PATTERSON UTI ENERGY INC
For the period ended Sep 30, 2024. Filed Oct 28, 2024.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2024 · Filed Oct 28, 2024
PTEN$9.92-0.3%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-06-30; filed 2024-07-29.
0001628280-24-033296
ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-09-30; filed 2024-10-28.
0000889900-24-000016
ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 132 previous paragraphs and 152 current paragraphs.
66 unchanged; 50 reworded; 30 added; 14 removed; 2 previous and 6 current paragraphs rearranged.
Tables are not compared: 15 previous and 17 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (30)
Current report
As of September 30, 2024, we had 152 marketed land-based drilling rigs based in the following regions:
Current report
Inour Completion Services segment, during the fourth quarter, we expect a sequential slowdown in activity due to typical holiday seasonality and capital discipline being exercised by our customers into the end of the year.
Current report
In our Drilling Products segment for the fourth quarter, we expect a slight sequential increase in revenue and adjusted gross profit, driven by growth in our International operations, while U.S. revenue is expected to decline slightly on lower industry rig count.
Current report
Negative market indicators such as lower industry-wide drilling rig and pressure pumping fleet count forecasts, increased volatility and pricing declines in the pressure pumping market, and continued efficiency gains and technology advancements reducing operating days have led to a reduced outlook for activity. We viewed the reduction in activity forecasts combined with the recent decline in the market price of our common stock as a triggering event that warranted a quantitative assessment for goodwill impairment. As a result, we recorded an $885 million impairment charge to goodwill for the completion services reporting unit during the third quarter of 2024. See Note 7 of Notes to unaudited condensed consolidated financial statements for additional information.
Current report
We also evaluated our fleet of drilling rigs for marketability based on the condition of inactive rigs, expenditures that would be necessary to bring them to working condition and the expected demand for drilling services by rig type. As a result of this evaluation, during the three months ended September 30, 2024, we identified 42 legacy, non-Tier-1 super-spec drilling rigs and related equipment to be abandoned. Based on the strong customer preference across the industry for Tier-1 super-spec drilling rigs, in addition to efficiency gains and technology advancements that have reduced the total number of rigs needed for the U.S. drilling market, we believe the 42 rigs that were abandoned had limited commercial opportunity. Accordingly, we recorded a $114 million abandonment charge during the third quarter of 2024. See Note 6 of Notes to unaudited condensed consolidated financial statements for additional information.
Current report
Our net loss attributable to common shareholders for the three months ended September 30, 2024 was $979 million or $2.50 per common share. Excluding the $885 million goodwill impairment, $114 million asset abandonment charge, and $7 million of merger and integration expenses net of income tax benefits totaling $25.4 million, adjusted net income attributable to common shareholders for the three months ended September 30, 2024 was $2 million or $0.00 per common share. See Non-GAAP Financial Measures below for a reconciliation of GAAP net income (loss) attributable to common shareholders to adjusted net income attributable to common shareholders.
Current report
Recent Developments in Joint Ventures and Business Combinations— On September 30, 2024, one of our subsidiaries signed the previously announced joint venture agreement with subsidiaries of ADNOC Drilling and SLB. Our subsidiary will hold a 15 percent interest in a newly created company named Turnwell Industries, which has been awarded a contract to drill and complete 144 unconventional wells for ADNOC.
Current report
The decrease in operating days for our U.S. contract drilling business reflects a modest reduction in our rig count mainly due to merger and acquisition activity for certain customers.
Current report
Depreciation, amortization and impairment increased primarily due to a charge of $114 million related to the abandonment of 42 legacy, non-Tier-1 super-spec drilling rigs and related equipment. See Note 6 of Notes to unaudited condensed consolidated financial statements for additional information.
Current report
Completion services direct operating costs increased disproportionately to the increase in revenues, which negatively impacted our adjusted gross profit. The higher direct operating costs resulted from unplanned gaps for several of our fleets, which impacted fixed cost leverage on those fleets.
Current report
During the three months ended September 30, 2024, we recorded an $885 million impairment charge to goodwill associated with our completion services reporting unit. See Note 7 of Notes to unaudited condensed consolidated financial statements for additional information.
Current report
Other operating income, net in the second quarter of 2024 was due to gain on legal settlement.
Current report
Revenues and direct operating costs increased slightly primarily due to market share gains in our U.S. and Canadian markets.
Current report
Other operating expense (income), net includes net gains or losses associated with the disposal of assets. Accordingly, the related gains or losses have been excluded from the results of specific segments. The $5.8 million change in other operating expense (income), net is primarily the result of gains on the disposal of assets in the second quarter of 2024 that did not recur in the third quarter.
Current report
The decrease in operating days for our U.S. contract drilling business reflects the industry-wide activity declines during the first nine months of 2024 due to increased drilling efficiencies and market consolidation.
