Patterson-UTI Energy Reports Financial Results for the Three Months Ended March 31, 2019

HOUSTON, April 25, 2019 /PRNewswire/ -- PATTERSON-UTI ENERGY, INC. (NASDAQ: PTEN) today reported financial results for the three months ended March 31, 2019. The Company reported a net loss of $28.6 million, or $0.14 per share, for the first quarter of 2019, compared to a net loss of $34.4 million, or $0.16 per share, for the quarter ended March 31, 2018. Revenues for the first quarter of 2019 were $704 million, compared to $809 million for the first quarter of 2018.

During the first quarter, the Company invested $75.1 million to repurchase 5.4 million shares, which represents 2.5% of the outstanding shares on December 31, 2018. In total, over the past five quarters, the Company has spent $226 million on the repurchase of 14.7 million shares in the open market or 6.6% of the shares outstanding at December 31, 2017. At March 31, 2019, the remaining amount under the Company's share repurchase authorization was approximately $175 million.

Andy Hendricks, Patterson-UTI's Chief Executive Officer, stated, "Drilling and completion activity slowed during the first quarter as E&P companies reacted to the sharp drop in oil prices at the end of 2018. In contract drilling, our rig count averaged 175 rigs during the first quarter, compared to an average of 183 during the fourth quarter. While oil prices strengthened and operator cash flow expectations have improved, operators have remained fiscally conservative and demand levels remain subdued. For the second quarter, we expect our rig count to average approximately 160 rigs."

Mr. Hendricks added, "During the first quarter, average rig revenue per day increased $620 to $23,590, more than offsetting a $310 increase in average rig operating costs per day to $13,880. Accordingly, the average rig margin per day increased $310 to $9,700.

"As of March 31, 2019, we had term contracts for drilling rigs providing for approximately $650 million of future dayrate drilling revenue. Based on contracts currently in place, we expect an average of 104 rigs operating under term contracts during the second quarter, and an average of 59 rigs operating under term contracts during the 12 months ending March 31, 2020.

"In pressure pumping, as expected, completion activity slowed in the first quarter. We ended the first quarter with 16 active spreads compared to 20 at the end of the fourth quarter. As we remain focused on reducing costs and improving cash flow, we took the proactive step of removing spreads from the market until we can redeploy them at attractive economics. With the sequential decrease in activity, pressure pumping revenues for the first quarter declined to $248 million. Gross margin of $44.9 million for the first quarter exceeded our expectation, as we were able to improve internal efficiencies during the quarter. While we have reduced our spread count, we expect our second quarter activity to be similar to the first quarter.

"In directional drilling, gross margin improved to $7.4 million in the first quarter from $6.7 million in the fourth quarter, as we reduced expenses for repairs and maintenance and third-party rentals. Revenues for the first quarter were $53.0 million compared to $56.4 million for the fourth quarter."

Mark S. Siegel, Chairman of Patterson-UTI, stated, "The industry backdrop improved during the first quarter as oil prices began to recover from the sharp drop in the fourth quarter. Oil prices in the mid-$60s have historically been sufficient to support increasing activity levels. While drilling and completion activity is currently subdued, we expect the strength in commodity prices will eventually lead to higher activity levels. Nonetheless, we remain resolute in our focus on efficient and high-quality services, our operational flexibility, a strong balance sheet, and prudent capital allocation."

Mr. Siegel continued, "As our free cash flow improved during the first quarter, we opportunistically accelerated share repurchases and bought back $75 million of our stock at a valuation we believe significantly undervalues the cash flow generating power of the underlying assets. Even after $75 million of share repurchases and $8.5 million of dividends paid in the first quarter, our cash balance improved to $249 million," he concluded.

The Company declared a quarterly dividend on its common stock of $0.04 per share, to be paid on June 20, 2019, to holders of record as of June 6, 2019.

All references to "per share" in this press release are diluted earnings per common share as defined within Accounting Standards Codification Topic 260.

