PTEN - Earnings call transcript Q2 2019 | Patterson-UTI Energy, Inc.

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good morning. My name is Bonita, and I will be your conference operator today. At this time, I would like to welcome everyone to the Patterson-UTI Energy Second Quarter 2019 Earnings Call. All lines have been placed on mute to prevent any background noise. Afer the speakers’ remarks, there will be a question-and-answer session. Instructions] [Operator

will Sir, turn please I to call like Drickamer. Mike begin. now you. the to over Thank

Mike Drickamer

Thank you, conference Chief Andy Bonita. six today's Patterson-UTI Smith, the Energy, call Good Andy of Executive months morning. And like results Financial Mark XXXX. Chief welcome Officer; on ended to will June and you Participating three be Hendricks, today's the call XX, discuss I'd to Officer. and behalf in of Chairman; Siegel,

risks and that forward-looking as to actual made for Litigation cause statements of Form company's in and forward-looking statements expects. that XX-K state results reminder Securities Act of statements call beliefs, uncertainties predictions in the Private such Reform management's conference or company statements the annual the quick to the Securities for with uncertainties XXXX, from differ the Exchange Act risks filings intentions, forward-looking what plans, Securities materially subject A are SEC. of the report the and company's These U.S. meaning or XXXX These could and this on of the those are in Act suggested within expectations the disclosed company's XXXX. the other future and

this financial measures press call conference company's www.patenergy.com, non-GAAP available are prior in company website, are statements. through The the revise measures. the the contacting by our obligation GAAP issued website filings update may obtained and required on and any in made publicly release call. company's The through or no undertakes include to Statements system. to forward-looking included reconciliations The be EDGAR to SEC financial or SEC’s the company's the SEC and conference the company

opening to over my Siegel it's remarks. now, to Mark turn for call Mark? some pleasure And the

Mark Siegel

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

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

Andy Smith

Thanks Mark.

in As which issued quarter totaling loss we the forth charges our per pre-tax earnings set morning included $X.XX of for certain share, release or a this million, press reported or $XX.X second million $XX.X after-tax. $XX.X million net

bad million, we've the the XXXX, sand $X.X a would debt XXXX $X.XX of charges, to is Excluding net been $XX.X deposit charge these per value future carrying charges quarter million purchases. have debt these of the loss the the on or expense expense, $XX.X placed in reduce first million Included in and for since time bad of share. recognized

reservation contract. it XXXX the the remember, than and access tighter may moving As of the market the sand in today you was was sizes. industry as we placed mesh as activity order mesh our deposit sand to is pressure In pumping capacity sizes, increase part finer these to finer much increasing was to

sand amortizing on based have the been We received this on deposit discounts purchases.

we substantial a value. the makes realizable to it expected outside at capacity reservation this sand its in decrease with However and lower portion purchase sand good cost economic contract sense of thus deposit revalued prices, of the have

used would quarter our non-cash stock. to for shares which charges, $XXX part X.X million EBITDA repurchase $XX these have Excluding in million, was been adjusted million, of or the second

directors of of representing board million million. to For have our we repurchase repurchased the to half stock share of of the of beginning shares quarter, $XXX year. our outstanding X.X% our Subsequent the XXXX, the end first authorization at $XXX the of increased second the

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

more million, after cash $XXX increase to year. Even in $XXX sheet share than the at end improved of the XXXX, the balance of of balance our XXth and remains combined last an million of first June million million at strong. dividends just half repurchases Our $XX $XXX from over

million modestly levered undrawn remain remains with ratio to and debt Additionally, our a XX.X%. $XXX we revolver capital net of

and $XXX capital $XX technology $XXX the down our a for previous related; in for second including $XX.X rental spend maintenance general Cash expenditures pumping, in capital; forecast down million This quarter from pressure businesses; forecast oilfield $XXX million is million breaks $XX from million the new of to million $XXX for $XX million. for and for million primarily We million which million now million contract follows: purposes. our $XXX totaled E&P first quarter. drilling; as drilling, of maintenance directional for corporate XXXX, $XXX expect decrease

are specific CapEx, While to if XXXX current activity expect XXXX we lower capital give remains the would we guidance prepared spending drilling completion around not for as and be levels.

expected the expected million to be to is $XXX $XX million, approximately is third rate expense tax effective and For be XX%. approximately depreciation quarter, our SG&A expected to is be

With turn over the Andy that, to I'll now call Hendricks.

