PTEN - Earnings call transcript Q1 2019 | Patterson-UTI Energy, Inc.

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Operator

Good morning. My name is Melissa, and I will be your conference operator today. At this time I would like to welcome everyone to the Patterson-UTI Energy First Quarter 2019 Earnings Conference Call. [Operator Instructions] Thank you. Mr. of you President your Vice Drickamer, Investor begin Relations conference. Mike

Mike Drickamer

are conference management's in call company's release and opening discuss made to These on on call. our predictions remarks. XXXX, Private of now, Melissa. XXXX, some financial Chief you pleasure through quick measures These the Patterson-UTI to statements The forward-looking and today's as included GAAP of obligation within first call Good publicly Chairman; the Participating you, forward-looking beliefs, contacting Smith, The www.patenergy.com, Mark it's SEC. Hendricks, for The of to the statement. made suggested may plans, update obtained to XX, for behalf Act company XXXX. in for Mark revise ended the filing such be in the disclosed U.S. company's today's of or that conference company this call March materially over quarter from risks reminder intentions, the and to required and by no company's morning. financial through the with Report call will turn welcome are and Thank Andy subject in conference call website uncertainties SEC's in expectations that those to in the Siegel Chief the measures. A other this the And could include future company's of Securities the statements state the the any uncertainties Executive Financial statements Act and XXXX. forward-looking Annual issued non-GAAP Securities what actual and company available filings EDGAR and to Mark? or the Litigation undertakes this results expects. the Officer. And Securities like Statements cause differ Energy, Reform are press or conference to risks SEC, XX-K System. statements on are Siegel, to Exchange be company's forward-looking results my prior SEC the or the company's website, of Andy reconciliations I'd meaning Form Act Officer;

Mark Siegel

Thanks and the quarter to conference call Patterson-UTI's Mike. Good of first morning welcome for XXXX.

join as will call operational Andy's March We the Smith Hendricks, ended over the over as to you closing who well are call call results our I review outlook. financial pleased turn could then turning remarks questions. some will the and Andy? on the over This Andy today. He our to turn us Andy comments, will the will After to for who morning quarter comments highlights, will I share provide some before XX.

Andrew Smith

Thanks Mark.

the loss forth this of million. we net first a $XX.X for set earnings per million. reported Consolidated issued million release for morning of EBITDA in press $XXX first on quarter or revenues $XXX the was adjusted $X.XX As our quarter share

which Given million million we represents of of our the beginning repurchases X.X% buy of total XXXX. million outstanding In XX.X open shares $XXX of in we the on were year. repurchase or market of the end spent the at XXXX, since million have X.X% the share beginning the during that of to first market opportunistically stock share the our back X.X at accelerated $XX common and conditions outstanding shares shares of quarter the invested

share repurchase particularly repurchase we significantly when authorization. will is our to under had our million approximately opportunities stock XX, At March evaluate our We $XXX remaining shares feel continue to undervalued. we

buybacks share paid the dividends to the in million of addition we also $X.X quarter. In

we for expenditures upgrades buybacks balance totaled and from capital Cash and completed the no remained $XXX revolver during $XXX million million first rig million, have dividends undrawn We the a XX first XX.X%. Our the of this of major remains two $XXX our quarter, fourth additional balance major ratio than down million sheet million remains first quarter. at cash upgrades planned time. the quarter in our quarter $XXX with improved net-debt-to-capital strong. Even $XX more March and rig share at after to modestly in levered combined

our we cash not of during maintaining call. the disposals older of we are from from offsetting million the include receipt asset towards cash you proceeds forecast sales XXXX CapEx quarter capital estimates. your We expected this million sales. year do our for our in $XXX fairly fourth regular first suspect asset we $X cash of million many that I assets, flow of of out generated of in laid Last of and quarter $XX generated as Partially from expenditures

Given of to our older the and fleet pumping limited asset our utilities on equipment. rigs focus super-spec has new of technology, pressure some

As the facility offset partially we assets and equipment the these to of an expenditures continue needs, capital efficient review sale our be to operate our continue business. way to to needed

be million, rate call expected $XXX $XX SG&A XX%. approximately be For approximately is I'll our the that, expected expense be turn the to expected to now Andy effective Hendricks. and depreciation million. to to quarter With second over tax is is

William Hendricks

count the Thanks first as oil In prices of slowed reaction in fourth rigs, during drop decrease the Andy. activity last rigs eight contract averaged sharp customers XXX a quarter late to year. drilling the quarter from our rig in

operating offsetting revenue more a than the to average increase per day. first per average day rig rig in increased $XX,XXX costs During quarter, $XXX $XXX

As months average we place, dayrates contracts had average per of in the At margin highest since term rigs rig an operating term at a increased XX currently XXXX. quarter XX, of providing of day to March for result, early our contracts under XX for XXX we rigs contracts $XXX during ending operating contracts average day the XX, per margin average drilling approximately March term rig on expect second during rigs under an future $X,XXX drilling $XXX million XXXX. Based revenue.

