Patterson-UTI Drilling Co, LLC issued the following announcement.
PATTERSON-UTI ENERGY, INC. (NASDAQ: PTEN) today reported financial results for the three and nine months ended September 30, 2020. The Company reported a net loss of $112 million, or $0.60 per share, for the third quarter of 2020, compared to a net loss of $262 million, or $1.31 per share, for the third quarter of 2019. Revenues for the third quarter of 2020 were $207 million, compared to $598 million for the third quarter of 2019.
For the nine months ended September 30, 2020, the Company reported a net loss of $697 million, or $3.70 per share, compared to a net loss of $340 million, or $1.65 per share, for the nine months ended September 30, 2019. Revenues for the nine months ended September 30, 2020 were $903 million, compared to $2.0 billion for the same period in 2019.
Andy Hendricks, Patterson-UTI's Chief Executive Officer, stated, "Our financial results during the third quarter exceeded our expectations across all of our business segments, as drilling and completion activity stabilized during the third quarter. We further strengthened our financial position during the third quarter as our cash position increased by $57 million to $304 million. Based on our customer engagement, we expect activity will continue to improve through at least the first quarter of 2021. Assuming commodity prices remain around current levels, we expect our profitability will be at or near an inflection point in the fourth quarter and move higher in early-2021."
Mr. Hendricks continued, "In contract drilling, our average rig count for the third quarter of 60 rigs slightly exceeded our expectation. For the fourth quarter, we expect that our rig count will average 61 rigs, with a lower proportion of idle but contracted rigs as customers reactivate rigs during the fourth quarter. We expect the rig count at the end of the year to be 63 rigs, of which approximately 10% will be idle but contracted.
"Average rig margin per day during the third quarter was $10,170, which included benefits from lump sum early termination revenue and a credit to operating costs for sales and use taxes. Excluding these items, average rig margin per day would have been $8,990, which exceeded our expectation.
"As of September 30, 2020, we had term contracts for drilling rigs providing for approximately $305 million of future dayrate drilling revenue. Based on contracts currently in place, we expect an average of 43 rigs operating under term contracts during the fourth quarter, and an average of 35 rigs operating under term contracts during the four quarters ending September 30, 2021.
"In pressure pumping, activity levels improved as we averaged five active spreads during the third quarter compared to four active spreads in the second quarter. With the higher than expected activity during the third quarter, pressure pumping revenues improved 21% sequentially to $72.0 million. Adjusted EBITDA improved to $6.2 million during the third quarter and exceeded pressure pumping capital expenditures of $1.7 million.
"In directional drilling, revenues were $10.3 million, and operating margin was $0.5 million. Results improved during the quarter, as we were able to increase activity and gain market share in what was essentially a flat rig market during the quarter. The market share increase was a result of the enhanced performance of our new technology, the Mercury™ measurement while drilling system and new Mpact® directional drilling motor sizes, which were introduced in the first quarter of the year."
Mr. Hendricks continued, "Technology and performance will be an increasing differentiator, and we continue to move forward with remote operations capabilities for reduced costs, and automation technologies for improved performance and repeatability. These improvements are enabled by the high-frequency data and metadata originating from the wellsite operations, as well as by digitalizing our processes and workflow. These technology investments are capital-light and operate in a cloud data environment where, for example, in contract drilling and directional drilling, they can be added to our combined high-performance, super-spec rigs and directional systems.
"We are also seeing increased interest in a number of our technology solutions as operators focus on ESG and carbon emission reductions. We believe we have a leadership position in these technologies, including lithium battery hybrid-energy storage and automated energy transfer system, which reduce costs and lower emissions through the use of alternative energy sources.
"As always, we continue to focus on prudent capital stewardship and bolstering our already strong financial position. Our liquidity improved to more than $900 million at September 30, 2020, including an increase of $57 million of cash to $304 million of cash and $600 million of availability under our undrawn revolver. Patterson-UTI is well positioned to emerge from this downturn even stronger."
The Company declared a quarterly dividend on its common stock of $0.02 per share, payable on December 17, 2020 to holders of record as of December 3, 2020.
Financial results for the nine months ended September 30, 2020 include pre-tax charges during the first two quarters totaling $461 million, consisting of $423 million of non-cash impairment charges and $38.3 million of restructuring costs. Partially offsetting these charges is a pre-tax gain in the second quarter of $4.2 million included in other operating income from the realization of insurance proceeds. The financial results for the nine months ended September 30, 2019 include pre-tax charges totaling $276 million.
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 September 30, 2020, is scheduled for today, October 22, 2020, at 9:00 a.m. Central Time. The dial-in information for participants is (844) 494-0002 (Domestic) and (647) 253-8640 (International). The conference ID for both numbers is 9968598. 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 leading provider of oilfield services and products to oil and natural gas exploration and production companies in the United States, 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 the rapid decline in crude oil prices as a result of economic repercussions from the recent COVID-19 pandemic; 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
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