Current report
Depreciation, amortization and impairment increased primarily due to a charge of $114 million related to the abandonment of 42 legacy, non-Tier-1 super-spec drilling rigs and related equipment. See Note 6 of Notes to unaudited condensed consolidated financial statements for additional information.
Current report
During the nine months ended September 30, 2024, we recorded an $885 million impairment charge to goodwill associated with our completion services reporting unit. See Note 7 of Notes to unaudited condensed consolidated financial statements for additional information.
Current report
Other operating income, net in 2024 was due to gain on legal settlements.
Current report
The changes in the results of our drilling products segment for the nine months ended September 30, 2024 as compared to September 30, 2023 are attributable to the Ulterra acquisition, which closed on August 14, 2023. The results for the nine months ended September 30, 2023 included 45 days of operating results, and as such, there was no meaningful year-over-year comparison.
Current report
Depreciation, depletion, amortization and impairment decreased primarily due to a $6.2 million impairment recorded in our oil and natural gas business during the nine months ended September 30, 2023 compared to a $3.4 million impairment for the comparable period in 2024.
Current report
Merger and integration expense decreased due to the timing of the NexTier merger and the Ulterra acquisition, which both closed in the third quarter of 2023.
Current report
Adjusted Net Income (Loss) and Adjusted Earnings Per Share
Current report
Adjusted net income (loss) and adjusted earnings per share are not defined by GAAP. We define adjusted net income (loss) as net income (loss) attributable to common stockholders as reported, excluding merger and integration expense, impairment of goodwill and asset abandonment, less income tax benefit. We present adjusted net income (loss) and adjusted earnings per share in order to convey to investors our performance on a basis that, by excluding the items listed above, is more comparable to our net income (loss) and earnings per share reported in previous periods. Adjusted net income (loss) and adjusted earnings per share should not be construed as an alternative to GAAP net loss and earnings per share. Adjusted net income (loss) and adjusted earnings per share for the three and nine months ended September 30, 2024 were as follows (in thousands, except per share amounts):
Current report
(1)Depreciation, depletion, amortization and impairment expense excludes impairment of goodwill.
Current report
Impairment of long-lived assets —We review our long-lived assets, including property and equipment and definite-lived intangible assets, for impairment whenever events or changes in circumstances indicate that the carrying amounts of certain assets may not be recovered over their estimated remaining useful lives (“triggering events”). In connection with this review, assets are grouped at the lowest level at which identifiable cash flows are largely independent of other asset groupings. We estimated future cash flows over the life of the respective assets or asset groupings in our assessment of its recoverability. These estimates of cash flows were based on historical trends in the industry as well as our expectations regarding the continuation of these trends in the future. As of September 30, 2024, no impairment was indicated for our long-lived tangible or definite-lived intangible assets.
Current report
While we believe our judgments and assumptions are reasonable, geopolitical instability, global or regional decreases in the demand of our services and products, or other unforeseen macroeconomic considerations could negatively impact the expected cash flows used in our recoverability tests on our asset groups. Such changes could result in impairment charges in the future, which could be material to our results of operations and financial statements as a whole.
Current report
Negative market indicators such as lower industry-wide drilling rig and pressure pumping fleet count forecasts, increased volatility and pricing declines in the pressure pumping market, and continued efficiency gains and technology advancements reducing operating days have led to our reduced outlook for activity. We viewed the reduction in activity forecasts combined with the recent decline in the market price of our common stock as a triggering event that warranted a quantitative assessment for goodwill impairment.
Current report
We estimated the fair value of the cementing services reporting unit in our completion services operating segment using a market approach. The market approach was based on trading multiples of earnings before interest, taxes, depreciation and amortization for companies comparable to the cementing services reporting unit.
Current report
The forecast for the completion services reporting unit assumed lower activity in 2025 compared to average activity levels for full year 2024 and increases in estimated activity of 2% to 8% beginning in 2026 through 2029. Those estimates were based on future drilling rig and pressure pumping fleet count forecasts during the third quarter of 2024 and estimated market share. Additionally, the forecast reflected the expectation that industry-wide pricing pressure will persist within the completions market and continue to compress adjusted gross profit. These factors negatively impacted the estimated value of the reporting unit.
Current report
Based on the results of the quantitative assessment, the fair value of the completion services reporting unit was less than its carrying value. Accordingly, we recorded an $885 million impairment charge to goodwill for the completion services reporting unit during the third quarter of 2024.
Removed paragraphs (14)
Previous report
In our Completion Services segment, we expect to see fewer schedule gaps in the third quarter compared to the second quarter of 2024, although we do still expect elevated schedule gaps compared to normal operations. Activity in West Texas is expected to be steady, with segment gains coming from higher activity in natural gas basins compared to the second quarter.
