Workflow
Patterson-UTI Energy(PTEN) - 2021 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - For Q2 2021, the company reported a net loss of $103 million or $0.55 per share, while consolidated adjusted EBITDA was $35.4 million [15] - Average rig count improved to 73 rigs in Q2 from 69 rigs in Q1, with average rig margin per day at $6,250 [16] - Pressure Pumping revenues increased almost 50% sequentially to $112 million, with gross margin improving to $9.7 million [18] Business Line Data and Key Metrics Changes - In Contract Drilling, the average rig count increased to 73 rigs, with expectations to improve to an average of 81 rigs in Q3 [16][17] - Pressure Pumping saw an increase in active spreads from 8 to 9, with revenues expected to improve by more than 30% to approximately $150 million in Q3 [19] - Directional Drilling revenues increased 26% to $24.9 million, with expectations for further growth to $34 million in Q3 [20] Market Data and Key Metrics Changes - The company noted general oilfield cost inflation across segments due to improving activity levels and labor market tightness [15] - The company has term contracts for drilling rigs providing approximately $210 million of future day rate drilling revenue [17] Company Strategy and Development Direction - The company is focusing on increasing activity and pricing in response to rising demand for drilling and completion services [24] - Investments in high-demand items, including specialty drill pipe and ESG-related technologies, are part of the increased CapEx forecast of $165 million for 2021 [22] - The company is also pursuing an acquisition of Pioneer Energy Services, expected to close in Q4, which will enhance its operational capabilities [25] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about increasing E&P demand for services, driven by commodity price stability and the company's performance [24] - The company anticipates a "fear of missing out" scenario in 2022, leading to increased pricing and margins as operators scramble for high-spec rigs [36][39] Other Important Information - The company plans to pay a quarterly cash dividend of $0.02 per share on September 16, 2021 [22] - The company is upgrading engines on existing pump trailers to Tier 4 dual fuel, which is expected to improve operational efficiency and margins [11][30] Q&A Session Summary Question: Can you provide insights on frac fleet upgrades and CapEx? - The company is changing engines to Tier 4 dual fuel, with some CapEx allocated for this upgrade, which is seen as a cost-effective solution [30] Question: What is the outlook for rig demand from public E&Ps? - Management noted a broad-based increase in rig demand from private, midsized public, and large international E&Ps [32] Question: Can you discuss pricing for ESG-friendly fleets? - The company believes that offering Tier 4 dual fuel will allow for better pricing and margins compared to conventional fleets [34] Question: What are the expectations for land drilling margins? - Management anticipates a potential return to higher margins as operators may face challenges in securing desired rigs [39] Question: Will there be a decline in rig demand in Q4? - Management indicated that the typical decline in Q4 may not occur this year due to favorable commodity prices [40] Question: Can you elaborate on the incremental rigs from a major E&P? - The company expects to grow share within existing drilling programs rather than a significant ramp-up in overall drilling activity [43]