been delaying contract high to plans have oil customers have higher to prices incremental Higher rigs. Turning rig yet pick subdued to our remains up now which drilling as not demand outlook. spec translated

the rig for the is near second in we WTI it in decline our the expect term Therefore recognize mid-XXXs. further quarter counterintuitive mid-XXs, count this with quarter, fully rig we bottoming the expect our in will I private XX%, rigs While that our to for XXX expect over rig quarter similar we With first with per quarter upside some the count average second will to from operators. be day potential approximately margin super-spec average levels. utilization

pressure to now pumping. Turning

as combination affected reduced to As at activity first the which revenues expected, costs quarter fourth spreads choose first first compared of in and XX the slowed the The cash lower decreased reduce lower pricing to $XXX We and million. completion activity active active of ended the spreads quarter quarter. quarter to to flow. XX the with we end in improved

expectations. to and However as profit helped efficiencies quarter efforts million improve our reduce gross $XX.X costs internal first in of exceeded our margin the

less efficiency only an quarter average count terms total with per In increased we XX% are the actual by the decreased first spread us expected margin a remain pressure rents for generate active. second number leaving gross space similar spread believe or at pursuing spreads the currently pricing we is equipment pumping revenue internal quarter X%. chose With as profit decreased good are disciplined to stage of not of three quarter by additional use the spreads on the first here of stage in capital. work the while been to and that total we our We XX%, idle by quarter, the levels. white low our XX sequentially and selective count second our in incurring expect as levels Early spreads we in have to

of a greater combination remain pricing challenged, focused profitability While on internal we pressure cost and through improving remains pumping reductions. efficiencies

included industry levels algorithms. by activity guidance, first parent-child highlight the our million expenses $XX this fourth automated minute improving team's operators and based position analytics Turning Superior margin million as quarter I and placement quarter correction navigation, In the maintenance for increasing We relative is despite from like well-to-well the well-bored seeing to take control position horizontal is downhole recalculating the rentals. of as we the Directional of reduced directional for million segment. within the using increased on well now quarter. drilling, revenues where a interest compared focus an would system. more QC techniques. drilling to standard experience $X.X automated accuracy expectations. enhanced communications, to which QC on an service and a to $X.X in directional improving decreasing improves as third-party in drilling service are well drilling error wells drilling. data of this our Gross field service we the With repairs the focus Superior understanding during data profit the prefer surveying spacing in well the margin extensive first to exceeded in improves on well's of accurate increased designing

still relatively is our from a financial growing it contribution QC business. fast Superior While low, is

business data this help analytics production. encouraged business minimize prospects it's just drilling that the jobs directional improve are service beyond this goes frac and drilling used frac better and our to in design order We hits to of as and

revenues margins market terms the equates quarter, despite first profitability million mid-teens segment of the quarter as a of gross improving drilling to demonstrates positive and in For to profit this revenue which revenues we similar conditions. of second margin gross This of gross in expect with the percentage $XX level. tough directional a step level the the profit profit

compared our of technology during E&P operations to during With prior call quarter the to percentage a our now second remarks. quarter. rental $XX.X quarter results revenues Mark other million in as Turning financial for concluding first Revenues XX.X% quarter. fourth to to his was $XX.X the to the first million be quarter Gross our our I we were will business, the In which compared includes businesses, business. and margin expect to turn similar XX.X% the quarter. first the back that, the in

Mark Siegel

less the oil the the been I surprising. quarter, in prices It of both activity appears were Last the and as oil and forecast speed In some Andy. terms prices the had almost the that in the decrease in Thanks fourth recovery than late has speed XXXX. quarter quarter decline. surprising decrease much will the magnitude in drilling in be of of commented and completion severe magnitude that first now

At sector. the restrained conviction we opportunities more we our with is meet for pumping tightening While the efficient how comfortable oil investment Patterson-UTI focus many capital focused capital at did mid-XXs, current fleets on for which pressure allocation while in have the and we the we are on time the returns all that energy question drilling attract asking is spending and focused investing in of share we believe hurdles, and years. prices unwarranted. held our many We were remained have when positive not have same the the back and industry conviction we a investors into feel do

leading of new the for market. the both not is $XXX to expenditures For spending which cash shareholders capital in approximately more quarter we XXXX, million have to capital stock is to for us. shareholders. Since We and for levels. current to the to flow than that we XXXX pressure $XX expectation of This generation increase drilling returning our including spending and first while shareholders Returning been than Patterson million the strengthening dividends. In XXXX, we the returned below is Since billion pumping have in XXXX, million reduction UTI well-positioned have share fleets. $X.X and returned repurchases of to we are quarter believe capital XX% we our through first $XXX alone, returned capital and quality merger of shareholders more shareholders repurchases. growing the

such I'm of in company. XXXX pleased on commend its women We market of paid dividend today XX, sheet be strength stock XXXX. leverage I up have to $X.XX to a company With always to continuing the share would as make and X allowed call June We like now thank prudently your has declared hard-working holders announce on questions. common to Operator, respond like who men we efforts. open of the this cash used to June appreciate opportunities. both for and that, per the to the record us of would and quarterly balance

