Patterson-UTI Energy(US:PTEN)2023-02-13 21:26Operational 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].