Financial Data and Key Metrics Changes - Adjusted net income attributable to common shareholders was $55 million or $0.20 per share, excluding merger and integration expenses [15] - Adjusted EBITDA totaled $277 million, also excluding merger and integration expenses [15] - Total reported revenue for the quarter was just over $1 billion, with a small net income essentially breakeven on a per share basis [28] Business Line Data and Key Metrics Changes - Drilling Services revenue was $489 million, including $29 million in previously deferred revenue, with a gross margin of $209 million [48] - Completion Services segment revenue totaled $460 million, with an adjusted gross margin of $91 million, impacted by lower customer activity and pricing [31] - Drilling Products revenue totaled $47 million with an adjusted gross margin of $14 million [53] Market Data and Key Metrics Changes - U.S. drilling activity averaged 120 rigs, with an improvement to 118 active rigs by the end of the quarter [24] - Average rig revenue per day increased to $38,110, with average rig operating costs per day at $19,870 [49] - The average adjusted rig margin per day was $18,240, a $1,330 increase from the previous quarter [30] Company Strategy and Development Direction - The company aims to maximize potential through the NexTier and Ulterra transactions, expecting at least $200 million in annualized synergies by Q1 2025 [20][35] - A commitment to capital discipline and returning at least 50% of free cash flow to shareholders annually is emphasized [23][36] - The company is focused on integrating operations and enhancing service quality to differentiate itself in a bifurcated market [5][10] Management's Comments on Operating Environment and Future Outlook - Management remains optimistic about the drilling and completion markets, expecting a modest increase in U.S. shale oil and natural gas production over the next several years [25][26] - The company anticipates continued positive momentum into 2024, with super-spec rig utilization remaining high [11] - Management acknowledges the need for U.S. shale production to grow modestly to meet global demand, particularly in light of OPEC supply cuts [25] Other Important Information - The company has returned over $1.2 billion to shareholders in the past decade and has $281 million remaining on its share repurchase authorization [23][29] - Total CapEx for Q3 was $160 million, with expectations of $190 million for Q4 [33] - The company has maintained an investment-grade credit rating from all three major rating agencies [34] Q&A Session Summary Question: What is the current horsepower and rig count? - The company has 3.3 million horsepower, with some parked for maintenance as they prepare for increased activity in 2024 [62] Question: What are the expectations for rig market recovery? - Management expects margins to bottom around Q1 or Q2, with an anticipated increase in rig count as commodity prices stabilize [65] Question: Can you elaborate on the synergies from the recent mergers? - The company is confident in achieving over $100 million in annualized synergies, with a significant portion coming from SG&A and procurement efficiencies [73] Question: What is the outlook for the Pressure Pumping side? - Management sees a stable outlook for activity and pricing, with expectations for steady performance through the end of the year [52] Question: How is the company managing labor and scaling up? - The company is focused on maintaining a strong workforce and is optimistic about scaling up operations as activity increases in 2024 [100]

PART I — FINANCIAL INFORMATION [Financial Statements](index=3&type=section&id=ITEM%201.%20Financial%20Statements) The unaudited condensed consolidated financial statements for the period ended June 30, 2023, show a significant increase in net income compared to the prior year, driven by higher revenues across key segments [Condensed Consolidated Balance Sheets](index=3&type=section&id=Unaudited%20condensed%20consolidated%20balance%20sheets) As of June 30, 2023, total assets were $3.12 billion, a slight decrease from $3.14 billion at December 31, 2022, primarily due to reduced accounts receivable and accrued liabilities Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2023 | December 31, 2022 | | :--- | :--- | :--- | | **Total Current Assets** | $801,327 | $829,419 | | **Property and equipment, net** | $2,263,581 | $2,260,576 | | **Total Assets** | **$3,117,196** | **$3,143,823** | | **Total Current Liabilities** | $454,321 | $550,966 | | **Long-term debt, net** | $822,408 | $830,937 | | **Total Liabilities** | **$1,397,027** | **$1,478,300** | | **Total Stockholders' Equity** | **$1,720,169** | **$1,665,523** | [Condensed Consolidated Statements of Operations](index=4&type=section&id=Unaudited%20condensed%20consolidated%20statements%20of%20operations) For Q2 2023, net income significantly improved to $84.6 million from $21.9 million in Q2 2022, with six-month net income reaching $184.3 million, driven by substantial revenue growth in Contract Drilling and Pressure Pumping segments Key Operating Results (in thousands, except per share data) | Metric | Q2 2023 | Q2 2022 | Six Months 2023 | Six