Patterson-UTI Energy(PTEN) - 2021 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - For Q4 2021, the company reported a net loss of $362 million or $1.68 per share, which included pre-tax charges totaling $286 million [17] - The adjusted EBITDA for 2022 is expected to exceed $450 million, which is more than $100 million above the CapEx forecast of approximately $350 million [7][18] - The average rig margin per day during Q4 decreased to $5,450 due to increased labor and rig reactivation costs [19] Business Line Data and Key Metrics Changes - In contract drilling, total revenue increased by 46% and adjusted gross margin increased by 26% [19] - Pressure pumping profitability improved significantly, with adjusted gross margin rising to $20.9 million on $183 million of revenues in Q4 [23] - Directional drilling adjusted gross margin for Q4 was $1 million, which included a $4 million non-cash write-off of inventory [25] Market Data and Key Metrics Changes - The U.S. rig count is projected to be between 650 to 700 for the industry in 2022 [39] - The company expects to generate approximately $16 million of revenue in Colombia for Q1 2022 [20] Company Strategy and Development Direction - The company plans to focus on high return, quick payback opportunities for CapEx, with a majority directed towards maintenance and reactivation [8][32] - The company is increasing its quarterly dividend to $0.04 per share, reflecting improved cash flow [8] - The company aims to upgrade approximately 20 rigs to Tier 1 status in 2022, with expected paybacks ranging from 1 to 3 years [22] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about a multiyear up cycle in the oilfield services sector due to tight premium equipment availability and improving pricing [30][31] - The company anticipates strong EBITDA growth year-on-year, driven by higher activity and improved pricing [32] - Management noted that labor remains tight but compensation increases have been implemented to address potential challenges [81] Other Important Information - The company repaid a $50 million balance on its term loan, resulting in approximately $741 million of net debt outstanding as of December 31, 2021 [27] - The company has a total of 107 Tier 1 super-spec rigs in the U.S., with 95% utilization [11] Q&A Session Summary Question: Guidance for 2022 and rig count expectations - Management expects the rig count in 2022 to be between 650 to 700, with improving pricing and profitability across businesses [39][40] Question: Daily gross margins expectations - Management indicated that daily gross margins are expected to improve, with some rigs earning over $30,000 per day [42][44] Question: Term contracts and pricing - Management confirmed that term contracts are rolling up and will not be dilutive to expected realized day rates [55][58] Question: Pressure pumping margins - Management expects continued progression in pressure pumping gross margins throughout the year, potentially reaching high teens [71][73] Question: Rig upgrades and costs - Management noted that upgrading Tier 2 rigs to Tier 1 super-spec could be costly, with their own upgrades costing about $2 million each [46][47] Question: Directional drilling growth - Management highlighted the impressive growth in directional drilling and plans to roll out new technology to improve profitability [82]