UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
DATE OF EARLIEST EVENT REPORTED: May 13, 2014
HELMERICH & PAYNE, INC.
(Exact name of registrant as specified in its charter)
State of Incorporation: Delaware
COMMISSION FILE NUMBER 1-4221
Internal Revenue Service Employer Identification No. 73-0679879
1437 South Boulder Avenue, Suite 1400, Tulsa, Oklahoma 74119
(Address of Principal Executive Offices)
(918)742-5531
(Registrants telephone number, including area code)
N/A
(Former Name or Former Address, if Changed since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
ITEM 7.01 REGULATION FD DISCLOSURE
Helmerich & Payne, Inc. (the Company) will discuss information to be distributed in investor meetings that includes the slides attached as Exhibit 99.1 to this Current Report on Form 8-K, which are incorporated herein by reference.
This information is not filed for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and is not incorporated by reference into any filing made pursuant to the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended. The furnishing of these slides is not intended to constitute a representation that such information is required by Regulation FD or that the materials they contain include material information that is not otherwise publicly available.
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS
(d) Exhibits.
Exhibit Number |
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Description |
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99.1 |
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Slides to be distributed in investor meetings. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly authorized the undersigned to sign this report on its behalf.
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HELMERICH & PAYNE, INC. |
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(Registrant) |
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/s/ Steven R. Mackey |
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Steven R. Mackey |
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Executive Vice President |
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DATE: May 13, 2014 |
Exhibit 99.1
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Helmerich & Payne, Inc. 2014 Citi Global Energy and Utilities Conference May 13, 2014 |
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Statements within this presentation are forward-looking statements within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934, and are based on current expectations and assumptions that are subject to risks and uncertainties. All statements other than statements of historical facts included in this release, including, without limitation, statements regarding the registrants future financial position, business strategy, budgets, projected costs and plans and objectives of management for future operations, are forward looking statements. For information regarding risks and uncertainties associated with the Companys business, please refer to the Risk Factors and Managements Discussion & Analysis of Financial Condition and Results of Operations sections of the Companys SEC filings, including but not limited to, its annual report on Form 10-K and quarterly reports on Form 10-Q. As a result of these factors, Helmerich & Payne, Inc.s actual results may differ materially from those indicated or implied by such forward-looking statements. We undertake no duty to update or revise our forward-looking statements based on changes in internal estimates, expectations or otherwise, except as required by law. Forward-looking Statements |
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A Quick Primer on 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 |
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U.S. Land Active Rig Count BHI Industry Rig Count |
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Innovation & Applied Technology FlexRig® AC Driven Systems & Integrated Top Drive Mechanized Tubular Handling Computerized Controls BOP Handling Drillers Cabin Satellite Communications Rig Move Capabilities 31 |
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Evolution of H&Ps Global Rig Fleet * Estimates include existing rigs and announced new build commitments. |
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H&P Activity as of May 13, 2014 Rigs Working/ Contracted 289 288 1 8 24 321 Rigs Available 327 294 33 9 31 367 17 384 % Contracted 88% 98% 3% 89% 77% 87% U.S. Land AC Drive FlexRigs SCR Fleet Offshore International Land Total FlexRig Construction Total Fleet (2) 10 of the 294 AC Drive FlexRigs are expected to be transferred to Argentina. The one inactive platform rig has a commitment to work and is expected to commence operations in early fiscal year 2015. Includes announced new build commitments under term contracts. (1) (3) |
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U.S. Land Market Trends Today Stronger than expected oil and gas prices for 2014 Increasing proportion of horizontal wells with longer laterals and pad drilling requirements 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 additional new build orders continue |
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H&Ps U.S. Land Fleet Activity (1) (1) Includes completed new builds pending delivery and not generating revenue days. |
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Delivering Safety H&P vs. Industry (IADC) U.S. Land Safety Performance (2005 2013) OSHA Recordable Injury Incidence Rates H&P = 0.84 IADC w/o H&P = 1.81 Injuries per 200,000 Man Hours |
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Unconventional Plays Shaping Landscape Well Complexity is increasing: Horizontal and directional wells make up over 75% of wells drilled in the U.S. Extended reach laterals progressively longer Multi-well pad drilling gaining acceptance in more areas This all creates an expanding level of demand for FlexRigs |
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Increasing Focus on More Difficult Drilling |
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Increasing International FlexRig Presence Deploying ten existing FlexRig3s from the U.S. to Argentina Five-year term contracts with YPF to work in the Vaca Muerta play in the Neuquén Province All ten rigs expected to be operating by the second quarter of fiscal 2015 Expecting a total of 19 H&P land rigs in Argentina by this time next year, including 15 FlexRigs |
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As of May 2014 (~1,780 Active Rigs in U.S. Land By Power Type) The Replacement Cycle Continues As of October 2008 (Peak) (~1,900 Active Rigs in U.S. Land By Power 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 included in the above analysis was greater than 600 horsepower. Certain assumptions were made on approximately 5% of the active rigs that were not readily identified. |
