- Earnings call transcript Q3 2022

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Operator

Good morning. My name is Denis and I will be your conference operator today. At this time, I'd like to welcome everyone to Patterson-UTI Energy Third Quarter 2022 Earnings Conference Call. [Operator Instructions] I would like to turn the conference over to Mike Drickamer, Vice President of Investor Relations. Please go ahead.

Mike Drickamer

Dennis. you, Thank Good morning. XXXX. Energy, call today's for to months September Patterson-UTI like welcome the of ended to I'd discuss XX, to behalf conference you on three And the results Hendricks, Participating Chief Chief in Officer. will today's be Financial Executive and Andy call Officer; Smith, Andy quick for in conference the forward-looking state statements future call intentions, beliefs, made management's company's are or plans, that expectations reminder that A this the or predictions statements. could company's cause to risks company's and as SEC statements filings differ forward-looking the which to are subject results These the disclosed actual uncertainties in materially. statement. update The company to obligation undertakes no or publicly revise any forward-looking Statements non-GAAP made conference in this call financial measures. include The patenergy.com financial and required issued measures website company's the on press release our conference GAAP reconciliations in this prior are to to included call. the some Hendricks to turn And call over opening now for it's Andy pleasure remarks. my to Andy?

Andy Hendricks

Good remain on morning. and pleased I'm call. today the we continue technology growing you quarter while service capital, for customers from to quarter as enhancements high thank Patterson-UTI. on very third Patterson-UTI’s maintaining level And expect quality results focused joining of deliver for generating We Thanks returns us our conference invested with that third our Mike. profitability.

profitability continues for consolidated $XXX we million. for increase approximately to upgrades delivery EBITDA from previous is are to increasing customers. up the XXXX also than XXX being includes our this $XXX funded rig CapEx million, by The XXXX to forecast more million. largely in from of forecast CapEx improve, adjusted up the We're our our As XXXX increasing where $XXX acceleration million,

horsepower in upgrade fleet. continue purchase of power an also Tier the of opportunistic pressure earnings to additional We to had pumping our X order quality and an

over We up which increases remain cash our driving thereby drilling what is There given may the next believe to lot E&Ps, fourth months drilling deliver in through and year. and U.S. multi-year been the increase a we in discussion early to increases last discipline a potential their year, of or do stages has are industry flow. our activity. outlook cycle, regarding in continues growth next tempering forward, moderated with of the plans activity and the the the by few completion We the in industry not capital in and free may quarter of E&Ps encouraged believe Looking production reports

planning large their As will our understand representative a our customers part find major a each our of enlightening. of XXXX believe I of recently we plans. sample you process, of the survey to across businesses completed better drilling results

a And private of recent total discussion of add to the and fourth almost has XX XXXX. a with in spoke E&Ps enough, about quarter of XX largest who drilling interestingly differences diverse customers the of fourth lot rigs in ranging drilling the of working plan the and to we from the real market. additional won't XX plan what operators. another there ones the a in by add the year, rigs discernible and rigs been most add U.S. rigs in wells a Interestingly, primarily spoke rigs strength complete backed do, an private will in recently those XX than commodity We and XXXX to and public increase drill based of and to we And with U.S. operators. XX believe In indication the U.S. expect activity XXXX. in by of cross no this E&Ps led is E&Ps on through an market, with had the among and the section small Our to discussions with, broad prices, classes equity. horizontal is while section almost quarter cross base of different private the next more good represents summary, we private completions the customer super customers majors, independence, by

