Patterson-UTI Energy(PTEN) - 2025 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Total reported revenue for Q3 2025 was $1.176 billion, with a net loss attributable to common shareholders of $36 million or $0.10 per share, and an adjusted net loss of $21 million [20] - Adjusted EBITDA for the quarter totaled $219 million, with total CapEx at $144 million [20][26] - The company generated $146 million of adjusted free cash flow during the first three quarters of the year [20] Business Line Data and Key Metrics Changes - In the drilling services segment, Q3 revenue was $380 million with an adjusted gross profit of $134 million, while completion services revenue totaled $705 million with an adjusted gross profit of $111 million [22][23] - The drilling products segment reported revenue of $86 million with an adjusted gross profit of $36 million, impacted by higher bit repair expenses [24][26] Market Data and Key Metrics Changes - The U.S. contract drilling business saw an average operating rig count of 95 rigs, with activity stabilizing as the company exited Q3 [22][23] - In Canada, there was a strong recovery in revenue post-spring breakup, while international revenue declined mainly in Saudi Arabia [17] Company Strategy and Development Direction - The company is focused on enhancing commercial strategies through service and product line integration, performance-based agreements, and lowering cost structures [4][5] - Investments are being made in technologies that are in high demand, with expectations of strong returns [8][9] - The company aims to return at least 50% of annual free cash flow to shareholders through dividends and share repurchases [9][20] Management's Comments on Operating Environment and Future Outlook - Management noted that while oil prices have fallen, they have remained more resilient than expected, with long-term global demand growth continuing [5] - The outlook for natural gas appears favorable, with physical demand growth from LNG starting to come online [6] - The company expects lower capital expenditures in 2026 compared to 2025, while still maintaining high-demand fleet and investing in new technologies [8][9] Other Important Information - The company closed Q3 with $187 million in cash and an undrawn $500 million revolver, indicating strong liquidity [9][26] - The company has repurchased 44 million shares since the NextTier merger and Altera acquisition, reducing share count by 9% [21][22] Q&A Session Summary Question: Completion services pricing trends - Management highlighted that their teams are executing high-end work, which has allowed them to maintain pricing without significant pressure to reduce it [34] Question: Fleet renewal programs for 2026 - The company is excited about the 100% natural gas direct-drive emerald systems and plans to continue investing in high-end equipment while allowing lower-tier equipment to attrition [36] Question: Power market opportunities - Management acknowledged their expertise in power generation but noted that entering larger power markets would require significant capital and may not align with immediate shareholder value [42][45] Question: Completion optimization software - The EOS Completions platform is being rolled out across all fleets, which is expected to improve performance and reliability [46] Question: Customer discussions amid macroeconomic uncertainty - Customers are seeking to maintain production levels despite a softer commodity environment, leading to requests for more technology and efficiency [54] Question: Pricing expectations for 2026 - Management indicated that while there may be some pricing movement, overall demand for natural gas services remains strong, which should support pricing stability [70]