Highlights of Q1 Earnings The Zacks Consensus Estimate for second-quarter 2024 earnings has witnessed no upward revision and one downward movement in the past 30 days. The estimated figure indicates a 79.55% year-over-year decline. The Zacks Consensus Estimate for revenues indicates an increase of 86.6% from the year-ago period. What Does Our Model Say? Stocks to Consider TechnipFMC (FTI) has an Earnings ESP of +4.17% and a Zacks Rank #3. The firm is scheduled to release earnings on Jul 25. Baker Hughes is ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ______________________ Form 10-Q ______________________ þ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2024 or o 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 regist ...

Financial Data and Key Metrics Changes - Total reported revenue for Q1 2024 was $1.510 billion, with net income attributable to common shareholders of $51 million or $0.13 per share, including $12 million in merger and integration expenses [8][9] - Adjusted net income attributable to common shareholders, excluding merger and integration expenses, was $61 million or $0.15 per share [8] - Free cash flow for the first quarter was $139 million, with $130 million returned to shareholders, including an $0.08 per share dividend and $98 million used to repurchase 9 million shares [25][26] Business Line Data and Key Metrics Changes - In the Drilling Services segment, Q1 revenue was $458 million with adjusted gross profit of $186 million [10] - Completion Services revenue totaled $945 million with an adjusted gross profit of $199 million, impacted by lower activity and a shift away from higher revenue jobs in the Haynesville [49] - Drilling Products revenue was $90 million, up 2% sequentially, with adjusted gross profit of $41 million [12] Market Data and Key Metrics Changes - The company expects to average 114 active rigs in Q2 compared to 121 in Q1, with adjusted gross profit per day expected to decrease by roughly $300 [11] - International revenue improved sequentially, with growth primarily from operations in the Middle East, showing over 15% growth compared to Q1 last year [23] Company Strategy and Development Direction - The company is focused on investing in technologies that enhance efficiency in U.S. shale drilling, aiming to improve returns and free cash flow [3][18] - The operational integration with Nextier is largely complete, achieving over $200 million in annualized synergies faster than expected [14][22] - The company is committed to returning at least $400 million to shareholders through dividends and share repurchases in 2024, exceeding the targeted return of more than 50% of free cash flow [26][73] Management's Comments on Operating Environment and Future Outlook - Management expressed a constructive outlook for the industry in 2024, citing strong demand for technology and stable oil prices [30] - Weak natural gas prices are impacting activity, but long-term positive views on natural gas remain unchanged due to increasing LNG exports and demand for power in the U.S. [19] - The company anticipates modest demand upside in all basins starting later this year, despite current challenges in natural gas markets [19] Other Important Information - The company is advancing its transition to natural gas-powered frac equipment, with plans to grow electric frac horsepower to 140,000 by mid-year [7][12] - Total CapEx for Q1 was $227 million, with expectations of approximately $180 million for Q2 [51][52] Q&A Session Summary Question: Can you discuss the integration of well site services? - Management highlighted the successful integration of wireline systems and logistics to ensure efficient operations without delays [32][33] Question: What are the expectations for frac activity in Q3? - Management indicated that Q3 is expected to see increased activity as customers resume normal operations, with a potential return to Q1 levels [36][80] Question: How is the company addressing the current soft gas market? - Management noted that while the gas market is soft, structural changes and increasing LNG exports are expected to improve the situation in 2025 and beyond [61] Question: What is the outlook for capital returns and share repurchases? - The company remains committed to returning at least $400 million this year through dividends and buybacks, with a focus on maintaining flexibility in capital allocation [72][74] Question: Can you provide an update on the e-frac program? - Management confirmed that the e-frac program is progressing well, with long-term agreements in place and positive early results from the new fleet [81][82]

