HOUSTON, April 26, 2018 /PRNewswire/ -- PATTERSON-UTI ENERGY, INC. PTEN today reported financial results for the three months ended March 31, 2018.  The Company reported a net loss of $34.4 million, or $0.16 per share, for the first quarter of 2018, compared to a net loss of $63.5 million, or $0.40 per share, for the quarter ended March 31, 2017.  Revenues for the first quarter of 2018 were $809 million, compared to $305 million for the first quarter of 2017. 

The financial results for the first quarter of 2018 include the effect of a non-cash valuation allowance recorded against certain deferred tax assets, and larger than expected permanent book versus tax differences.  These items resulted in a small book tax expense for the quarter instead of the expected tax benefit.

Andy Hendricks, Patterson-UTI's Chief Executive Officer, stated, "Our drilling activity is experiencing a strong start to 2018.  For the first quarter, our rig count averaged 169 rigs, an increase of eight rigs from the fourth quarter average of 161.  The strength in rig demand continues, as we expect our average rig count for the second quarter to increase to 176 including a seasonal slowdown in Canadian drilling activity."

Mr. Hendricks added, "Average rig revenue per day increased $590 sequentially in the first quarter to $21,540.  In anticipation of continued growth in our rig count we increased our headcount faster than our rig count in the first quarter to train crews for future rig activations.  This increase in headcount combined with the seasonal increase in payroll taxes contributed to average rig operating costs per day of $13,970. 

"The market for super-spec rigs remains strong, as we have customer contracts for all 12 of our previously announced major upgrades.  Of these 12, four have been delivered and are included in our current active rig count.  The remaining eight rigs receiving major upgrades will be incremental to our current rig count. 

"We believe upgrades continue to be the most capital efficient method of maintaining our position as a leading provider of drilling rigs in the United States, as our major upgrades have substantially all of the capabilities of a newbuild rig, but at a much lower upgrade cost.  Additionally, when supported by contracts from customers, we will continue to make other upgrades, such as high-pressure circulating systems and walking systems, to meet the growing demand for super-spec rigs. 

"As of March 31, 2018, we had term contracts for drilling rigs providing for approximately $600 million of future dayrate drilling revenue, an increase from $540 million at December 31, 2017.  Based on contracts currently in place, we expect an average of 110 rigs operating under term contracts during the second quarter, and an average of 75 rigs operating under term contracts during the 12 months ending March 31, 2019. 

"In pressure pumping, revenues for the first quarter were $407 million, relatively unchanged from the fourth quarter despite seasonal issues that affected the first quarter.  Gross margin during the first quarter increased $2.8 million sequentially to $85.8 million as operating costs decreased by $2.6 million.  Despite well publicized logistical challenges for the pressure pumping industry during the first quarter, our supply chain organization did a great job in securing sufficient sand volumes such that we had almost no sand-related downtime.  However, higher costs resulting from rail logistics and delays in the startup of local Permian mines increased operating costs. 

"Early in the second quarter we created our 24^th frac spread utilizing already active horsepower, and this spread is currently working in the Permian basin.  We expect to activate our 25^th frac spread late in the second quarter with a significant amount of the horsepower for this spread coming from already active equipment.

"In directional drilling, revenues for the first quarter were $48.6 million compared to $45.6 million for the 81 days we owned MS Directional in the fourth quarter.  Gross margin as a percentage of revenues was 22.5% compared to 29.4% during the fourth quarter.  This was due primarily to an increase in third-party rental expenses as we have experienced delays in the delivery of equipment ordered in 2017." 

Mark S. Siegel, Chairman of Patterson-UTI, stated, "Our first quarter results for pressure pumping were impacted by well-publicized industry issues that were primarily the result of weather conditions.  Despite these challenges, we are pleased with our overall first quarter results.  We believe these issues were transitory in nature, and their impact on the remainder of 2018 will be minimal. 

"In fact, we are optimistic on the outlook for the remainder of 2018.  Commodity prices remain favorable for increasing oilfield activity and the strong growth in the rig count year-to-date bodes well for increasing pressure pumping demand.  Patterson-UTI is the only company in the U.S. unconventional market with significant scale in contract drilling, pressure pumping, and directional drilling.

