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Patterson-UTI Energy(PTEN) - 2022 Q4 - Annual Report
PTENPatterson-UTI Energy(PTEN)2023-02-13 21:26
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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 550million[26].−Thecompanyrecordedgainsontheextinguishmentofdebttotaling550 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 830millionasofDecember31,2022,upfrom830 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 476million,or18476 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 256millionin2022,256 million in 2022, 110 million in 2021, and 105millionin2020[36].−TheacquisitionofPioneerEnergyServicesCorp.wascompletedonOctober1,2021,valuedatapproximately105 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].−Pricingfordrillingandcompletionservicesincreasedin2022duetolimitedsupplyofhigh−qualityequipment[25].−Thecompanyexperiencedgeneraloilfieldcostinflationacrosssegmentsduetosupplychaindisruptionsandlabormarketchallenges[24].EmployeeandOperationalManagement−Thecompanyhasapproximately6,500full−timeemployeesasofJanuary31,2023,withemployeerelationsconsideredsatisfactory[62].−Thecompanyprioritizesemployeesafetywithrobusttrainingprograms,ensuringcompliancewithapplicablelawsandindustrystandards[64].−Thecompanyemphasizesdiversityandinclusion,requiringannualtrainingforallemployeesandbiannualtrainingforsupervisorsandmanagers[66].EnvironmentalandRegulatoryCompliance−Thecompanymaintainsarigorousfocusonenvironmentalsustainability,utilizingtechnologiestoreducecarbonemissionsandimproveairquality[59].−Thecompanyhasnotincurredsignificantcapitalexpendituresforenvironmentalcomplianceanddoesnotanticipatematerialcostsintheforeseeablefuture[69].−Legislativeandregulatorychangescouldincreaseoperationalcostsandimpactoilandgasproductionactivities,potentiallyaffectingthecompany′sfinancialcondition[70].−Thecompanyissubjecttostrictliabilityundervariousenvironmentallaws,whichcouldleadtosignificantremediationcostsifregulationschange[73].−Thecompanymonitorsgreenhousegasemissionsregulationsandclimatechangepolicies,whichmayimposeadditionalcostsandoperationallimitations[85].RiskManagement−Thecompanyfacesinherentoperationalhazardsthatcouldresultinsubstantialliabilities,includingpersonalinjuryandenvironmentaldamage[86].−Indemnificationagreementswithcustomersmaynotfullyprotectthecompanyfromliabilities,potentiallyimpactingitsfinancialcondition[87].−Thecompanymaintainsvarioustypesofinsurancecoverage,includinga82.79[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 10milliondeductibleforgeneralliability[88].−Thecompanyself−insuresseveralrisks,includinglossofearningsandmostcybersecurityrisks[88].−Thecompanyretainstheriskforanylossinexcessofinsurancelimitsorexclusions,whichcouldmateriallyaffectitsfinancialcondition[89].FinancialPositionandBorrowing−ThecompanyhadnoborrowingsoutstandingunderitsrevolvingcreditfacilityasofDecember31,2022,withavailableborrowingcapacityof10 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].