Operator

Securities. UBS [Operator Instructions] from of from comes line the Your Sasha first question Sanwal

Your open. line is

Sasha Sanwal

in notification on kind customer the conversations? rig of mid-XXXs period, second some of you can drilling the just in give thoughts count on QX of XXXX color kind half start to of in guidance any visibility your bottoming Maybe early the day the more and the count given the typical us XX off rig given

William Hendricks

in that second But the end year second quarter the count the will So recent of time see really our current of they our WTI. of And still rig we terms to bottom is the do delaying increasing in made somewhere the given sentiment understand trying we've may last quarter plans lot in in spent mid-XXXs. that in have customers activity. are even a early what customers' run-up towards the maybe

quarter of earlier, view faster the that today, we as there. So have And I who XXX from does our on public QX of may rig out the mentioned upside bottom decisions private be the operators count. appear the from second some for are average some think of the than to do we operators make some especially

Sasha Sanwal

at drilling, thoughts how on maybe to margins specifically of margin given to sticking rigs margin get progression kind the lower about think lower for year spec well? the been of that play of kind rig maybe And as kind released some into returning your kind as from essentially can well the as as we closer rigs, we of have presumably that of normalized costs, remainder of

William Hendricks

encouraged set any especially the are And now you we very right visibility look since progressions high we it's new any is today. XXXX. WTI our that past trading margins pleased second encouraged current in QX by difficult a to rig but get at have where and if half, Well, are

Operator

question James. next Adkins comes from from line Your of Raymond the Marshall

open. is line Your

Marshall Adkins

pack we returns efficiencies it all deteriorating focus pressure pumping, capital the return like seems you a meaningfully First in On on I in improved you think are your all of environment. of guys regard. on that applaud activity pretty and leading

think you you're you minute of pressure or doing pumping? than telling things where in could spend to Andy So stock to the us changed have do a better how I differently able what just most

William Hendricks

give to pressure of the our field teams to the need pumping credit in I working Well there.

out And things the doing activity or we've been in are decisions. for changed. this margins teams the in the activities pace have the hard. to able They've very the even faster changes a challenging making been quarter are at is working But Our second that scaled improve right that a they right than there market.

those we are And down. around various handle so our getting We're costs. working

you still to continue per per down improvement. spread. more at the those as And uptime there's work see producing our the we're can for on we're month, stages and per same time, quarter We some more And room stages improving spreads.

Marshall Adkins

stack looking what out at So them. you're us there. you have you few a Help metrics before understand fleets activate

What your those you like better on million operations an basis of $X.X fleet look to be EBITDA to looking at than You ones? going of seems cash kind was annualized per maybe breakeven. fleet which reactivate other are be to

William Hendricks

are we than better breakeven. we see cash certainly fluids knows in. Well our that margins capitalize Everybody that do

lower CapEx However, so far on this should quarter and projects throughout the year it fluid show that be spend year. was our than year this last in

and CapEx do understand the in the terms maintenance on have in. Our different materials. a spend different that but of to started stainless half, have over on going have teams on the upside on is in side to done this fluid that there also ways job. to some conversion found testing we're which just Not field stainless year repairs you're we we our bit last a and trying we and think But earlier the which and too teams designs great complex our

we we're that of this out feel business. cash free So do producing confident flow

though yet. But drilling potential it's our levels getting in just trading quarter-on-quarter. sense. are For it amount quarter. is rates visibility later we internal us again And flat changing by we the see hurdle see today's have rig, see relatively we that where in own don't WTI market encouraged activity but increasing financials of We where we don't we to year our and second the just have flat of in don't makes relatively activity similar the might to that and

Marshall Adkins

Or the - Is at to depending though type on is looking a kind more thing? them it customer put market back? just of that you're the increasing hurdle type of and rate specific there of that

William Hendricks

some so internal pleased in oversupplied still how hurdle we we're the moving our challenges, have teams efforts market's have have been bit to quarter-on-quarter rates is have to and based been area. The a market on still this but adjust Our the that try doing. the making with with market

Operator

question of Scott comes from Gruber Your next Citigroup. with the line

is open. line Your

Scott Gruber

where the guys here or seeing activity a price power? is crude your to touching by Just wanted you starting are start perspective a Are pricing with pullback slip from helping super-spec stock rate to bit there rigs. that on on given

