Patterson-UTI Energy(US:PTEN)2025-10-23 15:02Financial 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 [22] - Adjusted EBITDA for the quarter totaled $219 million, with total CapEx of $144 million [22][27] - The company generated $146 million of adjusted free cash flow during the first three quarters of the year [22] 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, and the average operating rig count was 95 rigs [23] - Completion services segment revenue totaled $705 million with an adjusted gross profit of $111 million, showing flat activity on a pump-hour basis compared to Q2 [24] - Drilling products revenue was $86 million with an adjusted gross profit of $36 million, impacted by lower activity in Saudi Arabia [25] Market Data and Key Metrics Changes - U.S. contract drilling saw 8,737 operating days, with activity flat outside the Permian Basin, which experienced a sequential decline in rig count [23][24] - International revenue declined mainly in Saudi Arabia, while revenue outside of Saudi Arabia was strong [19] - The company expects completion services adjusted gross profit to be approximately $85 million in Q4, with less seasonality compared to the previous year [25] Company Strategy and Development Direction - The company is focused on enhancing commercial strategies through service and product line integration and performance-based agreements while lowering costs [5][10] - Investments in technology are prioritized, with expectations for strong returns on incremental investments [10][11] - The company aims to return at least 50% of annual free cash flow to shareholders through dividends and share repurchases [11][30] Management's Comments on Operating Environment and Future Outlook - Management noted that while oil prices have fallen, they remain resilient, and the U.S. shale picture is more constructive than expected [5][6] - The outlook for natural gas appears favorable, with physical demand growth from LNG expected to drive higher drilling and completion activity [8] - Management expressed confidence in maintaining high-demand portions of the fleet while generating meaningful free cash flow [11][30] Other Important Information - The company closed Q3 with $187 million in cash and an undrawn $500 million revolver, with no senior note maturities until 2028 [28] - The company has repurchased 44 million shares since the NextTier merger and Altera acquisition, reducing share count by 9% [23] 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 [35][37] Question: Fleet renewal programs for 2026 - Management discussed the excitement around 100% natural gas direct-drive systems and indicated a focus on high-end investments while allowing lower-tier equipment to attrition [38][39] Question: Power market opportunities - Management acknowledged their expertise in power generation but noted that entering larger power markets would require careful consideration of capital and returns [44][47] Question: Customer discussions on drilling and completion - Management indicated that customers are seeking to maintain production levels despite a softer commodity environment, leading to requests for more technology and efficiency [56][58] Question: Capital allocation strategy - Management emphasized the importance of maintaining a strong balance sheet while committing to returning capital to shareholders, with a focus on performance driving pricing [76][80]