Investors – Helmerich & Payne Inc. – slide 4
    Well Positioned for Opportunities Ahead Our experience indicates that in the face of a very negative market like we see today, and a growing perception and panic of weaker-forever-prices, the market does work and eventually oil…
  5. Meetings with Investors – Helmerich & Payne Inc. – slide 5
    About Helmerich & Payne (H&P) A premier land drilling contractor founded in 1920 Very strong balance sheet U.S. land drilling market share leader Most modern and capable land drilling fleet Leader in ongoing industry land rig…
  6. Meetings with Investors – Helmerich & Payne Inc. – slide 6
    H&P Highlights Very Strong High Quality Balance Sheet Focus on Customer Base Organic Growth Strong Multi-Year Market Leader Backlog Superior Most Advanced ROIC and ROE Best-in-Class Fleet Safety
  7. Meetings with Investors – Helmerich & Payne Inc. – slide 7
    Selected H&P Financial Metrics As of December 31, 2014 Balance Sheet Highlights: (Dollars in millions) Cash (including Cash Equivalents) 252 Total LT Debt 80 Shareholders' Equity 4,921 Total Assets 6,802 Other Financial Highlights:…
  8. Meetings with Investors – Helmerich & Payne Inc. – slide 8
    H&Ps Conservative Financial Practices Conservatively managed balance sheet throughout its history Over the last 20 years, H&Ps peak total-debt-to-total-capitalization ratio has been 20% This capitalization ratio has averaged 9% and…
  9. Meetings with Investors – Helmerich & Payne Inc. – slide 9
    H&Ps Global Rig Fleet * Estimates include existing rigs and new build commitments as of January 29, 2015 and exclude nine conventional rigs decommissioned at the end of fiscal 2014.
  10. Meetings with Investors – Helmerich & Payne Inc. – slide 10
    Organic U.S. Land Fleet Growth 371 49 * Estimates include existing rigs and announced new build commitments.
  11. Meetings with Investors – Helmerich & Payne Inc. – slide 11
    H&P Continues to Capture Market Share As of October 2008 (Peak) As of January 2015 (1,900 Active Rigs in U.S. Land) (1,600 Active Rigs in U.S. Land) Note: The above estimates corresponding to market share are derived from Rig…
  12. Meetings with Investors – Helmerich & Payne Inc. – slide 12
    U.S. Land Active Rig Count Through Fourth Quarter of Calendar 2014 BHI Industry Rig Count
  13. Meetings with Investors – Helmerich & Payne Inc. – slide 13
    U.S. Land Average Daywork Margins(1) Through Fourth Quarter of Calendar 2014 (1) Does not include the impact of early contract termination revenue.
  14. Meetings with Investors – Helmerich & Payne Inc. – slide 14
    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.
  15. Meetings with Investors – Helmerich & Payne Inc. – slide 15
    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…
  16. Meetings with Investors – Helmerich & Payne Inc. – slide 16
    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
  17. Meetings with Investors – Helmerich & Payne Inc. – slide 17
    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…
  18. Meetings with Investors – Helmerich & Payne Inc. – slide 18
    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
  19. Meetings with Investors – Helmerich & Payne Inc. – slide 19
    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 H&P
  20. Meetings with Investors – Helmerich & Payne Inc. – slide 20
    Safety Excellence Also Generates Savings Reduced Workers Comp and General Liability Losses per Man Hour EMR = Experience Modifier Ratio (Industry Average = 1.00)
  21. Meetings with Investors – Helmerich & Payne Inc. – slide 21
    Return on Invested Capital (ROIC) * Excludes gains from the sale of investment securities and 4QFY14 abandonment (non-cash) charges. H&P's unadjusted ROIC resulted in 14.8%. ** The corresponding ROIC values for the selected…
  22. Meetings with Investors – Helmerich & Payne Inc. – slide 22
    H&P Global Fleet Under Term Contract ** * The above term contract coverage excludes long-term contracts for which the Company received early contract termination notifications as of 1/29/15. During the first fiscal quarter the…
  23. Meetings with Investors – Helmerich & Payne Inc. – slide 23
    H&P Term Contract Overview H&P new build contracts Average term contract duration of 3 years Firm take-or-pay early termination provisions* protect daily cash margin Attractive economic returns during term (with annual ROIC…
  24. Meetings with Investors – Helmerich & Payne Inc. – slide 24
    H&P Customer Credit Ratings Number of Active H&P Rigs* Number of Contracted Rig-Years** (Working for Corresponding Customers) (4.6 Billion H&P Backlog) * As of December 31, 2014. Consists of 294 active U.S. Land rigs, 9 active and…
  25. Meetings with Investors – Helmerich & Payne Inc. – slide 25
    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.
