Helmerich &
Payne, Inc. Bank of America Energy Conference November 13-14, 2008 Investor
Relations Contact: Juan Pablo Tardio – (918) 588-5383 –
juanpablo.tardio@hpinc.com
The information
contained within this presentation is forward looking and involves risks and
uncertainties that could significantly impact expected results. A discussion
of these risks and uncertainties is contained in the Company’s Form 10-K
filed with the Securities and Exchange Commission on November 28, 2007.
H&P’s
Global Rig Fleet * Includes existing rigs and announced new build
commitments. 77 90 89 88 96 111 127 130 128 151 193 224 249 0 50 100 150 200
250 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009E* Rigs
Available Fiscal Year (Ending Sept 30) International Land Offshore U.S. Land
$0 $100 $200
$300 $400 $500 $600 GW* PTEN** NBR*** HP Operating Income (Millions) U.S.
Land Drilling Operating Income 12 Months Ended June 30, 2008 Most Profitable
Driller in U.S. Land Business ** PTEN’s operating income includes drilling
operations in Canada. *** NBR’s operating income corresponds to their U.S.
Lower 48 Land Drilling segment. * GW’s operating income includes drilling
operations in Mexico.
Create value through efficiency and safety
Provide the most innovative and advanced drilling rigs Structure the
organization required to support them Drive customers’ total well costs down
Seize opportunities to expand market share Deliver premium margins and
sustainable growth to shareholders H&P’s Differentiated Approach
Growth in
H&P’s U.S. Land Fleet * Includes existing rigs and announced new build
commitments only. 30 36 40 39 49 66 83 90 90 113 157 185 208 0 25 50 75 100
125 150 175 200 225 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
2008 2009E* U.S. Land Rigs Fiscal Year (Ended Sept 30)
60% 70% 80% 90%
100% Q1CY05 Q2CY05 Q3CY05 Q4CY05 Q1CY06 Q2CY06 Q3CY06 Q4CY06 Q1CY07 Q2CY07
Q3CY07 Q4CY07 Q1CY08 Q2CY08 Estimated Avarege Rig Utilization Quarter Ended
U.S. Land Estimated Average Rig Utilization* H&P Peers** ** Represents
estimated average combined utilization for PTEN, NBR, UNT and GW in the Lower
48. Technology and Quality Service Make a Difference * Utilization is herein
calculated to be average active rigs divided by estimated available
marketable rigs during the quarter.
-30% -20% -10%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Q1CY05 Q2CY05 Q3CY05 Q4CY05
Q1CY06 Q2CY06 Q3CY06 Q4CY06 Q1CY07 Q2CY07 Q3CY07 Q4CY07 Q1CY08 Q2CY08 Change
in Average Active Rigs Quarter Ended Growth / Decline in U.S. Land Average
Rig Activity H&P (From 84 to 168 Rigs at ~96% Utilization in Q2CY08)
Peers* (From 663 to 694 Rigs at ~78% Utilization in Q2CY08) *Represents
average active rigs for PTEN, NBR, UNT and GW. H&P Rapidly Gaining Market
Share
$4,000 $6,000
$8,000 $10,000 $12,000 $14,000 $16,000 Q1CY05 Q2CY05 Q3CY05 Q4CY05 Q1CY06
Q2CY06 Q3CY06 Q4CY06 Q1CY07 Q2CY07 Q3CY07 Q4CY07 Q1CY08 Q2CY08 Average Rig
Margin per Day Quarter Ended U.S. Land Average Daywork Margins H&P Peers*
*Represents weighted-average rig margin per day for PTEN, NBR, UNT and GW.