Andy Hendricks

Andy. Thanks,

wanted Before overview everyone in we second our we're results, of give quarter what get seeing to into I an market. the

Unfortunately, the began sense concerns inventory rose trade, range. levels pushed demand as oil optimism optimism quarter cautious a throughout with the low and second faded started in first into as mid prices $XX and $XX prices the overall second of quarter this the about oil range. quarter The

exhaustion, as lead of spending expected of of budget. the monitoring be their and seem third activity volatility companies fourth much point would if exceeding year the they in the reaching Historically, price budget slow E&P E&P increased would in being the reached in With vigilant companies avoid had are commodity focus but which the put The levels on them of the so spending quarter. to of completion quarter rate budget rate run lower slowing this activity slowing the sooner, their operators budget, risk this is at to extra drilling spending. to the spending point and run exhaustion, within to

XXX million rigs of of per both in XXX to $XXX average of from XXth, rigs expect quarter long-term million for quarter. major for our the rig contracts with In future an Average contract Based and term the benefit increased revenue quarter first to the place, increased day revenue of drilling, XX, average to in currently rigs day of dayrate the and of extensions per months during an $XXX E&P. include under approximately first count several drilling $XXX down increase during contracts quarter we term ending providing term June rig rig during an third day second from we averaged a $XX,XXX termination revenue, have XX which on XX average to rigs of $X drilling due we received June rigs XX XXXX. the At early had per quarter. million contracts the on operating under contracts second operating the related in end $XX,XXX rigs margin contract at

outlook, our to expect count now to average the drilling contract for Turning we rig rigs XXX quarter. our third

super-spec utilization. high rigs Our have to continue

most The However, be offset in rigs standby to dayrate, function rigs. approximately we our lower to $XX,XXX the costs a rigs the end the rigs. the costs a operating by APEX rig receives with lower per are will the by also rigs rig be on an And day fleet of released. standby, expected to for our in fixed the $XX,XXX, on be the partially increase within million. day decrease and direct rig number fleet, absorption be day U.S. early similar operating operating expected associated and per average the approximately of to likely operating is $X costs solely revenues is our including in which second whereby revenue termination per has active of comprised quarter reflects costs rig quarter, expect non-APEX costs. level but primarily is minimal of revenue Average that third of Average lower STACK

averaged for our the level time active our from conference the in revenues $XX.X XX had quarter $XXX quarter. second pressure the the was the during million pumping, quarter quarter. call similar spreads quarter the the of we from and in pressure spreads X.X of now the quarter margin quarter, We second level with to expected last pumping Despite active unchanged Turning the spreads, XX.X first gross April. increased million as in same average million ended were first at to to on results first while fewer second financial $XXX

first annual capitalization fluid-ins Our into XX% the increase million EBITDA our quarter placed many per first we year million an between On Since spend of we spread fluid-ins this of of service. reported over and in in service. $X $X.X spent expect the you placed adjust level. the basis, for for half fluid-ins million per to represented total spread active an approximately per spread on through $XX EBITDA

forecast. life of operating pressure significant have contributing progress our CapEx fluid-ins, We the lower pumping to extending made our thus

to received Permian completed lateral XX,XXX basin. are the of mentioned known major the XXX, recognize frac of Before the customers and by take I the a pounds reviewing XX pumping. to foot. We basin. orders ordinarily and completed customer, feet Permian. longest second from stages also company, the but a basis This which X,XXX lateral profit frac during like length our our with a a crew well for spread would don't a outlook, safely that for proud regular its especially award the with contractor received well commend minute them, was the in quarter this Permian crew lateral of recently being quite I to this an best was pressure in frac for the in spread we operational on excellence oil is With would recognized universal like and XXX crew the successfully of using per distinction

completion outlook, mix we industry. will we now well expect to the third activity spreads single to own to fleet, pads. our maintain quarter expect XX third negatively impact Turning though a lower drilling that active expect activity across we throughout Within our more the shift quarter

