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Patterson-UTI Energy Reports Financial Results for Three Months Ended March 31, 2016

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HOUSTON, April 28, 2016 /PRNewswire/ -- PATTERSON-UTI ENERGY, INC. (NASDAQ: PTEN) today reported financial results for the three months ended March 31, 2016.  The Company reported a net loss of $70.5 million, or $0.48 per share, for the first quarter of 2016, compared to net income of $9.1 million, or $0.06 per share, for the quarter ended March 31, 2015.  Revenues for the first quarter of 2016 were $269 million, compared to $658 million for the first quarter of 2015.

Andy Hendricks, Patterson-UTI's Chief Executive Officer, stated, "During the first quarter, our rig count averaged 71 rigs in the United States and three rigs in Canada, compared to the fourth quarter average of 88 rigs in the United States and three in Canada.  For the month of April, we expect our average rig count will be 56 in the United States, and in Canada we expect a minimal number of operating days due to the industry downturn and spring breakup." 

Mr. Hendricks added, "We recognized $16.8 million of revenues related to early contract terminations in our drilling business during the first quarter.  These early termination revenues positively impacted our total average rig revenue per day of $25,340 by $2,520.  Excluding early termination revenue from both the fourth and first quarters, total average rig revenue per day during the first quarter would have been $22,820 compared to $23,140 in the fourth quarter.

"Total average rig operating costs per day during the first quarter decreased $490 to $12,150 from $12,640 in the fourth quarter.  This decrease is due in part to a reduction in our workers' compensation reserves, resulting from our strong and consistent operational record.  In addition, the proportion of rigs on standby increased during the quarter, further reducing the average rig operating costs per day as rigs on standby have very little associated cost.  Total average rig margin per day, excluding the positive impact from early termination revenues in both the fourth and first quarters, increased to $10,660 during the first quarter, from $10,500 during the fourth quarter.

"As of March 31, 2016, we had term contracts for drilling rigs providing for approximately $580 million of future dayrate drilling revenue.  Based on contracts currently in place, we expect an average of 43 rigs operating under term contracts during the second quarter, and an average of 40 rigs operating under term contracts during the remaining three quarters of 2016.  We also expect approximately $5 million of early termination revenues during the second quarter.

"In pressure pumping, industry activity decreased further in the first quarter, and pricing remains unsustainable.  We believe it is prudent to be disciplined in the use of our assets and have chosen to stack horsepower rather than operate the equipment at pricing levels that do not generate acceptable cash flow.  With the lower activity levels and our stacking of horsepower during the first quarter, pressure pumping revenues decreased 27% to $96.3 million from $132 million in the fourth quarter.  Gross margin as a percentage of revenues decreased to 8.8% during the first quarter from 10.4% in the fourth quarter.  Pressure pumping Adjusted EBITDA was $5.6 million in the first quarter compared to $10.9 million in the fourth quarter," he concluded.

Mark S. Siegel, Chairman of Patterson-UTI, stated, "We believe the U.S. rig count is beginning to stabilize as crude oil prices have improved from the cyclical lows reached in the first quarter.  The outlook for crude oil prices remains uncertain with numerous economic and geopolitical concerns.  For this reason, visibility into the timing of a recovery remains limited, and we do not believe current oil prices in the mid-$40s are sufficient to support a meaningful increase in U.S. drilling activity.

"Despite limited visibility into a recovery, we remain optimistic about a recovery in our cyclical industry.  The severe downturn in the rig count has brought the U.S. rig count to the lowest level in more than 65 years.  We believe this unprecedented low level of U.S. drilling activity will further reduce U.S. oil production and help to balance oil supply and demand.  At Patterson-UTI, we remain focused on operational execution and preserving the strength of our balance sheet. 

"Our cash position in the quarter improved by more than $73 million to $187 million, and our revolver remains undrawn.  To further improve our liquidity position in advance of the opportunities arising from a cyclical recovery, we have elected to reduce our quarterly dividend to $0.02 per share, which should save the Company approximately $47 million on an annual basis," he concluded.

The Company declared a quarterly dividend on its common stock of $0.02 per share, to be paid on June 23, 2016, to holders of record as of June 9, 2016.

The financial results for the three months ended March 31, 2016 include a pretax non-cash charge of $2.2 million ($1.5 million after-tax or $0.01 per share) related to the impairment of certain oil and natural gas properties.

All references to "net income 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, 2016, is scheduled for today, April 28, 2016, at 9:00 a.m. Central Time. The dial-in information for participants is 866-841-7265 (Domestic) and 704-908-0463 (International).  The passcode for both numbers is 51014956.  The call is also being webcast and can be accessed through the Investor Relations section at www.patenergy.com.  A replay of the conference call will be on the Company's website for two weeks. 

About Patterson-UTI

Patterson-UTI Energy, Inc. subsidiaries provide onshore contract drilling and pressure pumping services to exploration and production companies in North America.  Patterson-UTI Drilling Company LLC and its subsidiaries operate land-based drilling rigs in oil and natural gas producing regions of the continental United States and western Canada.  Universal Pressure Pumping, Inc. and Universal Well Services, Inc. provide pressure pumping services primarily in Texas and the Appalachian region.