Technology and Quality Service Make a Difference 62% H&P’s Margin Premium
12% 14% 16% 18%
20% 22% 24% PTEN NBR GW HP Return on Equity 12 Months Ended June 30, 2008
Returns are Ultimately Driven by Performance
Estimated
Growth from 2007-2008 and 2008-2009 (Calendar Years) Delivering Earnings
Growth to Shareholders Earnings per Share Growth Analyst Estimates
CY2007-CY2008 (First Call Consensus - November 10, 2008) -40% -30% -20% -10%
0% 10% 20% 30% GW PTEN NBR HP Earnings per Share Growth Analyst Estimates
CY2008-CY2009 (First Call Consensus - November 10, 2008) -40% -30% -20% -10%
0% 10% 20% 30% GW PTEN NBR HP
$907 $1,065
6.17 7.24 4.21 4.84 $0 $2 $4 $6 $8 $10 $12 $0 $200 $400 $600 $800 $1,000
$1,200 2002 2003 2004 2005 2006 2007 2008C* 2009C* Consensus EPS and CPS
Expectations Consensus EBITDA Expectations (Millions) Fiscal Year** Actual
and Consensus EPS, CPS and EBITDA EBITDA CPS EPS Delivering Growth to
Shareholders * Represents Thomson First Call consensus expectations as of
November 10, 2008. ** Actuals exclude proceeds from the sale of portfolio
securities, sale of drilling equipment and insurance settlements.
H&P’s
Active Fleet (11/14/08) * Includes pending deliveries corresponding to new
build commitments announced through 7/31/08 ** The idle Offshore rig is
contracted and waiting on the customer’s platform. H&P New Builds
Drilling Pending Segment Active Delivery* Idle U.S. Land 180 21 7
International Land 27 5 0 Offshore 8 0 1**
Long-term
contracts – Over half of our fiscal 2009 potential U.S. land revenue days are
already contracted at attractive dayrates Customer base – About 80% of our
U.S. land fleet is operated by majors and very large independents Over half
of H&P’s rigs in the U.S. land spot market are FlexRigs Strong Balance
Sheet – Debt-to-cap ratio under 20% Well Positioned to Cope with Market
Volatility
End of
Presentation
Additional
References:
H&P Basics
Founded: 1920 Activity: Contract Drilling for Oil and Gas Symbol: HP (NYSE,
Since 1963) Employees: 7,400 (Worldwide) Market Cap: $2.7 (In Billions,
November 12, 2008) Assets: $3.4 (In Billions, June 30, 2008) EBITDA: $849 (In
Millions, 12 months ended June 30, 2008) Debt: $455 (In Millions, June 30,
2008)
U.S. Land 208
U.S. FlexRigs 169* Mobile & Conventional 39 International Land 32**
H&P’s Global Rig Fleet 249 Total Rigs (Includes New Build Commitments) *
Includes 23 rigs scheduled for delivery during fiscal 2009 (October 1, 2008
through September 30, 2009). ** Includes 1 FlexRig operating in Tunisia and 7
FlexRigs scheduled for delivery in fiscal 2009. Offshore 9
$0 $20 $40 $60
$80 $100 $120 $140 $160 $180 $200 Mar-02 Jun-02 Sep-02 Dec-02 Mar-03 Jun-03
Sep-03 Dec-03 Mar-04 Jun-04 Sep-04 Dec-04 Mar-05 Jun-05 Sep-05 Dec-05 Mar-06
Jun-06 Sep-06 Dec-06 Mar-07 Jun-07 Sep-07 Dec-07 Mar-08 Jun-08 Operating
Income per Quarter (Millions) Quarter Ended H&P Segment Operating Income
International Land Offshore U.S. Land H&P’s Growth in Operating Income *
Excludes asset impairment charge in the Offshore segment. * ** Excludes
effect of one time depreciation adjustment corresponding to prior years in
the International Land segment. **
180 of 187 rigs active as of 11/14/08,
including 110 under term contracts FlexRigs continue to deliver outstanding
field performance at 100% utilization More than half of the segment’s
potential revenue days for fiscal 2009 are already contracted Expansion
continues through new build program H&P’s U.S. Land Operations
50 67 60 0 20
40 60 80 100 120 140 160 180 200 Thru FY2004 FY2005 - 2006 FY2007 - 2008
Number of FlexRigs FlexRig Announcements and Completions LT Contracts