Accordingly, $XXX to pressure continues of third quarter approximately challenging. Additionally, of million we revenues million. expect a pricing with margin $XX gross pumping be

for focus horizontal directional as lower $X.X drilling revenues from to $X.X offset Turning million second activity during million the on and margins continued now margin to quarter. quarter the improved efficiency second to decreased Gross due drilling. a

directional third million For quarter, we drilling second to quarter expect margins level. the the similar of $XX gross with revenues profit

was to $XX.X operations, during quarter. to second Turning revenues the rental includes function $XX.X demand a E&P for of million technology was first margin in to items. XX% the million seasonal in decrease revenue quarter. the were The other which largely compared our of during fleet a XX% businesses. as Revenues the the lower compared and Gross second quarter our in now prior rental quarter percentage certain

our financial third to other quarter. second we the operations the to expect For results similar quarter, in be

will to remarks. call turn I that concluding now the his back With for Mark

Mark Siegel

our cash have sector cap, to we in the in activity many Like million, just believe now, leader market activity differentiating that the in we drilling CapEx appear reached also million. we relative market Andy. are looking one but Thanks, of completion is to among had industry, not you, but not sitting energy case. $XXX doesn't entire our $XXX the be the sector. broader that bottom expected at Lower cash look conversion by of by flow and cash. energy or to are and way of our our either a half yield and but the affecting in energy Through the cash have is are flow we a we When the flow to EBITDA which for relative in we ourselves non-cash the total general market cash in on we have EBITDA only When XXXX, matter the exceeded companies charges entire the you highest that flow which at from revenues, excluding adjusted first terms generated generation. other of of

beginning the the of generating our this We the of outstanding or of first investing Through or X.X% we cash than and million back at shares half months in repurchased XXXX. year, year. in the bought end of of at have of stock the million past stock $XXX the have $XXX shares outstanding worth already stock have been XX we’re more of our X.X% the

of million first the of through the $XX of than to than million. this shareholders total year more bringing cash $XXX return paid year to dividends also have We amount more the half

and in underlying debt earnings are forced which buybacks future are being maintenance sheet. One survive, equipment, our we not able advantage power, our we've strength to our of cash our the to assets. restrain fund does higher preserving of some is balance adequately disciplined of the to take also we been market the believe dedicate of flow while with to the CapEx to reason able to being cash to generate thereby reflect equity loads order public our Whereas companies dividends value enough valuation,

bad concerns not to and for stocks settle lies the generate best may opportunity. have restrain the to and buy We're a back for understand best uninvestible therefore that the people, many being energy our therein doing are spending, house neighborhood fully but We willing in we cash, stock.

we forward our to buying on back while repaying – focus some expect expect Going also focus we cash our our debt. prudently sock, flow

at balance operations $XXX than million, more strong need quarter was end is given our the to cash cash cash second daily our million flow. Our we and $XXX line credit of expected the of maintain which

intend its that focus cash the to outstanding $XXX on today share on common due paid September the have of we outstanding on record announce a through declared placement our to X, in we of XX, a quarterly debt XXXX XXXX. of Therefore, to dividend be the to – the are as September of that company some of October I'm primarily use portion cash to per holders of private stock coming notes million a with of $X.XX XXXX. pleased

Without, to commend efforts. I'd men and this like your women who up thank make and company. the continuing appreciate We both hardworking

now would turn to over like to we call Anita, the questions.

Operator

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

Andy Hendricks

Good morning.

Sasha Sanwal

Thank and you good morning.

what saw if just if on maybe you types to maybe for guidance, released? the customers XXXX can rig color we start major requirements – with being the some indications about So QX you’re contract the count of think giving and on what as are drilling, any, rigs You get about customers? different from are extension seeing we rig

Andy Hendricks

can you landscape. that the different North look have So customers of we American at U.S. types the across

the whole As in we we in to companies able operations of kind of looked a the that recontract oil to in just U.S., of one at steady the major international we’re and their – number operate be holding were they seem rigs, majors. therefore

down the at right of to discipline the recount in going independence, some to for whether trying the you happen look they budgets look guiding be to what's the large we're going small, With public you that's players why When their of sitting seem of or the some still to and to sideline how That's manage a lot exerting rest on volatility. with year. we waiting got the the see are. way private on pricing now

to SCR you count both So rigs in seeing where remember going we're rigs move to with that also to downward, AC seeing rig but and it's shift operate super-spec continue in a a we're the that have we along shift mix.

we that, But we're don't of one generates what's that terms share, we rigs, important and thing I'd like to looking point what holding terms believe out margins. in the market believe share, is and in in the numbers for we flow market, that's cash we're very on is our just what at the in that's super-spec chase of share which free and market, happening focused market us. But

Sasha Sanwal

where off divergence to your rates leading a rigs can views in on last today, helpful. in and seen great. weeks? just Okay, [indiscernible] few eventually get edge super-spec That's also then dayrates, we touching have And determined maybe the we dayrates

Andy Hendricks

hard and call coming relatively last think utilization on over there's been down, to I With there any diversions spots rig is terms pressure pricing, out count the still rigs if is on few high. but weeks. also super-spec remember it's in

is there some while high. pressure, relatively still utilization is So,

Sasha Sanwal

over. Thank I'll turn it you.