Months 2022 | | :--- | :--- | :--- | :--- | :--- | | **Total Operating Revenues** | $758,885 | $622,238 | $1,550,687 | $1,131,613 | | **Operating Income** | $104,582 | $36,762 | $230,545 | $17,881 | | **Net Income (Loss)** | $84,614 | $21,886 | $184,292 | $(6,891) | | **Diluted EPS** | $0.40 | $0.10 | $0.87 | $(0.03) | | **Cash Dividends per Share** | $0.08 | $0.04 | $0.16 | $0.08 | [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Unaudited%20condensed%20consolidated%20statements%20of%20cash%20flows) Net cash provided by operating activities for the six months ended June 30, 2023, substantially increased to $397.2 million, primarily funding capital expenditures, share repurchases, and dividend payments Cash Flow Summary for Six Months Ended June 30 (in thousands) | Cash Flow Category | 2023 | 2022 | | :--- | :--- | :--- | | **Net cash provided by operating activities** | $397,206 | $85,017 | | **Net cash used in investing activities** | $(242,212) | $(178,194) | | **Net cash used in financing activities** | $(142,259) | $(5,160) | | **Net increase (decrease) in cash** | $12,735 | $(97,888) | | **Cash and cash equivalents at end of period** | $150,288 | $19,636 | [Notes to Financial Statements](index=8&type=section&id=Notes%20to%20unaudited%20condensed%20consolidated%20financial%20statements) The notes detail significant accounting policies and events, including pending mergers with NexTier Oilfield Solutions Inc. and Ulterra Drilling Technologies, L.P., along with revenue recognition, debt, and share repurchase program specifics - On June 14, 2023, the company entered into a merger agreement with NexTier Oilfield Solutions Inc., where each share of NexTier common stock will be converted into **0.7520 shares of Patterson-UTI common stock**, with the transaction expected to close in 2023[24](index=24&type=chunk) - On July 3, 2023, the company agreed to acquire Ulterra Drilling Technologies, L.P. for **34.9 million shares of common stock** and **$370 million in cash**, with the transaction expected to close in the third quarter of 2023[94](index=94&type=chunk) - The contract drilling backlog in the United States as of June 30, 2023, was approximately **$760 million**, representing commitments under term contracts of six months or more[35](index=35&type=chunk) - In April 2023, the Board of Directors increased the stock buyback program authorization to an aggregate of **$300 million**, with approximately **$281 million** remaining available for repurchase as of June 30, 2023[69](index=69&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)](index=24&type=section&id=ITEM%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the impact of volatile commodity prices on industry activity, noting a decline in Q2 2023 rig count and reduced capital expenditure forecasts, alongside details of two significant pending acquisitions and strong liquidity [Management Overview and Recent Developments](index=24&type=section&id=Management%20Overview%20and%20Recent%20Developments) The company experienced a decrease in U.S. rig activity in Q2 2023 due to commodity price volatility, leading to a reduced capital expenditure forecast and the announcement of two major acquisitions - The average active rig count in the U.S. was **128 rigs** for Q2 2023, down from **131** in Q1 2023, with an expected average of approximately **119 rigs** during Q3 2023[106](index=106&type=chunk) - The 2023 capital expenditure forecast has been lowered to **$485 million** based on the outlook for the second half of the year[108](index=108&type=chunk) - The company entered into merger agreements to acquire Ulterra Drilling Technologies for cash and stock, and NexTier Oilfield Solutions in an all-stock transaction, both expected to close in 2023[109](index=109&type=chunk)[111](index=111&type=chunk)[112](index=112&type=chunk) [Results of Operations](index=26&type=section&id=Results%20of%20Operations) Q2 2023 saw increased Contract Drilling revenue and margins, while Pressure Pumping revenue and margins declined; however, for the six months ended June 30, 2023, all segments showed significant revenue and operating income growth compared to the prior year Contract Drilling Performance (Q2 2023 vs Q1 2023) | Metric | Q2 2023 | Q1 2023 | % Change | | :--- | :--- | :--- | :--- | | Revenues (in thousands) | $432,375 | $419,026 | 3.2% | | Adjusted Gross Margin (in thousands) | $200,955 | $188,668 | 6.5% | | Average Rigs Operating (U.S.) | 128 | 131 | (1.8)% | | Avg. Revenue per Day (U.S.) (in thousands) | $35.94 | $34.76 | 3.4% | Pressure Pumping Performance (Q2 2023 vs Q1 2023) | Metric | Q2 2023 | Q1 2023 | % Change | | :--- | :--- | :--- | :--- | | Revenues (in thousands) | $250,241 | $293,268 | (14.7)% | | Adjusted Gross Margin (in thousands) | $53,768 | $73,152 | (26.5)% | | Fracturing Jobs | 137 | 147 | (6.8)% | | Adj. Gross Margin % of Revenue | 21.5% | 24.9% | (13.9)% | Segment Operating Income (Six Months Ended June 30, in thousands) | Segment | 2023 | 2022 | % Change | | :--- | :--- | :--- | :--- | | Contract Drilling | $213,672 | $18,556 | 1,051.5% | | Pressure Pumping | $69,736 | $26,512 | 163.0% | | Directional Drilling | $3,449 | $5,816 | (40.7)% | [Liquidity and Capital