So operations. to my of turning now review

First, pricing average businesses and drilling, continuing our to by quarter, both as again, we for quarter count activity to successfully while proud solid U.S. very rig rigs third increased of contract of service. the In our this increased the each at XXX provide seven execution I'm rigs. excellent customer

tight today, approximately market $XX,XXX visibility drilling as remains of combined U.S. thereby already rigs Leading these to and we committed and the volatility. rigs are strength year. including of taking At increasing and the Across that XXX current be per we under pricing additional Patterson-UTI As chain. supply by of to continues earnings before edge rigs return that with along industry, earnings to active the two challenged in have limited with pricing pricing the strong. are reducing year, services. due next labor the Supply for rigs advantage the activated be rig all four drilling contracted demand work continues end availability contract, grow day, of to number spec improving to dwindling and the are Tier-X, our to is the of overall super rigs term our ancillary

increased the three-year million rigs to term for quarter, During contracts our signed drilling as XX% five contract with major a we U.S. XX by third backlog operator. $XXX including contracts,

hybrid the as gallons operations Our repeatable combined automated drilling achieved. reduced has eliminated three saw well. pressure our and consumption I would quarters the operations engine has applications CORTEX drilling drilling support first of the be functions functionality of commend execution In consistent system, operating a from our in this team have execution, on of deployed operations, our Rigs. to automation, In XXX,XXX in across enables in performance improved like diesel our business leadership marketing, for almost from continues to business what lithium continues emissions with the in pumping pumping, to our technologies, functions Apex which area to our system battery of management year. drilling where and solution various for EcoCell™ key position pressure we been our

with strategy apparent of the in focus business scaled where efficiency quarter historically EBITDA per We third on adjusted high the reducing we structure. benefits cost and overall a have were increased this achieved spread. the our The organizational

horsepower when pressure lower flow used financially Additionally, well work possibly with been XX,XXX purchase to frac spread pressure pump financial in were Tier previously us We opportunistic strong of pumps generation as favorable as we've driving combined X for the a which an is will from down frac upgrade XX with spreads, disciplined terms cash engines. business allow investments, and in XXXX. completed very These returns. recently this to existing activate pumping of

performance vertical used new from to Additionally, at key further our our placement supply many the tools the our by systems. to and operations and and on of regards costs well Empower ability with to quality. field components technology approach emissions our impact invest faster to Ecostar drill to have has and continue transmission also technologies to that platform teams pumping in as our for remain to wellbore consistency, and with In new reduce continues wells to of drilling, our site. improved the technology This integration better the control data we Measurements enhance developments our benefit engineering chain. downhole to motors, steer wells, drilling also improve improve we and pressure better such services, specific a With digital will directional business new our focused and

will improving data survey validation recent quality industry approximately correction Superior With utilizing well more horizontal accurate Additionally, wells. analytics horizontal our data than party X accuracy calculations standard I'll quarter. QC are continues process that industry section customer's third proprietary placement well that the over the placement, Superior precision review for to for turn algorithms placement, A algorithms. of business, analytics placement and lead results greater QCs in times of allowing to call the showed our Smith, the the for financial who well in Andy the third now

Andy Smith

morning. good and Thanks,

end cost general for $XXX for inflation of up XX was due renewals to the said both second million during drilling an average pleased revenues margins where the results support per up $X.XX drilling general third in margins share second segments. and approximately day improved In for third to with quarter as Net we had $XX.X and under XXXX XX, rigs all over for in the quarter contract and per U.S. our providing or Andy September million the the achieved maintenance. from were rigs term income and quarter million. are the As we contracts due revenue, quarter across rigs $XX.X gross was quarter. million third increased share, $X.XX again of operating of the quarter. term we an In in increases drilling at or revenues we from third and contract September based increasing significantly the day our $X,XXX for to from rates operating and personnel, $X.X $XX.X inflationary costs strengthen with contract second contracts we under million $XXX XXXX. and revenues U.S. day to per rate activity. from operating ending by in the rate margin benefit day currently in of XX, pressures future momentum, rig average At by Columbia, the increased by contracts Average day as on contract the the rig approximately as during adjusted per well our million renewals of Based pricing expect quarter continued $X,XXX In term fourth continue repairs Average rig drilling quarters including XX $XX,XXX. and per increased contracts $X,XXX increased four day place wage third quarter, average more revenue adjusted pricing. margin U.S. rig quarter favorable