Operator

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

Sean Meakim

good Hey, you. morning. Thank

Andy Hendricks

Good morning.

Sean Meakim

indicate managing seem more that this of crews, Frac are budgets. than year So they how and Andy, last least E&P around year. frac behavior the they the seems to their to rigs dropping dropping be impact at crews are concerned more into

Does the particularly quarter in fourth of fleet, terms any you rig rigs on of you're running confidence some as your markets. into both the that only rigs? in going give APEX So once those up

lead get And time those that the I around guess making you you decisions? could about what perimeters side, just think challenged period same do on – the something the decision to pumping that more to stacking in wish UN, fleets, in types you how of more making

Andy Hendricks

to just way later challenge. get exhaustion happening that trying might now, the through earlier. managing But, in time. think QX working that to on I visibility they're seems what hard ahead like. the right it a at it’s still are know trying QX have E&Ps this of what's seems manage to budget looks other You QX of in budgets that their words, In happen year, the normal ahead it they're it We're where

lot may as to So quarter. level fourth yet happen to drop fourth I does as in there's drop or that the in chance general, much what’s going think activity the not still on relative previously may much in there's a third a quarter not it as may rig count of as quarter. out, not But anticipated visibility normally

activity, frac think I America. rig is just the on in North I across overall of the activity the one think terms will in of And on frac based count. our that recount industry, decrease proxies activity

So a frac us I but think this a in is slowdown. doesn't at there We're it going to a it schedule, crew our point. dropping of warrant see bit

good third So is quarter. a level XX and challenging of for throughout frac But our expect after crews this the though even so maintain CapEx roughly we like for positive seems cash us at market. for free a quarter it same business spreads us, still the are the to generating

Sean Meakim

feedback. that appreciate I Understood.

XXXX. So have on we visibility don’t XQ, much not about why talk

sort you – million $XXX outlined budget also about of split, it. in spend talked the Andy So breakdown of move you the what the and the to CapEx down how

Maybe sounded that estimates number seems So even $XXX something going but like, what you south $XXX like of maintenance based activity million. commentary, level. your going obviously something where million looks it to which prior capital, on on to maintenance place like have

help could you the line that? And make deployment incremental around by there frac? from you into set us you could rigs on XXXX And so think at you budget, versus and/or spending the then base just hit technology maybe as decisions where

Mark Siegel

Yes.

we of terms any So of of lot in what activity. terms the visibility. happen assumptions maintenance But going to on in what CapEx, spend would in could you have terms XXXX, of of course and relative CapEx cash a on flow, to we XXXX our in don't make is be

and you let's So XXXX, through QX were exit with down. CapEx to in at of stay year-on-year activity maintenance flat into XXXX, QX see the relatively activities can down say going

was drilling, for which $XXX called $XXX Andy Drilling as had million And in business, out, of our contract million we total maintenance.

So it's for we're These as and many our worth good maybe in this outside many as are year, possible we investment business but don't it's that projects maintenance. projects of do the not for XXXX. doing

So could good to continue free cash We'd generating certainly CapEx come flow well. still down. as be very

Sean Meakim

you for Thank the enough. Fair feedback.

Operator

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

Your line sir. open is

Vebs Vaishnav

apologies. it's and I but Hey, implied Thank is of just of what you kind you just you by and my see mentioned leading edge forward? you somewhat But terms rigs. on help mute. that taking the leading dayrates in I of on you kind I questions. on seen could the standby guess what dayrates, are sorry was declining, in like mentioned edge impacted guess My going the for dayrates about you talking

Andy Hendricks

to approximately in and in an the that part parts that second early within per expected it had moving levels on as so number termination is the And operating of to clarify rig there's XX,XXX rigs this number of be Yes, includes also average just standby. increase, revenue we similar the that an quarter. saying it’s increase we're day of

big element there's dayrates of that say that. a wouldn't I So

third are by how of is will exclusively the as pressure to mentioned the our and quarter I at count almost fleet, us not It's down, on much clear some yet but expected end APEX utilization. be affect rigs relatively dayrates. as still terms rig under of dayrates with super-spec earlier, Now, the coming rigs the in pricing are certainly the high pressure