Resources](index=33&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains a strong liquidity position with $150 million in cash and $600 million available under its revolving credit facility, deemed sufficient to fund pending acquisitions, operations, debt service, and dividends for the next 12 months Liquidity Position as of June 30, 2023 (in millions) | Item | Amount | | :--- | :--- | | Working Capital | $347 | | Cash and cash equivalents | $150 | | Availability under revolving credit facility | $600 | Major Uses of Cash (Six Months Ended June 30, 2023, in millions) | Use of Cash | Amount | | :--- | :--- | | Capital Expenditures | $250 | | Repurchases of common stock | $101 | | Dividends paid | $33.5 | | Repurchases of Senior Notes | $7.8 | - The company had commitments to purchase major equipment totaling approximately **$114 million** as of June 30, 2023[176](index=176&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=38&type=section&id=ITEM%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company reports no material changes in market risk exposure since its 2022 Annual Report, with primary risk being interest rates on variable-rate credit facilities, currently minimized by no outstanding borrowings - There have been no material changes in the company's exposure to market risk since the year ended December 31, 2022[189](index=189&type=chunk) - The company's primary market risk is interest rate risk associated with its variable-rate credit facilities, with no borrowings outstanding under the revolving credit facility as of June 30, 2023[190](index=190&type=chunk)[191](index=191&type=chunk) [Controls and Procedures](index=39&type=section&id=ITEM%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of June 30, 2023, with no material changes to internal control over financial reporting during the quarter - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of June 30, 2023[195](index=195&type=chunk) - No material changes to the company's internal control over financial reporting occurred during the most recently completed fiscal quarter[196](index=196&type=chunk) PART II — OTHER INFORMATION [Legal Proceedings](index=40&type=section&id=ITEM%201.%20Legal%20Proceedings) The company is involved in various legal proceedings arising in the normal course of business, with management not expecting a material adverse effect on financial condition or results - The company does not expect that the outcome of various legal proceedings from the normal course of business will have a material adverse effect on its financial condition or results[198](index=198&type=chunk) [Risk Factors](index=40&type=section&id=ITEM%201A.%20Risk%20Factors) This section introduces new material risks primarily associated with the pending mergers with NexTier and Ulterra, including completion uncertainties, integration challenges, and limitations on Net Operating Loss (NOL) carryforwards - Completion of the NexTier and Ulterra acquisitions is subject to conditions not within the company's control, and failure to complete them could negatively impact stock price and results[200](index=200&type=chunk)[209](index=209&type=chunk) - The company expects an "ownership change" under Section 382 of the tax code due to the NexTier merger, imposing an annual limitation on the use of historic U.S. net operating loss (NOL) carryforwards[202](index=202&type=chunk)[203](index=203&type=chunk)[204](index=204&type=chunk) - Integrating NexTier and Ulterra presents risks including inability to combine businesses, complexities in managing expanded operations, and potential loss of customers or key employees[216](index=216&type=chunk)[205](index=205&type=chunk) - Significant non-recurring transaction costs are expected for the mergers, which will be borne by the company regardless of transaction completion[211](index=211&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=45&type=section&id=ITEM%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) During Q2 2023, the company repurchased approximately 1.8 million shares of common stock under its buyback program at an average price of $10.57 per share, with $281 million remaining authorized for future repurchases Share Repurchases for Quarter Ended June 30, 2023 | Month | Total Shares Purchased | Average Price Paid per Share | Shares Purchased Under Program | Remaining Authorization (in thousands) | | :--- | :--- | :--- | :--- | :--- | | April 2023 | 153,119 | $11.69 | — | $300,000 | | May 2023 | 2,165,522 | $10.57 | 1,796,927 | $281,031 | | June 2023 | 227,570 | $11.58 | — | $281,031 | - In April 2023, the Board of Directors increased the stock buyback program authorization to allow for an aggregate of **$300 million** of future share repurchases[230](index=230&type=chunk) [Other Information](index=45&type=section&id=ITEM%205.%20Other%20Information) Following a stockholder advisory vote at the June 8, 2023 meeting, the Board of Directors has determined that advisory votes on executive compensation will be held annually - Following a stockholder advisory vote, the Board of Directors has determined that advisory votes on named executive compensation will be held annually[231](index=231&type=chunk) [Exhibits](index=46&type=section&id=ITEM%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including the merger agreements with NexTier and Ulterra, corporate governance documents, and certifications by the CEO and CFO - Exhibits filed include the Agreement and Plan of Merger with NexTier Oilfield Solutions Inc. and the Agreement and Plan of Merger with Ulterra Drilling Technologies, L.P.[233](index=233&type=chunk)