  26. Meetings with Investors – Helmerich & Payne Inc. – slide 26
    Underlying U.S. Land Market Trends Unconventional plays continue to shape the landscape. AC drive rigs are in highest demand. Customers continue to focus on drilling efficiency, technology and safety. The replacement cycle…
  27. Meetings with Investors – Helmerich & Payne Inc. – slide 27
    Increasing Focus on More Difficult Drilling
  28. Meetings with Investors – Helmerich & Payne Inc. – slide 28
    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.…
  29. Meetings with Investors – Helmerich & Payne Inc. – slide 29
    Legacy Fleet Most Impacted by Rig Count Reductions Note: The above estimates corresponding to rig activity are derived from multiple sources including Rig Data, Smith Bits, and corporate filings. Additionally, the drawworks…
  30. Meetings with Investors – Helmerich & Payne Inc. – slide 30
    The Replacement Cycle Continues As of October 2008 (Peak) As of January 2015 (1,900 Active Rigs in U.S. Land (1,600 Active Rigs in U.S. Land By Power Type) By Power Type) Note: The above estimates corresponding to rig activity…
  31. Meetings with Investors – Helmerich & Payne Inc. – slide 31
    U.S. Activity by Well and Rig Type 1,600 Active U.S. Land Rigs (January 2015) Vertical All Rigs Horiz & Dir AC Drive Rigs Horiz & Dir SCR & Mech Rigs Note: The above estimates corresponding to rig activity and rig type are…
  32. Meetings with Investors – Helmerich & Payne Inc. – slide 32
    U.S. Activity by Well and Rig Type 1,600 Active U.S. Land Rigs (January 2015) Vertical All Rigs Horiz & Dir AC Drive Rigs Horiz & Dir SCR & Mech Rigs Note: The above estimates corresponding to rig activity and rig type are…
  33. Meetings with Investors – Helmerich & Payne Inc. – slide 33
    New Build FlexRigs (As of January 29, 2015) 40 new FlexRigs are scheduled to be delivered during fiscal 2015 and six during early fiscal 2016 All 46 of the above new FlexRigs are supported with multi-year term contracts that are…
  34. Meetings with Investors – Helmerich & Payne Inc. – slide 34
    H&Ps Long Term Strategy Innovation Technology Safety and operational excellence Customer satisfaction Financial strength
  35. Meetings with Investors – Helmerich & Payne Inc. – slide 35
    Additional References
  36. Meetings with Investors – Helmerich & Payne Inc. – slide 36
    H&Ps Second Quarter Outlook and Other Estimates (As described in 1/29/15 Earnings Press Release and Conference Call) Drilling Operations Outlook for 2Q of Fiscal 2015 compared to 1Q of Fiscal 2015 U.S. Land Segment Revenue days…
  37. Meetings with Investors – Helmerich & Payne Inc. – slide 37
    H&P Activity as of January 29, 2015 Rigs Rigs Working/ % Available Contracted Contracted U.S. Land 340 243 71% AC Drive FlexRigs 315 242 77% SCR Fleet 25 1 4% Offshore 9 9 100% International Land 40 26 65% Total 389 278 71% (1)…
  38. Meetings with Investors – Helmerich & Payne Inc. – slide 38
    H&Ps U.S. Land Fleet Activity (1) (1) Includes completed new builds pending delivery and not generating revenue days.
  39. Meetings with Investors – Helmerich & Payne Inc. – slide 39
    Leading U.S. Unconventional Driller (274 H&P Contracted Land Rigs as of 1/29/15*) * Includes 31 announced new FlexRigs with customer commitments scheduled for delivery in calendar 2015.
  40. Meetings with Investors – Helmerich & Payne Inc. – slide 40
    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 or equal to 600 horsepower.
  41. Meetings with Investors – Helmerich & Payne Inc. – slide 41
    H&Ps International Land Operations Rig Fleet Status (as of January 29, 2015) Active In-Transit Idle Total Long-term Contracts(1) Argentina 9 6 4 19 10 Bahrain 2 1 3 2 Colombia 5 2 7 1 Ecuador 1 5 6 1 Mozambique 1 1 Tunisia 2 2 U.A.E.…
  42. Meetings with Investors – Helmerich & Payne Inc. – slide 42
    H&P Global Fleet Under Term Contract Number of Rigs Already Under Long-Term Contracts* (Estimated Quarterly Average, Including Announced New Builds - as of 1/29/15) Segment Q2 Q3 Q4 Q1 Q2 Q3 Q4 FY15 FY15 FY15 FY16 FY16 FY16 FY16…
  43. Meetings with Investors – Helmerich & Payne Inc. – slide 43
    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…
  44. Meetings with Investors – Helmerich & Payne Inc. – slide 44
    Changes in Lower 48 U.S. Land Rig Count * PDS active rig count includes both PDS and Grey Wolf rigs.
  45. Meetings with Investors – Helmerich & Payne Inc. – slide 45
    Ten-Year Relative Shareholder Return Source: Thomson Reuters as of January 29, 2015.
  46. Meetings with Investors – Helmerich & Payne Inc. – slide 46
    Land Drilling Market Valuations Source: Thomson Reuters as of January 29, 2015.
  47. Meetings with Investors – Helmerich & Payne Inc. – slide 47
    Return on Equity * Excludes gains from the sale of investment securities and 4QFY14 abandonment (non-cash) charges. H&P's unadjusted ROE resulted in 15.2%. ** The corresponding ROIC values for the selected companies exclude certain…
  48. Meetings with Investors – Helmerich & Payne Inc. – slide 48
    Current Dividend Yields Source: Thomson Reuters. Yields calculated as of market close on January 29, 2015.
  49. Meetings with Investors – Helmerich & Payne Inc. – slide 49
    Oil and Natural Gas Prices Oil Prices Natural Gas Prices Source: Energy Information Administration and Thomson Reuters
  50. Meetings with Investors – Helmerich & Payne Inc. – slide 50
    Oil vs. Natural Gas Directed Rig Count
  51. Meetings with Investors – Helmerich & Payne Inc. – slide 51
    End of Document

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