Release Date: October 24, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Patterson-UTI Energy Inc (PTEN, Financial) successfully integrated NexTier and Ulterra, solidifying its position as a leading player in the oilfield services sector.
- The company generated almost $570 million of free cash flow in the first four quarters since the NexTier and Ulterra transactions.
- Patterson-UTI Energy Inc (PTEN) returned 15% of its current market cap to shareholders through share repurchases and dividends.
- The company has a strong balance sheet with an investment-grade credit rating, allowing for a lower cost of capital.
- Patterson-UTI Energy Inc (PTEN) is seeing strong financial results from its electric fleets, which are delivering higher-than-average returns compared to the completion services segment average.
Negative Points
- Patterson-UTI Energy Inc (PTEN) reported a net loss attributable to common shareholders of $979 million in the third quarter, including an $885 million impairment of goodwill.
- The company experienced a decline in completion services adjusted gross profit due to unplanned gaps impacting fixed cost leverage.
- There is a potential for the overall industry rig count to move somewhat lower, impacting Patterson-UTI Energy Inc (PTEN)'s operations.
- The company anticipates average activity in 2025 will be slightly below 2024, with a steady rig count, indicating potential challenges in maintaining growth.
- Patterson-UTI Energy Inc (PTEN) is retiring and decommissioning nearly 400,000 horsepower of older Tier 2 diesel frac equipment, reflecting challenges in maintaining competitiveness in an oversupplied market.
Q & A Highlights
Q: Andy, you mentioned higher gross profit in the first half of next year for Completion. Can you provide any color on where you think that lands?
A: William Hendricks, CEO: We expect a reduction in activity in Q4, but this isn't indicative of next year. We anticipate a reset at the start of the year, with equipment going back to work, and margins improving over Q4 levels.
Q: Can you provide some color on the Turnwell JV and your participation?
A: William Hendricks, CEO: We're excited about the JV with ADNOC, initially providing expertise. We may increase rig count participation, but any capital deployment will be carefully considered to ensure it aligns with our focus on returning cash to shareholders.
Q: How do you view the medium-term supply/demand for pressure pumping, and what attrition do you expect?
A: William Hendricks, CEO: The industry is seeing attrition, and we're taking a leadership role by retiring older equipment. We expect others to follow, and anticipate a tighter market in 2025, especially for high-end equipment.
Q: Can you discuss your plans for free cash flow returns in 2025?
A: C. Andrew Smith, CFO: While it's early, our long-term commitment is to return 50% of free cash flow to shareholders. We don't plan to finance buybacks through debt, as maintaining our investment-grade credit rating is a priority.
Q: What are the early lessons from the integrated drilling and completion contracts?
A: William Hendricks, CEO: The customer is pleased, and we've outperformed expectations. The biggest win is running more services than initially expected, and we're in discussions with other E&Ps for similar projects.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
