2014

Patterson-UTI Energy Reports Financial Results for Three Months Ended March 31, 2014

HOUSTON, April 24, 2014 /PRNewswire/ -- PATTERSON-UTI ENERGY, INC. (NASDAQ: PTEN) today reported financial results for the three months ended March 31, 2014.  The Company reported net income of $34.8 million, or $0.24 per share, for the first quarter of 2014, compared to net income of $56.2 million, or $0.38 per share, for the quarter ended March 31, 2013.  Revenues for the first quarter of 2014 were $678 million, compared to $667 million for the first quarter of 2013.

Andy Hendricks, Patterson-UTI's Chief Executive Officer, stated, "We experienced strong growth in our rig count, which averaged 193 rigs in the United States during the first quarter of 2014, an increase of 10 from 183 rigs in the fourth quarter of 2013.  In Canada, our average rig count increased to 10 rigs in the first quarter from nine rigs in the fourth quarter.  Our rig count in the United States continues to grow, and we expect to average 199 rigs operating during April, while in Canada our rig count is being impacted by the annual seasonal decline in activity and is expected to average one rig during April."

Mr. Hendricks added, "Average rig revenue per day was $23,380 during the first quarter.  Excluding the impact of early termination revenues in the fourth quarter, average rig revenue per day increased $210 from $23,170 in the fourth quarter.

"Average rig operating costs per day in the first quarter were $13,780, an increase of $270 per day from the fourth quarter as we incurred additional costs related to rig reactivations and typical first quarter payroll taxes.  Accordingly, excluding the positive impact from the early termination revenues in the fourth quarter, average rig margin per day was $9,600 in the first quarter compared to $9,660 in the fourth quarter.  

"We completed three new APEX® rigs during the first quarter, bringing our APEX® rig fleet to 127 rigs.  Since our last earnings release we have signed contracts on four of the rigs to be completed in 2014 and one rig to be completed in 2015.  We expect to complete 20 rigs in 2014 and all either have signed contracts, or are committed and awaiting signature by customers.

"We will continue to build rigs to meet customer demand.  Given the recent surge in demand for high-spec APEX® rigs, we have increased the number of rigs in our construction program by adding six rigs.  We now expect to complete 23 rigs through the four quarters ending March 2015.  

"As of March 31, 2014, we had term contracts for drilling rigs providing for approximately $1.04 billion of future dayrate drilling revenue.  Based on contracts currently in place, we expect an average of 137 rigs operating under term contracts during the second quarter, and an average of 111 rigs operating under term contracts during the remaining three quarters of 2014. 

"As previously announced, in pressure pumping, our Appalachian operations were negatively impacted by unusually severe weather during the first quarter.  Nonetheless, revenues increased sequentially to $240 million in the first quarter from $234 million in the fourth quarter.  Our gross margin decreased sequentially to 16.8% of revenues as a result of having crews and equipment on location that were unable to provide revenue generating services during the unusually severe weather.  While on location, we continued to incur labor, demurrage and other costs, including fuel costs to run our equipment in order to protect it in these extraordinary weather conditions," he concluded.  

Mark S. Siegel, Chairman of Patterson-UTI, stated, "Since bottoming in July 2013, the horizontal rig count in the United States has increased by more than 150 rigs, leaving high-spec rigs in short supply across the industry.  Having transformed the Company, we are well positioned to benefit from the strong demand for our growing fleet of high-spec rigs.  During the first quarter, our fleet of APEX® rigs achieved better than 97% utilization.

"The increase in horizontal drilling activity is positively impacting our pressure pumping operations.  The increase in horizontal drilling activity and frac intensity is increasing demand for pressure pumping.  While the pressure pumping industry continues to be over-supplied, we believe the incremental demand is moving the industry toward equilibrium.  Within our fleet, we expect activity will recover in the northeast, as weather in the second quarter is expected to be more accommodating.  Additionally, in the southwest, activity is expected to remain strong due to increasing horizontal activity in the Permian. 

"Commodity prices remain favorable for increasing activity levels, and we remain positive about the outlook for both contract drilling and pressure pumping.  We believe that with the short supply of high-spec rigs, the industry is at the point where in previous cycles dayrates accelerated," he concluded.

The Company declared a quarterly dividend on its common stock of $0.10 per share, to be paid on June 26, 2014 to holders of record as of June 12, 2014.