William Hendricks

to seeing more Well that's rigs We that work we're think come continuing in driven down count the our bit. rig the non-super-spec, non-high-spec we fleet. still a by that

XX% current based In in still the on still terms is XX% will of quarter be super-spec over our the projection. utilization second over

seeing still we're to that. of pricing. due flat we're encouraged terms second so And very indication of And the projections essentially drilling what in margin some by our in quarter for

Scott Gruber

guys pretty So banker peers bit you be just of is Are looking XX more it coming bit overall more your holding and in limited versus pullback rates at over a sounds terms expectation here on rig versus like XQ. seems that next slipping the into it line little count a rigs like will count here. the given But months? maybe shares the back for the customers

William Hendricks

our highly I Yes, have rigs. so think in reflected think that's we for of very with those we rig to that want get pride we the line in that the APEX and dayrates

Operator

JPMorgan. line next Your Meakim of from comes Sean the question with

is line open. Your

Sean Meakim

types oil think visibility maybe could up second mentioned and types timing the terms between in you prices picking of How of dropping that about you you a the of types of rigs? upside. operator dropping that E&Ps offer looks towards sense those rigs you the have. next some And that private quarter give lag Andy do they're operators rigs the like during could what are and us the the

Andrew Smith

year company's driven can prices last the all were resetting that where of at up, And quarter. publics is at E&P week. been we side more up. first and down slowing oil same And Well up moving nearest some the the upside. a WTI time of event show than statistics prices when decline. the on to in there the the But have faster that's last has privates quickly our mid-XXs pace end the at move move been what's the some of budgets privates think with And a in oil we changes recent in that's the potential saw the of

shrank The there mid-XXs operators in of actual to move some projections to of So yes challenge because we're of mid-XXs we're see upside. so there's ahead giving we the operator that's best see back rig the visibility have week But quarter. on number having gets And there last you we the is WTI that of the some WTI that up with the out where first one the to potential with moving are operator count where mix back potential week had we upside. the that's average visibility. over today. the But XXX we operators

Sean Meakim

economics then reactivations. those thinking and the And side the gap would pumping on current that between about precipitate

call things You the the where today where the into the your gap efforts are where to what control be to within things you equipment are those are, need versus margin of quarter. extent optimization on done be more for in that order narrowed economics they well terms To for can put in market?

William Hendricks

equipment rig flat relatively to to believe market and we visibility activity a our is industry put going to difficult and coming second quarter count we down the have given bit on have quarter-on-quarter. activity visibility today into little more It's still in the the be the more

We improve move Our quarter-on-quarter, efficiencies decreased by state spread and the up. spread efficiencies. one of our internal but internal financials to continue so to are continues we - relatively flat

has activity flat. some visibility Pressure internally activity our on think relatively still an upside Pumping we So our is Universal though even Patterson-UTI its

on increase trading that see to and in like today need count count the where looks our an the bottom today. QX count a going to to visibility rig change given think rig is likely in is I rig we're see WTI

Mark Siegel

to I yours to Scott's Marshall's could applies just was now additional if make to to comment one question Sean. which Right comment Shasha's and comment really what

backdrop. and this capital. operator pressure budget about And not in think entirely generate being want it's do when some against downdraft quarter our incredible of amount of and that to If price in returns on from to in we time fourth set what WTI it optimal in rethink being set budgets that mind saw E&P surprising companies is taking with you were shareholders they the particularly with budgets to

along So occurs mind not but now of we're on very giving fact that. and levels oil that will in or activity in mid-XXs that companies we that that and their certain on But companies kind have XXX-plus setup quickly. my event count is event pricing now can perhaps willingness us. based on eventually, exactly you And they is could should change E&P calibrated front publicly occurs that of hold that we're the seeing a what when something and understand E&P for we're it. when based be positive step seeing numbers they that out Right our we're confidence think and that we to right in decide what

Operator

Your Bailey line from Fargo. question of from next Wells Jud comes the

open. Your line is

Jud Bailey

question up. Quick more prices or you that Andy is falling and getting oil yet? expectation are quiet mean small has front. all oil at clarify on are as I been or from to inbounds customers pretty dialogue it you inquiries referenced change of just the still the price But privates of

mean hear customers? differentiate from between of expecting to you're what what I Just kind starting trying you're to

Andrew Smith

Yes.

