Patterson-UTI Energy(US:PTEN)2021-04-29 17:35Financial Data and Key Metrics Changes - For Q1 2021, the company reported a net loss of $106 million or $0.50 per share, while adjusted EBITDA grew 20% sequentially to $35.4 million on a 9% sequential increase in revenues [14][6] - Average rig revenue per day for Q1 was $21,590, benefiting from a $2.3 million revenue recognition from the previous downturn [15][14] - Average rig margin per day exceeded expectations due to higher-than-expected revenue and lower-than-expected operating costs [16] Business Line Data and Key Metrics Changes - In contract drilling, average rig count improved to 69 rigs from 62 in the previous quarter, with expectations to increase to 73 rigs in Q2 [14][18] - Pressure pumping revenues decreased to $75.8 million in Q1, with a gross margin loss of $700,000, but expected to improve to $120 million in Q2 with a gross margin of $9 million [20][23] - Directional drilling revenues improved to $19.7 million in Q1, with expectations to rise to $22.5 million in Q2 [21][23] - Other operations revenues improved to $11.9 million in Q1, with expectations to reach approximately $13 million in Q2 [22][23] Market Data and Key Metrics Changes - The U.S. land rig count has nearly doubled over the past nine months, with private operators increasing their rig count by over 150% [25] - The company noted a shift towards capital discipline among operators, which is expected to support further increases in activity throughout the year [26][28] Company Strategy and Development Direction - The company is positioned as a premium service provider, focusing on integrating directional drilling operations into drilling rigs to improve wellbore quality [30] - The company is leveraging technology to reduce costs and emissions, including the use of alternative fuels and a lithium battery hybrid energy management system [31][32] - The outlook for 2021 is positive, with expectations of steadily increasing activity driven by both private and public operators [33] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in further improvements in drilling and completion activity, with expectations for rig count to reach approximately 80 rigs in the coming months [8] - The company anticipates that Q2 will be the low point for margins in the current cycle, with opportunities for pricing increases as more rigs are activated [37][49] - Management highlighted the importance of capital discipline among operators, which is expected to lead to increased activity funded within cash flow [28][54] Other Important Information - The company expects depreciation, depletion, amortization, and impairment expense of approximately $145 million for Q2, with a quarterly cash dividend of $0.02 per share [23] Q&A Session Summary Question: Margin guidance for Q2 - The margin guidance for drilling in Q2 is expected to be $6,200 per day [36] Question: Pricing outlook and efficiency improvements in pressure pumping - Management indicated that the pressure pumping sector is becoming structurally better, with opportunities for pricing to move up as activity increases [44][47] Question: Incremental demand sources for drilling and pumping - Demand is coming from a mix of private and public operators, with larger public operators also discussing increasing rig activity [52][54] Question: LNG-related rig activity opportunities - Activity in the LNG area is steady and slightly increasing, with potential for improved economics over the year [59] Question: Utilization and pricing for super-spec rigs - Utilization for super-spec rigs is currently high, and as these rigs start to work, pricing is expected to move up [60][61]