"Our optimistic operational outlook for 2018 is complemented by our strong financial position.  During the first quarter, we took significant steps to further strengthen our financial position and reduce our cost of debt.  With our investment grade credit rating, we were able to issue $525 million of 10-year notes at an interest rate of 3.95%.  We were also able to extend our revolving line of credit until March 2023 and increase the commitments at terms consistent with our investment grade credit rating.

"Our quarterly cash flow was sufficient to cover capital expenditures, dividends and share repurchases.  We opportunistically repurchased 924,800 shares at an average price of $18.28 and paid our regular $0.02 per share quarterly dividend.  For 2018, we continue to expect to generate substantial free cash flow, and we will remain disciplined and prudent with our capital, as we consider opportunities to maximize shareholder returns.  Our capex budget for 2018 remains unchanged at approximately $675 million.  We currently have $170 million of remaining authorization under our stock buyback program.  Additionally, the board has approved an increase in our quarterly dividend to $0.04 from $0.02," he concluded.

The Company declared a quarterly dividend on its common stock of $0.04 per share, to be paid on June 21, 2018, to holders of record as of June 7, 2018.

All references to "per share" in this press release are diluted earnings per common share as defined within Accounting Standards Codification Topic 260.

The Company's quarterly conference call to discuss the operating results for the quarter ended March 31, 2018, is scheduled for today, April 26, 2018, at 9:00 a.m. Central Time. The dial-in information for participants is (844) 704-2496 (Domestic) and (647) 253-8661 (International).  The conference ID for both numbers is 5798683.  The call is also being webcast and can be accessed through the Investor Relations section at investor.patenergy.com.  A replay of the conference call will be on the Company's website for two weeks. 

About Patterson-UTI

Patterson-UTI is a provider of oilfield services and products to oil and natural gas exploration and production companies in North America, including market leading positions in contract drilling, pressure pumping and directional drilling services.  For more information, visit www.patenergy.com.   

Cautionary Statement Regarding Forward-Looking Statements

This press release contains forward-looking statements which are protected as forward-looking statements under the Private Securities Litigation Reform Act of 1995 that are not limited to historical facts, but reflect Patterson-UTI's current beliefs, expectations or intentions regarding future events.  Words such as "anticipate," "believe," "budgeted," "continue," "could," "estimate," "expect," "intend," "may," "plan," "predict," "potential," "project," "pursue," "should," "strategy," "target," or "will," and similar expressions are intended to identify such forward-looking statements.  The statements in this press release that are not historical statements, including statements regarding Patterson-UTI's future expectations, beliefs, plans, objectives, financial conditions, assumptions or future events or performance that are not historical facts, are forward-looking statements within the meaning of the federal securities laws.  These statements are subject to numerous risks and uncertainties, many of which are beyond Patterson-UTI's control, which could cause actual results to differ materially from the results expressed or implied by the statements.  These risks and uncertainties include, but are not limited to: volatility in customer spending and in oil and natural gas prices, which could adversely affect demand for Patterson-UTI's services and their associated effect on rates, utilization, margins and planned capital expenditures; global economic conditions; excess availability of land drilling rigs and pressure pumping equipment, including as a result of low commodity prices, reactivation or construction; liabilities from operations; weather; decline in, and ability to realize, backlog; equipment specialization and new technologies; shortages, delays in delivery and interruptions of supply of equipment and materials; ability to hire and retain personnel; loss of, or reduction in business with, key customers; difficulty with growth and in integrating acquisitions; governmental regulation; product liability; legal proceedings and actions by governmental or other regulatory agencies; political, economic and social instability risk; ability to effectively identify and enter new markets; cybersecurity risk; dependence on our subsidiaries to meet our long-term debt obligations; variable rate indebtedness risk; and anti-takeover measures in our charter documents.

Additional information concerning factors that could cause actual results to differ materially from those in the forward-looking statements is contained from time to time in Patterson-UTI's SEC filings.  Patterson-UTI's filings may be obtained by contacting Patterson-UTI or the SEC or through Patterson-UTI's website at http://www.patenergy.com or through the SEC's Electronic Data Gathering and Analysis Retrieval System (EDGAR) at http://www.sec.gov.  Patterson-UTI undertakes no obligation to publicly update or revise any forward-looking statement.

 

 

 

 

 

 

 

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SOURCE PATTERSON-UTI ENERGY, INC.