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Patterson-UTI Energy Reports Financial Results for Three and Six Months Ended June 30, 2016

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HOUSTON, July 28, 2016 /PRNewswire/ -- PATTERSON-UTI ENERGY, INC. (NASDAQ: PTEN) today reported financial results for the three and six months ended June 30, 2016.  The Company reported a net loss of $85.9 million, or $0.58 per share, for the second quarter of 2016, compared to a net loss of $19.0 million, or $0.13 per share, for the quarter ended June 30, 2015.  Revenues for the second quarter of 2016 were $194 million, compared to $473 million for the second quarter of 2015.

For the six months ended June 30, 2016, the Company reported a net loss of $156 million, or $1.06 per share, compared to a net loss of $9.9 million, or $0.07 per share, for the six months ended June 30, 2015.  Revenues for the six months ended June 30, 2016, were $463 million, compared to $1.1 billion for the same period in 2015.

Andy Hendricks, Patterson-UTI's Chief Executive Officer, stated, "In contract drilling, our rig count during the second quarter averaged 55 rigs in the United States and less than one rig in Canada, compared to the first quarter average of 71 rigs in the United States and three rigs in Canada.  Activity levels stabilized for both our drilling and pressure pumping businesses during the second quarter.  Since reaching a bottom in late-April of 52 rigs, our rig count in the United States has improved to 58 rigs.  For the month of July, we expect our average rig count will be 56 rigs in the United States and two rigs in Canada." 

Mr. Hendricks added, "We recognized $5.4 million of revenues related to early contract terminations in our drilling business during the second quarter.  These early termination revenues positively impacted our total average rig revenue per day of $23,070 by $1,080.  Excluding early termination revenue from both the first and second quarters, total average rig revenue per day during the second quarter would have been $21,980 compared to $22,820 in the first quarter.

"Total average rig operating costs per day during the second quarter increased to $12,770 from $12,150 in the first quarter.  Costs associated with preparing rigs for reactivation contributed to this increase.  Total average rig margin per day, excluding the positive impact from early termination revenues in both the first and second quarters, decreased to $9,210 during the second quarter, from $10,660 during the first quarter.

"As of June 30, 2016, we had term contracts for drilling rigs providing for approximately $507 million of future dayrate drilling revenue.  Based on contracts currently in place, we expect an average of 45 rigs operating under term contracts during the third quarter, and an average of 42 rigs operating under term contracts during the second half of 2016. 

"In pressure pumping, activity stabilized during the second quarter, but pricing remains unsustainably low.  In this low price environment, we continue to be disciplined in the use of our assets, and we have not activated idle spreads.  With the lower activity, pressure pumping revenues decreased by 23% to $74.0 million from $96.3 million in the first quarter.  Gross margin as a percentage of revenues decreased to 6.0% during the second quarter from 8.8% in the first quarter.  Pressure pumping Adjusted EBITDA was $1.4 million in the second quarter compared to $5.6 million in the first quarter," he concluded.

Mark S. Siegel, Chairman of Patterson-UTI, stated, "During the second quarter, activity stabilized in both our drilling and pressure pumping businesses as commodity prices improved.  We are encouraged by the recent increase in our rig count and optimistic about a continued recovery in the U.S. rig count, assuming commodity prices remain at or above recent levels. 

"During a recovery, our operational focus shifts as we scale the Company to higher activity levels, but our priorities remain the same – operational execution, maximizing margins, and maintaining financial flexibility.  We are well positioned for a cyclical recovery with both high quality drilling rigs and pressure pumping equipment that are ready to be reactivated, as well as the financial position necessary to cover reactivation costs and increases in working capital.

"As previously announced, to further solidify our financial position, we recently amended our bank credit agreement to, among other things, extend the maturity of our revolving credit facility by 18 months to March 2019.  Additionally, we repaid the entire $230 million of bank term loans outstanding as of June 30, 2016 using cash on hand and $70 million drawn from the revolving credit facility.  As a result, we believe we have ample liquidity to finance working capital requirements during a recovery.  Additionally, we have reduced our pro forma debt to total capital ratio at June 30, 2016 to 22%, reduced future interest expense, effectively eased our ability to pay future dividends, and we no longer have any term debt maturities until October 2020," he concluded.

The Company declared a quarterly dividend on its common stock of $0.02 per share, to be paid on September 22, 2016, to holders of record as of September 8, 2016.

