Patterson-UTI Energy(US:PTEN)2026-02-10 21:17Oil and Gas Market Conditions - Average oil price per barrel for Q4 2025 was $59.62, with a closing price of $61.60 on February 2, 2026[30]. - Oil prices averaged $59.62 per barrel in Q4 2025, while natural gas prices averaged $3.73 per MMBtu during the same period[97]. - Global economic conditions and geopolitical tensions have contributed to uncertainty in energy markets, impacting share prices and future profitability[97]. - The company expects oil and natural gas prices to remain unpredictable, affecting financial condition and capital access[98]. - Demand for services is driven by customers' expectations of future oil and natural gas prices and their ability to deploy capital[98]. - The company is dependent on the oil and natural gas industry, with declines in prices adversely affecting operating results[91]. Drilling and Operational Activity - Average active rig count in the U.S. for Q4 2025 was 93 rigs, down from 95 rigs in Q3 2025 and 105 rigs in Q4 2024[31]. - The average number of rigs operating per day in the U.S. is projected to decline to 100 in 2025 from 112 in 2024 and 124 in 2023[45]. - The number of wells drilled in the U.S. for 2025 was 2,090, a decrease from 2,376 in 2024 and 2,530 in 2023[45]. - The company expects an average of 49 rigs operating under term contracts in Q1 2026 and 27 rigs for the entire year[31]. - The company reported a contract drilling backlog in the United States of approximately $291 million as of December 31, 2025, down from $426 million in 2024, with about 9% expected to remain after 2026[67]. Financial Performance and Expenditures - Capital expenditure forecast for 2026 is approximately $500 million on a gross basis, net of asset sales[34]. - The company spent approximately $237 million, $265 million, and $335 million on capital expenditures in drilling services operations for 2025, 2024, and 2023, respectively[37]. - As of December 31, 2025, the company had approximately $1.4 billion in gross U.S. federal net operating losses, $60.0 million in gross Canadian net operating losses, and $889 million in post-apportionment U.S. state net operating losses[185]. - The company’s ability to access capital markets may be limited by oil and natural gas prices, existing capital structure, and ESG-related regulatory requirements[179]. - The company may incur substantial indebtedness to finance future acquisitions and technology development, which could strain financial resources and affect cash flow[139]. Customer and Revenue Concentration - Approximately 57% of the company's consolidated operating revenues in 2025 came from its ten largest customers, with one customer accounting for approximately $597 million, or 12% of total revenues[66]. - In 2025, approximately 57% of consolidated operating revenues came from the company's ten largest customers, with 39% from the five largest and 12% from the largest customer[126]. Competitive Landscape and Challenges - The competitive landscape has led to a surplus of drilling services equipment, which may adversely affect profit margins and the carrying value of assets[102]. - The company faces challenges in maintaining pricing due to high competition and surplus equipment, which could lead to operating losses[107]. - The company faces risks related to supply chain disruptions, inflation, and geopolitical issues that could impact demand for its services[99]. - The company has invested in new technologies, including natural gas-powered equipment, to remain competitive, but future demand for these technologies is uncertain[120]. Environmental and Regulatory Risks - The company continues to pursue initiatives to mitigate climate change risk, utilizing technologies that reduce carbon and greenhouse gas emissions compared to traditional diesel equipment[70]. - The company is subject to numerous environmental laws and regulations, which could result in substantial compliance costs and adversely affect operating results[150]. - Legal and regulatory risks related to hydraulic fracturing could impose additional requirements or restrictions, adversely affecting operations and financial performance[144]. - Climate change and related regulatory pressures could increase operating costs and limit production areas, thereby reducing demand for the company's services[145]. Cybersecurity and Data Privacy - Cybersecurity risks are a growing concern, with threats including unauthorized access, theft, and various cyber incidents that could materially affect the company's operations and financial condition[129]. - The company has implemented a cybersecurity program aligned with the NIST Framework to protect information systems and manage cybersecurity risks[194]. - The Audit Committee oversees cybersecurity matters and receives quarterly updates from senior leadership on risk management and mitigation measures[196]. - The Senior Vice President and Chief Information Officer leads the cybersecurity team and reports directly to the Chief Financial Officer, ensuring effective implementation of cybersecurity practices[197]. Corporate Governance and Shareholder Returns - The Board of Directors approved a cash dividend of $0.10 per share to be paid on March 16, 2026, subject to future business conditions[219]. - The company repurchased a total of 35,684 shares in the fourth quarter of 2025, with an average price of $6.11 per share[221]. - The stock buyback program was increased to allow for an aggregate of $1.0 billion in future share repurchases, with no expiration date associated with the program[221]. - 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 based on business conditions[184].