[Financial and Operational Highlights](index=1&type=section&id=Second%20Quarter%202025%20Financial%20Results%20and%20Other%20Key%20Items) Patterson-UTI reported a Q2 2025 net loss of $49 million, with $1.2 billion revenue and $231 million Adjusted EBITDA Q2 2025 Financial Highlights | Metric | Value (Q2 2025) | | :--- | :--- | | Total Revenue | $1.2 billion | | Net Loss Attributable to Common Stockholders | $49 million | | Non-cash Asset Impairment (Colombia) | $28 million | | Adjusted EBITDA | $231 million | | Shareholder Returns | $46 million ($0.08/share dividend + $16M buybacks) | - The company declared a quarterly dividend of **$0.08 per share**, payable on September 15, 2025[6](index=6&type=chunk) [Management Commentary](index=1&type=section&id=Management%20Commentary) Management noted Q2 activity aligned with market trends, emphasizing technology and a positive long-term natural gas outlook - The company is focused on leveraging its technology portfolio, including automation and digital services, to deliver differentiated value and improve its market position in both drilling and completions[3](index=3&type=chunk) - Customer caution persists due to oil market volatility and macroeconomic uncertainties, however, management sees long-term upside for natural gas activity driven by rising domestic and global LNG demand[3](index=3&type=chunk) - The company's strong balance sheet is a key strategic advantage, providing flexibility for capital allocation, with free cash flow expected to accelerate in the second half of 2025[3](index=3&type=chunk) [Segment Performance](index=1&type=section&id=Segment%20Performance) Q2 2025 saw Completion Services lead revenue at $719 million, with all segments advancing technology for efficiency and value [Drilling Services](index=1&type=section&id=Drilling%20Services) Drilling Services generated $404 million revenue and $149 million adjusted gross profit, with growing automation demand Drilling Services Q2 2025 Metrics | Metric (Q2 2025) | Value | | :--- | :--- | | Revenue | $404 million | | Adjusted Gross Profit | $149 million | | U.S. Operating Days | 9,465 | | Average Rigs Working | 104 | - Demand is growing for proprietary technologies like the Cortex® Automation Platform and the cloud-based REX® monitoring system, which enhance drilling processes and customer relationships[6](index=6&type=chunk)[7](index=7&type=chunk) - As of June 30, 2025, the company had term contracts for drilling rigs in the U.S. providing for approximately **$312 million** in future dayrate drilling revenue[7](index=7&type=chunk) [Completion Services](index=3&type=section&id=Completion%20Services) Completion Services reported $719 million revenue and $100 million adjusted gross profit, with fully utilized natural gas fleets Completion Services Q2 2025 Metrics | Metric (Q2 2025) | Value | | :--- | :--- | | Revenue | $719 million | | Adjusted Gross Profit | $100 million | - The fleet of Emerald™ 100% natural gas-powered assets and Tier IV dual fuel assets are fully utilized and expected to remain so through the rest of 2025[9](index=9&type=chunk) - The company is advancing its EOS Completions Platform™, successfully deploying its proprietary Vertex™ frac automation with fleet-wide deployment expected by the end of 2025[10](index=10&type=chunk) [Drilling Products](index=3&type=section&id=Drilling%20Products) Drilling Products achieved $88 million revenue and $39 million adjusted gross profit, with record U.S. revenue per rig Drilling Products Q2 2025 Metrics | Metric (Q2 2025) | Value | | :--- | :--- | | Revenue | $88 million | | Adjusted Gross Profit | $39 million | - Achieved a record U.S. revenue per U.S. industry rig, benefiting from an increase in performance-based agreements[12](index=12&type=chunk) - International business saw steady revenue with gains in the Middle East and continued penetration into offshore markets including the North Sea, Gulf of America, and Guyana[13](index=13&type=chunk)[14](index=14&type=chunk) [Other](index=3&type=section&id=Other) The 'Other' segment generated $8 million revenue and $2 million adjusted gross