Previous report
In our Drilling Products segment, we expect a modest increase in international activities in the third quarter of 2024, as well as a seasonal recovery in Canada after the spring breakup. Revenue in the United States is expected to decline slightly due to a lower industry rig count.
Previous report
We believe we can deliver capital efficient growth over the near-term beyond our expected recovery in the rig count, including through wellsite integration and power distribution.
Previous report
Completion services revenues and direct operating costs decreased primarily due to lower activity.
Previous report
Revenues and direct operating costs were relatively flat between sequential quarters.
Previous report
Capital expenditures increased primarily related to incremental spending in our oilfield rentals business.
Previous report
(2)Adjusted gross margin is defined as revenues less direct operating costs (excluding depreciation, amortization and impairment expense). See Non-GAAP Financial Measures below for a reconciliation of GAAP gross margin to adjusted gross margin by segment.
Previous report
(2)Adjusted gross margin is defined as revenues less direct operating costs (excluding depreciation, amortization and impairment expense). See Non-GAAP Financial Measures below for a reconciliation of GAAP gross margin to adjusted gross margin by segment.
Previous report
(1)Adjusted gross margin is defined as revenues less direct operating costs (excluding depreciation, amortization and impairment expense). See Non-GAAP Financial Measures below for a reconciliation of GAAP gross margin to adjusted gross margin by segment.
Previous report
The results of our drilling products segment reflect the operations of our Ulterra acquisition, which closed on August 14, 2023. As such, there were no comparable results for the six months ended June 30, 2023.
Previous report
(1)Adjusted gross margin is defined as revenues less direct operating costs (excluding depreciation, depletion, amortization and impairment expense). See Non-GAAP Financial Measures below for a reconciliation of GAAP gross margin to adjusted gross margin by segment.
Previous report
Merger and integration expense increased due to the NexTier merger and the Ulterra acquisition. The increase was primarily attributable to compensation associated with severance and retention payments.
Previous report
During the second quarter of 2024, we lowered our expectations with respect to near-term future activity levels in certain of our operating segments. This decline was deemed a triggering event that warranted a quantitative assessment for goodwill impairment.
Previous report
The forecast for the completion services reporting unit assumes lower activity in 2024 compared to 2023 exit levels and increases in activity of 7% to 9% beginning in 2025 through 2027, which was based on rig count forecasts in the second quarter and estimated market share. A sustained decrease in oil prices and rig count could negatively affect the key assumptions used in our goodwill assessment for completion services.
Reworded paragraphs (50)
Previous wording
Our contract drilling business operates in the continental United States and internationally in Colombia and, from time to time, we pursue contract drilling opportunities in other select markets. We also provide a comprehensive suite of directional drilling services in most major producing onshore oil and natural gas basins in the United States, and we provide services that improve the statistical accuracy of wellbore placement for directional and horizontal wells. We also service and re-certify equipment for drilling contractors, and we provide electrical controls and automation to the energy, marine and mining industries, in North America and other select markets.
Current wording
Our contract drilling business operates in the continental United States and internationally in South America and, from time to time, we pursue contract drilling opportunities in other select markets. We also provide a comprehensive suite of directional drilling services in most major producing onshore oil and natural gas basins in the United States, and we provide services that improve the statistical accuracy of wellbore placement for directional and horizontal wells. We also service and re-certify equipment for drilling contractors, and we provide electrical controls and automation to the energy, marine and mining industries, in North America and other select markets.
Previous wording
We have addressed our customers’ needs for drilling horizontal wells in shale and other unconventional resource plays by improving the capabilities of our drilling fleet. The U.S. land rig industry has in recent years referred to certain high specification rigs as “super-spec” rigs, which we consider to be 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. Due to evolving customer preferences, we refer to certain premium rigs as “Tier-1, super spec” rigs, which we consider as being a super-spec rig that also has a third mud pump and raised drawworks that allows for more clearance underneath the rig floor. As of June 30, 2024, our rig fleet included 173 super-spec rigs, of which 131 were Tier-1, super-spec rigs.
Current wording
We have addressed our customers’ needs for drilling horizontal wells in shale and other unconventional resource plays by improving the capabilities of our drilling fleet. The U.S. land rig industry has in recent years referred to certain high specification rigs as “super-spec” rigs, which we consider to be 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. Due to evolving customer preferences, we refer to certain premium rigs as “Tier-1, super spec” rigs, which we consider as being a super-spec rig that also has a third mud pump and raised drawworks that allows for more clearance underneath the rig floor. As of September 30, 2024, our rig fleet included 134 Tier-1, super-spec rigs.