rigs Columbia day For revenue increase margin $XX approximately revenues an is our day, $XX.X day. pressure and gross the the our million, in we to sequentially increase almost utilized we fourth by active margins per by quarter adjusted $XX,XXX as of four the $X,XXX during margin driven rigs. Columbia XXX spreads in we In expected in a the quarter slowdown rig In million. obtained pumping to rig expect $XXX customer pumping in third with increased fourth count rig drilling to average margin revenue XX% generate increased million. increase adjusted such as expect pricing. adjusted and U.S. improved expect XX% Average average to Pressure gross per $X.X seasonal highly quarter, per revenues approximately approximately sequentially million and were we to better contract of to to

increased in In gross in revenues million, to sequentially quarter expected resulted $XX.X the adjusted the margins. and and margin to pumping million the We quarter, to is and pressure fourth we then adjusted margin decrease million. drilling, $XXX and downtime activity holidays be margin to during $XX.X million. and improved revenues drilling quarter. directional Directional $XX such to improved to the is rebound expect gross revenue expect expected to third first as pricing higher due For revenues higher

quarter activity levels quarter. fourth the higher For pricing we the with gains than incremental expect slightly third

adjusted adjusted and our third to million, margin $XX to improving $XX approximately is for to E&P and to revenue quarter million. expected which gross other In $XX.X gross technology improve fourth million, includes see and we operations businesses improve such, the $XX.X margin to million. As grow rental, our quarter revenues

and other cash I'll Andy expect fourth quarter. expense quarter the third expense With taxes the to be of quarter $XX similar meaningful to back For call that tax depletion, we approximately and quarter depreciation, or levels. On general expect expect to fourth approximately and Hendricks. Selling, basis, administrative margin both be adjusted $XXX operations we fourth not million impairment total turn to do XXXX. – million. be gross to is for amortization amount a the consolidated expense for We the in revenues our now expected a tax for

Andy Hendricks

Andy. Thanks

has of quarter by contracts with a very encouraged outlook This challenges the in sufficient progress their results, As to services allow required up to outside and pleased oilfield last strong for across recent service cycle. of at was for enough mark-to-market the of raise I've I'm returns our in previous E&P product. service that's in is customers. companies that a real which I the that third have producing and portfolio providers time weren't one am the an decade multi-year pricing price the time most of had over that cycles duration these cycles their of full conferences, mentioned contrast to hedges our reflected and during is

Our we in over, teams as pricing drilling. to did all see push existing pricing a especially to increases service contracts continuing year, lines. of across further our great into many next contract And expect roll job going

our As free such, flow. to cash significant current upside believe have margins I still and we

interesting very expectation recent our based Our our results yielded on with is which discussions customer a from customers, survey.

of positive while limited be private anecdotal how been Patterson-UTI doesn't our the rig E&Ps based on shareholders number While I there and and history to to rigs, we will may billion of have our to we show consider heard stories to the a have best-to-return Therefore, the is be XXXX. returning review in discussing shareholders increase E&Ps dividends to this And net count case. best QX, shareholders, how we dropping we In a in a our cash in dropping that a cash QX continue forward, to describe through free result our than customers strong have outlook, of $X cash also since more our as return following and buybacks. how of considering share to At points. best intentions. return XXXX going rigs

we drilling less much industry contract expect the prior that capital be First, cycles. than will intensive

super drilling rigs rig major is of retooling spec to As our spec the high fleet and complete. powered AC

to strong will less buybacks. this well multi-year forward XX% flow free that to visibility from increasing our to Second, expenditures. the Therefore, return cycle dividends To encouraged a sheet positioned defined capital through we've by and up flow capital look discussed, shareholders. to the cash cycle. shareholders provided of Patterson-UTI term returning we continue have as strong operating has as prospect activities, are and potential lastly, target be and cash we balance our contracts And cash as we by

