Patterson-UTI Energy Reports Financial Results for the Three Months and Year Ended December 31, 2019
HOUSTON, Feb. 6, 2020 /PRNewswire/ -- PATTERSON-UTI ENERGY, INC. (NASDAQ: PTEN) today reported financial results for the three months and year ended December 31, 2019. The Company reported a net loss of $85.9 million, or $0.44 per share, for the fourth quarter of 2019, compared to a net loss of $201 million, or $0.93 per share, for the fourth quarter of 2018. Revenues for the fourth quarter of 2019 were $492 million, compared to $796 million for the fourth quarter of 2018.
For the year ended December 31, 2019, the Company reported a net loss of $426 million, or $2.10 per share, compared to a net loss of $321 million, or $1.47 per share, for the year ended December 31, 2018. Revenues for the year ended December 31, 2019 were $2.5 billion, compared to $3.3 billion for the year ended December 31, 2018.
During 2019, the Company spent $250 million to repurchase 22.6 million shares pursuant to the Company's share repurchase program. The Company also reduced its long-term debt by $150 million during 2019 and extended debt maturities. During the fourth quarter, the Company issued $350 million of senior, unsecured notes due 2029 in order to refinance $300 million of notes due 2022 and to reduce outstanding borrowings under a bank term loan. The early repayment of notes due 2022 resulted in a pre-tax charge of $15.8 million during the fourth quarter.
Andy Hendricks, Patterson-UTI's Chief Executive Officer, stated, "We believe our rig count bottomed in the fourth quarter and will modestly increase in early-2020. Lower than expected rig activity and higher than expected operating costs in the fourth quarter were the result of changes in our geographic mix and gaps in rig activity between jobs. In the first quarter, increasing rig count in the Permian should more than offset lower activity in other markets."
Mr. Hendricks continued, "In contract drilling, our rig count averaged 123 rigs in the fourth quarter, down from 142 rigs in the third quarter. The decrease in activity primarily occurred early in the fourth quarter with our December rig count showing the first increase in a year. For the first quarter, we expect activity will improve from December levels and result in an average rig count similar to the fourth quarter.
"During the fourth quarter, the fluctuation in activity resulted in increased revenues and expenses associated with stacking rigs in some basins, while reactivating rigs in the Permian. Additionally, gaps in the work schedule resulted in some rigs being stacked early in the quarter and being reactivated later in the quarter, which required us to carry extra labor while the rigs were not generating revenue or operating days. Therefore, average rig revenue per operating day and average rig direct operating cost per day of $23,980 and $15,540, respectively, were both higher than expected.
"As of December 31, 2019, we had term contracts for drilling rigs providing for approximately $605 million of future dayrate drilling revenue. Based on contracts currently in place, we expect an average of 77 rigs operating under term contracts during the first quarter and an average of 58 rigs operating under term contracts during 2020.
"In pressure pumping, our gross profit was $21.9 million for the fourth quarter, which included the benefit of a $10.8 million sales tax refund that reduced direct operating costs. We started the fourth quarter with 14 active spreads and stacked one spread in October and two spreads in November, as activity declined throughout the quarter. We expect to average 10 active spreads for the first quarter and will be negatively impacted by the sudden operational stoppage of a major oil company customer, however, due to the actions we have taken and continue to take, we believe that pressure pumping results should improve later in the year.
"In directional drilling, as we expected, a steep drop in fourth quarter activity resulted in revenues falling to $38.6 million in the fourth quarter from $47.0 million in the third quarter. Lower activity levels, combined with higher than expected expenses for repairs and maintenance, contributed to a lower than expected gross margin of $3.8 million for the fourth quarter."
Mr. Hendricks concluded, "Based on our current outlook for 2020 activity, we expect to spend approximately $250 million of capex for the year, down from $348 million in 2019. Our capex budget is primarily focused on maintenance spending to preserve the service quality for our customers and the earnings power of our assets."
Mark S. Siegel, Chairman of Patterson-UTI, stated, "In 2019, Patterson-UTI proactively responded to tough market conditions. We reduced capital spending by 46% and focused spending on maintaining the high quality of our equipment. We also made strategic investments in automation and performance technologies, a number of which will come to the market in 2020.
"In 2019, we generated strong cash flow and further strengthened our financial position. During the year, we spent $250 million to reduce our number of outstanding shares by more than 10%, and we reduced our long-term debt by $150 million," he concluded.
The Company declared a quarterly dividend on its common stock of $0.04 per share, payable on March 19, 2020, to holders of record as of March 5, 2020.
