Helmerich & Payne, Inc. Goldman Sachs Global Energy Conference January 7-8, 2015
General Market and Outlook Comments Low oil prices are increasingly impacting the U.S. land drilling market. Drilling activity and spot dayrate pricing are now expected to significantly decline in the U.S. Nevertheless, as was the…
H&Ps U.S. Land Activity and Pricing Comments 286 FlexRigs remain active in the U.S. Land segment. Since 12/11/14, the idle and available AC drive FlexRig count in the U.S. has increased from 15 to 26. The average FlexRig spot…
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 September 30, 2014 Balance Sheet Highlights: (Dollars in millions) Cash (including Cash Equivalents) 361 Total Debt 80 Shareholders' Equity 4,891 Total Assets 6,722 Other Financial Highlights: LTM…
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 7, 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 December 2014 (1,900 Active Rigs in U.S. Land) (1,800 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 Third Quarter of Calendar 2014 BHI Industry Rig Count
U.S. Land Average Daywork Margins(1) Through Third 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 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…
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 14.8%. ** The corresponding ROIC values for the selected…
H&P Global Fleet Under Term Contract (1) Includes four rigs with early termination notifications. All rigs included above are subject to early termination fees.
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) (5 Billion H&P Backlog) * As of September 30, 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…
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
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…
The Replacement Cycle Continues As of October 2008 (Peak) As of December 2014 (1,900 Active Rigs in U.S. Land (1,800 Active Rigs in U.S. Land By Power Type) By Power Type) Note: The above estimates corresponding to rig activity…
U.S. Activity by Well and Rig Type 1,800 Active U.S. Land Rigs (December 2014) 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…
U.S. Activity by Well and Rig Type 1,800 Active U.S. Land Rigs (December 2014) 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…
New Build FlexRigs 89 new FlexRig contracts announced since October 1, 2013 55 of the 89 announced new FlexRigs have already been delivered Currently building at a cadence of four FlexRigs per month, with 46 new FlexRigs under…
H&Ps Long Term Strategy Innovation Technology Safety and operational excellence Customer satisfaction Financial strength
Additional References
H&P Activity as of January 7, 2015 Rigs Rigs Working/ % Available Contracted Contracted U.S. Land 337 287 85% AC Drive FlexRigs 312 286 92% SCR Fleet 25 1 4% Offshore 9 9 100% International Land 40 30 75% Total 386 326 84% (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 (321 H&P Contracted Land Rigs as of 1/7/15*) * Includes 34 announced new FlexRigs with customer commitments scheduled for delivery in 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 or equal to 600 horsepower.
H&Ps International Land Operations Rig Fleet Status (as of January 7, 2015) Active In-Transit Idle Total Long-term Contracts(1) Argentina 10 8 1 19 12 Bahrain 3 3 3 Colombia 5 2 7 1 Ecuador 1 5 6 1 Mozambique 1 1 Tunisia 2 2 U.A.E. 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 1/7/15)1 Segment Q2 Q3 Q4 Q1 Q2 Q3 Q4 FY15 FY15 FY15 FY16 FY16 FY16 FY16…
Distribution of Announced New Builds Of the 89 new build FlexRigs announced since 10/1/2013, 39 are going to the Permian, 18 to the Oklahoma Woodford, 15 to the Eagle Ford, five to the Tuscaloosa Marine Shale, four each to the Utica…
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…
A Value Proposition Example H&P vs. Competitors Permian Basin Horizontal Well (Fiscal 2014) 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…
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…
Changes in Lower 48 U.S. Land Rig Count * PDS active rig count includes both PDS and Grey Wolf rigs.
Growth / Decline in U.S. Lower 48 Rig Activity As of 1/7/15 *Represents average active rigs for NBR, PTEN, and UNT.
Ten-Year Relative Shareholder Return Source: Thomson Reuters as of January 5, 2015.
Land Drilling Market Valuations Source: Thomson Reuters as of January 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 15.2%. ** The corresponding ROIC values for the selected companies exclude certain…
Current Dividend Yields Source: Thomson Reuters. Yields calculated as of market close on January 5, 2015.
Oil and Natural Gas Prices Oil Prices Natural Gas Prices Source: Energy Information Administration and Thomson Reuters
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