All references to "net income 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, 2014 is scheduled for today, April 24, 2014 at 9:00 a.m. Central Time. The dial-in information for participants is 866-318-8619 (Domestic) and 617-399-5138 (International).  The access code for both numbers is 59059477.  The call is also being webcast and can be accessed through the Investor Relations section at www.patenergy.com.  A replay of the conference call will be on the Company's website for two weeks.  A telephonic replay will be available through May 1, 2014 at 888-286-8010 (Domestic) and 617-801-6888 (International) with the access code 79747720.

About Patterson-UTI

Patterson-UTI Energy, Inc. subsidiaries provide onshore contract drilling and pressure pumping services to exploration and production companies in North America.  Patterson-UTI Drilling Company LLC and its subsidiaries have more than 275 marketable land-based drilling rigs and operate primarily in oil and natural gas producing regions in the continental United States, Alaska, and western and northern Canada.  Universal Pressure Pumping, Inc. and Universal Well Services, Inc. provide pressure pumping services primarily in Texas and the Appalachian region.

Location information about the Company's drilling rigs and their individual inventories is available through the Company's website at www.patenergy.com.

Statements made in this press release which state the Company's or management's intentions, beliefs, expectations or predictions for the future are forward-looking statements. It is important to note that actual results could differ materially from those discussed in such forward-looking statements. Important factors that could cause actual results to differ materially include, but are not limited to, volatility in customer spending and in oil and natural gas prices, which could adversely affect demand for our 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 reactivation or construction; equipment specialization and new technologies; adverse industry conditions; adverse credit and equity market conditions; difficulty in building and deploying new equipment; difficulty in integrating acquisitions; shortages, delays in delivery and interruptions of supply of equipment, supplies  and materials; weather; loss of key customers; liabilities from operations; ability to effectively identify and enter new markets; governmental regulation; ability to realize backlog; and ability to retain management and field personnel. 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 the Company's SEC filings, which may be obtained by contacting the Company or the SEC. These filings are also available through the Company's web site at http://www.patenergy.com or through the SEC's Electronic Data Gathering and Analysis Retrieval System (EDGAR) at http://www.sec.gov. We undertake no obligation to publicly update or revise any forward-looking statement.

 

PATTERSON-UTI ENERGY, INC.

Consolidated Condensed Statements of Operations (Unaudited)

(in thousands, except per share amounts)




      Three Months Ended

               March 31,              


2014

2013




REVENUES

$     678,168

$     667,039




COSTS AND EXPENSES



Direct operating costs

454,141

418,150

Depreciation, depletion, amortization  and impairment

147,322

136,435

Selling, general and administrative

19,673

17,397

Net (gain) loss on asset disposals

(1,744)

125

Total costs and expenses

619,392

572,107




OPERATING INCOME

58,776

94,932




OTHER INCOME (EXPENSE)



Interest income

176

173

Interest expense

(7,188)

(6,766)

Other

___—

19

Total other expense

(7,012)

(6,574)




INCOME BEFORE INCOME TAXES

51,764

88,358

INCOME TAX EXPENSE

16,942

32,128




NET INCOME

$       34,822

$       56,230




NET INCOME PER COMMON SHARE



Basic

$          0.24

$          0.38

Diluted

$          0.24

$          0.38







WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING



Basic

142,892

144,827

Diluted

145,099

146,783




CASH DIVIDENDS PER COMMON SHARE

$          0.10

$          0.05

 


PATTERSON-UTI ENERGY, INC.

Additional Financial and Operating Data (Unaudited)

(dollars in thousands)




      Three Months Ended

               March 31,              


2014

2013




Contract Drilling:



Revenues

$     425,903

$     419,094

Direct operating costs

$     251,059

$     247,072

Margin (1)

$     174,844

$     172,022

Selling, general and administrative

$         1,648

$         1,851

Depreciation, amortization and impairment

$     106,119

$       97,622

Operating income

$       67,077

$       72,549




Operating days – United States

17,325

16,957

Operating days – Canada

889

946

Total operating days

18,214

17,903




Average revenue per operating day – United States

$        23.00

$        22.94

Average direct operating costs per operating day – United States

$        13.47

$        13.49

Average margin per operating day – United States (1)

$          9.53

$          9.45

Average rigs operating – United States

193

188




Average revenue per operating day – Canada

$        30.84

$        31.76

Average direct operating costs per operating day – Canada

$        19.98

$        19.29

Average margin per operating day – Canada (1)

$        10.86

$        12.47

Average rigs operating – Canada

10

11




Average revenue per operating day – Total

$        23.38

$        23.41

Average direct operating costs per operating day – Total

$        13.78

$        13.80

Average margin per operating day – Total (1)

