Patterson-UTI Energy(US:PTEN)2024-10-24 19:34Financial Data and Key Metrics Changes - Total reported revenue for Q3 2024 was $1,357 million, with a net loss attributable to common shareholders of $979 million or $2.50 per share, including an $885 million impairment of goodwill [20][21] - Adjusted EBITDA for the quarter totaled $275 million, excluding special items [20] - Free cash flow generated in the first nine months of the year was $322 million, with over $100 million generated in Q3 [23] Business Line Data and Key Metrics Changes - In the Drilling Services segment, Q3 revenue was $422 million, with an adjusted gross profit of $171 million [24] - Completion Services segment revenue totaled $832 million, with an adjusted gross profit of $128 million, reflecting a slight increase due to a shift towards more integrated services [26] - Drilling Products revenue was $89 million, a 4% sequential increase, with adjusted gross profit of $42 million [27] Market Data and Key Metrics Changes - The company expects a steady rig count for Tier 1 high-spec drilling rigs through the rest of the year and into 2025, while the overall industry rig count may fluctuate [11] - Natural gas prices have stabilized recently, reinforcing optimism about long-term natural gas activity [11] - The company anticipates average activity in 2025 to be slightly below 2024 levels, with a stable rig count [13] Company Strategy and Development Direction - The company aims to unlock further value through operational integration and commercial synergies following the acquisitions of NexTier and Ulterra [7] - A focus on capital-efficient profitable growth is emphasized, with a commitment to returning cash to shareholders [8] - The company is taking a leadership role in reducing the supply of older, uncompetitive equipment in the market [35] Management's Comments on Operating Environment and Future Outlook - Management acknowledges a challenging macro environment but expresses confidence in the company's resilience and ability to generate free cash flow [6][13] - The company expects a seasonal slowdown in Q4 but does not view it as indicative of the overall market for 2025 [33] - Management believes that the completions dynamic in Q4 does not reflect the demand setup for 2025, anticipating tighter demand for high-end frac fleets [33] Other Important Information - The company has returned $366 million to shareholders year-to-date, including $270 million for share repurchases and $96 million for dividends [32] - The company has lowered its 2024 CapEx expectations while increasing electric horsepower to 155,000 in Q4 [16][30] - A joint venture agreement in the UAE with ADNOC Drilling and SLB has been signed, allowing the company to gain a valuable presence in the region [19] Q&A Session Summary Question: Thoughts on Completion Margins for Next Year - Management expects margins to improve in the first half of next year, with a return to mid-year profit levels anticipated [39] Question: Participation in Turnwell Joint Venture - Initial participation will be advisory, with potential for future rig contributions depending on capital deployment considerations [40][43] Question: Supply/Demand Dynamics for Pressure Pumping - The company is taking a leadership role in retiring older equipment, expecting a tighter market in 2025 due to reduced investment in older assets [44][47] Question: Integration of Services Post-NexTier Merger - Integration efforts have been progressing well, with increased service offerings and operational synergies being realized [49]