profit, including divested oilfield rentals Other Segment Q2 2025 Metrics | Metric (Q2 2025) | Value | | :--- | :--- | | Revenue | $8 million | | Adjusted Gross Profit | $2 million | [Business Outlook](index=3&type=section&id=Outlook) Q3 2025 outlook anticipates moderate drilling decline, steady completion services, and reduced full-year capital expenditures Q3 2025 Business Outlook | Segment | Q3 2025 Outlook | | :--- | :--- | | Drilling Services | Average rig count in the mid-90s; Adjusted gross profit of ~$130 million. | | Completion Services | Activity and adjusted gross profit to remain steady with Q2. | | Drilling Products | Adjusted gross profit to improve slightly sequentially. | - Full-year 2025 capital expenditures, net of asset sales, are now expected to be **less than $600 million**, a reduction from prior guidance[21](index=21&type=chunk) - For Q3, selling, general and administrative (SG&A) expense is expected to decline slightly, while depreciation, depletion, amortization, and impairment expense is projected to be approximately **$230 million**[20](index=20&type=chunk) [Financial Statements](index=7&type=section&id=Financial%20Statements) Financial statements show total assets of $5.58 billion as of June 30, 2025, with a Q2 2025 net loss of $49.1 million [Condensed Consolidated Balance Sheets](index=7&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of June 30, 2025, total assets were $5.58 billion, total liabilities $2.23 billion, and cash $185.9 million Condensed Consolidated Balance Sheets (in thousands) | Balance Sheet Item (in thousands) | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash, cash equivalents and restricted cash | $185,891 | $241,293 | | Total current assets | $1,241,123 | $1,295,315 | | Total assets | $5,575,620 | $5,833,466 | | Total current liabilities | $716,472 | $841,993 | | Total liabilities | $2,226,947 | $2,357,622 | | Total equity | $3,348,673 | $3,475,844 | [Condensed Consolidated Statements of Operations](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Q2 2025 revenues were $1.22 billion, resulting in a net loss of $49.1 million or ($0.13) per diluted share Condensed Consolidated Statements of Operations (in thousands) | Income Statement Item (in thousands, except per share data) | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Revenues | $1,219,320 | $1,348,194 | | Operating Income (Loss) | $(29,486) | $45,228 | | Net Loss Attributable to Common Stockholders | $(49,144) | $11,077 | | Diluted EPS | $(0.13) | $0.03 | [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For H1 2025, net cash from operations was $347.9 million, with a $55.4 million net decrease in cash Condensed Consolidated Statements of Cash Flows (in thousands) | Cash Flow Item (Six Months Ended June 30, in thousands) | 2025 | 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $347,890 | $563,413 | | Net cash used in investing activities | $(289,207) | $(349,504) | | Net cash used in financing activities | $(112,720) | $(332,538) | | Net decrease in cash | $(55,402) | $(117,644) | [Non-GAAP Financial Measures](index=11&type=section&id=Non-GAAP%20Financial%20Measures) Non-GAAP measures show Q2 2025 Adjusted EBITDA at $231.2 million and H1 2025 adjusted free cash flow [Adjusted EBITDA Reconciliation](index=11&type=section&id=Adjusted%20EBITDA) Q2 2025 Adjusted EBITDA was $231.2 million, reconciled from a net loss of $48.7 million, a decrease from Q2 2024 Adjusted EBITDA Reconciliation (in thousands) | Adjusted EBITDA Reconciliation (in thousands) | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Net income (loss) | $(48,697) | $11,621 | | Income tax expense | $1,194 | $17,785 | | Net interest expense | $16,373 | $16,046 | | Depreciation, depletion, amortization and impairment | $261,858 | $267,638 | | **Adjusted EBITDA** | **$231,216** | **$323,735** | [Adjusted Free Cash Flow Reconciliation](index=12&type=section&id=Adjusted%20Free%20Cash%20Flow) For H1 2025, adjusted free cash flow was $70.2 million, derived from net cash from operations and capital expenditures Adjusted Free Cash Flow (Six Months Ended June 30, in