First are thing like off I'd small. all to privates clarify not one

has that word and discussions to very is mid-XXs. And out changed I bit upside all softly. know is because like trade. do of recent WTI's them move of a kind wouldn't that of for say WTI And mentioned or yet do this Some I see the we potential the operators to But that we're where yet. with that certainly actually the work happy I large customers are use the them. there tone we

there's and managers. stay engineers, that's public stay I these drilling saying the to it completion there quicker. move under back and of drilling managers That's comes E&P can sales pushed the completion operators where have cash with conversation been it's the level with a potential upside interesting organization bit the private the given managers. flows trading drilling and engineers, it's and the And coming budget. that guys it's an are to they within When some our to now So manager, teams and that shift. marketing think sentiment to a completion But within in pressure are down deal

see to publics the So flows how higher operators this that prices. our can react the oil are and cash view they're that at move we'll area. in privates have to getting in these wait certainly faster But

Jud Bailey

then alluded probably And my environment all on dayrates that sufficient margin it's - you're if day structure. where for in earlier Would of stay today you're ask rig rig And to about seeing that leading today? of thinking this kind were just is that rate follow-up a just Is but to the I don't move want way. a it's seeing flat expect maintain your on is count XX,XXX day, a while. above based edge and you to to say per different

William Hendricks

Yes.

We still expect margins we stay relatively would flat. would anticipate

Operator

from of comes line from Inc. Stephens next Moll Tommy question the Your

open. is line Your

Tommy Moll

and make down a QC So drill I around two we've to your bit to analogy seen little to on rigs. prospect in trends an wanted commentary Superior the

you market, being to One your over capital to alternatives. new bring than has a into industry of the priorities to capture you're of in bringing rigs invest and those efficient rig customers been upgrade for value much more the the the company time to much as the as try rig a when

strategy over driven capture the make it? can back time now you that capture you Superior your on to the the this to value so them full that we're capability time as commercial What's sure customers technology QC. And you offer as demonstrate shifting comments more and to a technology is to that then focus and more

William Hendricks

to through we're from our that last just XXXX. this the on been benefit there's few the the from in latest operative out margins increased over drilling capital brought recognize high capture of for we value all efficiency we during technology that up of business We downturn rigs, now rig Especially that But a have the years. new getting had operators the the side years. heavy the the went XXXX/XXXX a

rig we're drilling Our to layer-on we doing moving certainly we're as rigs direction. talked in you starting as to and on this Superior layering have up QC that as going or high what and with on margins help call. technologies been are about and right is well that's that the such But quarter's see technology last capital investments moving

investments, operators. CORTEX the were system that to CORTEX some they for bring capital are writing significant and but value operating Our these low of applications software

our can so where finding on a that dayrate we we're And done capture intent cost we're to in of not the work to the value news potential and on we'll continue this to capital the on the But and of value that good But pricing the performance have road. share side new bring is investments that. the in it's is low are rig value mechanisms top saying our down fashion. our and these to

Tommy Moll

Make thank you. sense and

pumping Is share? bubbling that pressure I electric of you on any within commentary up view on fleets. do to interest in some that guys that you have have if wanted you something have the thoughts up at to a a follow have ask As looked around want

William Hendricks

to of natural think them. I gas a turbines drive source are are electric you gas so driven to They have fleets have by interesting.

for certain capital trying So we're mix we doesn't to select gas. discipline to markets another they thing do. maintain be fields access have us in into right spend select fit Right certain frac the to spread the just now to and around seem natural our adding

Operator

Your next line from question Cowen. the Bianchi comes Marc of from

line open. Your is

Marc Bianchi

business. I capital to related idea suppose the this of pumping allocation somewhat with the is

this ago when right in few the job quarters that is to were business questions from you've done And it strong got very where a was performance have also back business to of go about quarters there have business to You improve guys some a drilling a investors business. I from ago. couple good a think really we the if

forward? strategically interested so see you Patterson. high-level in hear there. So added pumping how thoughts a But us could annual for We guess updated give it view you margin to fits on curious how to comps the pumping of performance going if strategically noticed that I you just any focused on certainly turning

William Hendricks

recognize started business we've we the in the long think value franchise certainly the market solid we've getting in It's we've been solid with share name. two that in the time XXXX. So pumping, good and a Universal to price investments pressure in pressure had improving we this going forward. margins continue full a that improve pumping. in quarters in margins for been the We've we a we're in but not got for can tough

we're and to improve on business. staying performance the our now of right So focused continuing efficiencies

Mark Siegel

additional driven I product would one if think to sophisticated the and that gas for and oil horizontal multi-stage in of this frac community production core of during leaders fields the equipment is simulations. of sophisticated businesses. industry that to purpose drilling guess the giving that business are not great minute is by kind have community in We're try our of revolution the today in and that right proud is operators I we're I and investment two longer We equipment really it credit wells you recognize us natural U.S. show drill those it the both approach exposure. both about but

Marc Bianchi

absence of year? kind from maybe quarter. of first side? there that to in progressing back how be day to quarter more half that something near cost term for seasonal increased that the And would drilling of for I on in based you then lower just the the guidance on sequentially just a can and Or the on have the offsetting question anticipated costs is payroll per Is talk first

Andrew Smith

Andy Smith. is This

things. the down some seasonal spread count that rig taxes now which being fixed across cost that out With rig have quarter effect some which are and you lower payrolls rightly in obviously coming point the offsets the first of is higher you what forecast count

