8-K
PATTERSON UTI ENERGY INC (PTEN)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): September 6, 2022
Patterson-UTI Energy, Inc.
(Exact name of Registrant as Specified in Its Charter)
| Delaware | 1-39270 | 75-2504748 |
|---|---|---|
| (State or Other Jurisdiction<br><br>of Incorporation) | (Commission<br><br>File Number) | (IRS Employer<br><br>Identification No.) |
| 10713 W. Sam Houston Pkwy N, Suite 800, Houston, Texas | 77064 | |
| (Address of Principal Executive Offices) | (Zip Code) |
Registrant’s Telephone Number, Including Area Code: 281-765-7100
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instructions A.2. below):
| | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
|---|---|
| | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol | Name of each exchange on which registered |
|---|---|---|
| Common Stock, $0.01 Par Value | PTEN | The Nasdaq Global Select Market |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 7.01. Regulation FD Disclosure.
On September 6, 2022, Patterson-UTI Energy, Inc. ("Patterson-UTI") issued a press release, attached as Exhibit 99.1 to this Current Report on Form 8-K, announcing its participation in the Barclays CEO Energy-Power Conference, as well as certain operational updates. Patterson-UTI will deliver an investor presentation that includes the slides attached as Exhibit 99.2 to this Current Report on Form 8-K, which are incorporated herein by reference.
The information furnished pursuant to Item 7.01, including Exhibit 99.1 and 99.2, shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, shall not otherwise be subject to the liabilities of that section and shall not be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, unless specifically identified therein as being incorporated therein by reference. The furnishing of this press release and these slides is not intended to constitute a representation that such information is required by Regulation FD or that the materials they contain include material information that is not otherwise publicly available.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
| Exhibit No. | Description |
|---|---|
| 99.1 | Press release. |
| 99.2 | Investor presentation slides. |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Patterson-UTI Energy, Inc. | ||
|---|---|---|
| September 6, 2022 | By: | /s/ C. Andrew Smith |
| Name: C. Andrew Smith | ||
| Title: Executive Vice President and Chief Financial Officer |
EX-99.1
For Immediate Release
Contact: Mike Drickamer
Vice President, Investor Relations
(281) 765-7170
Patterson-UTI Energy to Present at the Barclays CEO Energy-Power Conference
HOUSTON – September 6, 2022 – PATTERSON-UTI ENERGY, INC. (NASDAQ: PTEN) today announced that Andy Hendricks, the Company’s President and Chief Executive Officer, will participate in a fireside chat at the Barclays CEO Energy-Power Conference on Wednesday, September 7, 2022, at 9:45 a.m. Eastern time. During the fireside chat, Mr. Hendricks will make reference to an investor presentation filed today with the SEC and available in the investor relations section of the Company’s website.
Mr. Hendricks stated, “Strong demand for drilling and pressure pumping equipment and services combined with limited availability of incremental equipment across the industry continues to bode well for Patterson-UTI. As customer conversations about their 2023 drilling plans progress, operators have entered into term contracts to guarantee access to the drilling rigs that they need. Since the end of the second quarter, we have signed term contracts adding approximately $335 million of contract drilling revenue backlog, including contracts with a major operator for five rigs under three-year contract terms. On August 31, 2022, we had term contracts for drilling rigs in the United States providing for future dayrate drilling revenue of approximately $690 million.
“In pressure pumping, we continue to operate 12 frac spreads and have been able to achieve agreements for higher rates with a number of customers during the third quarter. We believe the strong market demand for high quality services will allow us to continue to improve rates,” he concluded.
To access the webcast of this fireside chat, go to the investor relations section of the Company’s webcast at investor.patenergy.com prior to the scheduled start time.