Location information about the Company's drilling rigs and their individual inventories is available through the Company's website at www.patenergy.com.

Statements made in this press release which state the Company's or management's intentions, beliefs, expectations or predictions for the future are forward-looking statements. It is important to note that actual results could differ materially from those discussed in such forward-looking statements. Important factors that could cause actual results to differ materially include, but are not limited to, volatility in customer spending and in oil and natural gas prices, which could adversely affect demand for our 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; decline in, and ability to realize, backlog; equipment specialization and new technologies; adverse industry conditions; adverse credit and equity market conditions; difficulty in building and deploying new equipment; difficulty in integrating acquisitions; shortages, delays in delivery and interruptions of supply of equipment, supplies and materials; weather; loss of, or reduction in business with, key customers; legal proceedings; ability to effectively identify and enter new markets; governmental regulation; and ability to retain management and field personnel. 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 the Company's SEC filings, which may be obtained by contacting the Company or the SEC. These filings are also available through the Company's web site at http://www.patenergy.com or through the SEC's Electronic Data Gathering and Analysis Retrieval System (EDGAR) at http://www.sec.gov. We undertake no obligation to publicly update or revise any forward-looking statement.

 

PATTERSON-UTI ENERGY, INC.

Condensed Consolidated Statements of Operations

(unaudited, in thousands, except per share data)




Three Months Ended




March 31,




2016



2015


REVENUES


$

268,939



$

657,699


COSTS AND EXPENSES









Direct operating costs



170,801




428,333


Depreciation, depletion, amortization and impairment



176,770




175,382


Selling, general and administrative



17,972




20,537


Other operating (income) expense, net



(1,345)




9,344











Total costs and expenses



364,198




633,596











OPERATING INCOME (LOSS)



(95,259)




24,103











OTHER INCOME (EXPENSE)









Interest income



110




283


Interest expense



(10,800)




(8,541)


Other



16














Total other expense



(10,674)




(8,258)











INCOME (LOSS) BEFORE INCOME TAXES



(105,933)




15,845


INCOME TAX EXPENSE (BENEFIT)



(35,430)




6,720











NET INCOME (LOSS)


$

(70,503)



$

9,125











NET INCOME (LOSS) PER COMMON SHARE









Basic


$

(0.48)



$

0.06


Diluted


$

(0.48)



$

0.06


WEIGHTED AVERAGE NUMBER OF COMMON

   SHARES OUTSTANDING









Basic



145,770




144,983











Diluted



145,770




145,745











CASH DIVIDENDS PER COMMON SHARE


$

0.10



$

0.10


 


PATTERSON-UTI ENERGY, INC.

Additional Financial and Operating Data

(unaudited, dollars in thousands)




Three Months Ended




March 31,




2016



2015


Contract Drilling:









Revenues


$

168,659



$

401,478


Direct operating costs


$

80,898



$

212,810


Margin (1)


$

87,761



$

188,668


Selling, general and administrative


$

1,758



$

1,438


Depreciation, amortization and impairment


$

121,099



$

118,832


Operating income (loss)


$

(35,096)



$

68,398











Operating days – United States



6,425




14,827


Operating days – Canada



232




693


Operating days – Total



6,657




15,520











Average revenue per operating day – United States


$

25.27



$

25.87


Average direct operating costs per operating day – United States


$

11.85



$

13.50


Average margin per operating day – United States (1)


$

13.42



$

12.37


Average rigs operating – United States



71




165











Average revenue per operating day – Canada


$

27.15



$

25.76


Average direct operating costs per operating day – Canada


$

20.63



$

18.18


Average margin per operating day – Canada (1)


$

6.53



$

7.58


Average rigs operating – Canada



3




8











Average revenue per operating day – Total


$

25.34



$

25.87


Average direct operating costs per operating day – Total


$

12.15



$

13.71


Average margin per operating day – Total (1)


$

13.18



$

12.16


Average rigs operating – Total



73




172











Capital expenditures


$

11,880



$

157,422











Pressure Pumping:









Revenues


$

96,313



$

249,721


Direct operating costs


$

87,813



$

212,725


Margin (2)


$

8,500



$

36,996


Selling, general and administrative


$

2,889



$

5,093


Depreciation, amortization and impairment


$

49,570



$

46,919


Operating loss


$

(43,959)



$

(15,016)











Fracturing jobs



83




216


Other jobs



158




618


Total jobs



241




834











Average revenue per fracturing job


$

1,132.71



$

1,097.87


Average revenue per other job


$

14.54



$

20.36


Average revenue per total job


$

399.64



$

299.43


Average costs per total job


$

364.37



$

255.07


Average margin per total job (2)


$

35.27



$

44.36


Margin as a percentage of revenues (2)



8.8

%



14.8

%










Capital expenditures and acquisitions


$

7,552



$

75,810











Oil and Natural Gas Production and Exploration:









Revenues – Oil


$

3,357



$

5,864


Revenues – Natural gas and liquids


$

610



$

636


Revenues – Total


$

3,967



$

6,500


Direct operating costs


$

2,090



$

2,798


Margin (3)


$

1,877



$

3,702


Depletion


$

2,531



$

4,900


Impairment of oil and natural gas properties


$

2,201



$

3,364


Operating loss


$

(2,855)



$

(4,562)











Capital expenditures


$

1,528



$

7,592











Corporate and Other:









Selling, general and administrative


$

13,325



$

14,006


Depreciation


$

1,369



$

1,367


Other operating (income) expense, net


$

(1,345)



$

9,344











Capital expenditures


$

341



$

642


Total capital expenditures


$

21,301



$

241,466




(1)

For Contract Drilling, margin is defined as revenues less direct operating costs and excludes depreciation, amortization and impairment and selling, general and administrative expenses. Average margin per operating day is defined as margin divided by operating days.



(2)

For Pressure Pumping, margin is defined as revenues less direct operating costs and excludes depreciation, amortization and impairment and selling, general and administrative expenses. Total average margin per job is defined as margin divided by total jobs. Margin as a percentage of revenues is defined as margin divided by revenues.



(3)

For Oil and Natural Gas Production and Exploration, margin is defined as revenues less direct operating costs and excludes depletion and impairment.

 



March 31,



December 31,


Selected Balance Sheet Data (unaudited, dollars in thousands):


2016



2015


Cash and cash equivalents


$

186,557



$

113,346


Current assets


$

494,211



$

486,536


Current liabilities


$

313,384



$

307,649


Working capital


$

180,827



$

178,887


Current portion of long-term debt


$

76,970



$

63,267


Borrowings under revolving credit facility


$



$


Other long-term debt


$

764,559



$

787,900


 

PATTERSON-UTI ENERGY, INC.

Non-U.S. GAAP Financial Measures

(unaudited, dollars in thousands)




Three Months Ended




March 31,




2016



2015


Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (Adjusted EBITDA)(1):









Net income (loss)


$

(70,503)



$

9,125


Income tax expense (benefit)



(35,430)




6,720


Net interest expense



10,690




8,258


Depreciation, depletion, amortization and impairment



176,770




175,382











Adjusted EBITDA


$

81,527



$

199,485











Total revenue


$

268,939



$

657,699


Adjusted EBITDA margin



30.3

%



30.3

%










Adjusted EBITDA by operating segment:









Contract drilling


$

86,003



$

187,230


Pressure pumping



5,611




31,903


Oil and natural gas



1,877




3,702


Corporate and other



(11,964)




(23,350)











Consolidated Adjusted EBITDA


$

81,527



$

199,485




(1)

Adjusted EBITDA is not defined by accounting principles generally accepted in the United States of America ("U.S. GAAP"). We present Adjusted EBITDA (a non-U.S. GAAP measure) because we believe it provides additional information with respect to both the performance of our fundamental business activities and our ability to meet our capital expenditures and working capital requirements. Adjusted EBITDA should not be construed as an alternative to the U.S. GAAP measures of net income (loss) or operating cash flow.

 

PATTERSON-UTI ENERGY, INC.

Impact of Early Termination Revenues

(unaudited, dollars in thousands)




2016



2015




First



Fourth




Quarter



Quarter


Contract drilling revenues


$

168,659



$

202,276


Operating days - Total



6,657




8,344


Average revenue per operating day - Total


$

25.34



$

24.24


Early termination revenues - Total


$

16,776



$

9,173


Early termination revenues per operating day - Total


$

2.52



$

1.10


Average revenue per operating day excluding early termination revenues - Total


$

22.82



$

23.14


Direct operating costs - Total


$

80,898



$

105,472


Average direct operating costs per operating day - Total


$

12.15



$

12.64


Average margin per operating day excluding early termination revenues - Total


$

10.66



$

10.50


 

PATTERSON-UTI ENERGY, INC.

Pressure Pumping Margin and Adjusted EBITDA

(unaudited, dollars in thousands)




2016



2015




First



Fourth




Quarter



Quarter











Pressure pumping revenues


$

96,313



$

131,702


Direct operating costs



87,813




117,943


Margin



8,500




13,759


Selling, general and administrative



2,889




2,855


Adjusted EBITDA


$

5,611



$

10,904


Margin as a percentage of revenues



8.8

%



10.4

%

 

Patterson-UTI Energy, Inc.

Impact of Non-Cash Charge

Three Months Ended March 31, 2016

(unaudited, dollars in thousands, except per share amount)


Impairment of oil and natural gas properties


$

(2,201)







Effective tax rate



33.4

%






After tax amount


$

(1,466)







Weighted average number of common shares outstanding - diluted



145,770







Non-cash charge per share - diluted


$

(0.01)


 

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/patterson-uti-energy-reports-financial-results-for-three-months-ended-march-31-2016-300258894.html

SOURCE PATTERSON-UTI ENERGY, INC.

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