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 December 31, 2019, is scheduled for today, February 6, 2020, 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 1061035. 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, including the ability to develop and obtain satisfactory returns from new technology; 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; perception of sustainability practices; 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; stock price volatility; 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 Twelve Months Ended
December 31,
December 31,
2019 2018 2019 2018
REVENUES $
492,297 $
795,937 $
2,470,685 $
3,326,997
COSTS AND EXPENSES:
Direct operating costs 363,515 557,685 1,773,697 2,402,487
Depreciation, depletion,
amortization and impairment 180,011 212,390 1,003,873 916,318
Impairment of goodwill 211,129 17,800 211,129
Selling, general and administrative 31,833 32,771 133,513 134,071
Provision for bad debts 2,089 5,683
Merger and integration expenses 2,738
Other operating income, net (2,388) (7,248) (2,305) (17,569)
Total costs and expenses 575,060 1,006,727 2,932,261 3,649,174
OPERATING LOSS (82,763) (210,790) (461,576) (322,177)
OTHER INCOME (EXPENSE):
Interest income 1,532 997 6,013 5,597
Interest expense, net of amount
capitalized (28,183) (12,910) (75,204) (51,578)
Other 61 84 389 750
Total other expense (26,590) (11,829) (68,802) (45,231)
LOSS BEFORE INCOME TAXES (109,353) (222,619) (530,378) (367,408)
INCOME TAX BENEFIT (23,430) (21,370) (104,675) (45,987)
NET LOSS $
(85,923) $
(201,249) $
(425,703) $
(321,421)
NET LOSS PER COMMON SHARE:
Basic $
(0.44) $
(0.93) $
(2.10) $
(1.47)
Diluted $
(0.44) $
(0.93) $
(2.10) $
(1.47)
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES
OUTSTANDING:
Basic 193,687 215,700 203,039 218,643
Diluted 193,687 215,700 203,039 218,643
CASH DIVIDENDS PER COMMON SHARE $
0.04 $
0.04 $
0.16 $
0.14
PATTERSON-UTI ENERGY, INC.
Additional Financial and Operating Data
(unaudited, dollars in thousands)
Three Months Ended Twelve Months Ended
December 31,
December 31,
2019 2018 2019 2018
Contract Drilling:
Revenues $
270,785 $
387,487 $
1,308,350 $
1,430,492
Direct operating costs $
175,427 $
229,074 $
785,355 $
885,704
Margin (1) $
95,358 $
158,413 $
522,995 $
544,788
Selling, general and administrative $
1,701 $
1,697 $
6,317 $
6,296
Depreciation, amortization and
impairment $
113,169 $
129,773 $
668,007 $
571,607
Operating (loss) income $
(19,512) $
26,943 $
(151,329) $
(33,115)
Operating days - United States 11,246 16,732 54,282 63,971
Operating days - Canada 45 137 262 508
Operating days - Total 11,291 16,869 54,544 64,479
Average revenue per operating day -
United States $
24.01 $
23.00 $
24.02 $
22.22
Average direct operating costs per
operating day - United States $
15.47 $
13.58 $
14.36 $
13.71
Average margin per operating day -
United States (1) $
8.54 $
9.43 $
9.66 $
8.50
Average rigs operating - United
States 122 182 149 175
Average revenue per operating day -
Canada $
16.78 $
19.15 $
17.92 $
18.29
Average direct operating costs per
operating day - Canada $
32.47 $
14.10 $
22.68 $
16.85
Average margin per operating day -
Canada (1) $
(15.69) $
5.04 $
(4.76) $
1.45
Average rigs operating - Canada 0 1 1 1
Average revenue per operating day -
Total $
23.98 $
22.97 $
23.99 $
22.19
Average direct operating costs per
operating day - Total $
15.54 $
13.58 $
14.40 $
13.74
Average margin per operating day -
Total (1) $
8.45 $
9.39 $
9.59 $
8.45
Average rigs operating - Total 123 183 149 177
Capital expenditures $
36,275 $
94,958 $
194,416 $
394,595
Pressure Pumping:
Revenues $
161,448 $
319,703 $
868,694 $
1,573,396
Direct operating costs $
139,597 $
257,497 $
724,788 $
1,263,850
Margin (2) $
21,851 $
62,206 $
143,906 $
309,546
Selling, general and administrative $
2,921 $
3,989 $
12,655 $
15,420
Depreciation, amortization and
impairment $
45,493 $
58,640 $
233,952 $
250,010
Impairment of goodwill
$ $
121,444
$ $
121,444
Operating loss $
(26,563) $
(121,867) $
(102,701) $
(77,328)
Fracturing jobs 93 181 505 812
Other jobs 215 250 844 1,081
Total jobs 308 431 1,349 1,893
Average revenue per fracturing job $
1,613.67 $
1,737.50 $
1,673.81 $
1,909.42
Average revenue per other job $
52.92 $
20.86 $
27.75 $
21.23
Average revenue per total job $
524.18 $
741.77 $
643.95 $
831.17
Average costs per total job $
453.24 $
597.44 $
537.28 $
667.64
Average margin per total job (2) $
70.94 $
144.33 $
106.68 $
163.52
Margin as a percentage of revenues 13.5 19.5 16.6 19.7
(2) % % % %
Capital expenditures $
15,775 $
47,870 $
105,803 $
173,848
PATTERSON-UTI ENERGY, INC.