Vebs Vaishnav

would picking Got of if sense, be on you think grateful? make it, guess comment XXXX terms okay. currently presence question, I that Any like, just thoughts rationalize, we you that where and in the guys guys basin need – about back think about And just around you on if Sean's all for to basins a pressure guess in pumping. are we that if are and can

Andy Hendricks

West over for in year. out for where or X.X South change You today. no Texas, today. Texas, make work on year past basins I spreads forth. know We we've sense which of rationalize the need particular that and already the They we're any now primarily of today current We've we move any don't today, Permian, the right see us spreads mid-con that rest today the order. to of any working Northeast cases spreads the we've moved number South Mid-Continent between of in done don't are see a that and and year, But the back moved Texas and

Vebs Vaishnav

you taking question. my for Thank

Operator

is question Your Narra next Praveen member James. from the Raymond line with

Praveen Narra

Thanks, good morning guys.

Andy Hendricks

Hey, good morning.

Praveen Narra

pumping free inefficiencies cash about we’re Is to and the the think be the or obviously, the just in those going on do we we reduction you think we fleets But do in are Can how through idea active, guess you walk I how of count? the guys about the scale a fleets despite it pressure terms idea basin how to kind stacking the of active getting that? second can we issue keep theme expecting inefficiencies do choosing the second – fleet positive. those versus of for keep flow half. CapEx of half,

Andy Hendricks

we stages we're number think to going the versus of think pump the And of quarter. the activity, when of third so we reduction in in second the slowdown quarter that in

we're doing, pads a where some to moving of shifts And single-well the some pads. are from crews multi-wells type frac of and driven to work of our that's going mixed by be zipper

that mix So number have and when option you equipment reduce you available, activity impact does to that, do the of shift negatively on doesn't have you give the because you efficiencies. frac spreads, the to but still it

seeing because expect number the work, of we're run still the going same so cover we I we're shift, that And spreads. to to but, need

Praveen Narra

terms side, declines of have How you of you. of already think that And if understood. rig of the kind the laid about reduction guess out seen the we rigs happen go rig Or by it, on the cadence – customers terms when it does you've to quarter? we see activity the the think then through rate Do do could as happens we on exit Okay, kind – at or I kind in that the can the and an and reduction have rate in – of nearly part? throughout? you beginning most of standby of think of

Andy Hendricks

Well, even if I you of like, that you gave what calendar tell change. can we our I look would

We decisions have customers different delay things their that delay their programs, or happen.

think scenario you I So what we think based of giving quarter best average third the the case on we're looks movement. like the in that all

Praveen Narra

Okay. Thank you.

Andy Hendricks

Thanks.

Operator

comes the line of next question and Taylor Pickering Tudor, Zurcher Your Holt. from with

Taylor Zurcher

good wanted just that the Is Hi, pressure response shift shift single-well mix customer assume seeing on I it question mix today? follow-up to in I Any morning. Is your changing function primarily of Andy, mix detailed pumping. function, of in geographies is you're in pads QX? you're that working be a in helpful. or a on towards more to that'd the the prior

Andy Hendricks

their that, same it's just one where Well we it's have. program particular the of different in case that customer a part

from And have Then spread shift another one so moving multi-well in over case in just single-wells may a go so back it's zipper you customer. to fracs the would know, for period and pads and to internal to customers’ of customer eventually frac it time. goes program zipper then fracs, their a it it’s a other program

surprise the what wouldn't varies be shift just well. wouldn't to our It the as mix I So depends. quarter. third back it and say me any see happens a and to trend industry looks future kind in like it it's in of

Taylor Zurcher

order is Just the to to frame kind rigs of way got for of impact fixed And off okay, OpEx of side, it moving these stack calibrate the relates we that they to rig a should the Okay, roll But rigs of cost I moving of baseline them to as from it. lower magnitude et a – day per terms in use cost forward? know contracts? and the idle some cost pieces the absorption lot there's on any line standby at cetera. there as

Andy Hendricks

two It's minimal at And labor. when and really that much. in you operating work roughly in a thirds a doesn't cost is our too day costs, XX,XXX of look

cost say stacking call minimal. wouldn't on any to I So, It's the there's fairly real out.