Financial Data and Key Metrics Changes - The company reported a net income of $84.6 million or $0.40 per share for the second quarter, which included $7.9 million of merger and integration expenses and $3.8 million of impairment expenses in the E&P business [73] - Average adjusted rig margin per day in the U.S. increased by $1,030 sequentially to $16,910, driven by a $1,190 increase in average rig revenue per day to $35,940 [49] - The company expects to lower its 2023 CapEx forecast to $485 million, which includes approximately $280 million for contract drilling, $140 million for pressure pumping, $20 million for directional drilling, and $45 million for other businesses and general corporate purposes [74] Business Line Data and Key Metrics Changes - In contract drilling, the average rig count is expected to be 119 rigs for the third quarter, with average rig revenue per day expected to be approximately $35,500 and average rig operating cost per day expected to be $19,400 [37] - Pressure pumping revenues for the second quarter were $250 million with an adjusted gross margin of $53.8 million, while for the third quarter, revenues are expected to be approximately $230 million with an adjusted gross margin of $37 million [75] - Directional drilling revenues were $55.1 million in the second quarter with an adjusted gross margin of $7.8 million, and for the third quarter, revenues are expected to decrease to $52 million [50] Market Data and Key Metrics Changes - The company noted that the Northeast gas market has experienced some stress, but the overall U.S. onshore market is expected to remain steady and strong [40][66] - The company anticipates that the rig count and frac activity will improve later in the year and into 2024, driven by recent strength in oil prices and natural gas futures [33][52] - The company expects that some operators will increase their activity in drilling and completions by year-end and into 2024, particularly in gas basins due to upcoming LNG export capacity [77] Company Strategy and Development Direction - The merger with NexTier is expected to strengthen the company's position as a leading provider of drilling and completion services, creating a platform at the forefront of innovation [40] - The company continues to prioritize margins over activity, focusing on maintaining pricing where possible [81] - The company plans to convert its Tier 2 diesel spreads to Tier 4 dual fuel to better position itself for increasing completion activity later in the year and in 2024 [72] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the overall U.S. onshore market, with expectations for improved well economics for E&P operators due to favorable commodity prices [52] - The company believes that pressure pumping activity has already reached a trough and expects additional work to begin later in the quarter [34] - Management indicated that while there is some softness in the market, they expect improvements in rig count and activity levels as commodity prices stabilize [81] Other Important Information - The company has returned approximately $126 million of cash to shareholders through the first half of 2023, including $33.5 million in dividends [48] - The company has $281 million remaining under its share repurchase authorization, although repurchases may be limited due to the pending merger with NexTier [36] Q&A Session Summary Question: What is the outlook for day rates in 2024? - Management is focused on maintaining day rates and margins, expecting improvements later in the year and into next year [81] Question: How many oil rigs could be recovered next year? - Management indicated that a recovery in gas could push the rig count over 700 rigs in the first quarter next year [82] Question: What are the pricing dynamics in the drilling market? - Management noted that pricing dynamics have stabilized, with day rates in the low to mid-30s, and they expect steady pricing moving forward [85] Question: How should we think about frac revenue progression into the fourth quarter? - Management explained that while there was significant white space in the calendar, they expect more dedicated work to layer in towards the end of the third quarter, justifying the increase in spreads for the fourth quarter [87] Question: What is the expected CapEx distribution for the second half of the year? - Management stated that the remaining CapEx is spread out over the back half of the year, with maintenance CapEx returning as activities pick up [100]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-Q ☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2023 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 1-39270 Patterson-UTI Energy, Inc. (Exact name of registrant as specified in its charter) Delaware 75-2504748 (State or other jurisdiction of i ...