Previous wording
Recent Developments in Market Conditions and Outlook — Commodity price volatility in the second quarter of 2023 resulted in a decline in industry activity; commodity prices subsequently increased during the third quarter before declining in the fourth quarter of 2023. Oil prices increased during the first quarter of 2024 and moderately fluctuated during the second quarter of 2024. While natural gas prices declined significantly during the first quarter of 2024, natural gas prices increased slightly during the second quarter of 2024. The current demand for equipment and services remains dependent on macro conditions, including commodity prices, geopolitical environment, inflationary pressures, economic conditions in the United States and elsewhere, as well as customer consolidation and focus by exploration and production companies and service companies on capital returns. Oil prices reached a low of $74.27 per barrel and averaged $81.81 per barrel in the second quarter of 2024, as compared to $77.50 per barrel in the first quarter of 2024. Natural gas prices (based on the Henry Hub Spot Market Price) averaged $2.07 per MMBtu in the second quarter of 2024 as compared to an average of $2.31 per MMBtu in the first quarter of 2024.
Current wording
Recent Developments in Market Conditions and Outlook — Commodity price volatility in the second quarter of 2023 resulted in a decline in industry activity; commodity prices subsequently increased during the third quarter before declining in the fourth quarter of 2023. Oil prices increased during the first quarter of 2024, moderately fluctuated during the second quarter of 2024 and declined in the third quarter of 2024. While natural gas prices declined significantly during the first quarter of 2024, natural gas prices increased slightly during the second quarter of 2024 and moderately fluctuated during the third quarter of 2024. The current demand for equipment and services remains dependent on macro conditions, including commodity prices, geopolitical environment, inflationary pressures, economic conditions in the United States and elsewhere, as well as customer consolidation and focus by exploration and production companies and service companies on capital returns. Oil prices reached a low of $66.73 per barrel and averaged $76.43 per barrel in the third quarter of 2024, as compared to $81.81 per barrel in the second quarter of 2024. Natural gas prices (based on the Henry Hub Spot Market Price) averaged $2.11 per MMBtu in the third quarter of 2024 as compared to an average of $2.07 per MMBtu in the second quarter of 2024.
Previous wording
Our average active rig count in the United States for the second quarter of 2024 was 114 rigs. This was a decrease from our average active rig count for the first quarter of 2024 of 121. We expect our rig count in the United States will average approximately 108 rigs during the third quarter of 2024. Term contracts help support our operating rig count. Based on contracts in place in the United States as of July 24, 2024, we expect an average of 63 rigs operating under term contracts during the third quarter of 2024 and an average of 39 rigs operating under term contracts during the four quarters ending June 30, 2025.
Current wording
Our average active rig count in the United States for the third quarter of 2024 was 107 rigs. This was a decrease from our average active rig count for the second quarter of 2024 of 114. We expect our rig count in the United States will average approximately 106 rigs during the fourth quarter of 2024. Term contracts help support our operating rig count. Based on contracts in place in the United States as of October 23, 2024, we expect an average of 58 rigs operating under term contracts during the fourth quarter of 2024 and an average of 33 rigs operating under term contracts during the four quarters ending September 30, 2025.
Previous wording
We maintain a backlog of commitments for contract drilling services under term contracts, which we define as contracts with a duration of six months or more. Our contract drilling backlog in the United States as of June 30, 2024 was approximately $433 million. Approximately 6% of our total contract drilling backlog in the United States at June 30, 2024 is reasonably expected to remain at June 30, 2025. See Note 3 of Notes to unaudited condensed consolidated financial statements for additional information on backlog.
Current wording
We maintain a backlog of commitments for contract drilling services under term contracts, which we define as contracts with a duration of six months or more. Our contract drilling backlog in the United States as of September 30, 2024 was approximately $401 million. Approximately 9% of our total contract drilling backlog in the United States at September 30, 2024 is reasonably expected to remain at September 30, 2025. See Note 3 of Notes to unaudited condensed consolidated financial statements for additional information on backlog.
Previous wording
For the third quarter of 2024, we expect total capital expenditures of approximately $219 million.
Current wording
For the fourth quarter of 2024, we expect total capital expenditures of approximately $150 million.
Previous wording
Recent Developments in Business Combinations— On September 1, 2023, we completed our merger (the “NexTier merger”) with NexTier Oilfield Solutions Inc. (“NexTier”). Each share of common stock of NexTier issued and outstanding immediately prior to the effective time (including outstanding restricted shares) was converted into the right to receive 0.752 shares of our common stock, which based on the closing price of our common stock of $14.91 on September 1, 2023, valued the transaction at approximately $2.8 billion, including the assumption of debt. NexTier is a predominately U.S. land-focused oilfield service provider, with a diverse set of well completion and production services across a variety of active basins.
Current wording
On September 1, 2023, we completed our merger (the “NexTier merger”) with NexTier Oilfield Solutions Inc. (“NexTier”). Each share of common stock of NexTier issued and outstanding immediately prior to the effective time (including outstanding restricted shares) was converted into the right to receive 0.752 shares of our common stock, which based on the closing price of our common stock of $14.91 on September 1, 2023, valued the transaction at approximately $2.8 billion, including the assumption of debt. NexTier is a predominately U.S. land-focused oilfield service provider, with a diverse set of well completion and production services across a variety of active basins.