Taylor Zurcher

probably it back more. finding winded a off work legacy squeeze And coming lot What's some point stacks relates XXXX, contract rigs. rigs roll from to these I or a these to your one in rig, way as sounds these it them type contract, as the at terms try I'll off are sorts in view long saying SCR Okay, rigs of but some actually or of chance of outlook non-APEX forward? there class some rigs of out moving follow-on way eventually that their marketability of is into guess that find any of

Andy Hendricks

has commodity these that us lower and history Yes, very work. higher, shown on price dependent rigs like price you'll commodity rigs moves spec are see these go back to

of where just under decisions dependent a in work kind budget. lot and rig price. This is the the relatively of of challenge end rigs, within which or rig the is work that business, the operators really on flow the cash I landing. And are a just are making is we've had any market to whether again stay to in pressure that we're generate that we're today of super-spec the traded not So for still majority operators the publically volatility think of make call the utilization I this WTI, high. a the class in rig wouldn't drilling premature with But commodity having,

Taylor Zurcher

for responses. great. Okay, the Thanks

Operator

with Brad is of Your next Handler line from question the Jefferies.

Brad Handler

guys. morning, Good Thanks.

Andy Hendricks

Hey, Brad.

Brad Handler

– of of that than peers commentary landscape Are Can sort the in landscape to quicker a – guess of be still I in your I seeing seeing you speak if more you know some is please the pace competitive – or on this bidding first competitive could I you're of in expecting. interesting comment activating of if pumping other is at but on shutting the the bidding? dedicated a frac it's around side. of market to any ask I on fleets, don't kind would to transfers relationships, you because in hear. There that competitiveness lot evidence some the If we're public from think even that hearing if negotiated

Andy Hendricks

So spreads agreements, frac competitive might in minority the think majority become in bidding. being I dedicated frac where of only our so we we spreads our of be said it's work under the more our bidding. competitive But that a

have good reduces still OpEx to job done of so. opportunity efficiency a improving there's very do and cost. that teams our And Our our

out $XXX of CapEx also for We pressure planned called the million pumping.

an per which is clarity really $X million us. the to on anybody than spend, for we've given spread, time model million fluid-ins lower this which annualized much first is probably Our on basis people ever only $X.X most is

out thought competitive so lot a good technical that fluid-ins efficiencies, costs, done getting work improve we our life job of makes of control was really of these teams the processes. a have because it and doing important in And to as well improve of us to it our call bidding

flow our spreads the planning And generate CapEx. work in we're that to XX cash third after free so, quarter

we that in think So we're very competitive respect.

Brad Handler

there. fluid-in at Understood lower we affirmation least so modeling and right. your for one were it's yes you're than Certainly, expense,

as volume answered it. in that again it bid sphere that XQ, competitively I is sounds whittles as get where work you are Okay, more of – so general in seeing seeing think maybe half understand anyway like pricing flattish but work think going the of the with are half was competitive pricing it be I in it things down? was or but What much like question the sounds point, I other you've you and the to the

Andy Hendricks

pressure is think under pumping. in there pricing pressure I

teams again, great have of in to pricing of in cases side think equation the controlling our I cost right now some third that doing the the comes well. we bid, as little down I a do quarter. are a bit job But where think

pressure spreads of on third have to is think out zippers a pricing multi-welled of we challenge right is shift the going it. but I reduce well in go the the mix for stages our and from the of Now, But now, side team the per cost on efficiency terms some good do that we in quarter. job to doing there And quarter the and our crews. single have for going activity pads that's overall to

Brad Handler

Understood.

back. it turn I'll much. very thanks Okay,

Andy Hendricks

Thanks.

Operator

from of with Chris is question line next Fargo. Wells the Voie Your

Chris Voie

Good morning.

Andy Hendricks

Good morning.

Chris Voie

Just of guidance about day, basis. margins the they an in question range the your to quarter in the get done correctly math per I've a next day. If adjusted that and on termination, and on somewhere the X,XXX on impact dayrate

to leading you you over lower trend them force range? edge the to few Would that to weeks last – if Just where were than bid current through. be curious likely me, rates, likely being X,XXX excuse roll see you

Andy Hendricks

depend on it's the in mix think what rigs standby on because going as day too know average on of be of early quarter per it the well. I fourth the is the lot a margin will to to rigs

Chris Voie

number Okay. you of didn't rigs that call standby, And you the you? out have did on

Andy Hendricks

No.

Chris Voie

average? Okay. margin Is or on dilutive accretive overall that drilling for standby to rig the

Andy Hendricks

but it at depends It's on mix the roughly same neutral, the time.