Operator

from line the of from RBC. Your Kurt next comes question Hallead

is line open. Your

Kurt Hallead

on updates in dynamics near-term Thanks the kind providing of marketplace. the you the for and of some perspective the

So back the for of on pull thoughts the rig and half the from in demand maybe updates land market? I the the in getting Any assets front what or the not on in context that on could that some just and the rig for the of drilling Andy kind how play are may regarding kind assets currently are you of more year? your start out change higher-spec base any customer indications of upgrading of backdrop indications

William Hendricks

two some working over in do next as on couple We'll quarters. that existing our in of But delivered upgrades general early the major the year. we upgrades do smaller major Yes, Andy we don't sense market any in use just it it's a mentioned good upgrades believe of have our rigs just giving capital. earlier today's make not we plans and we don't more for

it's So to now. upgrade over for super-spec high-spec there is XX% a reason tight us to and right the major market super-spec do take is no

Kurt Hallead

do And is unless general dynamic have any sort work guys generally you commitments. upgrades you way the any and demand contractual on you on of won't understanding that pull

you I this guess So answer incremental time? don't and have asking really can for in point looking upgrades at I any E&Ps for rates

Andrew Smith

yet. Not

Kurt Hallead

business. think the in I color provided guys and the knowing prior alter of things appreciate in very not the you Mark's frac and the question long-term kind Mark of maybe on viewpoints the So of involved and/or commentary kind you being to your suede perspective dynamic to

value is context might consolidators on a into the to being the sellers at of of in of some fragmented market be fragmented be And right more point it market guys you have that? being that any that's not recognized So being thoughts would or what think decision would made. they a

William Hendricks

for that we XX-plus is in answer to my looking Kurt have past opportunities years the every spent regard. that

are that to value as the we're so things always enhanced And for company's company - which opportunities the will a shareholders. seeks looking

know large the virtually lot are the you the As people a on stock. this all shareholders value and call of about care

should make in. trying it to this Or the thinking business an And all we're of that and every in do acquire different. so We're all be something we're you business? time in things this always consolidator looking you should and at decision

Mark Siegel

is that best a multiple the view room they relative this valuations ourselves there's has that if with company lots needs play play, this like think But think do beneficiaries strongly for happens. sector we pure consolidation this services. pure to to all we are the consider consolidation. of My each that than believe quicker that than table come groups we're other we and the Kurt across from

Kurt Hallead

business when drilling and and the and you automation the dynamic. revenue think model guys or the commercialization model about And the and apps that around, algorithms

the around hosting the absent to absent this the and evolving? adoption day automation of $XXX yourselves? have now of markets maybe given of the you And a see operating competitors do day $XXX changing dynamics. that us Some for system potentially a how you stay for see of your do $XXXX framework after incremental some technology kind How the

William Hendricks

day, What to technology just a QC. about and a top than a for collecting find center our look excited combine don't on dayrates. of value hours you think we helping when and that a really potential we this and beyond central models this into upside. commercial the potential the We're software just data to we'll and it - along extract instance of more with operations here operating But of can CORTEX think that that there's in dayrates with system We not do this down just lot the to is XX Houston that's in Superior into has performance adding roll value field for we or opportunities applications run we analyzing dayrates. want ways the

Andrew Smith

our which thought early and talked number we in analysis affect pumping take additional about that logistics pressure of the as for thinking improvements regard to make whole one Kurt, have in this follows; quarters potentially Uber sand We've et thinking potentially thinking efficient our and precise, for customers pumping that about the logistics new of more they ago. how how we to about more goes and were on to business the a sand business, effect advantage into will possible cetera. it more as software business impact accurate, pressure been dramatic could be will drilling

going preparing for and we the disruption no working on we're for disruption, in technology we the and that investing quietly be future the exceeded believe developing We've we're But one the disruption. industry. been second those areas we so understand areas. to in to those And the

Operator

Your of Chase next of America. question the comes from from Bank line Mulvehill

open. is line Your

Chase Mulvehill

I when rigs how super-spec want head about on rig many the guess to we you have. side, kind to I think

of are idled? said XXX actually many about you today. you How those got think I

William Hendricks

XX%. I'll XX super-spec idle. have rigs we Today remind you over utilization is still

Chase Mulvehill

expect weeks, to take the you go rigs you Yes most see of what kind over are then and those do few of down expect place rigs And to many super-spec? decline in? of of that next XX kind how those basins then the to

William Hendricks

of mix some Yes we basins. of rigs don't get SER high-specs, and various as in the into our a detail but well super-spec levels be and those projections it'll

Chase Mulvehill

any Are rigs pressure you kind just avoiding and super-spec day of you seeing down? pricing from some the competition on taking rigs

William Hendricks

relative You major know between market super-spec's some of utilization see still the that the XX%.We players. over there's what that on in discipline still