our As to per as December of common announce cash to on am X, such, that of share a December XXXX, represents XX, XXXX of quarterly prior be on which I dividend. stock cash paid pleased $X.XX our doubling quarterly declared a of to of holders Board Directors record our dividend

are improved our of that this where and million Directors $XXX we to for from announcing of to increased authorization our has Board forward buybacks, also buy share authorized are shares. back point We

forward. like hard call oil to provide Patterson-UTI with and questions. like products help the would to for that thank We with lives that, and at better. world going efforts people's the are excited prospects open their shareholders work, of for returns the we for we'd With to potential our the all make for the successes gas employees Denis, for

Operator

Your Instructions] ahead. Scott of from go first Please line question [Operator with the is Citi. Gruber

Scott Gruber

Yes, good morning.

Andy Hendricks

Good morning.

Andy Smith

Good morning.

Scott Gruber

Andy, a surveys concern tell forthcoming, some peer the that survey. just to to your an obviously Really care customers debate from I are take we a there color see just appreciate that you time on for items to motivates that steps today. is more obviously, such love the elicit given it lead adds which rigs reactivate and to there's rig incentive is guess I'd long

out could how rig which you the and provide is growth confidence that about materialize? data of think anything is the supportive confirmatory survey? so points to guess kind do of of kind going you And I XXXX kind validating to you in terms count your speak that of XQ, up in other but

Andy Hendricks

are I these our So, mean, customers with day. who with every direct our teams work discussions

that any I it requires this So not something feel is further like validation.

year. to having that to Now, early through. on teams who working the next comes these from the aren't But for are yet what's direct thing is until may mind not these still based one next feedback finalize E&Ps keep E&Ps because the that through are before to in budget plan approval approved happen going and even process their that budgets are

in comfortable with the rig and thing a these to So we're numbers. the remember have I'm customers Tier subset total to drilling are X using count spec drilling is rigs, The overall is horizontal super you of wells. this who They're talking U.S.

– in the there the can time and those count that down not year. customers any I different didn't but move the XXX with. do think are itself, I part I terms total the picking rig last in we see count differences their down anything a up was between that's of operators mechanical there that looked still end especially based till progress. sector of rig rigs U.S. And and and we're now not mentioned we slowing hearing next the discernible And what our from who's up classes privates of on rigs of

Scott Gruber

I got it.

So encouraging. it's very

then low up budget per peer rig of range. a a next for major million being talking some on I year. major think $X.X next the is range of we in but about year kind think thoughts any eco then was some talk that of about of that obviously yours other we I any Patterson just kind color And items CapEx per should a you and think items? the of and know, I the range today, the should upgrade for on number upgrades, mean, maintenance perspectively a and early about? early about cost ancillary on spending for sell

Andy Smith

Yes. Andy through around Hey and taken or a yet and taken is do looked guys our XXXX thought look the we process we – we haven't this have our Smith. CapEx. we've a – we but Look Scott, asked budget at company again, gone

so going guidance to And of easiest the way be and obviously little frame going maintenance at you to a I up probably our think if XXXX $XXX it million, of look sort that capital higher. is activity is with

incremental five a prefunded inflation as as million inflation of for well million, by of under you were already some are maintenance ads if bit start We that upgrades activity But three-year per capital contracts, rig and maintenance at you some seeing annual $X little that think customers. upgrades, are which those capital. think for rig. the maintenance. We're about then about now looking you of on $XXX And so the rigs announced, we've if with

but year. and an we in from the So accounting next of will CapEx this fourth receive standpoint year, cash quarter the that hit third

about to $XX add that's that million to number. So

ended the $XXX in, number plus that of the kind or range kind think about where million. minus all plus of think right $XXX totals you million around up if we I So this year

at targeting point. we're of kind number that's that this So the

Scott Gruber

it I back. you. I'll Okay. turn appreciate Thank color. the

Andy Smith

Thanks.