thousands) | Adjusted Free Cash Flow (Six Months Ended June 30, in thousands) | 2025 | 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $347,890 | $563,413 | | Less capital expenditures | $(306,037) | $(357,449) | | Plus proceeds from disposal of assets | $28,344 | $9,321 | | **Adjusted free cash flow** | **$70,197** | **$215,285** | [Adjusted Gross Profit Reconciliation](index=13&type=section&id=Adjusted%20Gross%20Profit) Q2 2025 total adjusted gross profit was $289.9 million, with Drilling Services contributing $149.0 million Adjusted Gross Profit by Segment (Q2 2025, in thousands) | Adjusted Gross Profit by Segment (Q2 2025, in thousands) | GAAP Gross Profit (Loss) | Depreciation, Amortization & Impairment | Adjusted Gross Profit | | :--- | :--- | :--- | :--- | | Drilling Services | $36,386 | $112,647 | $149,033 | | Completion Services | $(19,525) | $119,774 | $100,249 | | Drilling Products | $15,471 | $23,584 | $39,055 | | Other | $(1,918) | $3,538 | $1,620 |

Core Viewpoint - Patterson-UTI Energy, Inc. (PTEN) is expected to report a second-quarter loss of 4 cents per share with revenues of $1.21 billion, reflecting a year-over-year decline in both earnings and revenues [1][10]. Group 1: Financial Performance - In the first quarter of 2025, PTEN achieved breakeven adjusted earnings per share, outperforming the Zacks Consensus Estimate of a loss of 4 cents per share, driven by an 11.2% year-over-year reduction in costs and expenses [3]. - Total revenues for Q1 2025 were $1.3 billion, exceeding the Zacks Consensus Estimate by 7.7% [3]. - The Zacks Consensus Estimate for second-quarter 2025 earnings indicates a 180% year-over-year decline, while revenues are expected to decrease by 10.09% from the previous year [4][10]. Group 2: Cost Management - PTEN's operating costs and expenses are projected to reach $1.26 billion in the second quarter, a 3.4% decrease from the same period last year, reflecting the company's focus on streamlining operations [6]. - Direct operating costs are expected to decline from $971.2 million to $961.2 million, and depreciation, depletion, amortization, and impairment costs are anticipated to decrease from $267.6 million to $230 million [7]. Group 3: Revenue Challenges - The Zacks Consensus Estimate for second-quarter revenues is $1.21 billion, down from $1.35 billion in the year-ago quarter, attributed to poor performance in Completion Services, Drilling Services, and Drilling Products segments [8][10]. - Despite expected revenue declines across several segments, PTEN's cost management efforts are likely to mitigate the financial impact [9].

Core Viewpoint - Wall Street anticipates a year-over-year decline in earnings for Patterson-UTI due to lower revenues, with a focus on how actual results compare to estimates impacting stock price [1][2]. Earnings Expectations - Patterson-UTI is expected to report a quarterly loss of $0.04 per share, reflecting a year-over-year change of -180% [3]. - Revenue is projected to be $1.21 billion, down 10% from the same quarter last year [3]. Estimate Revisions - The consensus EPS estimate has been revised down by 32.87% over the last 30 days, indicating a reassessment by analysts [4]. - The Most Accurate Estimate for Patterson-UTI is lower than the Zacks Consensus Estimate, resulting in an Earnings ESP of -3.23% [12]. Earnings Surprise Prediction - A positive Earnings ESP is a strong predictor of an earnings beat, especially when combined with a Zacks Rank of 1, 2, or 3 [10]. - Stocks with a positive Earnings ESP and a solid Zacks Rank have historically produced a positive surprise nearly 70% of the time [10]. Historical Performance - In the last reported quarter, Patterson-UTI was expected to post a loss of $0.04 per share but delivered break-even earnings, resulting in a surprise of +100.00% [13]. - Over the last four quarters, the company has only beaten consensus EPS estimates once [14]. Conclusion - Patterson-UTI does not appear to be a compelling earnings-beat candidate, and investors should consider other factors when making decisions regarding the stock ahead of its earnings release [17].

