Helmerich & Payne, Inc. Investor Update March 12, 2015
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…
Declining Drilling Activity in the U.S.
H&Ps U.S. Land Activity and Pricing Comments H&Ps U.S. Land active rig count was 204 as of February 28, 2015, down from 294 at the beginning of the calendar year. The average FlexRig spot pricing is now down by approximately 15% as…
H&Ps Second Quarter Outlook and Other Estimates We are making the following changes to our operational outlook for the second fiscal quarter(1): U.S. Land average rig expense per day is now expected to increase to roughly 13,600…
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, if…
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…
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
Selected H&P Financial Metrics As of December 31, 2014 Balance Sheet Highlights: (Dollars in millions) Cash (including Cash Equivalents) 252 Total LT Debt (incl. current portion) 80 Shareholders' Equity 4,921 Total Assets 6,802 Other…
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…
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.
Organic U.S. Land Fleet Growth 371 49 * Estimates include existing rigs and announced new build commitments.
H&P Continues to Capture Market Share As of October 2008 (Peak) As of February 2015 (1,900 Active Rigs in U.S. Land) (1,200 Active Rigs in U.S. Land) Note: The above estimates corresponding to market share are derived from Rig…
U.S. Land Active Rig Count Through Fourth Quarter of Calendar 2014 BHI Industry Rig Count
U.S. Land Average Daywork Margins(1) Through Fourth Quarter of Calendar 2014 (1) Does not include the impact of early contract termination revenue.
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.
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…
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
Technology & Quality Service Make a Difference (1) (3) H&Ps Utilization H&Ps Margin Premium Premium (2) (4) (1) Does not include the impact of early contract termination revenue. (2) Represents weighted-average rig…
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 H&P
Safety Excellence Also Generates Savings Reduced Workers Comp and General Liability Losses per Man Hour EMR = Experience Modifier Ratio (Industry Average = 1.00)
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 15.2%. ** The corresponding ROIC values for the selected…
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 2/28/15. During the first fiscal quarter the…
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…
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…
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.
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…
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.…
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…
The Replacement Cycle Continues As of February 2015 (1,200 Active Rigs in U.S. Land By Power Type) As of October 2008 (Peak) As of October 2014 (Peak) (1,925 Active Rigs in U.S. Land By Power Type) (1,930 Active Rigs in U.S. Land…
U.S. Activity by Well and Rig Type 1,200 Active U.S. Land Rigs (February 2015) Vertical All Rigs Horiz & Dir Horiz & Dir AC Drive Rigs SCR & Mech Rigs Note: The above estimates corresponding to rig activity and rig type are…
U.S. Activity by Well and Rig Type 1,200 Active U.S. Land Rigs (February 2015) Vertical All Rigs Horiz & Dir Horiz & Dir AC Drive Rigs SCR & Mech Rigs Note: The above estimates corresponding to rig activity and rig type are…
New Build FlexRigs 40 new FlexRigs are scheduled to be completed 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 expected to generate…
H&Ps Long Term Strategy Innovation Technology Safety and operational excellence Customer satisfaction Financial strength
Additional References
Updated Second Quarter H&P Operations Outlook Drilling Operations Outlook for 2Q of Fiscal 2015 Compared to 1Q of Fiscal 2015 U.S. Land Segment Revenue days expected to decrease by roughly 25% Average rig revenue per day expected to…
H&P Activity as of February 28, 2015 Rigs Rigs Working/ % Available Contracted Contracted U.S. Land 345 204 59% AC Drive FlexRigs 320 204 64% SCR Fleet 25 0 0% Offshore 9 8 89% International Land 40 27 68% Total 394 239 61% (1)…
H&Ps U.S. Land Fleet Activity (1) (1) Includes completed new builds pending delivery and not generating revenue days.
Leading U.S. Unconventional Driller (230 H&P Contracted Land Rigs as of 2/28/15*) * Includes 26 announced new FlexRigs with customer commitments scheduled for delivery in calendar 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 or equal to 600 horsepower.
H&Ps International Land Operations Rig Fleet Status (as of February 28, 2015) Active In-Transit Idle Total Long-term Contracts(1) Argentina 11 4 4 19 10 (3) Bahrain 3 3 1 Colombia 5 2 7 1 Ecuador 1 5 6 1 Mozambique 1 1 Tunisia 2 2…
H&P Global Fleet Under Term Contract Number of Rigs Already Under Long-Term Contracts* (Estimated Quarterly Average, Including Announced New Builds - as of 2/28/15) Segment Q2 Q3 Q4 Q1 Q2 Q3 Q4 FY15 FY15 FY15 FY16 FY16 FY16 FY16…
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…
Changes in Lower 48 U.S. Land Rig Count * PDS active rig count includes both PDS and Grey Wolf rigs.
Ten-Year Relative Shareholder Return Source: Thomson Reuters as of March 5, 2015.
Land Drilling Market Valuations Source: Thomson Reuters as of March 5, 2015.
Return on Equity * Excludes gains from the sale of investment securities and 4QFY14 abandonment (non-cash) charges. H&P's unadjusted ROE resulted in 15.6%. ** The corresponding ROIC values for the selected companies exclude certain…
Current Dividend Yields Source: Thomson Reuters. Yields calculated as of market close on March 5, 2015.
Oil and Natural Gas Prices Oil Prices Natural Gas Prices Source: Energy Information Administration and Thomson Reuters
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