Previous wording
On August 14, 2023, we completed our acquisition (the “Ulterra acquisition”) of Ulterra Drilling Technologies, L.P. (“Ulterra”). Total consideration for the acquisition included the issuance of 34.9 million shares of our common stock and payment of approximately $373 million of cash (after purchase price adjustments), which based on the closing price of our common stock of $14.94 on August 14, 2023, valued the transaction at closing at approximately $895 million. Ulterra is a global provider of specialized drill bit solutions.
Current wording
On August 14, 2023, we completed our acquisition (the “Ulterra acquisition”) of Ulterra Drilling Technologies, L.P. (“Ulterra”). Total consideration for the acquisition included the issuance of 34.9 million shares of our common stock and payment of approximately $373 million of cash (after purchase price adjustments), which based on the closing price of our common stock of $14.94 on August 14, 2023, valued the transaction at closing at approximately $894 million. Ulterra is a global provider of specialized drill bit solutions.
Previous wording
As of June 30, 2024, we had no borrowings outstanding under our revolving credit facility. We had $2.3 million in letters of credit outstanding under the Credit Agreement at June 30, 2024 and, as a result, had available borrowing capacity of approximately $613 million at that date.
Current wording
As of September 30, 2024, we had no borrowings outstanding under our revolving credit facility. We had $2.1 million in letters of credit outstanding under the Credit Agreement at September 30, 2024 and, as a result, had available borrowing capacity of approximately $613 million at that date.
Previous wording
For the three months ended June 30, 2024 and March 31, 2024 and the six months ended June 30, 2024 and 2023 our operating revenues consisted of the following (dollars in thousands):
Current wording
For the three months ended September 30, 2024 and June 30, 2024 and the nine months ended September 30, 2024 and 2023 our operating revenues consisted of the following (dollars in thousands):
Previous wording
Effective as of the third quarter of 2023, we revised our reportable segments to align with certain changes in how our Chief Operating Decision Maker (“CODM”) manages and allocates resources to our business as a result of the Ulterra acquisition and NexTier merger. We now have the following reportable business segments: (i) drilling services, (ii) completion services and (iii) drilling products. Accordingly, we recast our results of operations for the six months ended June 30, 2023 to align with our revised reportable segments.
Current wording
Effective as of the third quarter of 2023, we revised our reportable segments to align with certain changes in how our Chief Operating Decision Maker (“CODM”) manages and allocates resources to our business as a result of the Ulterra acquisition and
Previous wording
Capital expenditures decreased primarily due to the timing of order placement and spending on committed deliveries that more heavily impacted the first quarter of 2024.
Current wording
Capital expenditures increased primarily due to the timing of order placement and spending on committed deliveries that more heavily impacted the third quarter of 2024.
Previous wording
Capital expenditures decreased due to the timing of order placement and spending on committed deliveries that more heavily impacted the first quarter of 2024.
Current wording
Capital expenditures increased due to the timing of order placement and spending on committed deliveries.
Previous wording
Depreciation, depletion, amortization and impairment decreased primarily due to a $5.8 million impairment recorded in our oil and natural gas business during the six months ended June 30, 2023.
Current wording
Depreciation, depletion, amortization and impairment decreased primarily due to a $3.4 million impairment recorded in our oil and natural gas properties business during the third quarter of 2024.
Previous wording
The following tables summarize results of operations by business segment for the six months ended June 30, 2024 and June 30, 2023:
Current wording
The following tables summarize results of operations by business segment for the nine months ended September 30, 2024 and September 30, 2023:
Previous wording
Total revenues and direct operating costs decreased primarily due to a decrease in operating days in our contract drilling business within the United States. Average revenue and direct operating costs per operating day were relatively flat between sequential quarters.
Current wording
Total revenues and direct operating costs decreased primarily due to a decrease in operating days in our contract drilling business within the United States. Average revenue per operating day remained relatively flat while average direct operating costs per operating day increased. The decline in operating days impacted the fixed cost leverage for U.S. drilling rigs during the nine months ended September 30, 2024.
Previous wording
Capital expenditures decreased primarily due to reduced investment in our ancillary drilling services not included within our contract drilling business.
Current wording
Capital expenditures decreased primarily due to reduced investment in our ancillary drilling services not included within our contract drilling business and timing of order placement.
Previous wording
The changes for the six months ended June 30, 2024 as compared to June 30, 2023 can be primarily attributed to the NexTier merger, which closed on September 1, 2023. The NexTier merger had a material impact on our reported results of operations. The results for the six months ended June 30, 2024 represent the combination of the well completion business from the NexTier merger and our legacy pressure pumping business. Due to the full integration of our legacy pressure pumping business into the NexTier legal entity in the first quarter of 2024, we are unable to provide a meaningful year-over-year comparison excluding the impact of the NexTier merger.