Industry Overview - The Zacks Oil and Gas - Drilling industry includes companies providing rigs and services for oil and natural gas exploration and development, with operations both onshore and offshore [2] - Drilling for hydrocarbons is capital-intensive and technically challenging, primarily influenced by contracting activity rather than oil or gas prices [2] - Offshore drilling companies exhibit higher volatility compared to onshore counterparts, with their share prices more closely correlated to oil and gas prices [2] Current Challenges - The industry is facing significant challenges due to contracting delays, soft gas prices, and macroeconomic uncertainty, leading to a Zacks Industry Rank of 235, placing it in the bottom 4% of 245 Zacks industries [1][7] - Earnings estimates for the industry have declined sharply, with a drop of 85.2% for 2025 and 51.7% for 2026 over the past year, indicating a negative outlook [9] - The industry has underperformed compared to the broader Zacks Oil - Energy sector and the S&P 500, with a decline of 38.6% over the past year versus a 2.1% increase in the sector and a 9.1% gain in the S&P 500 [11] Market Trends - Macroeconomic uncertainty is causing hesitation in customer decision-making, slowing the pace of tenders and contract awards, and making near-term earnings visibility difficult for drillers [3] - There are concerns about premature rig reactivation leading to oversupply, particularly in deepwater segments, which could undermine pricing power and margins [4] - Despite short-term challenges, long-term demand for deepwater drilling is expected to grow, with forecasts indicating a 40% increase in investment by 2030, supported by large undeveloped reserves and major project approvals [5] Company Highlights - **Transocean Ltd. (RIG)**: Reported contract drilling revenues of $906 million in Q1 2025, an 18.7% increase year-over-year, with a market capitalization of $2.9 billion and a projected earnings growth of 123.1% for 2025 [18] - **Patterson-UTI Energy (PTEN)**: Generated $51 million in adjusted free cash flow in Q1 2025, with a market capitalization of $2.5 billion and a dividend yield of nearly 5% [21] - **Precision Drilling Corporation (PDS)**: Canada’s largest drilling rig contractor, with a market capitalization of $687.3 million, has seen its earnings estimate for 2025 increase from $3.84 to $4.13 per share in the past 60 days [24]

Company Overview - Patterson-UTI Energy is an oil and gas service provider primarily operating in the United States [1] Industry Context - A recent decline in crude oil prices has led several producers to slightly reduce drilling activity [1]

Core Viewpoint - Patterson-UTI reported a decline in revenue and earnings for the quarter ended March 2025, with a revenue of $1.28 billion, down 15.2% year-over-year, and an EPS of $0.00 compared to $0.15 in the previous year, although it exceeded Wall Street expectations for revenue and EPS [1]. Financial Performance - Revenue of $1.28 billion represents a surprise of +7.67% over the Zacks Consensus Estimate of $1.19 billion [1]. - EPS surprise was +100.00%, with the consensus EPS estimate being -$0.04 [1]. - Shares of Patterson-UTI returned +6.5% over the past month, outperforming the Zacks S&P 500 composite's +0.4% change [3]. Key Metrics - Average direct operating costs per operating day were $19.55, slightly above the estimated $19.47 [4]. - Average adjusted gross profit per operating day was $16.17, exceeding the estimate of $15.25 [4]. - Operating revenue from Other Operations was $15.93 million, below the average estimate of $28.05 million [4]. - Operating revenue from Drilling Services was $412.86 million, slightly above the estimate of $402.03 million [4]. - Revenues from Completion Services were $766.08 million, significantly above the average estimate of $686.10 million, but represented a year-over-year decline of -18.9% [4]. - Revenues from Drilling Products were $85.66 million, slightly below the estimate of $87.29 million, reflecting a -4.8% year-over-year change [4]. - Operating income from Other was $0.23 million, below the estimate of $2 million [4]. - Operating income from Corporate was -$47.49 million, slightly better than the estimate of -$48.99 million [4]. - Operating income from Drilling Products was $6.73 million, exceeding the estimate of $5.69 million [4]. - Operating income from Completion Services was -$18.84 million, better than the estimate of -$34.08 million [4]. - Operating income from Drilling Services was $76.31 million, above the estimate of $70.39 million [4].