Andy Hendricks

Thanks.

Operator

Piper line is of Please Sandler. next Luke go the from ahead. Lemoine with Your question

Luke Lemoine

your about bit quarter margin little Can either XQ progressing pressure you basis a you results. GP a gross Andy per this had talk how of past morning. good a pumping Hey, you see in on kind breakout fleet? or

Andy Hendricks

of in standpoint. more relative it me let kind Well, describe

is as it we discussions budget fatigue? into wide little of space going what's in we've pressure Is efficient, a have drilling on? and What bump-up get rigs. this? things it's been really the to against so more about So QX pumping, calendar And the see budget had really, else we it's lot and starting our for a that driving much fatigue really not we're so customers

the there's is our well slow fourth to wide activity. the efficiencies we number essentially that's caveat that. results Basin, forward in the the means rig that in happening back so about I pumping going in in operations January. in a will continue real close Permian in pumping I hear But cold because alleviate in that'll in the And are with as spreads winter out help probably sometimes which count ducks we're Then as no of think I I pumping of it there New QX, towards comments to drilling Mexico, some because seeing expect quarter, the and the maybe general, But what space operations. going and what industry forward increase move the QX to saw drilling can think

So white the that we quarter to think seeing in sense? closer while where in third this the quarter some starts make fourth in I results the to first that and were get disappear the Does of we're year. quarter, space back

Luke Lemoine

results. I fair? like seems and potential from weather Is during of XQ that months looking XQ, XQ better at Kind mean, XXXX; more there's maybe absolutely. it the XXXX Yes, upside

Andy Hendricks

fair. why We've outside standpoint but from those start circumstances. things the got there's weather holidays can't and Permian, that's done in January, improve of QX at of to and bit we've little reason duplicate then February we sometimes a we no a quarter in winter get and end of Yes, this what then

Luke Lemoine

were about, on those your super you were ads rig then general? talking [Indiscernible] And how rig that? characterize with survey incremental customers, those all ads just in you spec would rig your ads or

Andy Hendricks

class customers to are Yes. rigs. are our super these In spec general, add looking who

Luke Lemoine

Thanks it. much. Got Okay.

Andy Smith

company. business, our drilling again base our across our broadly across for base customer went this customer our our was pumping directional pressure the business. business, And our We entire rental business,

Operator

go question from line ahead. next is Barclays. Derek the Podhaizer of Please Your with

Derek Podhaizer

Hey, on that good stay just survey. guys. morning want to I

upgrades So those imply far how then does for those what XX the then And much of you editions? the of rigs expect in the as wondering rig XXXX, rigs rigs in ads to in it know as of for market? XX, added to get And next add, you your those out I you required? XX. first through you're total that share going those that do broke level to us rig XX CapEx what's

Just the there an you get deployed. rigs rig to and cost those where update dollar of are per

Andy Hendricks

Yes.

our sample customer base, So a this a sub-set. so was of

up, were we we've So it the potential just little over talked this more when customers data XX from. and because you ads total rig a was what there's for describing to than gather that

we yet, for gave you Andy to on rig more that is ourselves XX be do the different for some rig budget count upgrades, expecting some that's but years, at there's will add what we're high you we for it reactivations we CapEx level various do or and of through in When that haven't in and potential likely $XXX that. to process and gone a in and XX that total. And with gives XX look likely customers that range. in some added that's plus what the will So And our XXXX rigs look – is idea probably what in color at million. we reasons minus then of terms

Derek Podhaizer

just through of historic think a three those profitability, pricing, that from a buckets has driven we utilization floor as over really your for EBITDA expectations is through ran pressure and as pumping you in down far what the you next. of Switching integration this year? break now Obviously, another you guys talk fleet year helpful. But into by but integration? it next setting That's this new mark as and trend could level vertical I vertical and about pricing about us? where utilization, end differences the the between know end you Can for of to for of

