Patterson-UTI Energy(US:PTEN)2024-05-02 19:28Financial Data and Key Metrics Changes - Total reported revenue for Q1 2024 was $1.510 billion, with net income attributable to common shareholders of $51 million or $0.13 per share, including $12 million in merger and integration expenses [8][9] - Adjusted net income attributable to common shareholders, excluding merger and integration expenses, was $61 million or $0.15 per share [8] - Free cash flow for the first quarter was $139 million, with $130 million returned to shareholders, including an $0.08 per share dividend and $98 million used to repurchase 9 million shares [25][26] Business Line Data and Key Metrics Changes - In the Drilling Services segment, Q1 revenue was $458 million with adjusted gross profit of $186 million [10] - Completion Services revenue totaled $945 million with an adjusted gross profit of $199 million, impacted by lower activity and a shift away from higher revenue jobs in the Haynesville [49] - Drilling Products revenue was $90 million, up 2% sequentially, with adjusted gross profit of $41 million [12] Market Data and Key Metrics Changes - The company expects to average 114 active rigs in Q2 compared to 121 in Q1, with adjusted gross profit per day expected to decrease by roughly $300 [11] - International revenue improved sequentially, with growth primarily from operations in the Middle East, showing over 15% growth compared to Q1 last year [23] Company Strategy and Development Direction - The company is focused on investing in technologies that enhance efficiency in U.S. shale drilling, aiming to improve returns and free cash flow [3][18] - The operational integration with Nextier is largely complete, achieving over $200 million in annualized synergies faster than expected [14][22] - The company is committed to returning at least $400 million to shareholders through dividends and share repurchases in 2024, exceeding the targeted return of more than 50% of free cash flow [26][73] Management's Comments on Operating Environment and Future Outlook - Management expressed a constructive outlook for the industry in 2024, citing strong demand for technology and stable oil prices [30] - Weak natural gas prices are impacting activity, but long-term positive views on natural gas remain unchanged due to increasing LNG exports and demand for power in the U.S. [19] - The company anticipates modest demand upside in all basins starting later this year, despite current challenges in natural gas markets [19] Other Important Information - The company is advancing its transition to natural gas-powered frac equipment, with plans to grow electric frac horsepower to 140,000 by mid-year [7][12] - Total CapEx for Q1 was $227 million, with expectations of approximately $180 million for Q2 [51][52] Q&A Session Summary Question: Can you discuss the integration of well site services? - Management highlighted the successful integration of wireline systems and logistics to ensure efficient operations without delays [32][33] Question: What are the expectations for frac activity in Q3? - Management indicated that Q3 is expected to see increased activity as customers resume normal operations, with a potential return to Q1 levels [36][80] Question: How is the company addressing the current soft gas market? - Management noted that while the gas market is soft, structural changes and increasing LNG exports are expected to improve the situation in 2025 and beyond [61] Question: What is the outlook for capital returns and share repurchases? - The company remains committed to returning at least $400 million this year through dividends and buybacks, with a focus on maintaining flexibility in capital allocation [72][74] Question: Can you provide an update on the e-frac program? - Management confirmed that the e-frac program is progressing well, with long-term agreements in place and positive early results from the new fleet [81][82]