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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 rig included in the above analysis was greater than 600 horsepower. Certain assumptions were made on approximately 5% of the active rigs that were not readily identified. |
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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 owned by HP, NBR, PTEN and PDS. |
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H&Ps Pad Capable Fleet 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 to existing FlexRigs. |
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H&P Continues to Capture Market Share As of October 2008 (Peak) (~1,900 Active Rigs in U.S. Land) As of May 2014 (~1,780 Active Rigs in U.S. Land) Note: The above estimates corresponding to market share are derived from Rig Data. PDS market share includes both PDS and Grey Wolf rigs. Additionally, the drawworks capacity of each land rig included in the above analysis was greater than 600 horsepower. |
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Leading U.S. Unconventional Driller * Includes 17 announced new FlexRigs with customer commitments scheduled for delivery in fiscal 2014 and fiscal 2015. (306 H&P Contracted Land Rigs as of 5/13/14*) |
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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 600 horsepower. |
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H&Ps New Build Program Continues Plan to build three rigs per month through at least the remainder of the fiscal year. Flexibility to increase our production cadence and our capital spares capacity. This approach has allowed us to quickly respond to increased FlexRig demand. |
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Performance is Not Only About Better Rigs Our competitive advantage is also about: People Safety Experience Training Culture Support Structure Processes Organizational Network Maintenance Supply Chain |
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U.S. Land Average Daywork Margins(1) (1) Does not include the impact of early contract termination revenue. |
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** NBRs operating income corresponds to its U.S. Lower 48, U.S. Offshore and Alaska business units. Ten Year Profit Comparison * PTENs operating income includes drilling operations in Canada. |
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Return on Equity * Including gains from the sale of investment securities and discontinued operations, H&P's corresponding ROE resulted in 17.5%. ** The corresponding ROE values for the selected companies exclude certain extraordinary, non-recurring charges. |
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Current Dividend Yields Source: Thomson Reuters. Yields calculated as of market close on May 8, 2014. |
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Ten-Year Relative Shareholder Return Source: Thomson Reuters as of May 8, 2014 |
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In Summary: H&Ps long term strategy for growing shareholder value: Innovation Technology Safety and operational excellence Customer satisfaction |
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Additional References |
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The FlexRig Difference: Key Advantages Increased drilling productivity and reliability Variable frequency (AC) drives with increased precision and measurability Computerized electronic driller that more 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 H&Ps FlexRig Advantage |
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FlexRigs Delivering Drilling Efficiencies We have over 1,300 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 23% in 2012 Improved our footage per day by 14% in 2013 |
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Changes in Lower 48 U.S. Land Rig Count * PDS active rig count includes both PDS and Grey Wolf rigs. |
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High-Grading Continues 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 included in the above analysis was greater than 600 horsepower. Certain assumptions were made on approximately 5% of the active rigs that were not readily identified. As of May 2013 (~1,610 Active Rigs in U.S. Land By Power Type) As of May 2014 (~1,780 Active Rigs in U.S. Land By Power Type) |
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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. |
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H&P Global Fleet Under Term Contract Segment Q3 Q4 Q1 Q2 Q3 Q4 Q1 FY14 FY14 FY15 FY15 FY15 FY15 FY16 U.S. Land 164.7 162.5 145.6 127.9 102.9 83.1 70.1 International Land 13.1 14.5 16.5 17.9 17.8 16.3 14.2 Offshore 2.5 1.9 1.0 1.0 1.0 1.0 1.0 Total 180.3 178.9 163.1 146.8 121.7 100.4 85.3 Number of Rigs Already Under Long-Term Contracts (Estimated Quarterly Average, Including Announced New Builds - as of 5/13/14) |
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Active In-Transit Idle Total Long-term Contracts Argentina 8 1 9 4 Bahrain 3 3 3 Colombia 4 1 3 8 1 Ecuador 5 1 6 1 Mozambique 1 1 Tunisia 2 2 U.A.E. 2 2 2 Total 22 2 7 31 11 H&Ps International Land Operations (1) 9 of 17 FlexRigs, included in the international fleet of 31 rigs, are under long-term contracts. (1) Rig Fleet Status (as of May 13, 2014) |
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FlexRigs Leading in Pad Drilling Efforts AC Drive FlexRigs lead in pad drilling efforts in U.S. Land FlexRig3 first pad application in 2004 FlexRig4 was the first bi-directional land drilling design FlexRig5 is the latest generation of bi-directional, long lateral pad drilling rig We have drilled over 8,000 wells on approximately 1,600 pads |
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Oil vs. Natural Gas Directed Rig Count |
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Oil and Natural Gas Prices Source: Energy Information Administration and CME Oil Prices Natural Gas Prices |
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Estimated proportion of H&Ps active U.S. Land rigs by primary hydrocarbon target as of 5/13/14 H&Ps Exposure to Oil & Liquids Dry Gas (Long-term Contracts) 3% Dry Gas (Spot Market) 3% |
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Return on Invested Capital (ROIC) * Excludes gains from the sale of investment securities and discontinued operations. H&P's unadjusted ROIC resulted in 16.8%. ** The corresponding ROIC values for the selected companies exclude certain extraordinary, non-recurring charges. |
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Land Drilling Market Valuations Source: Thomson Reuters as of May 8, 2014. |
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End of Document |