Andy Hendricks

across from that marketing the pumping pushing teams organization The towards as the the pricing in where efficiency we we're have Yes, can, our the really keeping in operational ability pricing said, leading levels we that and from where that pumps in operation that the we it's just pressure and maintenance have edge agreements. at done. where I blenders the per And per stages week, seeing is the support operations make work to work. month, more quarter. per have And field getting we're we sure

so, these running business we're with really successes really there. the the well And days is just and pleased overall

Derek Podhaizer

turn Got it. helpful. very That’s it back. I'll

Operator

the Your with next questions Rice. line Don Johnson of Crist from Please go ahead.

Don Crist

Good morning gentlemen. How today? are you all

Andy Smith

Don, how you? Yes, are

Andy Hendricks

morning. Good

Don Crist

Good. under What general contracts, getting push term just you around general On expectations going term your forward? on next term there just the you I or thoughts or contracts of you're months do to your have or for XX% XX% about any out calculate just XX is can that so. thoughts where

Andy Hendricks

out which faster we to pricing were As have in contract as we upside terms this it cycle, our year any we knew this begun industry. agreements of we moved keeping historically very push And came in has has than up, of bottom this pricing. had in we probably because pricing short ever

portfolio, contracts in layering longer have like so, view were And much reluctant we could could. as start But we this. of an in long-term to as pricing signing we term a we and push until investment

for we've signed two even other year, and term The to that and the in we is signing the started the terms half, years, of but so years And up we contracts portfolio some. signed longest up contracts we've ones. have a layering five longer rigs for in year in three

upside, continue So We we're a edge they we've still sign as do long-term well, it we'll time that up we project but be the think to right as for but to in and customer right which to to layer year, same some want next got right rates contract. blend And more see will, it's a move think we able sense the prudent time measured probably the when I process. to time leading from at now. capture makes in the

Don Crist

was supply earlier color one on bit year. It how Can chain general supply it a this some. was Is from like thoughts obviously give it's chain much I year? or through And progressed you me. year? than appreciate now and the little earlier seems more it this just tight loosening better that's the The super now better the us there.

Andy Hendricks

still tight. chain I pressure and Supply And is still growth the factors would is market the is and the say I might where has market one that's ahead what's that's still tight. tight had in of supply evolved tight. rig get manage pumping we've keeping have chain we to certain to things. to six to how think, What, nine had plan that months months constraining

we're Now ahead a things. to get certain year planning

how on an it's still adjustment really the our But manage so chain. And on side we supply it's tight.

Don Crist

I color. appreciate back. it Thanks. I'll turn the

Andy Hendricks

Thanks.

Operator

of Your the from ahead. line go of Bank Saurabh next questions Pant Please with America.

Saurabh Pant

the Hi question. for taking Andy and Andy, thanks

Sorry it's right. around on the to beat it survey, But I think important.

So let me ask another one on that.

strip really we XXs, I saw low the right. especially, volatile, the going to First commodity XX think right. WTI XX-month been range, have prices thing, XX, September obviously

on scaring much So the think not E&P or if do carrying us E&Ps you price commodity carried survey you is help when how was can out, right.

might context their on have think sensitivity revisit some to they that plans? before prices give you you do Just far How oil lies? and fall think us where

Andy Hendricks

to the And they're customers frame towards just prices Yes, commodity any but movement had seen enough check. had customers October even tell September early of change And of to so had discussions had. happening and But the any commodity cause anybody with months, There no of even plans. in rethink – discussions all you were over some to few have our have wasn't on time. been I these last just that prices end movement we prices that prices you those doing. we've give what at commodity the movement enough were to what to that effect doing double customer’s we've downward the plans time hasn't can that of downward commodity in movement