The Company's quarterly conference call to discuss the operating results for the quarter ended March 31, 2019, is scheduled for today, April 25, 2019, at 9:00 a.m. Central Time. The dial-in information for participants is (844) 704-2496 (Domestic) and (647) 253-8661 (International). The conference ID for both numbers is 3537997. The call is also being webcast and can be accessed through the Investor Relations section of the Company's website at https://investor.patenergy.com. A replay of the conference call will be on the Company's website for two weeks.

About Patterson-UTI

Patterson-UTI is a provider of oilfield services and products to oil and natural gas exploration and production companies in North America, including market leading positions in contract drilling, pressure pumping and directional drilling services. For more information, visit www.patenergy.com.

Cautionary Statement Regarding Forward-Looking Statements

This press release contains forward-looking statements which are protected as forward-looking statements under the Private Securities Litigation Reform Act of 1995 that are not limited to historical facts, but reflect Patterson-UTI's current beliefs, expectations or intentions regarding future events. Words such as "anticipate," "believe," "budgeted," "continue," "could," "estimate," "expect," "intend," "may," "plan," "predict," "potential," "project," "pursue," "should," "strategy," "target," or "will," and similar expressions are intended to identify such forward-looking statements. The statements in this press release that are not historical statements, including statements regarding Patterson-UTI's future expectations, beliefs, plans, objectives, financial conditions, assumptions or future events or performance that are not historical facts, are forward-looking statements within the meaning of the federal securities laws. These statements are subject to numerous risks and uncertainties, many of which are beyond Patterson-UTI's control, which could cause actual results to differ materially from the results expressed or implied by the statements. These risks and uncertainties include, but are not limited to: volatility in customer spending and in oil and natural gas prices, which could adversely affect demand for Patterson-UTI's services and their associated effect on rates, utilization, margins and planned capital expenditures; global economic conditions; excess availability of land drilling rigs and pressure pumping equipment, including as a result of low commodity prices, reactivation, improvement or construction; liabilities from operations; weather; decline in, and ability to realize, backlog; equipment specialization and new technologies; shortages, delays in delivery and interruptions of supply of equipment and materials; ability to hire and retain personnel; loss of, or reduction in business with, key customers; cybersecurity risk; difficulty with growth and in integrating acquisitions and new technology; governmental regulation; product liability; legal proceedings, including technology disputes, and actions by governmental or other regulatory agencies; political, economic and social instability risk; ability to effectively identify and enter new markets; dependence on our subsidiaries to meet our long-term debt obligations; variable rate indebtedness risk; ability to maintain credit rating and service debt; and anti-takeover measures in our charter documents; contingent tax liabilities; and ability to use net operating losses.

Additional information concerning factors that could cause actual results to differ materially from those in the forward-looking statements is contained from time to time in Patterson-UTI's SEC filings. Patterson-UTI's filings may be obtained by contacting Patterson-UTI or the SEC or through Patterson-UTI's website at http://www.patenergy.com or through the SEC's Electronic Data Gathering and Analysis Retrieval System (EDGAR) at http://www.sec.gov. Patterson-UTI undertakes no obligation to publicly update or revise any forward-looking statement.

                                                            
            
              PATTERSON-UTI ENERGY, INC.


                                                        
           Condensed Consolidated Statements of Operations


                                                       
           (unaudited, in thousands, except per share data)




                                                                                                                             Three Months Ended


                                                                                                                
          
              March 31,



                                                                                                                 2019                           2018

                                                                                                                                                ---


     
              REVENUES                                                                                              $
            704,171                     $
            809,164



     
              COSTS AND EXPENSES:



     Direct operating costs                                                                                                   489,325                               588,987



     Depreciation, depletion, amortization and impairment                                                                     214,410                               209,892



     Selling, general and administrative                                                                                       32,555                                32,817



     Merger and integration expenses                                                                                                                1,991



     Other operating income, net                                                                                              (8,736)                              (2,421)






     Total costs and expenses                                                                                                 727,554                               831,266






