Patterson-UTI Patterson-UTI Energy, Energy, Inc. Inc. Meetings Meetings With With Investors Investors March March 2012 2012 Exhibit 99.1 |
2 2 Forward Looking Statements This material and any oral statements made in connection with this material This material and any oral statements made in connection with this material include "forward-looking statements" within the meaning of the Securities Act of include "forward-looking statements" within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934. Statements made which provide 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 Company’s or management’s intentions, beliefs, expectations or predictions for the future are forward-looking statements and are inherently uncertain. The the future are forward-looking statements and are inherently uncertain. The opinions, forecasts, projections or other statements other than statements of opinions, forecasts, projections or other statements other than statements of historical fact, including, without limitation, plans and objectives of management 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 the Company are forward-looking statements. It is important to note that actual results could differ materially from those discussed in such forward-looking results could differ materially from those discussed in such forward-looking statements. Important factors that could cause actual results to differ materially statements. Important factors that could cause actual results to differ materially include the risk factors and other cautionary statements contained from time to 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 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 or the SEC. These filings are also available through the Company’s web Company’s web site at http://www.patenergy.com site at http://www.patenergy.com or through the SEC’s Electronic Data Gathering or through the SEC’s Electronic Data Gathering and and Analysis Analysis Retrieval Retrieval System System (EDGAR) (EDGAR) at at http://www.sec.gov. http://www.sec.gov. We We undertake undertake no no obligation to publicly update or revise any forward-looking statement. Statements obligation to publicly update or revise any forward-looking statement. Statements made in this presentation include non-GAAP financial measures. The required made in this presentation include non-GAAP financial measures. The required reconciliation to GAAP financial measures are included on our website and at the reconciliation to GAAP financial measures are included on our website and at the end of this presentation. end of this presentation. |
3 Presentation • • PTEN Overview PTEN Overview • • The Energy Environment The Energy Environment • • PTEN’s Land Drilling Business PTEN’s Land Drilling Business • • PTEN’s Well Stimulation Business PTEN’s Well Stimulation Business • • PTEN Investment Highlights PTEN Investment Highlights • • Conclusions Conclusions A Transformation in the Energy Industry… A Transformation in the Energy Industry… …A Transformation at PTEN |
4 Overview of Patterson-UTI Energy, Inc. • One of the “Big 3” US land drillers (drilling ~65% of total 2011 revenues) • One of the top pressure pumping companies in the US (pressure pumping ~33% of total 2011 revenues) • Substantial investment in new drilling and pressure pumping equipment • Strong history of creating shareholder equity • Trading at a substantial discount to both its historical valuation and its peers |
Changing Energy Environment 5 Source: US Energy Information Administration, Short-Term Energy Outlook, February 7, 2012 Decades of Declining US Crude Oil Production… Reversed in 2009 4.0 4.5 5.0 5.5 6.0 6.5 7.0 7.5 |
Changing Energy Environment 6 Source: US Energy Information Administration, Short-Term Energy Outlook, February 7, 2012 Petroleum Imports as a Percent of Total Consumption… More Demand Being Satisfied With US Production 0% 10% 20% 30% 40% 50% 60% 70% |
7 Changing Energy Environment – North America Land-Based Energy Unconventional drilling and well completion has Unconventional drilling and well completion has evolved: evolved: • • A “manufacturing” A “manufacturing” approach to drilling and approach to drilling and well completion well completion • • Focus on oil & liquids rich plays Focus on oil & liquids rich plays • • Unconventional drilling and well completion Unconventional drilling and well completion techniques being applied to historically techniques being applied to historically conventional basins conventional basins |
Changing Energy Environment – Changing Energy Environment – Land-Based Drilling Land-Based Drilling PTEN’s PTEN’s Drilling Drilling Business Business |