Financial Performance - Total operating revenues for Q1 2025 were $1,280,537, a decrease of 15.2% compared to $1,510,360 in Q1 2024[13]. - Net income attributable to common stockholders for Q1 2025 was $1,005, down 98.0% from $51,235 in Q1 2024[13]. - The company reported a comprehensive income of $1,001 for Q1 2025, compared to $50,713 in Q1 2024, indicating a significant drop[15]. - Operating income for Q1 2025 was $16,945, down 80.5% from $86,999 in Q1 2024[13]. - Net income for the three months ended March 31, 2025, was $1,290 million, a decrease from $51,706 million in the same period of 2024[20]. - For Q1 2025, total consolidated revenues were $1,280,537, a decrease of 14.1% from $1,510,360 in Q1 2024[116]. Assets and Liabilities - Total assets decreased to $5,765,426 as of March 31, 2025, from $5,833,466 at December 31, 2024, representing a decline of 1.2%[10]. - Current liabilities decreased slightly to $818,288 from $841,993, a reduction of 2.8%[10]. - Total liabilities decreased to $2,330,021 as of March 31, 2025, from $2,357,622 at December 31, 2024, a decrease of 1.2%[10]. - The weighted average number of common shares outstanding decreased to 386,521 in Q1 2025 from 408,182 in Q1 2024, a reduction of 5.3%[13]. - The company’s total current assets, including other current assets, were $124,148 thousand as of March 31, 2025, compared to $123,193 thousand at the end of 2024, showing a slight increase of about 0.77%[41]. Cash Flow and Capital Expenditures - Net cash provided by operating activities was $208,141 million, down from $365,891 million year-over-year[20]. - Capital expenditures for Q1 2025 totaled $161,831, down 28.7% from $226,941 in Q1 2024[117]. - The company anticipates $44.7 million in capital expenditures for the remainder of 2025 related to various contractual obligations[189]. - Cash dividends paid during the three months ended March 31, 2025, totaled $30.9 million, with a declared dividend of $0.08 per share[191]. Debt and Financing - Long-term debt as of March 31, 2025, was $1,220,083 thousand, slightly up from $1,219,770 thousand at December 31, 2024, reflecting a marginal increase of about 0.03%[64]. - The company issued $400 million in 7.15% Senior Notes due 2033, with net proceeds of approximately $396 million used to repay prior credit obligations[74]. - The total debt to capitalization ratio must not exceed 50%, and the company was in compliance with this covenant as of March 31, 2025[68]. - As of March 31, 2025, the company had no borrowings outstanding under the Credit Agreement and approximately $498 million in available borrowing capacity[69]. Segment Performance - Segment operating income for Drilling Services was $76,314, while Completion Services reported an operating loss of $18,836, resulting in total segment operating income of $64,206 for Q1 2025[116]. - The Completion Services segment generated revenues of $766.1 million in Q1 2025, accounting for 59.8% of total revenues, compared to 62.6% in Q1 2024[145]. - Adjusted gross profit for the Drilling Services segment in Q1 2025 was $165.2 million, reflecting a year-over-year decline of 11.1%[146]. - Revenues for drilling products were $85,663,000, a 1.0% sequential decrease and a 4.8% year-over-year decrease[157]. Market Conditions and Risks - The company anticipates potential risks including commodity price volatility, competition, and operational hazards in the oil and natural gas industry[122]. - The company’s revenues, profitability, and cash flows are highly dependent on prevailing oil and natural gas prices and customer capital deployment[207]. - Global economic conditions deteriorated post-March 31, 2025, due to new trade policies and tariffs, impacting market stability[207]. - Customer consolidation and focus on capital returns by exploration and production companies are impacting demand for services[207]. Legal and Regulatory Matters - The company is involved in ongoing legal proceedings that may impact financial results, with a trial scheduled for October 27, 2025[89]. - The effective income tax rate for the three months ended March 31, 2025, was 51.9%, compared to 27.9% for the same period in 2024, primarily due to permanent differences against earnings[107].