Financial Data and Key Metrics Changes - The company reported a net income of $99.7 million or $0.46 per share for the first quarter [32] - Adjusted EBITDA improved to $256 million for the first quarter from $239 million in the fourth quarter of 2022 [32] - Average adjusted rig margin per day in the U.S. increased by $2,430 to $15,880, driven by higher average rig revenue per day [32] Business Line Data and Key Metrics Changes - In contract drilling, revenues from Colombia were $10.6 million with an adjusted gross margin of $2.1 million for the first quarter [33] - Pressure pumping revenues were $293 million with an adjusted gross margin of $73.2 million, expected to decline to approximately $277 million with a gross margin of $61 million in the second quarter due to increased white space in the calendar [30][32] - Directional drilling revenues were $56.3 million with an adjusted gross margin of $8.2 million, expected to increase by approximately $1 million in the second quarter [34] Market Data and Key Metrics Changes - The overall rig count has declined, primarily affecting lower-spec rigs, while demand for Tier 1 super-spec rigs remains strong [17][18] - The company expects a modest reduction in rig count due to current natural gas prices but anticipates an increase in the second half of the year driven by activity in oil basins [21][22] Company Strategy and Development Direction - The company aims to capitalize on its position as a leading provider of Tier 1 super-spec rigs, focusing on profitability and cash flow over activity levels [19][40] - The strategy includes maintaining capital discipline and prioritizing cash flow and margin over activity levels, with a target to return 50% of free cash flow to shareholders [41] - The company plans to continue upgrading rigs to dual fuel capabilities, with expectations to have 9 out of 12 frac spreads dual fuel capable by the end of the year [23][76] Management's Comments on Operating Environment and Future Outlook - Management noted a transitory pause in activity due to softness in natural gas prices but expects stability in rig counts for Tier 1 super-spec rigs [17][21] - The company anticipates that improving market fundamentals for oil will positively impact drilling activity levels, despite near-term challenges in natural gas basins [19][22] - Management expressed confidence in the ability to improve drilling economics through operational excellence and technology integration [20][39] Other Important Information - The company repurchased 5.6 million shares for $73.6 million and $9 million of long-term debt for $7.8 million, indicating a strong belief in the undervaluation of its shares [16] - The effective tax rate for 2023 is expected to be approximately 17%, with no significant U.S. federal cash taxes anticipated [36] Q&A Session Summary Question: Can you speak to the timing and cost of bringing rigs back out when the market recovers? - Management indicated that the timing is relatively short and costs are low, with minimal budget growth CapEx required for rigs down for only a few months [8][12] Question: What are the dynamics in different basins? - Management noted stability in the Northeast and long-term growth in the Permian, with near-term challenges in Mid-Con and South Texas [48][70] Question: How does the company view pricing dynamics in the current market? - Management stated that they do not see a need to reduce rates on rigs, emphasizing the quality of their rigs and the ongoing demand in oil basins [56][75] Question: What is the company's outlook for rig count in the second half of the year? - Management expressed confidence in an increase in rig count driven by customer discussions and expected demand in oil basins [81][94] Question: Are there any changes in cost inputs like steel or labor? - Management noted that while labor remains tight, there are some cost savings in materials like sand, but no significant changes in service rates [92][100]

Operational Overview - As of December 31, 2022, the company operated a fleet of 192 marketed land-based drilling rigs in the U.S. and 8 in Colombia, with 172 of these being super-spec rigs[34]. - The average number of rigs operating per day in the U.S. was 131, an increase from 128 in Q3 2022[21][22]. - The company expects an average of 130 rigs operating in the U.S. in Q1 2023, with a projected average of 87 rigs under term contracts during the same period[21][22]. - The average active spread count was 12 in Q4 2022, with expectations to activate a 13th spread towards the end of 2023[23]. - Average rigs operating per day in the U.S. increased to 124 in 2022 from 82 in both 2021 and 2020, with a total of 2,489 wells