9 PTEN’s Drilling Business Preferred Rigs as of December 31, 2011 Preferred Rigs as of December 31, 2011 30 new rigs planned in 2012 30 new rigs planned in 2012 175 by the end of 2012 175 by the end of 2012 PTEN has more than 145 of these preferred rigs …and Expected as of December 31, 2012 …and Expected as of December 31, 2012 APEX 1500 APEX 1500 APEX 1000 APEX 1000 APEX Walking APEX Walking Total New Rigs Total New Rigs Other Electric Rigs Other Electric Rigs Class Class 38 38 13 13 40 40 91 91 54 54 12/31/2011 12/31/2011 61 61 15 15 45 45 121 121 54 54 12/31/2012 12/31/2012 TM TM TM TM TM TM |
10 PTEN’s Drilling Business 30 New Rigs expected to be added in 2012 30 New Rigs expected to be added in 2012 121 27 New APEX™ Rigs Have Significantly Increased Fleet Quality. 0 20 40 60 80 100 120 140 |
PTEN’s Drilling Business 11 Strong US Rig Count 2010 - Current 0 50 100 150 200 250 2009 2010 2011 |
12 PTEN’s Drilling Business • • Increasing focus on oil & liquids rich plays Increasing focus on oil & liquids rich plays – – Horizontal drilling techniques developed for shale gas have Horizontal drilling techniques developed for shale gas have been a “game changer” been a “game changer” for oil and liquids rich shales for oil and liquids rich shales – – Approximately 60% of PTEN operating rigs are drilling for oil Approximately 60% of PTEN operating rigs are drilling for oil or liquids or liquids – – “Fit-for-purpose” “Fit-for-purpose” rigs are very active in oil & liquids rich rigs are very active in oil & liquids rich plays, but not all oil & liquids rich plays require “fit-for- plays, but not all oil & liquids rich plays require “fit-for- purpose” purpose” rigs (i.e. Permian and Mississippi Lime) rigs (i.e. Permian and Mississippi Lime) • • Decreasing Dry Gas Exposure Decreasing Dry Gas Exposure – – Less than 30 rigs in the US drilling for dry gas under Less than 30 rigs in the US drilling for dry gas under contracts that are well-to-well or that have an initial term of contracts that are well-to-well or that have an initial term of less than one year less than one year – – Expect continued rig movement from dry gas to oil and Expect continued rig movement from dry gas to oil and liquids rich areas liquids rich areas |
13 PTEN’s Active Rigs in Unconventional Areas PTEN’s Active Rigs in Unconventional Areas as of February 2012 as of February 2012 Bakken Bakken Haynesville Haynesville Marcellus Marcellus Barnett Barnett 20 Rigs PTEN’s Drilling Business Eagle Ford Eagle Ford 5 Rigs 7 Rigs 27 Rigs 16 Rigs 28 Rigs 22 Rigs Niobrara Niobrara 1 Rig Utica Utica 4 Rigs Woodford 5 Rigs Woodford 5 Rigs Pinedale Piceance |
14 PTEN’s Drilling Business PTEN has designed three types of land rigs PTEN has designed three types of land rigs for these “new wells”: for these “new wells”: • • Each designed to meet customer demands in Each designed to meet customer demands in different markets different markets – – Each has specific applications for which it is “most suitable” Each has specific applications for which it is “most suitable” • • Significance: Significance: – – Drilling is an integral part of the well “manufacturing” Drilling is an integral part of the well “manufacturing” business business •Fast drilling and “speedy” •Fast drilling and “speedy” rig moves rig moves – – APEX Walking ™ APEX Walking ™ rigs and APEX 1000™ rigs and APEX 1000™ rigs provide access rigs provide access to certain “challenging well locations” to certain “challenging well locations” |
15 PTEN’s Drilling Business APEX 1000™ APEX 1500™ APEX Walking™ •1000 HP drawworks •Small footprint, big rig capability •Fast move & rig-up •Walking system is an optional feature •1500 HP drawworks •Great all purpose rig •Fast move & rig-up •Ideal for Eagle Ford, Barnett, and Haynesville •1000 to 2000 HP drawworks •Able to move in all directions •Able to “walk” with mast up and drill pipe/collars in the derrick •A leadership position in this “fit-for-purpose” rig category |
PTEN’s Drilling Business Video of Walking Rig Moving Video of Walking Rig Moving |
17 PTEN’s Drilling Business • • PTEN has approximately 180 other rigs in the PTEN has approximately 180 other rigs in the fleet of which approximately 100 are active fleet of which approximately 100 are active – – Major upgrade program has provided: Major upgrade program has provided: – – PTEN commitment to customers and service PTEN commitment to customers and service • • PTEN’s large fleet provides substantial PTEN’s large fleet provides substantial “upside” “upside” if drilling continues to increase if drilling continues to increase Major rig refurbishments Major rig refurbishments Enhanced mobility Enhanced mobility Iron roughnecks and other automation Iron roughnecks and other automation Improved mud systems Improved mud systems |