Current wording
The changes in the results of our completion services segment for the nine months ended September 30, 2024 as compared to September 30, 2023 can be primarily attributed to the NexTier merger, which closed on September 1, 2023. The NexTier merger had a material impact on our reported results of operations. The results for the nine months ended September 30, 2024 represent the combination of the well completion business from the NexTier merger and our legacy pressure pumping business. Due to the full integration of our legacy pressure pumping business into the NexTier legal entity in the first quarter of 2024, we are unable to provide a meaningful year-over-year comparison excluding the impact of the NexTier merger.
Previous wording
Direct operating costs and depreciation, amortization and impairment were approximately $1.5 million and $3.2 million higher than they would have otherwise been for the three months ended June 30, 2024, respectively, as a result of the step up to fair value of our drill bits in accordance with purchase accounting. For the three months ended March 31, 2024, direct operating costs and depreciation, amortization and impairment were approximately $2.2 million and $5.8 million higher, respectively, as a result of the step up to fair value of our drill bits.
Current wording
Direct operating costs and depreciation, amortization and impairment were approximately $4.8 million and $11.6 million higher than they would have otherwise been for the nine months ended September 30, 2024, respectively, as a result of the step up to fair value of our drill bits in accordance with purchase accounting. Direct operating costs and depreciation, amortization and impairment were approximately $6.4 million and $7.4 million higher than they would have otherwise been for the nine months ended September 30, 2023, respectively, as a result of the step up to fair value of our drill bits in accordance with purchase accounting.
Previous wording
Our effective income tax rate for the six months ended June 30, 2024 was 37.4%, compared with 15.6% for the six months ended June 30, 2023. The higher effective income tax rate for the six months ended June 30, 2024 was primarily attributable to the impact of valuation allowances on deferred tax assets between periods, as well as the impact of permanent differences against earnings between periods.
Current wording
Our effective income tax rate for the three months ended September 30, 2024 was 3.0%, compared with 60.5% for the three months ended June 30, 2024. The difference in effective income tax rates between the periods was primarily attributable to the impact of permanent differences against earnings between periods.
Previous wording
Our effective income tax rate for the three months ended June 30, 2024 was 60.5%, compared with 27.9% for the three months ended March 31, 2024. The higher effective income tax rate for the six months ended June 30, 2024 was primarily attributable to the impact of valuation allowances on deferred tax assets between periods, as well as the impact of permanent differences against earnings between periods.
Current wording
Our effective income tax rate for the nine months ended September 30, 2024 was (0.8)%, compared with 13.9% for the nine months ended September 30, 2023. The difference in effective income tax rates between the periods was primarily attributable to the impact of valuation allowances on deferred tax assets between periods, as well as the impact of permanent differences against earnings between periods.
Previous wording
Our primary sources of liquidity are cash and cash equivalents, availability under our revolving credit facility and cash provided by operating activities. As of June 30, 2024, we had approximately $428 million in working capital, including $75 million of cash and cash equivalents, and approximately $613 million available under our revolving credit facility.
Current wording
Our primary sources of liquidity are cash and cash equivalents, availability under our revolving credit facility and cash provided by operating activities. As of September 30, 2024, we had approximately $444 million in working capital, including $115 million of cash and cash equivalents, and approximately $613 million available under our revolving credit facility.
Previous wording
Equipment Loans may be drawn in multiple tranches, with each loan evidenced by a separate promissory note. The Master Agreement and the Equipment Loans contain customary affirmative and negative covenants, including limitations on further encumbrance of the collateral other than the applicable loans under the Master Agreement. We were in compliance with these covenants at June 30, 2024. The Equipment Loans bear interest at a rate of 5.25% per annum, and we pay interest on the 1 st of each month. The Equipment Loans will mature on June 1, 2025.
Current wording
As part of the NexTier merger, we assumed the obligations of NexTier Completions Solutions Inc. (“NCS”) under a Master Loan and Security Agreement (as amended, the “Master Agreement”) with Caterpillar Financial Services Corporation. The Master Agreement allows NCS to enter into secured equipment financing term loans from time to time (the “Equipment Loans”). The Equipment Loans may be drawn in multiple tranches, with each loan evidenced by a separate promissory note. The Master Agreement and the Equipment Loans contain customary affirmative and negative covenants, including limitations on further encumbrance of the collateral other than the applicable loans under the Master Agreement. We were in compliance with these covenants at September 30, 2024. The Equipment Loans bear interest at a rate of 5.25% per annum, and we pay interest on the 1 st of each month. The Equipment Loans will mature on June 1, 2025.