[Patterson-UTI Energy Q1 2024 Financial Results](index=1&type=section&id=Patterson-UTI%20Energy%20Reports%20Financial%20Results%20for%20the%20Quarter%20Ended%20March%2031%2C%202024) [Q1 2024 Financial Highlights](index=1&type=section&id=First%20Quarter%202024%20Financial%20Results%20and%20Other%20Key%20Items) The company reported strong Q1 2024 results with $1.5 billion in revenue and significant shareholder returns Q1 2024 Key Financial Metrics | Metric | Value (USD) | | :--- | :--- | | Total Revenue | $1.5 billion | | Net Income (attributable to common stockholders) | $51 million ($0.13/share) | | Adjusted Net Income | $61 million ($0.15/share) | | Adjusted EBITDA | $375 million | | Cash from Operations | $366 million | | Free Cash Flow | $139 million | - Achieved the **annualized synergy target of $200 million** from the NexTier merger[5](index=5&type=chunk) - Returned **$130 million to shareholders** in Q1 and confirmed its plan to return at least **$400 million in 2024**[5](index=5&type=chunk) [Management Commentary](index=1&type=section&id=Management%20Commentary) Management noted strong Q1 performance despite market headwinds and reaffirmed its commitment to shareholder returns - The near-term outlook is cautious due to low natural gas prices, but **oil basin activity is expected to improve** in Q3[3](index=3&type=chunk) - The company is ahead of its goal to return at least **$400 million to shareholders in 2024**[3](index=3&type=chunk) - Since recent mergers, the company has retired **4% of its post-transaction outstanding shares**[3](index=3&type=chunk) - The company expects to convert at least **40% of its adjusted EBITDA to free cash flow** in 2024[3](index=3&type=chunk) [Segment Performance](index=1&type=section&id=Segment%20Performance) [Drilling Services](index=1&type=section&id=Drilling%20Services) The Drilling Services segment reported stable Q1 results with $458 million in revenue and holds $527 million in future contracts Drilling Services Q1 2024 Performance | Metric | Q1 2024 | Q4 2023 | | :--- | :--- | :--- | | Total Revenue | $458 million | $464 million | | Adjusted Gross Profit | $186 million | $187 million | | U.S. Contract Drilling Revenue | $393 million | $393 million | | U.S. Operating Days | 11,024 | 10,841 | | Avg. Rig Revenue per Day (U.S.) | $35,680 | $36,280 | | Avg. Adj. Gross Profit per Day (U.S.) | $16,170 | $16,330 | - Future dayrate drilling revenue from U.S. term contracts was approximately **$527 million** as of March 31, 2024[7](index=7&type=chunk) - The company expects an average of **70 rigs operating under term contracts in Q2 2024**, and an average of 41 rigs for the four quarters ending March 31, 2025[7](index=7&type=chunk) [Completion Services](index=3&type=section&id=Completion%20Services) The segment generated $945 million in revenue, with strong cost controls offsetting lower natural gas basin activity Completion Services Q1 2024 Performance | Metric | Value (USD) | | :--- | :--- | | Revenue | $945 million | | Adjusted Gross Profit | $199 million | - The sequential decline in revenue was driven by **lower activity**, especially in natural gas basins like the Haynesville[9](index=9&type=chunk)[10](index=10&type=chunk) - Financial performance has been relatively steady, reflecting progress in capturing **synergy value** from the NexTier merger[10](index=10&type=chunk) [Drilling Products](index=3&type=section&id=Drilling%20Products) The segment reported revenue of $90 million, driven by international growth and strong U.S. market penetration Drilling Products Q1 2024 Performance | Metric | Value (USD) | | :--- | :--- | | Revenue | $90 million | | Adjusted Gross Profit | $41 million | - Revenue **increased 2% sequentially**, driven by Ulterra's International operations[12](index=12&type=chunk) - Purchase price accounting for the Ulterra acquisition temporarily **increased reported segment direct operating costs by $2 million** and depreciation by $6 million in Q1[13](index=13&type=chunk) [Other](index=3&type=section&id=Other) The 'Other' segment recorded revenue of $18 million and an adjusted gross profit of $7 million during Q1 2024 Other Segment Q1 2024 Performance | Metric | Value (USD) | | :--- | :--- | | Revenue | $18 million | | Adjusted Gross Profit | $7 million | [Outlook](index=3&type=section&id=Outlook) The company anticipates steady oil basin activity and projects key financial metrics for Q2 across its segments - **Drilling Services (Q2 Outlook):** Expects to operate an average of **114 U.S. rigs**, with adjusted gross profit per operating day down roughly $300 from Q1[17](index=17&type=chunk) - **Completion Services (Q2 Outlook):** Revenue expected to be approximately **$860 million** with an adjusted gross profit of around **$170 million**, with an improvement in activity expected in Q3[18](index=18&type=chunk) - **Drilling Products (Q2 Outlook):** Results are expected to be **relatively in line with Q1**[19](index=19&type=chunk) - **Corporate (Q2 Outlook):** SG&A expense is expected to be approximately **$65 million**, and D&A expense is expected to be approximately **$265 million**[20](index=20&type=chunk) [Financial Statements](index=6&type=section&id=Financial%20Statements) [Condensed