18 PTEN’s Drilling Business • • Long term contracts* Long term contracts* – – PTEN expects to average 120 rigs under term PTEN expects to average 120 rigs under term contract in 2012 including 131 in the first quarter contract in 2012 including 131 in the first quarter – – Approximately 60% of active rigs in the US are Approximately 60% of active rigs in the US are committed under term contracts committed under term contracts – – Term contracts have an initial duration of at least Term contracts have an initial duration of at least 12 months 12 months – – Provides estimated future dayrate drilling revenue Provides estimated future dayrate drilling revenue stream of approximately $1.8 billion for 2012 and stream of approximately $1.8 billion for 2012 and beyond beyond – – Continued customer interest in term agreements Continued customer interest in term agreements with PTEN with PTEN * As of February 4, 2012 * As of February 4, 2012 |
Changing Energy Environment – Changing Energy Environment – Well Stimulation Well Stimulation PTEN’s PTEN’s Pressure Pressure Pumping Pumping Business Business |
20 PTEN’s Pressure Pumping Business • • Changing Significance of Well Stimulation Changing Significance of Well Stimulation – – Shale and other unconventional plays changed the Shale and other unconventional plays changed the business business – – Changing equipment (“quints”) and crew Changing equipment (“quints”) and crew competencies competencies – – Key to unlocking long laterals and greatly increased Key to unlocking long laterals and greatly increased shale production shale production Substantial increases in horizontal completions Substantial increases in horizontal completions Increasing number of stages per well Increasing number of stages per well Substantially higher HP requirements Substantially higher HP requirements Higher pressures and higher volumes Higher pressures and higher volumes |
Southwest Region: 21 PTEN’s Pressure Pumping Business Northeast Region: Fracturing horsepower: 288,500 Other horsepower: 20,270 Frac Crews under contract : 3 Fracturing horsepower: 261,000 Other horsepower: 61,300 Frac Crews under contract: 2 A Significant Player in Growing Markets Approximately 155,000 HP under term contract 47% 53% Fracturing Horsepower |
22 Recent Investments in Pressure Pumping… …Have Increased Fleet Size and Quality PTEN’s Pressure Pumping Business 140,000 HP expected to be added in 2012 140,000 HP expected to be added in 2012 * Includes acquisition of pressure pumping assets from Key Energy 0 200 400 600 800 2006 2007 2008 2009 2010* 2011 2012E Fracturing Horsepower Other Horsepower Year End 771 65 |
23 Strong Growth in Pressure Pumping PTEN’s Pressure Pumping Business 2006 2007 2008 2009 2010 2011 146 203 217 161 351 846 2006 2007 2008 2009 2010 2011 55 79 62 29 103 267 Revenues ($MM) EBITDA ($MM) |
24 Service Intensity By Region Average Horsepower Per Well (000s HP)* PTEN’s Pressure Pumping Business *Source: Simmons & Company Equity Research 35 35 30 24 16 Eagle Ford Utica Marcellus Permian (Horizontal) Permian (Vertical) |
25 Increasing Service Intensity Eagle Ford Shale PTEN’s Pressure Pumping Business *Source: Simmons & Company Equity Research Frac Stages* 2008 2009 2010 2011E Leading Edge 11 15 17 18 32 2008 2009 2010 2011E Leading Edge 3,700 4,350 5,500 6,000 9,200 Lateral Length* |
26 Increasing Service Intensity Marcellus Shale PTEN’s Pressure Pumping Business *Source: Simmons & Company Equity Research 2009 2010 2011E Leading Edge 6 8 15 28 Frac Stages* 2009 2010 2011E Leading Edge 2,750 4,000 5,000 9,000 Lateral Length* |
PTEN’s Pressure Pumping Business More than two-thirds of fracturing More than two-thirds of fracturing horsepower is less than five years old horsepower is less than five years old PTEN Pressure Pumping Fleet by Age >10 Years 5 - 10 Years < 5 Years 12/31/2011 >10 Years 5 - 10 Years < 5 Years 12/31/2012E 27 |
PTEN Investment PTEN Investment Highlights Highlights |
29 PTEN Investment Highlights - Strategic Approach • • Concentrate on two core businesses Concentrate on two core businesses • • Plan to continue to grow organically Plan to continue to grow organically – – PTEN has the balance sheet and expected cash PTEN has the balance sheet and expected cash flow to support continued organic growth in both flow to support continued organic growth in both businesses businesses – – Acquisitions Acquisitions and and dispositions dispositions only only when when the the price price is is right right |
30 PTEN Investment Highlights Components of Components of Total Revenue Total Revenue EBITDA EBITDA Contract Drilling Contract Drilling 65% 65% Pressure Pressure Pumping Pumping 33% 33% Oil & Natural Oil & Natural Gas Gas 2% Segment ($ in 000’s) Segment ($ in 000’s) Contract Drilling Contract Drilling $690,395 $690,395 Pressure Pumping Pressure Pumping 266,719 266,719 Oil & Natural Gas Oil & Natural Gas 40,944 40,944 Corporate & Other Corporate & Other (34,596) (34,596) Discontinued Operations Discontinued Operations (576) (576) Total Total $962,886 $962,886 |