Chris Voie

switch I'm Okay. that and efficiency if go well stage? to – Or at to switch to where you efficiency pumping that it when per have customers wealth on account going pressure have curious I are And operation, that one cost is – to your when these that dedicated contract you to lack then extra you could. kind carry of get just kind of does if kind price and you something when of operation? the for switching that of that raise of you're the

Andy Hendricks

pricing bit scope agreement of what us Every pricing to anticipate potential the work. is agreement based different. what's is communicated we little is on Every a and

or we some happen these month quarter maybe that and and in some multi-year a so include taking to shifts quarter account also already. from And that agreement would they of cases, may doing to include month may

Chris Voie

I'll you. thank back. Okay, turn it

Andy Hendricks

Thanks.

Operator

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

John Watson

morning. you. Thank Good

Andy Hendricks

morning. Good

Andy Smith

Good morning.

John Watson

Did if expect not, mind with this. apologize to us? would I sharing you that you you I in bottom And Andy, if where XQ? count out the call rig missed

Andy Hendricks

the No, certainly Rig in quarter. level. a calling not early in to happen going to drop a could we're quarter. exactly It could bottom bit third more. stay fourth It's little count too what's the know

of earlier to the the But that fourth means slowing fourth down that get where the the are know end again, just we that of year quarter seeing E&Ps and what pushing then it's in in explain big for steady think roll is yet. exactly of year quarter. their I trying This through ahead instead to off operational you we're year. the E&Ps, know, activity they're what hard a

John Watson

for those I the fleets? contemplated? couple call fuel Got about of it. you've a Are fleets pumping interest types that seems fuel today. of those have talked dual something And tier – four? on of interest What something four any prior like and you dual upgrades, fleets, but know tier fuel on side, two in tier dual about Patterson electric the we it wasn't that

Andy Hendricks

Every as I week dual spread operate northeast more frac or probably So operate the ability dual in with than any fuel couple we in have to a spreads that on believe industry. the we more many the spreads. has bi-fuel operate fuel. as we anybody given

as more this direction. today to could have In the because year. to It's terms particular by bi-fuel. through upgrade We we don't not that tier a for to cost. tier We've of need capital customer, to. four move but ability tier customers bi-fuel They the operate big four not just upgraded certainly in well be required four, it's engines have four been do easily we an capability bi-fuel adding particular a OEM if we tier

John Watson

And you. more drilling Thank pricing. on I'll Okay. try one

You Patterson Have are all from any competitors is shift your your share type more focused returns, maybe on who admirable. on not which are on of seen is? focus than focused becoming you share

Andy Hendricks

particular wouldn't say I shifts. seen any we've

done. think I behavior in has steady been competitors our what – they've general with historically

John Watson

Okay, understood. Thank you.

Andy Hendricks

rig in utilization especially high. discipline relatively the market, super-spec remains Relative since

John Watson

you. Thank appreciate I it. Perfect.

Operator

is of question [Operator AltaCorp with line Syed Instructions] This Capital. from Waqar the

Waqar Syed

is rigs your call. that comments on the Andy, general for Thanks rigs? that’s pressure comment taking a also? regarding Or on just rig for low spec for dayrates. question super-spec clarification a Is

Andy Hendricks

a it with down even bit ignore discipline to wait too rigs I a these the working market. don't have A coming there pressure could general just contracts we are And counts we'll And really of and that. it's plays now. right comment under rig out. in and that think is how see lot rig relative that the I put on think does super-spec coming down, pricing. count

early it's So I affect too do we there's think rigs, to but to pricing say super-spec how acknowledge much on going pressure. that's

Waqar Syed

come you yet But the as any for off super-spec? have of in contract renewals rigs seen

Andy Hendricks

too per day. the rig but know seen a average revenue bit what our impact to movement, is it's early We've of little on

at rigs of the look quarter, of most mix you standby. that's third by on If you impacted want

Waqar Syed

Okay.

of the here rigs maybe about that XX, rigs terms mentioned but that count, be the your would it rig in quarter? be from in imply industry industry third down, does you Now, rig could down XX count

Andy Hendricks

other down I is Well, down what's dealers American. same that our count happening contract while moving for I count, that in our like rig rig moving our little And than North a the others, at do total think bit super-spec is rig a think proxy probably large rate. maybe count faster

but what it's you coming rig take that do is, to count is overall the think it can down. and the interpolate So – industry I number

Waqar Syed

Okay. you And super-spec is what utilization currently? would say the rig

Andy Hendricks

it's to It's but high very XX%, still close relatively today.

