Patterson-UTI Energy(US:PTEN)2023-11-08 18:47Financial Data and Key Metrics Changes - Adjusted net income attributable to common shareholders was $55 million or $0.20 per share, excluding merger and integration expenses [15] - Adjusted EBITDA totaled $277 million, also excluding merger and integration expenses [15] - Total reported revenue for the quarter was just over $1 billion, with a small net income essentially breakeven on a per share basis [28] Business Line Data and Key Metrics Changes - Drilling Services revenue was $489 million, including $29 million in previously deferred revenue, with a gross margin of $209 million [48] - Completion Services segment revenue totaled $460 million, with an adjusted gross margin of $91 million, impacted by lower customer activity and pricing [31] - Drilling Products revenue totaled $47 million with an adjusted gross margin of $14 million [53] Market Data and Key Metrics Changes - U.S. drilling activity averaged 120 rigs, with an improvement to 118 active rigs by the end of the quarter [24] - Average rig revenue per day increased to $38,110, with average rig operating costs per day at $19,870 [49] - The average adjusted rig margin per day was $18,240, a $1,330 increase from the previous quarter [30] Company Strategy and Development Direction - The company aims to maximize potential through the NexTier and Ulterra transactions, expecting at least $200 million in annualized synergies by Q1 2025 [20][35] - A commitment to capital discipline and returning at least 50% of free cash flow to shareholders annually is emphasized [23][36] - The company is focused on integrating operations and enhancing service quality to differentiate itself in a bifurcated market [5][10] Management's Comments on Operating Environment and Future Outlook - Management remains optimistic about the drilling and completion markets, expecting a modest increase in U.S. shale oil and natural gas production over the next several years [25][26] - The company anticipates continued positive momentum into 2024, with super-spec rig utilization remaining high [11] - Management acknowledges the need for U.S. shale production to grow modestly to meet global demand, particularly in light of OPEC supply cuts [25] Other Important Information - The company has returned over $1.2 billion to shareholders in the past decade and has $281 million remaining on its share repurchase authorization [23][29] - Total CapEx for Q3 was $160 million, with expectations of $190 million for Q4 [33] - The company has maintained an investment-grade credit rating from all three major rating agencies [34] Q&A Session Summary Question: What is the current horsepower and rig count? - The company has 3.3 million horsepower, with some parked for maintenance as they prepare for increased activity in 2024 [62] Question: What are the expectations for rig market recovery? - Management expects margins to bottom around Q1 or Q2, with an anticipated increase in rig count as commodity prices stabilize [65] Question: Can you elaborate on the synergies from the recent mergers? - The company is confident in achieving over $100 million in annualized synergies, with a significant portion coming from SG&A and procurement efficiencies [73] Question: What is the outlook for the Pressure Pumping side? - Management sees a stable outlook for activity and pricing, with expectations for steady performance through the end of the year [52] Question: How is the company managing labor and scaling up? - The company is focused on maintaining a strong workforce and is optimistic about scaling up operations as activity increases in 2024 [100]