Yahoo Finance Patterson-UTI Energy Inc (PTEN) Q1 2024 Earnings Call Transcript Highlights: Key Financial ...
Total Revenue: $1.510 billion for the quarter.
Net Income: $51 million, or $0.13 per share.
Adjusted Net Income: $61 million, or $0.15 per share, excluding merger and integration expenses.
Free Cash Flow: $139 million for the quarter.
Dividends and Share Repurchases: Returned $130 million to shareholders, including dividends and share repurchases.
Drilling Services Revenue: $458 million with adjusted gross profit of $186 million.
Completion Services Revenue: $945 million with adjusted gross profit of $199 million.
Drilling Products Revenue: $90 million with adjusted gross profit of $41 million.
EBITDA: Adjusted EBITDA of $375 million, excluding merger and integration expenses.
Capital Expenditure: $227 million for the quarter across various segments.
Release Date: May 02, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
Patterson-UTI Energy Inc (NASDAQ:PTEN) reported strong free cash flow in Q1 2024, continuing a trend of robust cash generation.
The company successfully met its guidance across all operating segments, demonstrating effective management and operational efficiency.
Patterson-UTI Energy Inc (NASDAQ:PTEN) is investing in technologies that enhance drilling efficiency, which is expected to improve long-term returns and free cash flow.
The company's drilling and completions businesses outperformed expectations, with a positive outlook for continued long-term success.
Patterson-UTI Energy Inc (NASDAQ:PTEN) has achieved significant synergies faster than expected from its recent mergers, enhancing its market position and financial performance.
Negative Points
Weak natural gas prices are impacting customer activity, leading to reduced operations in natural gas basins.
The bifurcation in the oilfield services market could lead to challenges for companies that are not positioned as high-quality providers.
Customer consolidation is causing some near-term activity reduction, which could impact Patterson-UTI Energy Inc (NASDAQ:PTEN)'s operations.
There are ongoing customer-specific gaps in the frac activity schedule, which could affect performance in the short term.
Despite strong performance in technology and equipment, the overall softening market could pose risks to sustained growth and profitability.
Q & A Highlights
Q: Good morning. Andy, could you talk a little bit about where you are with your well site integration within frac of? A: Yes. So one of the premises of the merger and certainly one of the big synergy buckets is the integration of services that are vertical to us on what was essentially the frac fleets that we had at Patterson-UTI before the merger. So just to remind everybody next year, really excited about what they've accomplished over the years, especially with the ability to integrate wireline systems, cased-hole, Wireline and Perforating. And the real benefit to that is you don't have, as I said before, a $50 million frac-spread waiting on $1 million wireline truck will essentially make sure that everything's working like it needs to be as efficient as possible.
Q: Okay. That's helpful. And then you've both talked about the gaps in the dedicated fleets in 2Q, just on natural gas or these oil basins as well. And then you talked about 3Q frac it being up from 2Q on. I realize it's early, but could this be above 1Q as well in 3Q or well between 1Q and 2Q kind of a good starting point for now? A: So we have we have some white space in the calendar in Q2 where we have actually more than one of our E&P customers that completions it has been running so efficient that we're bumping up against the drilling rig. And so in discussions with the teams, it looks like we'll have more inventory in place in Q3. So we're just we're in a situation where we're bumping up the drilling rigs in Q2.And then in Q3, we'll have steadier work out of those same frac fleets.
Q: Andy, there's you you mentioned this and it's been a pretty popular topic. Obviously, the gas market's been pretty soft here of late, but the setup going into next year and probably for the next few years seems to be gaining traction, both on the LNG front and the kind of data center driven electricity implications for gas demand. Have you guys put any pencil to paper just to think about what you believe the impact will be on both frac and drilling activity as we roll into 25 and beyond on how much activity do we need to actually produce the volumes that are required based on where some of the demand estimates are just curious, it seems like we're in this short term, people have been focused on this soft market condition. But as we go into next year, it seems like this is going to rapidly change and tighten up markets, especially on the gas side, which tightens the overall thing. But just kind of curious, your big picture view as we roll into next year. A: Yes. So we've got natural gas production along the Gulf Coast and feeding into Henry Hub. And then, of course, we have all the associated gas coming in from the Permian. These days this year, we were supposed to get another Bcf in the pipelines coming out of the Permian competing against gas essentially in the Haynesville, which is why we've seen the Haynesville continues to stay soft. We don't today have visibility on any increase in natural gas for the end of 24. We do have some natural gas customers that have been talking to us about adding a rig or increasing activity to start to plan for things in 2025. I think we're all just trying to understand right now, what does it look like in terms of more pipeline capacity coming from the Permian and how does that compete against Haynesville gas?
Q: Yes, good morning. All right sustain on the rig side. And if your rig count is flattish from here from that 2Q level, we expect margins to be flattish as well in 3Q and 4Q? A: Yes, I was just looking at it to projections again. And what we're seeing is, like I said, we're going to have a couple of more rigs coming down in Q2. And I think that margins in rig count are likely to bottom somewhere in that Q2, Q3 time frame this year, whereas it's a little bit different on the completion side. As I mentioned earlier, completions had a different circumstance where we're going to see their activity bump up a little bit in Q3 with less white space. So Q2's kind of volume for completions for us. But on the rig side, it's probably across Q2, Q3.
Q: Hey, good morning, team. I wanted to touch on capital returns briefly, how should we be thinking about the cadence of share repurchases through 2024? And then is this level of capital returns, something we should view as standard going forward when we think about free cash flow payout? A: Yes, in terms of the cadence of how we intend to sort of buy back stock, I don't want to forecast too much. Obviously, I mean, we're we're committed to returning at least 50% this year. We're committed to returning at least $400 million combined between dividends and buybacks. But I don't want to give too much of an expectation as to how exactly we're going to do that will we'll remain opportunistic as best we can, but still stay within those sort of parameters and those commitment levels that we've given you.
Q: Hey, guys. Wanted to ask about that $10 million gain that we saw in completion services. Maybe if you could expand on what that is and if it's repeatable going forward? A: Yes, I wouldn't say it's repeatable going forward. This was a legal situation we got into with one of our suppliers have been finally settled. We settled in the quarter and it's a one-time thing.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