     OPERATING LOSS                                                                                                          (23,383)                             (22,102)






     
              OTHER INCOME (EXPENSE):



     Interest income                                                                                                            1,032                                 1,423



     Interest expense, net of amount capitalized                                                                             (12,984)                             (13,625)



     Other                                                                                                                        117                                   169






     Total other expense                                                                                                     (11,835)                             (12,033)






     LOSS BEFORE INCOME TAXES                                                                                                (35,218)                             (34,135)



     INCOME TAX EXPENSE (BENEFIT)                                                                                             (6,604)                                  282






     NET LOSS                                                                                                        $
            (28,614)                   $
            (34,417)

                                                                                                                                                                          ===




     
              NET LOSS PER COMMON SHARE:



     Basic                                                                                                             $
            (0.14)                     $
            (0.16)

                                                                                                                                                                          ===


     Diluted                                                                                                           $
            (0.14)                     $
            (0.16)

                                                                                                                                                                          ===


     
              WEIGHTED AVERAGE NUMBER OF COMMON
            SHARES OUTSTANDING:



     Basic                                                                                                                    211,868                               220,783




     Diluted                                                                                                                  211,868                               220,783




     CASH DIVIDENDS PER COMMON SHARE                                                                                     $
            0.04                        $
            0.02

                                                                                                                                                                          ===

                                     
          
                PATTERSON-UTI ENERGY, INC.


                                     
          Additional Financial and Operating Data


                                        
          (unaudited, dollars in thousands)




                                                                 Three Months Ended


                                              
              
                March 31,



                                                2019                                2018





                   Contract Drilling:



     Revenues                                          $
              372,392               $
          327,803


      Direct operating costs                            $
              219,202               $
          212,583



     Margin (1)                                        $
              153,190               $
          115,220


      Selling, general and
       administrative                                     $
              1,656                 $
          1,406


      Depreciation, amortization
       and impairment                                   $
              130,317               $
          130,917


      Operating income (loss)                            $
              21,217              $
          (17,103)




      Operating days - United States                               15,659                        14,984



     Operating days - Canada                                         128                           234



     Operating days - Total                                       15,787                        15,218




      Average revenue per
       operating day - United
       States                                             $
              23.63                 $
          21.59


      Average direct operating
       costs per operating day -
       United States                                      $
              13.85                 $
          13.92


      Average margin per
       operating day - United
       States (1)                                          $
              9.78                  $
          7.67


      Average rigs operating - United
       States                                                         174                           166




      Average revenue per
       operating day - Canada                             $
              18.46                 $
          18.50


      Average direct operating
       costs per operating day -
       Canada                                             $
              17.65                 $
          17.29


      Average margin per
       operating day - Canada (1)                          $
              0.81                  $
          1.21


      Average rigs operating - Canada                                   1                             3




      Average revenue per
       operating day - Total                              $
              23.59                 $
          21.54


      Average direct operating
       costs per operating day -
       Total                                              $
              13.88                 $
          13.97


      Average margin per
       operating day - Total (1)                           $
              9.70                  $
          7.57


      Average rigs operating - Total                                  175                           169




      Capital expenditures                               $
              75,725                $
          75,247




                   Pressure Pumping:



     Revenues                                          $
              247,601               $
          406,784


      Direct operating costs                            $
              202,748               $
          320,970



     Margin (2)                                         $
              44,853                $
          85,814


      Selling, general and
       administrative                                     $
              3,486                 $
          3,903


      Depreciation, amortization
       and impairment                                    $
              60,135                $
          56,522


      Operating income (loss)                          $
              (18,768)               $
          25,389





     Fracturing jobs                                                 164                           204



     Other jobs                                                      263                           280



     Total jobs                                                      427                           484




      Average revenue per
       fracturing job                                  $
              1,476.55              $
          1,966.18


      Average revenue per other
       job                                                $
              20.71                 $
          20.30


      Average revenue per total
       job                                               $
              579.86                $
          840.46


      Average costs per total job                        $
              474.82                $
          663.16