31 PTEN Investment Highlights • No equity sales in more than 11 years • History of returning capital to investors – Stock Buyback – Cash Dividend Total of $592 million in 2006 through 2008 Total of $592 million in 2006 through 2008 Initiated cash dividend in 2004 Initiated cash dividend in 2004 Quarterly dividend currently $0.05 per share Quarterly dividend currently $0.05 per share |
32 PTEN Investment Highlights • • Leading market position Leading market position – – One of the “Big 3” One of the “Big 3” US land drillers US land drillers – – One of the largest pressure pumping companies in the US One of the largest pressure pumping companies in the US – – Well positioned to grow organically and through Well positioned to grow organically and through opportunistic acquisition opportunistic acquisition • • Diverse asset base Diverse asset base – – Drilling rigs well-matched to customers’ Drilling rigs well-matched to customers’ needs needs – – Well stimulation assets that meet customers’ Well stimulation assets that meet customers’ needs needs • • Favorable industry trends Favorable industry trends – – Emerging shale and unconventional resource plays Emerging shale and unconventional resource plays – – US land drilling and pressure pumping are major US land drilling and pressure pumping are major beneficiaries of these trends beneficiaries of these trends |
33 PTEN Investment Highlights • • Flexible operating model Flexible operating model – – Maximizes earnings growth during periods of increased Maximizes earnings growth during periods of increased activity activity – – Minimizes costs during periods of low activity Minimizes costs during periods of low activity – – Strong cash flow generation Strong cash flow generation • • Strong management team Strong management team – – Prudent financial management Prudent financial management – – Operational management that is customer responsive Operational management that is customer responsive – – Proven track record through numerous cycles Proven track record through numerous cycles • • Strong financial position Strong financial position – – Low leverage Low leverage – – Adequate liquidity to meet medium-term growth and capex Adequate liquidity to meet medium-term growth and capex needs needs |
PTEN Investment Highlights 34 30 – 30 – 40% discount to both peers 40% discount to both peers and historical trading multiples and historical trading multiples Low valuation relative to both peers and historical trading multiples Source: Thomson One Financial 0.0 2.0 4.0 6.0 8.0 10.0 12.0 2007 2008 2009 2010 2011 2012 PTEN HP NBR |
PTEN Investment Highlights Growth in Shareholder Equity Growth in Shareholder Equity The Warren Buffett Standard The Warren Buffett Standard 35 0 500 1,000 1,500 2,000 2,500 3,000 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Thousands |
36 • • Favorable trends are likely to persist in North Favorable trends are likely to persist in North American oil and natural gas markets American oil and natural gas markets • • US Land Drilling and Pressure Pumping are major US Land Drilling and Pressure Pumping are major beneficiaries of the new trends beneficiaries of the new trends • • Patterson-UTI has the right assets: Patterson-UTI has the right assets: – – Drilling rigs well-matched to the customers’ Drilling rigs well-matched to the customers’ needs needs – – Well stimulation assets that meet customers’ Well stimulation assets that meet customers’ needs needs – – Operational management that is customer responsive Operational management that is customer responsive – – Prudent financial management Prudent financial management • • Long-term record of building shareholder equity Long-term record of building shareholder equity Conclusions |
Non-GAAP Financial Measures 37 Patterson-UTI Energy, Inc. EBITDA Reconciliation (dollars in thousands) 2011 2010 2009 2008 2007 2006 Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA): Net income (loss) $ 322,413 $ 116,942 $ (38,290) $ 347,069 $ 438,639 $ 673,254 Income tax expense (benefit) 187,938 72,856 (17,595) 193,490 229,350 360,639 Net interest expense (income) 15,465 11,098 3,767 (923) (164) (4,310) Depreciation, depletion, amortization and impairment 437,279 333,493 289,847 275,990 246,346 193,664 Cumulative effect of change in accounting principle - - - - - (687) Results of discontinued operations: Income tax expense (benefit) (209) (543) (2,208) 2,389 2,818 10,628 Net interest expense (income) - - - 7 (4) (13) Depreciation - 166 2,287 2,830 2,860 2,706 Impairment of assets held for sale - 2,155 1,900 - - - Impairment of goodwill - - - 9,964 - - EBITDA $ 962,886 $ 536,167 $ 239,708 $ 830,816 $ 919,845 $ 1,235,881 Total Revenue $ 2,565,943 $ 1,462,931 $ 781,946 $ 2,063,880 $ 1,986,096 $ 2,354,228 EBITDA Margin (EBITDA/Total Revenue) 37.53% 36.65% 30.66% 40.26% 46.31% 52.50% |