Previous wording
On March 16, 2015, we entered into a Reimbursement Agreement (the “Reimbursement Agreement”) with The Bank of Nova Scotia (“Scotiabank”), pursuant to which we may from time to time request that Scotiabank issue an unspecified amount of letters of credit. As of June 30, 2024, we had $43.8 million in letters of credit outstanding under the Reimbursement Agreement.
Current wording
On March 16, 2015, we entered into a Reimbursement Agreement (the “Reimbursement Agreement”) with The Bank of Nova Scotia (“Scotiabank”), pursuant to which we may from time to time request that Scotiabank issue an unspecified amount of letters of credit. As of September 30, 2024, we had $35.9 million in letters of credit outstanding under the Reimbursement Agreement.
Previous wording
We had $48.0 million of outstanding letters of credit at June 30, 2024, which was comprised of $43.8 million outstanding under the Reimbursement Agreement, $2.3 million outstanding under the Credit Agreement, and $1.9 million outstanding with financial institutions providing for short-term borrowing capacity, overdraft protection and bonding requirements. We maintain these letters of credit primarily for the benefit of various insurance companies as collateral for retrospective premiums and retained losses which could become payable under terms of the underlying insurance contracts and compliance with contractual obligations. These letters of credit expire annually at various times during the year and are typically renewed. As of June 30, 2024, no amounts had been drawn under the letters of credit. As of June 30, 2024, we had $35 million in surety bond exposure issued as financial assurance on an insurance agreement.
Current wording
We had $40.0 million of outstanding letters of credit at September 30, 2024, which was comprised of $35.9 million outstanding under the Reimbursement Agreement, $2.1 million outstanding under the Credit Agreement, and $1.9 million outstanding with financial institutions providing for short-term borrowing capacity, overdraft protection and bonding requirements. We maintain these letters of credit primarily for the benefit of various insurance companies as collateral for retrospective premiums and retained losses which could become payable under terms of the underlying insurance contracts and compliance with contractual obligations. These letters of credit expire annually at various times during the year and are typically renewed. As of September 30, 2024, no amounts had been drawn under the letters of credit. As of September 30, 2024, we had $35.0 million in surety bond exposure issued as financial assurance on an insurance agreement.
Previous wording
Our outstanding long-term debt at June 30, 2024 was $1.2 billion and consisted of $483 million of our 2028 Notes, $345 million of our 2029 Notes, $400 million of our 2033 Notes and $12.6 million of our Equipment Loans. We were in compliance with all covenants under the associated agreements and indentures at June 30, 2024.
Current wording
Our outstanding long-term debt at September 30, 2024 was $1.2 billion and consisted of $483 million of our 2028 Notes, $345 million of our 2029 Notes, $400 million of our 2033 Notes and $9.5 million of our Equipment Loans. We were in compliance with all covenants under the associated agreements and indentures at September 30, 2024.
Previous wording
A portion of our capital expenditures can be adjusted and managed by us to match market demand and activity levels. For the third quarter, we expect total capital expenditures of approximately $219 million.
Current wording
A portion of our capital expenditures can be adjusted and managed by us to match market demand and activity levels. For the fourth quarter, we expect total capital expenditures of approximately $150 million.
Previous wording
We anticipate $41.1 million of expenditures for the remainder of 2024 related to various contractual obligations such as certain commitments to purchase proppants and lease liabilities.
Current wording
We anticipate $16.5 million of expenditures for the remainder of 2024 related to various contractual obligations such as certain commitments to purchase proppants and lease liabilities.
Previous wording
During the six months ended June 30, 2024, our sources of cash flow included:
Current wording
During the nine months ended September 30, 2024, our sources of cash flow included:
Previous wording
•$563 million from operating activities, and
Current wording
•$860 million from operating activities, and
Previous wording
•$9.3 million in proceeds from the disposal of property and equipment.
Current wording
•$14.7 million in proceeds from the disposal of property and equipment.
Previous wording
During the six months ended June 30, 2024, our uses of cash flow included:
Current wording
During the nine months ended September 30, 2024, our uses of cash flow included:
Previous wording
•$357 million to make capital expenditures for the betterment and refurbishment of drilling services and completion services equipment and, to a much lesser extent, equipment for our other businesses, to acquire and procure equipment to support our drilling services, completion services, drilling products, and other operations,
Current wording
•$538 million to make capital expenditures for the betterment and refurbishment of drilling services and completion services equipment and, to a much lesser extent, equipment for our other businesses, to acquire and procure equipment to support our drilling services, completion services, drilling products, and other operations,
Previous wording
•$230 million for repurchases of our common stock,
Current wording
•$270 million for repurchases of our common stock,
Previous wording
•$64.4 million to pay dividends on our common stock, and
Current wording
•$95.6 million to pay dividends on our common stock, and
Previous wording
•$31.9 million for finance lease payments.