      Average margin per total
       job (2)                                           $
              105.04                $
          177.30


      Margin as a percentage of revenues                             18.1                          21.1
       (2)                                                              %                            %




      Capital expenditures                               $
              31,400                $
          24,923




                   Directional Drilling:



     Revenues                                           $
              52,959                $
          48,616


      Direct operating costs                             $
              45,602                $
          37,689



     Margin (3)                                          $
              7,357                $
          10,927


      Selling, general and
       administrative                                     $
              2,657                 $
          4,938


      Depreciation and
       amortization                                      $
              10,367                $
          10,902



     Operating loss                                    $
              (5,667)              $
          (4,913)




      Margin as a percentage of revenues                             13.9                          22.5
       (3)                                                              %                            %




      Capital expenditures                                $
              2,112                $
          12,829




                   Other Operations:



     Revenues                                           $
              31,219                $
          25,961


      Direct operating costs                             $
              21,773                $
          17,745



     Margin (4)                                          $
              9,446                 $
          8,216


      Selling, general and
       administrative                                     $
              2,862                 $
          2,991


      Depreciation, depletion and
       impairment                                        $
              11,788                 $
          9,314



     Operating loss                                    $
              (5,204)              $
          (4,089)




      Capital expenditures                                $
              7,773                 $
          9,396





     
                Corporate:


      Selling, general and
       administrative                                    $
              21,894                $
          19,579


      Merger and integration
       expenses                           
            $                                       $
          1,991



     Depreciation                                        $
              1,803                 $
          2,237


      Other operating income, net                       $
              (8,736)              $
          (2,421)




      Capital expenditures                                $
              1,331                   $
          526




      Total capital expenditures                        $
              118,341               $
          122,921




              (1)              For Contract Drilling, margin is
                                  defined as revenues less direct
                                  operating costs and excludes
                                  depreciation, amortization and
                                  impairment and selling, general
                                  and administrative expenses.
                                  Average margin per operating day
                                  is defined as margin divided by
                                  operating days.





              (2)              For Pressure Pumping, margin is
                                  defined as revenues less direct
                                  operating costs and excludes
                                  depreciation, amortization and
                                  impairment and selling, general
                                  and administrative expenses.
                                  Average margin per total job is
                                  defined as margin divided by
                                  total jobs. Margin as a
                                  percentage of revenues is defined
                                  as margin divided by revenues.





              (3)              For Directional Drilling, margin
                                  is defined as revenues less
                                  direct operating costs and
                                  excludes depreciation and
                                  amortization and selling, general
                                  and administrative expenses.
                                  Margin as a percentage of
                                  revenues is defined as margin
                                  divided by revenues.





              (4)              For Other Operations, margin is
                                  defined as revenues less direct
                                  operating costs and excludes
                                  depreciation, depletion and
                                  impairment and selling, general
                                  and administrative expenses.

                                                                                     March 31,            December 31,



       
                Selected Balance Sheet Data (unaudited, in thousands):     2019               2018

    ---


       Cash and cash equivalents                                           
     $          248,901 
          $     245,029



       Current assets                                                      
     $          927,731 
          $     950,197



       Current liabilities                                                 
     $          511,158 
          $     526,316



       Working capital                                                     
     $          416,573 
          $     423,881



       Long-term debt                                                      
     $        1,119,426 
          $   1,119,205

                                                                           
           
                PATTERSON-UTI ENERGY, INC.