Financial Data and Key Metrics Changes - Total reported revenue for Q1 2025 was $1,281 million, with a net income attributable to common shareholders of $1 million [24] - Adjusted EBITDA for the quarter totaled $251 million, and adjusted free cash flow generated was $51 million [24][39] - The company closed the quarter with $225 million in cash and an undrawn $500 million revolving credit facility [12][38] Business Line Data and Key Metrics Changes - In the Drilling Services segment, Q1 revenue was $413 million with an adjusted gross profit of $165 million [26] - The Completion Services segment reported revenue of $766 million and an adjusted gross profit of $108 million, with strong demand and high utilization [30] - Drilling Products revenue totaled $86 million with an adjusted gross profit of $39 million, showing steady performance across regions [32] Market Data and Key Metrics Changes - The U.S. contract drilling business had 9,573 operating days, with average rig revenue per day at $35,700 and average rig operating cost per day at $19,600 [27] - The company noted a strong performance in natural gas basins, particularly in the Haynesville region, with increased activity expected [15][19] Company Strategy and Development Direction - The company focuses on optimizing core operations and disciplined capital allocation, aiming for sustained success through integrated service offerings [7][10] - The strategy includes leveraging integrated agreements in drilling and completion businesses to enhance efficiency and maximize returns for investors [9][10] - The company plans to continue growing integrated work as a proportion of overall business, emphasizing value-accretive services over low pricing [10] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism regarding the oil market, noting potential softening if prices remain low, but highlighted stability in operations [14][68] - The outlook for natural gas is constructive, with expectations for increased drilling and completion activity to meet rising demand [15][43] - Management emphasized the importance of maintaining a strong balance sheet to navigate uncertainty and capitalize on opportunities [40][41] Other Important Information - The company returned $51 million to shareholders in Q1, including dividends and share repurchases [25] - The full-year 2025 net capital budget is set at approximately $600 million, with flexibility to adjust based on market conditions [37] Q&A Session Summary Question: Discussion on the evolution of the commercial model and integrated services - Management highlighted the unmatched breadth of offerings in U.S. shale, including drilling rigs, cementing services, and logistics, which enhance efficiency for E&Ps [49][50] Question: Thoughts on replacement CapEx and impacts of tariffs - Management indicated a measured approach to replacement CapEx, focusing on natural gas-powered equipment, while monitoring potential tariff impacts [51][55] Question: Clarification on completion guidance and expected activity levels - Management acknowledged a strong ramp-up in Q1 but expressed caution regarding potential white space in the second quarter due to oil price fluctuations [61][64] Question: Insights on potential activity declines in the second half of the year - Management noted that if oil prices remain low, some activity softening could occur, particularly among lower-spec rigs, but emphasized resilience among higher-tier operators [100][102] Question: Performance-based contracts and their adoption - Management reported that about 10% of operations now involve integrated performance-based contracts, with expectations for continued growth in this area [114][116]

Financial Data and Key Metrics Changes - Total reported revenue for Q1 2025 was $1,281 million, with a net income attributable to common shareholders of $1 million and adjusted EBITDA of $251 million [24][25]. - The company generated $51 million of adjusted free cash flow during the quarter [24]. - The working capital headwind was approximately $37 million, typical for the first half of the year [25]. Business Line Data and Key Metrics Changes - In the Drilling Services segment, Q1 revenue was $413 million with an adjusted gross profit of $165 million [26]. - The U.S. contract drilling business had 9,573 operating days, with average rig revenue per day at $35,700 and average rig operating cost per day at $19,600 [27]. - The Completion Services segment reported revenue of $766 million and adjusted gross profit of $108 million, with strong demand and high utilization in both oil and natural gas basins [30]. - The Drilling Products segment generated $86 million in revenue with an adjusted gross profit of $39 million, showing steady performance across major regions [32]. Market Data and Key Metrics Changes - The company noted a strong recovery in completions activity and steady drilling activity across U.S. shale, with positive momentum in natural gas basins [6][15]. - The Haynesville region saw significant demand growth, benefiting from the company's solid footprint in key natural gas plays [19]. - The company has an outsized exposure to the industry's largest and most stable operators, which are less reactive to short-term commodity price fluctuations [11]. Company Strategy and Development Direction - The company's strategy focuses on optimizing core operations and disciplined capital allocation, leveraging integrated agreements in drilling and completion businesses [8][10]. - The company aims to enhance efficiency and unlock value for customers through a comprehensive suite of services and products [8][9]. - The company plans to continue growing integrated work as a proportion of its overall business, emphasizing value-accretive services over the lowest price [10]. Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism regarding the natural gas market, anticipating increased drilling and completion activity to meet growing demand [15][43]. - The outlook for oil remains uncertain, with potential softening if prices remain low, but operations are currently stable [14][68]. - The company is prepared to adapt its strategy across various commodity price environments, maintaining a strong balance sheet and liquidity [12][41]. Other Important Information - The company closed the quarter with $225 million in cash and an undrawn $500 million revolving credit facility, maintaining low leverage and an investment-grade credit rating [12][38]. - The full-year 2025 net capital budget is set at approximately $600 million, with flexibility to adjust based on market conditions [37]. Q&A Session Summary Question: Discussion on the evolution of the commercial model and integrated services - Management highlighted the unmatched breadth of offerings in U.S. shale, including drilling rigs, cementing services, and logistics, which enhance efficiency for E&Ps [49][50]. Question: Thoughts on replacement CapEx and impacts of tariffs - Management indicated a measured approach to replacement CapEx, focusing on Emerald 100% natural gas systems, while monitoring potential tariff impacts [51][55]. Question: Clarification on completion guidance and expected activity levels - Management acknowledged a strong ramp-up in Q1 but expressed caution regarding potential white space in the second quarter due to oil price fluctuations [61][64]. Question: Insights on potential activity declines in the second half of the year - Management noted that if oil prices remain low, some activity softening could occur, particularly among lower-spec rigs, but higher-spec rigs would likely remain stable [100][102]. Question: Performance-based contracts and their adoption - Management reported that about 10% of operations now involve integrated performance-based contracts, with expectations for continued growth in this area [114].

Financial Performance - Patterson-UTI reported break-even quarterly earnings per share, compared to a Zacks Consensus Estimate of a loss of $0.04, and earnings of $0.15 per share a year ago, indicating an earnings surprise of 100% [1] - The company posted revenues of $1.28 billion for the quarter ended March 2025, surpassing the Zacks Consensus Estimate by 7.67%, but down from $1.51 billion year-over-year [2] - Over the last four quarters, Patterson-UTI has surpassed consensus EPS estimates just once and topped consensus revenue estimates two times [2] Stock Performance - Patterson-UTI shares have lost about 28.8% since the beginning of the year, while the S&P 500 has declined by 10.1% [3] - The current consensus EPS estimate for the coming quarter is -$0.03 on $1.23 billion in revenues, and -$0.09 on $4.83 billion in revenues for the current fiscal year [7] Industry Outlook - The Oil and Gas - Drilling industry, to which Patterson-UTI belongs, is currently in the bottom 14% of over 250 Zacks industries, indicating potential challenges ahead [8] - Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can impact Patterson-UTI's stock performance [5][6] Future Expectations - The estimate revisions trend for Patterson-UTI is mixed, resulting in a Zacks Rank 3 (Hold) for the stock, suggesting it is expected to perform in line with the market in the near future [6] - The upcoming earnings call will be crucial for understanding management's commentary on future earnings expectations [3][4] Competitor Insights - Noble Corporation PLC, another company in the same industry, is expected to report quarterly earnings of $0.31 per share, reflecting a year-over-year change of -31.1%, with revenues expected to be $853.91 million, up 34% from the year-ago quarter [9][10]