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 June 30, 2016, is scheduled for today, July 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 13110301.  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



Six Months Ended




June 30,



June 30,




2016



2015



2016



2015


REVENUES


$

193,907



$

472,761



$

462,846



$

1,130,460


COSTS AND EXPENSES

















Direct operating costs



134,999




299,383




305,800




727,716


Depreciation, depletion, amortization and impairment



170,975




181,924




347,745




357,306


Selling, general and administrative



17,087




19,216




35,059




39,753


Other operating (income) expense, net



(4,822)




(2,998)




(6,167)




6,346



















Total costs and expenses



318,239




497,525




682,437




1,131,121



















OPERATING LOSS



(124,332)




(24,764)




(219,591)




(661)



















OTHER INCOME (EXPENSE)

















Interest income



100




318




210




601


Interest expense



(10,678)




(9,249)




(21,478)




(17,790)


Other



17







33






















Total other expense



(10,561)




(8,931)




(21,235)




(17,189)



















LOSS BEFORE INCOME TAXES



(134,893)




(33,695)




(240,826)




(17,850)


INCOME TAX BENEFIT



(49,027)




(14,720)




(84,457)




(8,000)



















NET LOSS


$

(85,866)



$

(18,975)



$

(156,369)



$

(9,850)



















NET LOSS PER COMMON SHARE

















Basic


$

(0.58)



$

(0.13)



$

(1.06)



$

(0.07)


Diluted


$

(0.58)



$

(0.13)



$

(1.06)



$

(0.07)


WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING

















Basic



145,944




145,300




145,857




145,142


Diluted



145,944




145,300




145,857




145,142


CASH DIVIDENDS PER COMMON SHARE


$

0.02



$

0.10



$

0.12



$

0.20


 

PATTERSON-UTI ENERGY, INC.

Additional Financial and Operating Data

(unaudited, dollars in thousands)










Three Months Ended



Six Months Ended




June 30,



June 30,




2016



2015



2016



2015


Contract Drilling:

















Revenues


$

115,235



$

288,321



$

283,894



$

689,799


Direct operating costs


$

63,803



$

153,848



$

144,701



$

366,658


Margin (1)


$

51,432



$

134,473



$

139,193



$

323,141


Selling, general and administrative


$

1,479



$

1,420



$

3,237



$

2,858


Depreciation, amortization and impairment


$

120,402



$

123,627



$

241,501



$

242,459


Operating income (loss)


$

(70,449)



$

9,426



$

(105,545)



$

77,824



















Operating days – United States



4,960




11,064




11,385




25,891


Operating days – Canada



36




147




268




840


Operating days – Total



4,996




11,211




11,653




26,731



















Average revenue per operating day – United States


$

23.02



$

25.78



$

24.29



$

25.84


Average direct operating costs per operating day – United States


$

12.43



$

13.48



$

12.10



$

13.50


Average margin per operating day – United States (1)


$

10.59



$

12.30



$

12.19



$

12.34


Average rigs operating – United States



55




122




63




143



















Average revenue per operating day – Canada


$

28.92



$

20.72



$

27.39



$

24.88


Average direct operating costs per operating day – Canada


$

59.44



$

31.69



$

25.84



$

20.54


Average margin per operating day – Canada (1)


$

(30.53)



$

(10.97)



$

1.55



$

4.33


Average rigs operating – Canada



0




2




1




5



















Average revenue per operating day – Total


$

23.07



$

25.72



$

24.36



$

25.81


Average direct operating costs per operating day – Total


$

12.77



$

13.72



$

12.42



$

13.72


Average margin per operating day – Total (1)


$

10.29



$

11.99



$

11.94



$

12.09


Average rigs operating – Total



55




123




64




148



















Capital expenditures


$

16,570



$

153,940



$

28,450



$

311,362



















Pressure Pumping:

















Revenues


$

73,950



$

176,624



$

170,263



$

426,345


Direct operating costs


$

69,546



$

142,756



$

157,359



$

355,481


Margin (2)


$

4,404



$

33,868



$

12,904



$

70,864


Selling, general and administrative


$

3,029



$

4,351



$

5,918



$

9,444


Depreciation, amortization and impairment


$

47,400



$

48,261



$

96,970



$

95,180


Operating loss


$

(46,025)



$

(18,744)



$

(89,984)



$

(33,760)



















Fracturing jobs



74




148




157




364


Other jobs



172




535




330




1,153


Total jobs



246




683




487




1,517



















Average revenue per fracturing job


$

976.30



$

1,148.39



$

1,058.99



$

1,118.41


Average revenue per other job


$

9.91



$

12.45



$

12.13



$

16.69


Average revenue per total job


$

300.61



$

258.60



$

349.62



$

281.04


Average costs per total job


$

282.71



$

209.01



$

323.12



$

234.33


Average margin per total job (2)


$

17.90



$

49.59



$

26.50



$

46.71


Margin as a percentage of revenues (2)



6.0

%



19.2

%



7.6

%



16.6

%


















Capital expenditures and acquisitions


$

11,780



$

64,009



$

19,332



$

139,819



















Oil and Natural Gas Production and Exploration:

















Revenues – Oil


$

4,056



$

7,091



$

7,413



$

12,955


Revenues – Natural gas and liquids


$

666



$

725



$

1,276



$

1,361


Revenues – Total


$

4,722



$

7,816



$

8,689



$

14,316


Direct operating costs


$

1,650



$

2,779



$

3,740



$

5,577


Margin (3)