Waqar Syed

Okay.

on upcoming you're Now others? your in well in it is versus severe weakness, particularly pressure comment as is comments pumping that all for drilling, pressure more in regions some a weakness as Or a basins? market – seeing

Andy Hendricks

is all basins traded a comment of because on U.S. these within publicly the the E&Ps pressure stay across equal it's think to work budget. I their across that all

of of their that flow – levels internal has basins. cash pressure but E&P equal those affects E&Ps Now, varying all budgets, public the all that own their is because across every in

Waqar Syed

question. Understood. final then one just And

if If you back sometimes asset Do a about that possible article to to comment you you – it's you up may choose want to address that, would Reuters considering. was on you be but there that? sales

Andy Hendricks

too we much own CapEx internal of pressure efficiencies and remain improving our and business. focused still We providing article our on in pumping think cash flow still that didn't after

Waqar Syed

guys. much very you thank Great,

Operator

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

Tommy Moll

for Good questions. morning. taking Thanks my

Andy Hendricks

Thanks.

Tommy Moll

you the that interested I the It's about asking had particularly inbound most curious given from had the perspective seems it point. landscape you a – something discipline the tension just for topic? capital electric have many – asking you wanted anyway E&Ps of they oilfield you if are there There's to and they'll presumably at it much in this on it? it on and How integrators double for back customers’ have about frac. ask customers about. inbounds I'm want asking across from services But the

Andy Hendricks

electric mean frac. the questions operators certainly And well. well. on and benefits is are very there What challenges how it we and does and fracs from what know certainly think as are the electric it does I work what

technology electrical spreads. systems side our has of several done On Power division our the the for Current business, electric frac

see think technology. We frac the free and electric in sense. very that costs don't understand what flow it sense. cetera. deploy certainly us we it, ourselves cash We're generating just makes capacity. for the us don't understand and that takes so, et business just don't adding for it this make And adding to on focused We We spreads around economic

Tommy Moll

talk gears Shifting to drilling I side, land Okay. want about the the to automation.

you got automation us can extent into any might wonder You've pipeline I the software any Superior QC. And at if insight some you drilling introduce for one give exists to the that dayrate structure of you generally sell outside potentially? add do market to How around the with going And just envision technology value rig. that more can any point. you the the maybe

Andy Hendricks

doing. various So about field probably some what operating calls, quieter we system controls this I've some the exactly that plug-in the control and And we our than previous to allows We're we're to efficiency the pipeline of of on. a certainly have in that days on apps top rigs. on little working technology others On system. these testing AC we're a talked of the of layer rig improve also We're help the on of apps. us early Cortex

other apps. we're more more pipeline. also that about talk of rig ready We’re on to different a They get when things probably variety riding into and that of do the we'll later

putting the value, sure what into comes the for get it value to getting this. we want when to we're And make we

development, software little Now, it's hardware side. software. It's on very the

there, not efficiency. overall But on a positive. the a some that's big So, a rig costs got its and out we've CapEx improve put can deployment it's engineering but to rig this

models our we performance we'll add-on certainly our our various at efficiency it's investment So we do technology improve the intent get because to when value do outside dayrate of for look rig. and on the for when

Tommy Moll

you. all Thank from me. That's

Operator

This question Chris Voie of from comes line the Wells with Fargo.

Chris Voie

said spread come bit. you commentary part think in rate first of in year. is out some $X lower? be from the fluid-ins, you're that's on the spread $X.X put one bit what per The count that more. the – down purchasing a in might benefiting million I has and A clarification, Is bit Hi a to million that a the fact guys, purchase sustainable on just a period? of you little half a It the stacking just that since little level? Or that fleets the you're

Andy Hendricks

annualized the wasn't first million estimate. the half The just was an million Well, first that to year. to $X off, clarify, of $X.X

to over it hand Andy Smith. I'll So

Andy Smith

Yes, I’m half, remembering of the a we second half if think rate spent $XX good of first the kind run the And million on in the spread it's basis per the sort for of correctly, your question for we half that first year. well. as

said, Andy as million million basis. an $X $X.X it's spread annualized So, to per on

Andy Hendricks

certainly lot that those out. estimates work and in a and there running down We've to area done that higher try get are we most costs to out call of to wanted

Chris Voie

Thank that's helpful. Okay, you.

Operator

Siegel. like to it turn Thank back you. That question. to our now I'd was last Mark over

Mark Siegel

are the you quarter with third to We conference as announce our everybody. we speaking appreciate Thanks quarter. call we to Everybody, second respect participating in look you forward with earnings.

Operator

for today's participation. your And this conference you concludes call. Thank

disconnect. now may You

Patterson-UTI Energy (PTEN) 25 Jul 192019 Q2 Earnings call transcript