Announced Since Peak of 2006 LT Contracts Announced Thru Peak of 2006
Previously Existing FlexRigs Completed and Active FlexRigs The Remarkable
Success of the H&P FlexRig 177 152
AC Driven New
Builds Other New Builds Conventional Rigs Total Active U.S. Land Fleet
(Estimates) (~2,200 Rigs) AC Driven (FlexRig 3 & 4) Other New Builds
(FlexRig 1 & 2) Conventional Rigs Active H&P U.S. Land Fleet (180
Rigs as of 11/14/08) H&P is Leading the U.S. Land Retooling Effort
Refurbished rigs, built between 1940s and 1982
New Builds –
H&P’s FlexRig Program The FlexRig Difference: Key Advantages Increased
drilling productivity and reliability Variable frequency (AC) drives with
increased precision and measurability Computerized electronic driller that
precisely controls weight on bit, rotation and pressure Designed to move quickly
from well to well Accelerated well programs and NPV gains A significantly
enhanced and safer workplace Minimized impact to the environment Total well
cost savings even at premium dayrates
Performance is not only about better rigs
It’s also about: People Safety Experience Training Culture Supply chain
Maintenance Processes Organizational network Support structure A Strong Field
Organization
Value
Proposition Example – H&P vs. Competitors Estimated Field H&P
FlexRig3 Competitor Average 2008 1. Drilling days 13 7.8 Completion days 2 2
Moving days 5 3 Total rig revenue days per well 20 12.8 2. Drilling
contractor dayrate $19,500 $26,500 Operator’s other intangible $15,000
$15,000 cost per day estimate Total daily cost estimate $34,500 $41,500 Total
cost per well (daily services) $690,000 $531,200 3. Total well savings with
H&P – per well $158,800 per year $4.5MM
Value added
from FlexRig operations Significant H&P dayrate premium Increased wells
per rig per year: 10.3 wells Early production: Incremental wells on
production Lowest total well cost Value Proposition Example – H&P vs.
Competitors
Strong daily
margins Eight of nine rigs are currently active The ninth rig is contracted
and expected to begin operations in early to mid 2009 H&P’s Offshore
Operations
International
industry rig count is increasing H&P international land rigs currently
100% utilized Seven new FlexRigs to be delivered in Latin America beginning
in early fiscal 2009 Actively seeking additional growth opportunities around
the world H&P’s International Land Operations
$0.00 $2.00
$4.00 $6.00 $8.00 $10.00 $12.00 $0 $20 $40 $60 $80 $100 $120 1994 1995 1996
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008E 2009F U.S.
Dollars per Thousand Cubic Feet U.S. Dollars per Barrel Crude Oil &
Natural Gas Prices West Texas Intermediate Spot Average Henry Hub Spot
Average Crude Oil & Natural Gas Prices Source: Energy Information
Administration, Short-term Energy Outlook as of 10/22/2008. Crude Oil Natural
Gas Crude (11/10/08) NG (11/10/08)
0 250 500 750
1000 1250 1500 1750 2000 $0 $2 $4 $6 $8 $10 $12 $14 $16 2000 2001 2002 2003
2004 2005 2006 2007 2008 Land Rig Count (Monthly Average) Gas Price (Monthly
Average - mcf) Gas Price (Henry Hub) BHI Rig Count (Monthly Avg) U.S. Land
Rig Count vs. Commodity Prices $4.50 / mcf $6.00 / mcf $3.00 / mcf Source:
Energy Information Administration $7.50 / mcf September 2008 October 2008
AC Driven
Systems & Integrated Top Drive Mechanized Tubular Handling Computerized
Controls BOP Handling Driller’s Cabin Satellite Communications Rig Move
Capabilities Leader in New Ideas & Applied Technology
Driller on a
Conventional Rig vs. FlexRig
Roughnecks on a
Conventional Rig vs. FlexRig
H&P’s
Organizational Support Structure
End of Document
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