$

3,072



$

5,037



$

4,949



$

8,739


Depletion


$

1,805



$

4,607



$

4,336



$

9,507


Impairment of oil and natural gas properties


$



$

4,061



$

2,201



$

7,425


Operating income (loss)


$

1,267



$

(3,631)



$

(1,588)



$

(8,193)



















Capital expenditures


$

1,692



$

3,612



$

3,220



$

11,204



















Corporate and Other:

















Selling, general and administrative


$

12,579



$

13,445



$

25,904



$

27,451


Depreciation


$

1,368



$

1,368



$

2,737



$

2,735


Other operating (income) expense, net


$

(4,822)



$

(2,998)



$

(6,167)



$

6,346



















Capital expenditures


$

491



$

606



$

832



$

1,248


Total capital expenditures


$

30,533



$

222,167



$

51,834



$

463,633



















(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.

 

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


June 30,

2016



December 31,

2015

Cash and cash equivalents


$

209,627



$

113,346


Current assets


$

455,723



$

486,536


Current liabilities


$

291,986



$

307,649


Working capital


$

163,737



$

178,887


Current portion of long-term debt


$

85,721



$

63,267


Borrowings under revolving credit facility


$



$


Other long-term debt


$

741,169



$

787,900


 

PATTERSON-UTI ENERGY, INC.

Non-U.S. GAAP Financial Measures

(unaudited, dollars in thousands)










Three Months Ended



Six Months Ended




June 30,



June 30,




2016



2015



2016



2015


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

















Net loss


$

(85,866)



$

(18,975)



$

(156,369)



$

(9,850)


Income tax benefit



(49,027)




(14,720)




(84,457)




(8,000)


Net interest expense



10,578




8,931




21,268




17,189


Depreciation, depletion, amortization and impairment



170,975




181,924




347,745




357,306



















Adjusted EBITDA


$

46,660



$

157,160



$

128,187



$

356,645



















Total revenue


$

193,907



$

472,761



$

462,846



$

1,130,460


Adjusted EBITDA margin



24.1

%



33.2

%



27.7

%



31.5

%


















Adjusted EBITDA by operating segment:

















Contract drilling


$

49,953



$

133,053



$

135,956



$

320,283


Pressure pumping



1,375




29,517




6,986




61,420


Oil and natural gas



3,072




5,037




4,949




8,739


Corporate and other



(7,740)




(10,447)




(19,704)




(33,797)



















Consolidated Adjusted EBITDA


$

46,660



$

157,160



$

128,187



$

356,645



















(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 measure of net income (loss).

 

PATTERSON-UTI ENERGY, INC.

Impact of Early Termination Revenues

(unaudited, dollars in thousands)







2016




Second



First




Quarter



Quarter


Contract drilling revenues


$

115,235



$

168,659


Operating days - Total



4,996




6,657


Average revenue per operating day - Total


$

23.07



$

25.34


Early termination revenues - Total


$

5,419



$

16,776


Early termination revenues per operating day - Total


$

1.08



$

2.52


Average revenue per operating day excluding early termination revenues - Total


$

21.98



$

22.82


Direct operating costs - Total


$

63,803



$

80,898


Average direct operating costs per operating day - Total


$

12.77



$

12.15


Average margin per operating day excluding early termination revenues - Total


$

9.21



$

10.66


 

PATTERSON-UTI ENERGY, INC.

Pressure Pumping Margin and Adjusted EBITDA

(unaudited, dollars in thousands)










2016



2016




Second



First




Quarter



Quarter











Pressure pumping revenues


$

73,950



$

96,313


Direct operating costs



69,546




87,813


Margin



4,404




8,500


Selling, general and administrative



3,029




2,889


Adjusted EBITDA


$

1,375



$

5,611


Margin as a percentage of revenues



6.0

%



8.8

%

 

PATTERSON-UTI ENERGY, INC.

Pro Forma Debt to Total Capital Ratio

(unaudited, dollars in thousands)
















June 30, 2016



Repayment of

Term Loans



Revolver

Borrowing



Pro Forma


















Current portion of long-term debt (excluding debt issuance cost)

$

86,250



$

(86,250)



$

-



$

-


Long-term debt (excluding debt issuance cost)


743,750




(143,750)




70,000




670,000


Total debt


830,000




(230,000)




70,000




670,000


Total stockholders' equity


2,401,830




-




-




2,401,830


Total capital

$

3,231,830



$

(230,000)



$

70,000



$

3,071,830


















Debt to total capital ratio


26

%











22

%

 

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/patterson-uti-energy-reports-financial-results-for-three-and-six-months-ended-june-30-2016-300305239.html

SOURCE PATTERSON-UTI ENERGY, INC.

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