drilled in 2022 compared to 1,662 in 2021 and 1,324 in 2020[42]. Financial Performance - Capital expenditures for 2023 are forecasted to be approximately $550 million[26]. - The company recorded gains on the extinguishment of debt totaling $2.4 million during Q4 2022[33]. - The contract drilling backlog in the U.S. was approximately $830 million as of December 31, 2022, up from $325 million in 2021, with 32% expected to remain after 2023[56]. - Approximately 49% of consolidated operating revenues in 2022 came from the company's ten largest customers, with one customer accounting for approximately $476 million, or 18% of total revenues[55]. Capital Expenditures and Investments - The company spent approximately $471 million on capital expenditures over the last three years to modify, upgrade, and extend the lives of its drilling fleet, with $256 million in 2022, $110 million in 2021, and $105 million in 2020[36]. - The acquisition of Pioneer Energy Services Corp. was completed on October 1, 2021, valued at approximately $278 million, enhancing the company's service capabilities[27][28]. Market Conditions - The average oil price per barrel in Q4 2022 was $82.79[21][22]. - Pricing for drilling and completion services increased in 2022 due to limited supply of high-quality equipment[25]. - The company experienced general oilfield cost inflation across segments due to supply chain disruptions and labor market challenges[24]. Employee and Operational Management - The company has approximately 6,500 full-time employees as of January 31, 2023, with employee relations considered satisfactory[62]. - The company prioritizes employee safety with robust training programs, ensuring compliance with applicable laws and industry standards[64]. - The company emphasizes diversity and inclusion, requiring annual training for all employees and biannual training for supervisors and managers[66]. Environmental and Regulatory Compliance - The company maintains a rigorous focus on environmental sustainability, utilizing technologies to reduce carbon emissions and improve air quality[59]. - The company has not incurred significant capital expenditures for environmental compliance and does not anticipate material costs in the foreseeable future[69]. - Legislative and regulatory changes could increase operational costs and impact oil and gas production activities, potentially affecting the company's financial condition[70]. - The company is subject to strict liability under various environmental laws, which could lead to significant remediation costs if regulations change[73]. - The company monitors greenhouse gas emissions regulations and climate change policies, which may impose additional costs and operational limitations[85]. Risk Management - The company faces inherent operational hazards that could result in substantial liabilities, including personal injury and environmental damage[86]. - Indemnification agreements with customers may not fully protect the company from liabilities, potentially impacting its financial condition[87]. - The company maintains various types of insurance coverage, including a $1.5 million deductible for workers' compensation and a $10 million deductible for general liability[88]. - The company self-insures several risks, including loss of earnings and most cybersecurity risks[88]. - The company retains the risk for any loss in excess of insurance limits or exclusions, which could materially affect its financial condition[89]. Financial Position and Borrowing - The company had no borrowings outstanding under its revolving credit facility as of December 31, 2022, with available borrowing capacity of $600 million[32]. - As of December 31, 2022, the applicable margin on SOFR rate loans was 1.75% and on base rate loans was 0.75%[284]. - The company has no outstanding borrowings or letters of credit under the Credit Agreement as of December 31, 2022[284]. - The company is obligated to pay Scotiabank interest at the LIBOR rate plus 2.25% per annum for any amounts not paid on demand under the Reimbursement Agreement[285]. - The company has exposure to interest rate market risk associated with outstanding borrowings and letters of credit under the Credit Agreement[283]. Operational Trends - Seasonality has not significantly impacted overall operations, although there is slower activity toward the end of the calendar year[91]. - The carrying values of cash and cash equivalents, trade receivables, and accounts payable approximate fair value due to their short-term maturity[286]. - The company utilizes numerous independent subcontractors and suppliers for raw materials and services, with no assurance of continued favorable terms[92].