$          9.60

$          9.61

Average rigs operating – Total

202

199




Capital expenditures

$     124,923

$     134,383




Pressure Pumping:



Revenues

$     240,261

$     231,160

Direct operating costs

$     199,808

$     168,156

Margin (2)

$       40,453

$       63,004

Selling, general and administrative

$         4,868

$         4,253

Depreciation, amortization and impairment

$       34,042

$       30,236

Operating income

$         1,543

$       28,515




Fracturing jobs

243

266

Other jobs

880

1,142

Total jobs

1,123

1,408




Average revenue per fracturing job

$      914.73

$      784.60

Average revenue per other job

$        20.43

$        19.66

Total average revenue per job

$      213.95

$      164.18

Total average costs per job

$      177.92

$      119.43

Total average margin per job (2)

$        36.02

$        44.75

Margin as a percentage of revenues (2)

16.8%

27.3%




Capital expenditures

$       36,297

$       30,234




Oil and Natural Gas Production and Exploration:



Revenues – Oil

$       10,331

$       15,395

Revenues – Natural gas and liquids

$         1,673

$         1,390

Revenues – Total

$       12,004

$       16,785

Direct operating costs

$         3,274

$         2,922

Margin (3)

$         8,730

$       13,863

Depletion

$         4,994

$         5,723

Impairment of oil and natural gas properties

$         1,033

$         1,899

Operating income

$         2,703

$         6,241




Capital expenditures

$         8,684

$         8,664




Corporate and Other:



Selling, general and administrative

$       13,157

$       11,293

Depreciation

$         1,134

$            955

Net (gain) loss on asset disposals

$        (1,744)

$            125




Capital expenditures

$            468

$            880




Total capital expenditures

$     170,372

$     174,161



(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.  Total average margin per job is defined as margin divided by total jobs.  Margin as a percentage of revenues is defined as margin divided by revenues.



(3)

For Oil and Natural Gas Production and Exploration, margin is defined as revenues less direct operating costs and excludes depletion and impairment.













March 31,

December 31,




Selected Balance Sheet Data (Unaudited):


2014

2013




Cash and cash equivalents


$        257,746

$        249,509




Current assets


$        851,251

$        808,650




Current liabilities


$        457,691

$        354,277




Working capital


$        393,560

$        454,373




Current portion of long-term debt


$          10,000

$          10,000




Long-term debt


$        680,000

$        682,500








 


PATTERSON-UTI ENERGY, INC.

Non-GAAP Financial Measures (Unaudited)

(dollars in thousands)




Three Months Ended

                March 31,               


2014

2013




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



Net income

$       34,822

$       56,230

Income tax expense

16,942

32,128

Net interest expense

7,012

6,593

Depreciation, depletion, amortization and impairment

147,322

136,435

EBITDA

$     206,098

$     231,386




Total revenue

$     678,168

$     667,039




EBITDA margin

30.4 %

34.7%




EBITDA by operating segment:



Contract drilling

$     173,196

$     170,171

Pressure pumping

35,585

58,751

Oil and natural gas

8,730

13,863

Corporate and other

(11,413)

(11,399)

Consolidated EBITDA

$     206,098

$     231,386



(1)

EBITDA is not defined by generally accepted accounting principles ("GAAP"). We present EBITDA (a non-GAAP measure) because we believe it provides additional information with respect to both the performance of our fundamental business activities and our ability to meet our capital expenditures and working capital requirements. EBITDA should not be construed as an alternative to the GAAP measures of net income or operating cash flow.

 

PATTERSON-UTI ENERGY, INC.

Impact of Early Termination Revenue (Unaudited)

First Quarter of 2014 and Fourth Quarter of 2013

(dollars in thousands)



First Quarter

Fourth Quarter



2014

2013

    Change    





Operating days

18,214

17,709

505





Contract drilling revenue

$     425,903

$     412,667

$       13,236

Less early termination revenue

_____—

2,369

(2,369)

Contract drilling revenue excluding early termination revenue

425,903

410,298

15,605

Direct operating costs

251,059

239,166

11,893

Margin excluding early termination revenue

$     174,844

$     171,132

$         3,712





Average contract drilling revenue per operating day

$        23.38

$        23.30

$          0.08

Less average early termination revenue per operating day

___—

0.13

(0.13)

Average contract drilling revenue excluding early termination revenue per operating day

23.38

23.17

0.21

Average direct operating costs per operating day

13.78

13.51

0.27

Average margin excluding early termination revenue per operating day

$           9.60

$           9.66

$          (0.06)





 

SOURCE PATTERSON-UTI ENERGY, INC.



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