About Patterson-UTI
Patterson-UTI is a leading provider of oilfield services and products to oil and natural gas exploration and production companies in the United States and other select countries, including 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: adverse oil and natural gas industry conditions, including as a result of economic repercussions from the COVID-19 pandemic; global economic conditions; volatility in customer spending and in oil and natural gas prices that could adversely affect demand for Patterson-UTI’s services and their associated effect on rates; excess availability of land drilling rigs, pressure pumping and directional drilling equipment, including as a result of reactivation, improvement or construction; competition and demand for Patterson-UTI’s services; the impact of the ongoing conflict in Ukraine; strength and financial resources of competitors; utilization, margins and planned capital expenditures; liabilities from operational risks for which Patterson-UTI does not have and receive full indemnification or insurance; operating hazards attendant to the oil and natural gas business; failure by customers to pay or satisfy their contractual obligations (particularly with respect to fixed-term contracts); the ability to realize backlog; specialization of methods, equipment and services and new technologies, including the ability to develop and obtain satisfactory returns from new technology; the ability to retain management and field personnel; loss of key customers; shortages, delays in delivery, and interruptions in supply, of equipment and materials; cybersecurity events; synergies, costs and financial and operating impacts of acquisitions; the ultimate timing, outcome and results of integrating the operations of Pioneer Energy Services into Patterson-UTI; the effects of the acquisition on Patterson-UTI, including Patterson-UTI’s future financial condition, results of operations, strategy and plans; potential adverse reactions or changes to business relationships resulting from the acquisition; the failure to realize expected synergies and other benefits from the acquisition; difficulty in building and deploying new equipment; governmental regulation; climate legislation, regulation and other related risks; environmental, social and governance practices,
including the perception thereof; environmental risks and ability to satisfy future environmental costs; technology-related disputes; legal proceedings and actions by governmental or other regulatory agencies; the ability to effectively identify and enter new markets; weather; operating costs; expansion and development trends of the oil and natural gas industry; ability to obtain insurance coverage on commercially reasonable terms; financial flexibility; interest rate volatility; adverse credit and equity market conditions; availability of capital and the ability to repay indebtedness when due; stock price volatility; and compliance with covenants under Patterson-UTI’s debt agreements.
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. Barclays CEO Energy-Power Conference September 6-7, 2022
Forward Looking Statements This material and any oral statements made in connection with this material include "forward-looking statements" within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934. Statements made which provide the Company’s or management’s intentions, beliefs, expectations or predictions for the future are forward-looking statements and are inherently uncertain. The opinions, forecasts, projections or other statements other than statements of historical fact, including, without limitation, plans and objectives of management of the Company 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 the risk factors and other cautionary statements 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. Statements made in this presentation include non-U.S. GAAP financial measures. The required reconciliations to U.S. GAAP financial measures are included on our website and/or at the end of this presentation.
Market Update Market fundamentals are strong as demand is increasing and industry supply is constrained Strong demand for drilling and pressure pumping equipment and services Customers indicating demand for more rigs than PTEN can provide this year Recent oil price volatility has not had an impact on customer conversations Leading edge rig dayrates and frac stage pricing continue to improve Term contracts increasing backlog of future drilling revenue Contracts signed since July 1, 2022 have added approximately $335 million of drilling revenue backlog… …including contracts with a major operator for five rigs under three-year contract terms Approximately $690 million of future dayrate drilling revenue from U.S. term contracts as of August 31, 2022 We believe strong market demand for pressure pumping will allow us to continue to improve pricing We continue to operate 12 frac spreads We have reached agreements with a number of customers during the third quarter for better pricing
Patterson-UTI Segments 2 DRILLING PUMPING Onshore contract drilling in U.S. and Colombia, primarily focused on Tier-1, Super-Spec rigs and rigs capable of using alternative fuel sources such as natural gas, hi-line electrical power, and lithium batteries Full-service pressure pumping focused on engineered solutions and dual-fuel capable spreads with a strong reputation for regional knowledge and efficient operations DIRECTIONAL Comprehensive suite of directional drilling services with a strong reputation for the reliability and durability of downhole performance motors, MWD and remote operations RELIABILITY API-certified drilling equipment recertifications and upgrades for improved rig performance Large selection of equipment and field support used in drilling, completions and production RENTALS DATA ANALYTICS Space flight navigation algorithms to improve the accuracy of horizontal wellbore placement and quality POWER Electrical engineering, equipment, automation software, energy storage and field support to the energy, marine and heavy-equipment industries Revenue1 % 38% PRESSURE PUMPING 49% CONTACT DRILLING 4% 9% DIRECTIONAL DRILLING 1 Patterson-UTI reported revenue for the six months ended June 30, 2022. OTHER
35% of total shale well cost1 Drilling Services 60% of total shale well cost1 Completion Services Estimated well cost data provided by Rystad Energy Leading Provider of Critical Path Services ~50% of E&P total well spend includes services provided by Patterson-UTI
Patterson-UTI Segment Synergies Deeper customer relationships Breadth of our service offerings provides us with Greater market intelligence Technical collaborations across businesses Shared infrastructure for data analytics
Patterson-UTI Marketing Synergies Strong Customer Alignment Between Contract Drilling and Pressure Pumping 1 Percentage of pressure pumping revenues from customers that also utilized PTEN rigs divided by total pressure pumping revenues 1
Contract Drilling
Patterson-UTI Drilling
What is a Tier-1, Super-Spec Rig? Patterson-UTI is a market and technology leader 1,500 hp elevated drawworks for more room under rig floor Mast rated for at least 750,000 pound hookload High pressure circulating system (7,500 psi) Third mud pump for greater hydraulic horsepower Multi-well pad capable AC Powered A super-spec rig is defined as at least a 1,500 horsepower, AC-powered rig that has at least a 750,000-pound hookload, a 7,500-psi circulating system, and is pad-capable. A Tier-1, super-spec rig is defined as a super-spec rig that also has a third mud pump and raised drawworks that allow for more clearance underneath the rig floor.