Financial Data and Key Metrics Changes - Net income for Q4 2022 was $100 million or $0.46 per share, up from $61.5 million or $0.28 per share in Q3 2022 [12] - Adjusted EBITDA for Q4 2022 was almost 5 times that of Q4 2021, indicating significant profitability improvement [5] - Average rig revenue per day in the U.S. increased by $9,800 or 44% year-over-year from Q4 2021 to Q4 2022 [12] - The debt to adjusted EBITDA metric improved to 1.2x for 2022, with a fourth quarter annualized basis of less than 0.9x gross or approximately 0.7x net of cash [18] Business Line Data and Key Metrics Changes - In contract drilling, average adjusted rig margin per day in the U.S. increased by $2,970, driven by successful contract renewals at favorable pricing [12] - Pressure pumping revenues increased to $307 million in Q4 2022, with an adjusted gross margin of $86 million [38] - Directional drilling revenues improved to $59.5 million in Q4 2022 from $58.9 million in Q3 2022, with adjusted gross margin rising to $11.2 million [14] Market Data and Key Metrics Changes - The average rig count in the U.S. rose by 3 rigs to 131 rigs in Q4 2022 [8] - In Colombia, contract drilling revenues for Q4 2022 were $15.1 million, with an adjusted gross margin of $4.9 million [13] - The company anticipates an average rig count in the U.S. of 130 rigs for Q1 2023, with an expected increase in average rig margin per day by approximately $1,000 [13] Company Strategy and Development Direction - The company remains optimistic about being in a multiyear up-cycle, with high demand for Tier 1 super-spec rigs and premium pressure pumping equipment [6] - The strategic focus includes converting engines to Tier 4 dual fuel to reduce operational costs and emissions, and enhancing technology in directional drilling [10] - The company is shifting towards higher-margin rotary steerable work, with revenues from this segment increasing to approximately 20% of directional drilling revenues in 2022 [35] Management's Comments on Operating Environment and Future Outlook - Management expects continued high utilization of Tier 1 super-spec rigs to support current leading-edge rates, despite potential softness in gas markets outside the Northeast [31] - The company anticipates significant increases in earnings and cash flow during 2023, driven by repricing drilling rig contracts to current leading-edge rates [31] - Management acknowledges potential downside risks in gas markets but believes the Northeast remains stable due to long-term contracts with well-hedged customers [83] Other Important Information - The company plans to return 50% of free cash flow to shareholders through dividends and share buybacks [44] - Capital expenditures for 2023 are expected to be approximately $550 million, with a focus on maintenance and reactivation CapEx [16] - The company ended 2022 with $836 million of long-term debt and a cash balance of $138 million, reflecting improved profitability [18] Q&A Session Summary Question: Outlook on rig count and market demand - Management noted that while there may be a decline in gas rig counts, demand for oil rigs is expected to offset this, maintaining a tight market for high-spec rigs [23][31] Question: Reactivation of rigs and market conditions - Management confirmed plans for eight rig reactivations in 2023, with sufficient demand to support these actions despite potential softness in gas markets [82][87] Question: Pricing and operational costs - Management indicated that they expect to reprice around 30 contracts in the first half of 2023, with significant increases in revenue per day anticipated [66][88] Question: Pressure pumping market dynamics - Management highlighted that pressure pumping services remain robust, with supply constraints limiting equipment availability [34][38] Question: Hydrogen blending project - The trial for blending hydrogen with natural gas was successful, and the company is excited about the potential for reducing emissions in the future [121][100]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-Q ☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2022 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 1-39270 Patterson-UTI Energy, Inc. (Exact name of registrant as specified in its charter) 10713 W. Sam Houston Pkwy N, Suite 800 Houston, T ...

Patterson-UTI Energy, Inc. (NASDAQ:PTEN) Q3 2022 Earnings Conference Call October 27, 2022 10:00 AM ET Company Participants Mike Drickamer – Vice President-Investor Relations Andy Hendricks – Chief Executive Officer Andy Smith – Chief Financial Officer Conference Call Participants Scott Gruber – Citi Luke Lemoine – Piper Sandler Derek Podhaizer – Barclays Don Crist – Johnson Rice Saurabh Pant – Bank of America Keith Mackey – RBC Sean Mitchell – Daniel Energy David Smith – Pickering Energy Partners Dan Kutz ...

Patterson-UTI Energy, Inc. Barclays CEO Energy-Power Conference September 6-7, 2022 Forward Looking Statements 2 This material and any oral statements made in connection with this material include "forward-looking statements" within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934. Statements made which provide the Company's or management's intentions, beliefs, expectations or predictions for the future are forward-looking statements and are inherently uncertain. The opinion ...