Patterson-UTI Energy(PTEN) - 2024 Q4 - Annual Report

Oil and Gas Prices - Average oil price per barrel in Q4 2024 was $70.73, with a closing price of$ 73.52 on February 3, 2025[27] - Oil prices averaged $70.73 per barrel in Q4 2024 and closed at$ 73.52 per barrel on February 3, 2025[103] - Natural gas prices averaged $2.45 per MMBtu in Q4 2024 and closed at$ 3.30 per MMBtu on February 3, 2025[103] - The company expects oil and natural gas prices to remain unpredictable, affecting financial condition and operations[104] - A decline in demand for oil and natural gas could lead to reduced capital expenditures by customers, adversely impacting the company's operating results[105] Rig Activity and Operations - Average active rig count in the U.S. for Q4 2024 was 105 rigs, down from 107 rigs in Q3 2024[28] - The company expects an average of 106 rigs operating in the U.S. in Q1 2025, with 64 rigs under term contracts[28] - Average rigs operating per day in the U.S. decreased from 124 in 2023 to 112 in 2024, while the number of wells drilled also declined from 2,530 in 2023 to 2,376 in 2024[48] - A total of 40,899 operating days were recorded in the U.S. for 2024, down from 45,270 in 2023[48] - The contract drilling backlog in the U.S. decreased from approximately $700 million in 2023 to$ 426 million in 2024, with only 7.1% expected to remain after 2025[73] Mergers and Acquisitions - The company completed a merger with NexTier Oilfield Solutions valued at approximately $2.8 billion, including debt assumption[34] - The acquisition of Ulterra Drilling Technologies was valued at approximately$ 894 million, including cash payment of $373 million[35] - The company expanded its completions business significantly through the NexTier merger and added a specialized drill bit solutions business via the Ulterra acquisition in 2023[136] Financial Performance and Expenditures - Capital expenditure forecast for 2025 is approximately$ 600 million[31] - The company spent approximately $265 million,$ 335 million, and $272 million on capital expenditures in its Drilling Services operations for fiscal years 2024, 2023, and 2022, respectively[43] - The company recognized impairment charges of$ 3.8 million, $7.0 million, and$ 4.5 million in 2024, 2023, and 2022, respectively[115] - Approximately 53% of consolidated operating revenues in 2024 came from the ten largest customers, with one customer accounting for about $605 million, or 11% of total revenues[72] - The company may incur substantial indebtedness to finance future acquisitions and technology development, affecting cash available for operations[138] Technology and Innovation - The company continues to enhance its technology offerings, including the Cortex® operating system and EcoCell® lithium battery hybrid energy management system, aimed at reducing fuel consumption and emissions[50][77] - The company has invested in natural gas-powered equipment, including the Emerald™ line of hydraulic fracturing equipment, to meet evolving customer preferences for emissions-reducing technology[56] - Development and acquisition of new technology is critical for maintaining competitiveness, with risks of obsolescence affecting business and financial condition[126] - The company is investing in natural gas-powered equipment to replace legacy diesel completion services equipment[125] Environmental and Regulatory Compliance - The company maintains a rigorous focus on environmental sustainability, utilizing technologies that reduce carbon emissions compared to traditional diesel-only equipment[76] - The company’s operations are subject to environmental regulations that could materially affect operating results[87] - The company faces potential increased operating and capital costs due to climate change regulations, which could limit oil and natural gas production areas and reduce demand for services[144] - The Glasgow Climate Pact aims to reduce methane emissions by 30% by 2030, which may impact the company's operations[147] - Compliance with environmental laws and regulations could result in substantial costs, including civil, criminal, or administrative penalties[152] Employee Relations and Corporate Governance - The company employs approximately 9,200 full-time employees as of January 31, 2025, with employee relations considered satisfactory[79] - The company is committed to diversity and inclusion, focusing on recruiting and retaining high-caliber talent[82] - The company has implemented robust safety training programs for all U.S. field-based employees, requiring annual safety education[81] Cybersecurity and Operational Risks - Cybersecurity risks are growing, with potential material adverse effects on business and financial condition due to evolving threats[134] - The company has implemented a cybersecurity program aligned with the NIST Framework to manage risks from cybersecurity threats[195] - The Audit Committee oversees cybersecurity matters and receives regular reports from senior leadership regarding information security risks[196] - The company has adopted a cybersecurity incident reporting process to standardize responses to threats or incidents[200] Market and Economic Conditions - Global economic conditions, including inflation and geopolitical issues, may contribute to increased economic uncertainty and affect demand for services[106] - The company faces a highly competitive oil service industry, which may affect utilization and profit margins[107] - The company may not be able to maintain or increase service prices due to competitive pressures, which could adversely affect financial performance[113] - The company’s ability to access capital markets may be limited by various external factors, including oil prices and market perceptions[180] Legal and Compliance Issues - The company is involved in legal proceedings related to a breach of a license agreement, which could materially impact financial results if resolved unfavorably[210] - Intellectual property disputes could negatively impact the company's operations and competitiveness, potentially leading to significant legal costs[161] - The company is susceptible to legal proceedings and governmental investigations, which could materially adversely affect its business and financial condition[165] Stockholder Returns and Financial Flexibility - The Board of Directors approved a cash dividend of$ 0.08 per share, to be paid on March 17, 2025, subject to future business conditions and financial flexibility[220] - The company’s return of capital to stockholders, including dividends and stock repurchases, is at the discretion of the Board of Directors and may vary[184] - The market price of the company's common stock may be highly volatile, influenced by various factors including investor perception and changes in capital structure[190]