Current wording
•$36.6 million for finance lease payments.
Previous wording
We paid cash dividends during the six months ended June 30, 2024 as follows:
Current wording
We paid cash dividends during the nine months ended September 30, 2024 as follows:
Previous wording
In September 2013, our Board of Directors approved a stock buyback program. In February 2024, our Board of Directors approved an increase of the authorization under the stock buyback program to allow for an aggregate of $1.0 billion of future share repurchases. All purchases executed to date have been through open market transactions. Purchases under the buyback program are made at management’s discretion, at prevailing prices, subject to market conditions and other factors. Purchases may be made at any time without prior notice. There is no expiration date associated with the buyback program. As of June 30, 2024, we had remaining authorization to purchase approximately $819 million of our outstanding common stock under the stock buyback program. Shares of stock purchased under the buyback program are held as treasury shares.
Current wording
In September 2013, our Board of Directors approved a stock buyback program. In February 2024, our Board of Directors approved an increase of the authorization under the stock buyback program to allow for an aggregate of $1.0 billion of future share repurchases. All purchases executed to date have been through open market transactions. Purchases under the buyback program are made at management’s discretion, at prevailing prices, subject to market conditions and other factors. Purchases may be made at any time without prior notice. There is no expiration date associated with the buyback program. As of September 30, 2024, we had remaining authorization to purchase approximately $780 million of our outstanding common stock under the stock buyback program. Shares of stock purchased under the buyback program are held as treasury shares.
Previous wording
Treasury stock acquisitions during the six months ended June 30, 2024 were as follows (dollars in thousands):
Current wording
Treasury stock acquisitions during the nine months ended September 30, 2024 were as follows (dollars in thousands):
Previous wording
(1)We withheld 1,146,823 shares during the six months ended June 30, 2024 with respect to employees’ tax withholding obligations upon the vesting of restricted stock units. These shares were acquired at fair market value. These acquisitions were made pursuant to the terms of the Patterson-UTI Energy, Inc. 2021 Long-Term Incentive Plan, as amended, the NexTier Oilfield Solutions Inc. Equity and Incentive Award Plan and the NexTier Oilfield Solutions Inc. (Former C&J Energy) Management Incentive Plan and not pursuant to the stock buyback program.
Current wording
(1)We withheld 1,202,720 shares during the nine months ended September 30, 2024 with respect to employees’ tax withholding obligations upon the vesting of restricted stock units. These shares were acquired at fair market value. These acquisitions were made pursuant to the terms of the Patterson-UTI Energy, Inc. 2021 Long-Term Incentive Plan, as amended, the NexTier Oilfield
Showing the first 40 of 50 pairs. Open the source sections for the rest.
Rearranged current paragraphs (6)
Current report — wording carried from elsewhere
NexTier merger. We now have the following reportable business segments: (i) drilling services, (ii) completion services and (iii) drilling products.
Current report — wording carried from elsewhere
(2)Adjusted gross profit is defined as revenues less direct operating costs (excluding depreciation, amortization and impairment expense). See Non-GAAP Financial Measures below for a reconciliation of GAAP gross margin to adjusted gross profit by segment.
Current report — wording carried from elsewhere
(2)Adjusted gross profit is defined as revenues less direct operating costs (excluding depreciation, amortization and impairment expense). See Non-GAAP Financial Measures below for a reconciliation of GAAP gross margin to adjusted gross profit by segment.
Current report — wording carried from elsewhere
(1)Adjusted gross profit is defined as revenues less direct operating costs (excluding depreciation, amortization and impairment expense). See Non-GAAP Financial Measures below for a reconciliation of GAAP gross margin to adjusted gross profit by segment.
Current report — wording carried from elsewhere
(1)Adjusted gross profit is defined as revenues less direct operating costs (excluding depreciation, depletion, amortization and impairment expense). See Non-GAAP Financial Measures below for a reconciliation of GAAP gross margin to adjusted gross profit by segment.
Current report — wording carried from elsewhere
Solutions Inc. Equity and Incentive Award Plan and the NexTier Oilfield Solutions Inc. (Former C&J Energy) Management Incentive Plan and not pursuant to the stock buyback program.
Rearranged previous paragraphs (2)
Previous report — wording carried elsewhere
Direct operating costs and depreciation, amortization and impairment were approximately $3.8 million and $9.1 million higher than they would have otherwise been for the six months ended June 30, 2024, respectively, as a result of the step up to fair value of our drill bits in accordance with purchase accounting.
Previous report — wording carried elsewhere
As part of the NexTier merger, we assumed the obligations of NexTier Completions Solutions Inc. (“NCS”) under a Master Loan and Security Agreement (as amended, the “Master Agreement”) with Caterpillar Financial Services Corporation. The Master Agreement allows NCS to enter into secured equipment financing term loans from time to time (the “Equipment Loans”). The