Rig count as of September 1, 2022. Active U.S. rigs represents the number of the Company’s drilling rigs that were earning revenue under a drilling contract in the United States. Total U.S. Rig Fleet Active U.S. Rigs1 Utilization Tier-1, Super-Spec 117 112 96% Super-Spec 55 12 22% Total Super-Spec 172 124 72% AC-Powered APEX® Rigs 12 5 42% Total U.S. Land Rig Fleet 184 129 70% Patterson-UTI Drilling The market is tight! Industry utilization of Tier-1, Super-Spec rigs is very tight We have 100% utilization of our Tier-1, Super-Spec rigs in the southern U.S. Patterson-UTI is a leader in super-spec rigs available for reactivation
U.S. Drilling Margins per Operating Day Upside remains to prior peak margins Adjusted gross margin is defined as revenues less direct operating costs and excludes, other operating expenses, net, selling, general and administrative expenses and depreciation, amortization and impairment. Average adjusted gross margin per operating day is defined as adjusted gross margin divided by operating days. 2014 estimated average adjusted gross margin per operating day includes only AC-powered rigs for purposes of comparability with our current rig fleet. Estimates calculated as total revenue from AC-powered rigs less direct costs for AC-powered rigs less support cost allocation, divided by total operating days for AC-powered rigs. 2 1
Pressure Pumping
Universal Pressure Pumping
Digital Transformation Remote operations, enhanced analytics Operational data aggregation and equipment health monitoring Condition-based decision-making coupled with predictive analytics Edge automation Automated pump controls and fuel optimization provide safer, more reliable and consistently repeatable outcomes for customers Unified data platform provides remote supervision capabilities Logistics expertise 45,000 tons of sand/spread/month Real-time hub managing logistics using advanced ML/AI systems
Technical Expertise and Collaboration Engineered solutions Changes to completion design increased frac intensity and improved stimulated reservoir volume while lowering costs Remote simul-frac operation cut completion time by 38% for Permian customer >30% reduction in treatment schedule deviations Innovative application Pioneer of high-pressure flex hose use (process pat. pend.) Slipstream (designed comingling) operations to extend frac equipment maintenance cycles
Technical Expertise and Collaboration Intelligent fluid chemistry Domain experts formulate frac chemistry Real-time water rheology with friction reducing performance Environmentally friendly formulations Customer value Optimizing frac fluid chemistry has lowered well completion costs and improved completion efficiency for Northeast customer while preserving freshwater natural resources. Predictive analysis approach to fluid selection in pre-job planning allows Permian customers to select the best friction reducer for their cost structure and ESG initiatives. High-viscosity friction reducers increased frac treatment rate while reducing fluid system cost for South Texas customer
Directional Drilling and Data Analytics
MS Directional A leading provider of directional drilling services Strong reputation for the reliability and durability of downhole performance motors and measurement-while-drilling (MWD) tools Remote MWD operations with reduced personnel are standard on all directional drilling jobs
Superior QC Space flight navigation algorithms Improved well placement Better steering to target zones Better wellbore quality ™ ™
EcoVerse™
PTEN Sustainability Firsts 22
100% Natural Gas Generators on Drilling Rigs Dual Fuel Frac Spreads and Drilling Rigs Lithium Batteries on Drilling Rigs Hi-Line Power Automated Engine Management Software
Natural Gas Powered Engines on Drilling Rigs Offering fuel flexibility and utilizing local infrastructure Able to utilize local natural gas infrastructure already available thereby reducing the need for diesel fuel transportation and consumption Cleaner burning natural gas helps to reduce emissions PTEN is a leader in rigs capable of using natural gas as a fuel source Substituting natural gas for higher-priced diesel helps to reduce fuel costs
EcoCell™ Optimizing efficiency and reducing the carbon footprint of our rig Leveraging stored energy helps to optimize fuel efficiency and reduce fuel costs. Reduced fuel consumption helps to reduce emissions. Patterson-UTI is a leader in the use of lithium batteries on drilling rigs.