Chase Mulvehill

at a your and how you look level? one, more much dividend, I kind about Last think buybacks you're spending a Especially might and on investors about think that of I how dividend the such low look if you dividend have at discipline? when buybacks do stronger dividends dividend and capital you versus increase balancing commitment to you because as the increase maybe this implies bit meaningfully

William Hendricks

the stock our question having I that commitment, they think of the we of quarter hope million our sincerity wouldn't of back bought it our period that given back we Since back. time worth $XXX of would conviction. stock, amount that over first bought the I or XXXX bought

capital an think return quite to that and shareholders. incredibly I in have way, appropriate So the we determination to clear frankly, demonstrated

base. that repurchases to the in to that same at dividends and increasing an thoughtful dividend think that low of trying prices we stock time share team steadily been forever between management a about has our advantage take the opportunity effectuate have can have As support I capital to

commitment do think to as most And so way think the demonstrated in attractive about I well nimbleness returning we've the it shareholders. of to how to benefit all as for of the our the capital both

Chase Mulvehill

certain we you cash at do about capital Is shareholders? about there percent to how how flow much free certain operating flow? return you return should how Is metric cash of flow? Internally, think all much the cash to will look to a thinking that about think we shareholders? it Is it

William Hendricks

It's at always per with addition least board in quarterly at the lie on often times management quarter occurs several a and meetings our basis conversation board meetings. board of between with that our which

exact side the thinking we're capital So in my topic always a manner. of do mind backed how in about disciplined flip the that's that's

of that think reinvest over reinvestment dividends. to long best the are and is think in for investment to given appropriate trying much levels and and excess been you all about more just a dividends opportunistic use time. We're returning do you the every capital to how not what very, trying we're level moment. against make above to business? paying our We've how so our do if We're paying very And want cash appropriate those shareholders? What of

Andrew Smith

Yes.

of a capital so that as the due considerations have to in for well. comes adding that. part transit that's The we discussion Just debt XXXX,

Operator

of Vebs Vaishnav Weil. Your line Howard next question comes the from from

open. is line Your

Vebs Vaishnav

quarter about or get you when profitability about it you operator $XX thinking fluid about about my I how I the guys second if operator I increasing to about think you expensing. seems top the per it? Is EBITDA it help math guess, you of if do think pumping being doing talk to it's before and am that like million the fluid guys $XX for you that you being the how million about million call you $XX $XX EBITDA pressure fleet can quarter, did per think that's about correctly, top top is it? expensing? can Or fleet after think if million first in When just

Andrew Smith

a I've to what objective for While the been it's in top saying and our year over quartile. be

The We improve doing at in the EBITDA continue spread. there teams as we vary quarter-to-quarter are to look will per gross pace I it we'll which improve job. margins but is whether get great out. our And you a or of at to pointed our you margin terms continue think at

Vebs Vaishnav

would expand there? efficiencies? from if facility, some operational need get are you leases be it that coming looking just helpful. for? that some more And maintenance Or Is what on pricing what of of is be you you to operational do over can to going efficiency help reduction kind any And more get it

William Hendricks

at of the looking all We're above.

challenging, generating quarter we're not where any will continue and But cost more internal but anything you course improving market the little as do the that's more the improvements we the per cost on margin well. in revenue to upside margins maybe and stages reverses efficiency some pricing rig activity. count on than stay can side. that there from Of stages that in bit with focused any mark after just upside in if But increase drive pricing a today's as faster will on

Vebs Vaishnav

this. try pricing? our luck XX over to my there with next I'm question Can XX months we last get And going with the to

William Hendricks

and work in goes. that continue direction We'll it we'll see to how

Operator

Your line next from John the Watson comes of question from Simmons Energy.

Your line is open

John Watson

us? the to quarter had a that you you margins speak have In can that Will, contracts have quantify if you can for to benefit first might there's some what way

William Hendricks

a benefit rolled been up, have but mix neutral. a that's rolled balance about I of best It's down is it's our some some have on would say neutral

John Watson

similarly a And expect neutral QX? a net in you would

William Hendricks

based Especially margins flat. projections and on are our Yes.

John Watson

be you've potential asset over Can you and the mentioned Andy that the any Smith sales asset done sales number XX us six quarters. could months? that over for previous next idea give to what

Andrew Smith

last year We're looking we capital on any million. Yes. balance a where the think have I we at did lazy to predict. we It's hard bit access place mean of sheet. or $XX

it probably what market number exit historically that assets. use. older that back depending for looks and like go it a good and what those That's the relatively up just If to consistent. excess from upon you is pretty looks down can vary But

John Watson

also when have their doing any you're of rigs, Are are the they impression level? you they rigs? they dropping customers dropping they're when on frac drilling do lastly completions completion side? what drop Are crews And keeping activity