Additional Financial and Operating Data
(unaudited, dollars in thousands)
Three Months Ended Twelve Months Ended
December 31,
December 31,
2019 2018 2019 2018
Directional Drilling:
Revenues $
38,572 $
56,398 $
188,786 $
209,275
Direct operating costs $
34,726 $
49,715 $
178,645 $
175,829
Margin (3) $
3,846 $
6,683 $
10,141 $
33,446
Selling, general and administrative $
2,644 $
2,631 $
10,642 $
15,941
Depreciation, amortization and
impairment $
10,468 $
10,278 $
52,223 $
45,317
Impairment of goodwill
$ $
89,685
$ $
89,685
Operating loss $
(9,266) $
(95,911) $
(52,724) $
(117,497)
Margin as a percentage of revenues 10.0 11.8 5.4 16.0
(3) % % % %
Capital expenditures $
4,428 $
6,211 $
15,549 $
35,929
Other Operations:
Revenues $
21,492 $
32,349 $
104,855 $
113,834
Direct operating costs $
13,765 $
21,399 $
84,909 $
77,104
Margin (4) $
7,727 $
10,950 $
19,946 $
36,730
Selling, general and administrative $
1,408 $
3,620 $
14,068 $
13,439
Depreciation, depletion,
amortization and impairment $
9,331 $
11,824 $
42,803 $
41,512
Impairment of goodwill
$
$ $
17,800
$
Operating loss $
(3,012) $
(4,494) $
(54,725) $
(18,221)
Capital expenditures $
5,938 $
11,136 $
27,132 $
34,660
Corporate:
Selling, general and administrative $
23,159 $
20,834 $
89,831 $
82,975
Merger and integration expenses
$
$
$ $
2,738
Depreciation $
1,550 $
1,875 $
6,888 $
7,872
Other operating income, net $
(2,388) $
(7,248) $
(2,305) $
(17,569)
Provision for bad debts $
2,089
$ $
5,683
$
Capital expenditures $
1,808 $
715 $
4,612 $
2,426
Total capital expenditures $
64,224 $
160,890 $
347,512 $
641,458
(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, amortization and
impairment 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,
amortization and impairment,
impairment of goodwill, and
selling, general and
administrative expenses.
December 31, December 31,
Selected
Balance
Sheet
Data
(unaudited,
in
thousands): 2019 2018
---
Cash
and
cash
equivalents
$ 174,185
$ 245,029
Current
assets
$ 631,815
$ 950,197
Current
liabilities
$ 400,602
$ 526,316
Working
capital
$ 231,213
$ 423,881
Long-
term
debt
$ 966,540
$ 1,119,205
PATTERSON-UTI ENERGY, INC.
Non-U.S. GAAP Financial Measures
(unaudited, dollars in thousands)
Three Months Ended Twelve Months Ended
December 31,
December 31,
2019 2018 2019 2018
Adjusted Earnings Before Interest,
Taxes, Depreciation
and
Amortization (Adjusted
EBITDA)(1):
Net loss $
(85,923) $
(201,249) $
(425,703) $
(321,421)
Income tax benefit (23,430) (21,370) (104,675) (45,987)
Net interest expense 26,651 11,913 69,191 45,981
Depreciation, depletion,
amortization and impairment 180,011 212,390 1,003,873 916,318
Impairment of goodwill 211,129 17,800 211,129
Adjusted EBITDA $
97,309 $
212,813 $
560,486 $
806,020
Total revenues $
492,297 $
795,937 $
2,470,685 $
3,326,997
Adjusted EBITDA margin 19.8 26.7 22.7 24.2
% % % %
Adjusted EBITDA by operating
segment:
Contract drilling $
93,657 $
156,716 $
516,678 $
538,492
Pressure pumping 18,930 58,217 131,251 294,126
Directional drilling 1,202 4,052 (501) 17,505
Other operations 6,319 7,330 5,878 23,291
Corporate (22,799) (13,502) (92,820) (67,394)
Consolidated Adjusted EBITDA $
97,309 $
212,813 $
560,486 $
806,020
(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 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 2019
Fourth Third
Quarter Quarter Change
Contract drilling
revenues $
270,785 $
317,035 $
(46,250)
Operating days -
Total 11,291 13,081 (1,790)
Average rigs
operating -Total 123 142 (19)
Average revenue per
operating day -
Total $
23.98 $
24.24 $
(0.26)
Direct operating
costs -Total $
175,427 $
188,934 $
(13,507)
Average direct
operating costs
per operating day
-Total $
15.54 $
14.44 $
1.10
Average margin per
operating day -
Total $
8.45 $
9.79 $
(1.34)
PATTERSON-UTI ENERGY, INC.
Directional Drilling Margin
(unaudited, in thousands)
2019 2019
Fourth Third
Quarter Quarter Change
Directional drilling
revenues $
38,572 $
47,037 $
(8,465)
Direct operating
costs 34,726 56,215 (21,489)
Margin $
3,846 $
(9,178) $
13,024
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SOURCE PATTERSON-UTI ENERGY, INC.