                                                                              
            Non-U.S. GAAP Financial Measures


                                                                             
            (unaudited, dollars in thousands)




                                                                                                                                       Three Months Ended


                                                                                                                           
            
           March 31,



                                                                                                                            2019                          2018



                   Adjusted Earnings Before Interest, Taxes, Depreciation
          and Amortization (Adjusted EBITDA)(1):



     Net loss                                                                                                                   $
         (28,614)               $
         (34,417)



     Income tax expense (benefit)                                                                                                     (6,604)                           282



     Net interest expense                                                                                                              11,952                         12,202



     Depreciation, depletion, amortization and impairment                                                                             214,410                        209,892





     Adjusted EBITDA                                                                                                             $
         191,144                 $
         187,959






     Total revenues                                                                                                              $
         704,171                 $
         809,164



     Adjusted EBITDA margin                                                                                                              27.1                           23.2
                                                                                                                                               %                             %





     
                Adjusted EBITDA by operating segment:



     Contract drilling                                                                                                           $
         151,534                 $
         113,814



     Pressure pumping                                                                                                                  41,367                         81,911



     Directional drilling                                                                                                               4,700                          5,989



     Other operations                                                                                                                   6,584                          5,225



     Corporate                                                                                                                       (13,041)                      (18,980)






     Consolidated Adjusted EBITDA                                                                                                $
         191,144                 $
         187,959





              (1)              Adjusted earnings before
                                  interest, taxes, depreciation
                                  and amortization ("Adjusted
                                  EBITDA") is not defined by
                                  accounting principles generally
                                  accepted in the United States of
                                  America ("U.S. GAAP").  We
                                  define Adjusted EBITDA as net
                                  income (loss) plus net interest
                                  expense, income tax expense
                                  (benefit) and depreciation,
                                  depletion, amortization and
                                  impairment expense (including
                                  impairment of goodwill).  We
                                  present Adjusted EBITDA because
                                  we believe it provides to both
                                  management and investors
                                  additional information with
                                  respect to the performance of
                                  our fundamental business
                                  activities and a comparison of
                                  the results of our operations
                                  from period to period and
                                  against our peers without regard
                                  to our financing methods or
                                  capital structure.  We exclude
                                  the items listed above from net
                                  income (loss) in arriving at
                                  Adjusted EBITDA because these
                                  amounts can vary substantially
                                  from company to company within
                                  our industry depending upon
                                  accounting methods and book
                                  values of assets, capital
                                  structures and the method by
                                  which the assets were acquired.
                                  Adjusted EBITDA should not be
                                  construed as an alternative to
                                  the U.S. GAAP measure of net
                                  income (loss).  Our computations
                                  of Adjusted EBITDA may not be
                                  the same as similarly titled
                                  measures of other companies.

                                                                 
          
                PATTERSON-UTI ENERGY, INC.


                                                               
         Contract Drilling Per Day Successive Quarters


                                                                   
           (unaudited, dollars in thousands)




                                                                                                                      2019                    2018

                                                                                                                                              ---

                                                                                                                    First                 Fourth


                                                                                                                   Quarter                Quarter

                                                                                                                                              ---


     Contract drilling revenues                                                                                           $
         372,392          $
         387,487



     Operating days - Total                                                                                                     15,787                  16,869



     Average rigs operating - Total                                                                                                175                     183



     Average revenue per operating day - Total                                                                              $
         23.59            $
         22.97



     Direct operating costs - Total                                                                                       $
         219,202          $
         229,074



     Average direct operating costs per operating day - Total                                                               $
         13.88            $
         13.58



     Average margin per operating day - Total                                                                                $
         9.70             $
         9.39

                                
        
           PATTERSON-UTI ENERGY, INC.


                                   
        Pressure Pumping Margin


                                  
        (unaudited, in thousands)




                                                   2019                             2018



                                                 First                          Fourth


                                                Quarter                         Quarter






     Pressure pumping revenues                               $
            247,601          $
      319,703



     Direct operating costs                                            202,748              257,497




     Margin                                                   $
            44,853           $
      62,206


                                    
        
            PATTERSON-UTI ENERGY, INC.


                                      
        Directional Drilling Margin


                                       
        (unaudited, in thousands)




                                                          2019                          2018



                                                        First                       Fourth


                                                       Quarter                      Quarter






     Directional drilling revenues                                $
            52,959          $
      56,398



     Direct operating costs                                                 45,602              49,715




     Margin                                                        $
            7,357           $
      6,683


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SOURCE PATTERSON-UTI ENERGY, INC.