William Hendricks

end of where pressure the be on count. drive internal roughly flat the in You count actually internal activity stage activity. is of would efficiencies And going overall to change the terms been our improving our rig day pumping at we Especially know expect have quarter-on-quarter. to on protection our the site our

count bottom our quarter. again, going that benefiting across improvements And that drive the But industry. from efficiencies. So overall second that's productivity the is today rig it's it likely to internal we're in appears in

Operator

Brad [Operator next Your from the Instructions] line with question comes of Jefferies. Handler

line Your open. is

Brad Handler

it. have ask some to around going I'm sensitivities what recognize, I

I you recognized actually just today any of it and now or months running you're wake cruise? cruise take. XX stays we say share. is three sort What in but that you consolidate let's thoughts up that that further? I give So activity I'd pumping where XX, can or appreciate Can asked If from XX

William Hendricks

same I been whitespace predict We've on the to think time. calendar. can industry limitations difficult going that's to be there's at the how and become. hard efficient I actually think working the today And of is

In of last that the I multiwell overall in one move think pads but being when the to to industry change efficiencies. to Texas time. with the major is same multiwell you're at slow the driven looking moving rate of West of industry to that's at basins increases U.S. efficiency pad going

of lot So I last the that because seen starts improvement rate that. side a of think change I in to slow think we've as of But efficiency industry over on an year. overall completion the

Brad Handler

to was specifically. for calibrate was your trying I room Yes hard own there to per on fleet more you're much to And looking every trying do how Sure. more just you obviously know day. I don't

William Hendricks

rigs improve Not efficiency. just

Brad Handler

that XX. We we're we're to scenarios of of regions. the think smaller XX is maybe of say to comment my of maybe a scenarios and that's consolidate limit let but I equipment part sitting efficiencies. an question help you probably broadly space idle be and if hey, with so CapEx, much to to tight is run to able guys now conversation. so the even maybe is that you to are going good we're kind And in going possible then, our build space much you But attrition better a fleet sit demand where for are a respect. scenarios we'll be scenario in there sensitive in of a good the all very in spirit you if about actors be that first the medium again to obviously introductory be attrition be being that about that you the right acting a going business answer think are in saying about? of over capacity Is our you for that Where going term. conversation vary yes, actor you you that's that would to Is And around There in It signs being certainly demand part obviously a the individual capital too we that discipline? that it function all? think pretty you was the that good leader going of affect seems one standing, have all of and being conversation about, that a in

William Hendricks

will discipline make margins to not first more activate are spreads. spreads pressure by to would see In increasing count, that certainly Well, capital to I hurdle below equipment scenario working spreads, demand drive wait doesn't it just and the on where activate we're the pumping rig rate. our consume up and move us out we're not well. demonstrating a pricing for increasing want we're that as sense cash We I and to think to focus that suspect also activity and ones count internal

pressure pumping going we're so that's move I out to quicker we just business not internal necessarily on others than And there price at margin time. improve and very may to discipline suspect just But That's do. our of to focused trying the a take the at part spreads capital actually we're the discussion. lowest activate same

Brad Handler

have of another asking to feel a that guess that you I XX regional is again? way Then supports structure fleets an we can a support out like Sure. overhead and plus structure way figure

William Hendricks

Exactly.

Brad Handler

to is or in kind more efficiency? your are I constrain for your you of no essence fewer in very certainly there fewer demand more could there's as going be but been drive the basin but strong something guess regions as or how we say parts of and long to profitability going The change business example business forward envision maybe which

William Hendricks

focused on interested earnings is feel the in always to limiting of power. we're we sort ways what on not the but We're business lean really

we put ground that is business right? pricing cost to way As like at variablize being to And return for can work, equipment and look market back think and the Andy we sense to into demand whatever return, it. the we we're to it doesn't still want the scale able equipment We out for be we more to there and look levels running at said, while that's this in, inadequate we're any want to which there be able should do something make to at us.

for certainly is. are in conditions we whatever market appropriately business the scale to going whatever can timeframe we're the that react So

Andrew Smith

for thought activity if I Brad, which add to one going that of of summer, pretty middle in opportunity is was haven't we availability additional be there last has certainly to of an would aside back the out we're shortage strip to demand be frackers guess, you a months, not put that sort want weight I if would that whether to optimistic frac and the went a were who that to being possibility last but and pass people enjoy we come frac does - as opposition not that occur. equipment and six it

Brad Handler

sense. balances yeah, our pretty collective ability to makes demand That supply forecast challenging. Certainly,

Operator

further back no turn are you. time. the to There at call Siegel, this I over Mr. questions

Mark Siegel

Just quarter. you like for call earnings us joining everybody to after second to you. again forward our thank speaking first Thank the with following our Look quarter. for

Operator

call. conference today's concludes This

You disconnect. may now

Patterson-UTI Energy (PTEN) 25 Apr 192019 Q1 Earnings call transcript