Consolidated Statements of Operations](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) The company reported Q1 2024 total revenues of $1.51 billion and net income of $51.2 million, or $0.13 per share Statement of Operations Highlights (in thousands, except per share data) | Metric | Q1 2024 | Q4 2023 | Q1 2023 | | :--- | :--- | :--- | :--- | | Revenues | $1,510,360 | $1,584,317 | $791,802 | | Operating Income | $86,999 | $111,705 | $125,963 | | Net Income Attributable to Common Stockholders | $51,235 | $61,950 | $99,678 | | Diluted EPS | $0.13 | $0.15 | $0.46 | [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) The company generated $365.9 million in cash from operations, resulting in a net cash decrease of $22.4 million Cash Flow Summary (in thousands) | Metric | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Net cash provided by operating activities | $365,891 | $234,349 | | Net cash used in investing activities | ($227,485) | ($116,345) | | Net cash used in financing activities | ($161,589) | ($98,339) | | Net (decrease) increase in cash | ($22,433) | $19,665 | [Additional Financial and Operating Data](index=8&type=section&id=Additional%20Financial%20and%20Operating%20Data) This section details segment performance and key balance sheet items, including $1.22 billion in long-term debt Segment Revenue and Adjusted Gross Profit - Q1 2024 (in thousands) | Segment | Revenues | Adjusted Gross Profit | | :--- | :--- | :--- | | Drilling Services | $457,573 | $185,836 | | Completion Services | $944,997 | $199,403 | | Drilling Products | $89,973 | $41,343 | | Other | $17,817 | $6,639 | Selected Balance Sheet Data (in thousands) | Metric | March 31, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Cash, cash equivalents and restricted cash | $170,247 | $192,680 | | Working capital | $437,801 | $435,263 | | Long-term debt | $1,221,058 | $1,224,941 | [Non-GAAP Financial Measures](index=9&type=section&id=Non-GAAP%20Financial%20Measures) [Adjusted EBITDA](index=9&type=section&id=Adjusted%20EBITDA) Q1 2024 Adjusted EBITDA was $375.0 million, calculated by adjusting net income for interest, taxes, D&A, and merger costs Adjusted EBITDA Reconciliation (in thousands) | Metric | Q1 2024 | Q4 2023 | Q1 2023 | | :--- | :--- | :--- | :--- | | Net income | $51,706 | $61,938 | $99,678 | | Income tax expense | $19,997 | $31,332 | $20,185 | | Net interest expense | $16,146 | $17,142 | $7,586 | | D&A and impairment | $274,956 | $278,787 | $128,180 | | Merger and integration expense | $12,233 | $19,949 | — | | **Adjusted EBITDA** | **$375,038** | **$409,148** | **$255,629** | [Free Cash Flow](index=10&type=section&id=Free%20Cash%20Flow) The company generated $139.0 million in free cash flow in Q1 2024, an increase from $116.7 million year-over-year Free Cash Flow Calculation (in thousands) | Metric | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Net cash provided by operating activities | $365,891 | $234,349 | | Less capital expenditures | ($226,941) | ($117,601) | | **Free cash flow** | **$138,950** | **$116,748** | [Adjusted Gross Profit](index=11&type=section&id=Adjusted%20Gross%20Profit) This section reconciles GAAP gross profit to adjusted gross profit by adding back D&A for each operating segment Adjusted Gross Profit by Segment - Q1 2024 (in thousands) | Segment | GAAP Gross Profit | D&A Add-back | Adjusted Gross Profit | | :--- | :--- | :--- | :--- | | Drilling Services | $93,491 | $92,345 | $185,836 | | Completion Services | $50,723 | $148,680 | $199,403 | | Drilling Products | $14,161 | $27,182 | $41,343 | | Other | $1,228 | $5,411 | $6,639 | [Adjusted Net Income and Adjusted Earnings Per Share](index=13&type=section&id=Adjusted%20Net%20Income%20and%20Adjusted%20Earnings%20Per%20Share) Q1 2024 adjusted net income was $60.9 million, or $0.15 per share, after excluding merger and integration expenses Adjusted Net Income Reconciliation - Q1 2024 (in thousands, except per share) | Metric | Total | Per Share | | :--- | :--- | :--- | | Net income as reported | $51,235 | $0.13 | | Merger and integration expense | $12,233 | | | Income tax benefit | ($2,569) | | | **Adjusted net income** | **$60,899** | **$0.15** |

Commission File Number 1-39270 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-K (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 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 Patterson-UTI Energy, Inc. (Exact name of registrant as specified in its charter) | Delaware | 75-2504748 | | --- | --- | | (Stat ...

Patterson-UTI Energy, Inc. (NASDAQ:PTEN) Q4 2023 Earnings Conference Call February 15, 2024 10:00 AM ET Company Participants Mike Sabella - VP, IR Andy Hendricks - President & CEO Andrew Smith - CFO & EVP Conference Call Participants Arun Jayaram - JPMorgan Scott Gruber - Citi Derek Podhaizer - Barclays Capital Sean Mitchell - Daniel Energy Partners Jim Rollyson - Raymond James Keith MacKey - RBC Capital Markets Dan Kutz - Morgan Stanley & Co. Ati Modak - Goldman Sachs Saurabh Pant - Bank of America Merrill ...

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, 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 ...

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]