Patterson-UTI provides in-house electrical engineering, hardware packaging, and installation services to power our rigs from electric utility lines This full-service offering enables our customers to utilize an optimal power solution on our drilling rig when it comes to emission impacts at the wellsite Hi-Line Electrical Power Current Power designed and manufactured utility substation
Engine Automation Automating efficient engine management to optimize fuel savings and emission reduction Automation to start and stop engines as needed to meet fluctuations in rig power demand Helps to reduce fuel costs and emissions by optimizing the average genset load and decreasing the overall genset run hours Improves dual-fuel substitution rates Available through Patterson-UTI’s CORTEX® Automation platform
Power Management Dashboard Real time remote monitoring of rig fuel consumption and emissions Monitors real time rig power usage to effectively manage fuel consumption and reduce fuel costs Interactive analytical tools allow monitoring of 40 different engine data fields (pressures, temps, speed, alarms, etc.) Available through Patterson-UTI’s PTEN+ customer data portal
Dual-fuel equipment capable of instantaneous substitution up to 85% Natural Gas Powered Frac Spreads Improved fuel emissions, optimized consumption Majority of frac spreads are dual-fuel Saved >23MM gal diesel >18K dual-fuel frac stages
Financials
Focused on Shareholder Returns PTEN has returned more than $1 billion to shareholders in the last 10+ years
Capital Allocation CAPITAL SPENDING Primarily focused on maintenance, which increases with activity levels Equipment reactivations on a disciplined basis Major upgrades backed by term contracts SHAREHOLDER RETURNS Focused on maintaining a stable dividend with increases when economics allow Shareholder returns augmented by opportunistic share repurchases MAINTAIN STRONG BALANCE SHEET While no near-term debt maturities, opportunistically build cash for future debt repayment
Strong Financial Position ~1.5x Net Debt to Adjusted EBITDA forecast by end of 2022 Net debt of $864 million at June 30, 2022 No near-term debt maturities at June 30, 2022 $510 million 3.95% senior notes due 2028 $349 million 5.15% senior notes due 2029 $25 million under revolving credit facility maturing in 2025 Favorable credit ratings Moody’s – Baa3 S&P – BB+
No Near-Term Debt Maturities At June 30, 2022, we had $25 million outstanding under our $600 million revolving line of credit that matures in 2025 ($550 million available after 2024)
Environmental & Social Sustainability
Patterson-UTI Core Values Safety and Environment The safety of our employees and the protection of our environment is a cornerstone, and we are committed to providing a safe, incident-free work environment for all. Operational Excellence We partner with our customers to achieve their goals, through delivering high-quality performance, value-added services and with a focus on innovative technology and solutions in all aspects of our work. Honesty and Integrity We will act with honesty and integrity in everything we do. Diversity, Inclusion and Respect We are committed to diversity in recruiting, opportunity and leadership and to fostering a culture of inclusion and respect. Development of our People We are committed to support the growth, development and career advancement of every employee. Profitable Business and Financial Stability We are committed to delivering best-in-class profitability and maintaining financial strength.
Environmental Air Quality We utilize natural gas engines, dual-fuel equipment and other technologies that reduce our air emissions Water Quality We strive to conduct our drilling and completion activities in a manner that protects the quality of ground and surface water Land Use We employ spill prevention plans and use additional protective measures in environmentally sensitive areas
Social Our people are our most important asset and our greatest strength Health and Safety Our goal is to provide an incident-free work environment. The safety of our employees and others is our highest priority. We regularly audit and review our HSE performance in all of our businesses. Diversity, Inclusion and Respect We are committed to fostering a work environment where all people feel valued and respected We embrace our diversity of people, thoughts and talents, and combine these strengths to pursue extraordinary results for PTEN, our employees and stockholders
Appendix
Non-GAAP Financial Measures U.S. Drilling Average Adjusted Gross Margin Adjusted gross margin is defined as revenues less direct operating costs and excludes, other operating expenses, net, selling, general and administrative expenses and depreciation, amortization and impairment. Average adjusted gross margin per operating day is defined as adjusted gross margin divided by operating days. Adjusted gross margin is included as a supplemental disclosure because it is a useful indicator of our operating performance. (unaudited, dollars in thousands) 2Q 2022 1Q 2022 4Q 2021 3Q 2021 2Q 2021 Revenues $ 285,258 $ 239,683 $ 215,121 $ 157,925 $ 141,732 Direct operating expenses $ (181,784) $ (165,339) $ (161,870) $ (111,500) $ (100,070) Less depreciation, amortization and impairment $ (83,307) $ (80,470) $ (319,973) $ (97,160) $ (98,592) GAAP gross margin $ 20,167 $ (6,126) $ (266,722) $ (50,735) $ (56,930) Depreciation, amortization and impairment $ 83,307 $ 80,470 $ 319,973 $ 97,160 $ 98,592 Adjusted gross margin ¹ $ 103,484 $ 74,344 $ 53,251 $ 46,425 $ 41,662 Operating days - U.S. 11,015 10,362 9,764 7,361 6,652