Saurabh Pant

think think which Right? those good you. both if markets to compare capital the attractive that's footprint right, thing, one the in only markets big has side. you both you the on pressure going think, Perfect. drilling No, I the those are one you a which clearly and And for tight. of and were Okay. and more then pumping company one do rigs two companies, you fact forward? And contrast I deploy But to to between more really frac, are is only

Andy Hendricks

these We kind different attractiveness attractive. at of Their changes points find of level in of cycle. both the businesses

six some XXXX and businesses get next that cash we pricing But the And both back was look cycle of into business on frac as free the months. year. than to But probably of getting. we we're upside you amount grow see these by behind If started performing, are up about how the faster our to drilling, we're to pumping. and with both move pumping drilling months flow in earlier still business started and with pricing six pleased very pleased lagging these of returns businesses pressure about pressure

Saurabh Pant

Okay. Awesome. taxes. cash on And a quick one

think talked that XXXX, you tax think How from XXXX about no in meaningful on we cash about I cash should taxes. a standpoint?

Andy Smith

of Yes, on next from – in lot or may federal wouldn't that on shouldn't Columbia, a bit better have we're cash and XXXX we to call. amounts but the taxes. to lot state. cash both have But guidance generally Columbia I have XXXX some a expect a federal give We'll We of of a more a standpoint, going little small taxes. related

Saurabh Pant

for Andy, Perfect thanks Okay. turn it back. that. I'll

Andy Hendricks

Thanks.

Operator

Please questions go line Keith the from next Mackey ahead. with of Your RBC.

Keith Mackey

rates And on wanted be But OpEx. drilling contracts start about you the driving OpEx thanks I longer It $XX,XXX around as more just will certainly against hasn't higher is increases? And what across that continue? you can industry day, and a labor has questions. now obviously. in moved increase with out talk you think the my the how signed, as much moved to morning. good might insulated term for taking Hi, just future

Andy Smith

over So, raises two we've here the to at in year drilling, pumping, et operations, had cetera last for give pressure it's, pay Patterson-UTI. the whether field

especially not The really and since about our year drilling, the because of gave, first raises had give we increase the market for pay teams an adjustment in ago, been pay able was, happened. was a – downturn XXXX which we to

in the second one we're U.S. year pay was adjustment of a raise we the inflation of to And so ago. to as really then living did well factor give seeing in more were we one here a the about that cost And able

changes move happened well. We're And have that other happening lubricant so other recently. up. move seeing things up, broad in but anticipate we're some two don't seeing any going those, things forward, prices there's as I those

a little still happening. there So is bit of inflation

number, Now, R&E, per things but day thing others cost in include per other standpoint as from is which engineering for that that it's one business, day to our operations remember fully a when in drilling, loaded loaded looking and that cost you're fully that includes that's at an burdened that may not for includes well business.

Keith Mackey

do for stuff? Got pressure that if see – of – could on you type it. horsepower metrics do you to maybe shifting thing? kind being might Thanks acquisition any And you of And talk pumping, there the paid if cost a opportunities to it horsepower, of what acquired new you versus of more have it the that. the that just have just see can that for say, maybe about to you were what would around, give do

Andy Hendricks

it up pressure unusual came kind relatively but down. Permian was had equipment, West business new an of pump this that there was a the small used for being where low that in opportunity relatively was in only So Texas

So the on happened any what we they compared harsh pumps it use just frac wasn't do. we but of did them, typically yes, to so it hours It business. really was in that available and that relatively the seeing use were these have type hours soft would

So to any significant off we I'm And of into did the get we of going get equipment. equipment. condition buying new numbers, discount were real pleased with but not

So equipment. able tier X up pick we were to

of we'll the of into most Xs, end tier we where these. equipment, likely these very to fleets can take we up working to that that upgrade fuel existing add with dual some add Now can kits

And so we're the in continue earnings power market what our upgrade also to the of spreads. offering it will and existing

Keith Mackey

Appreciate very the Thanks Got it. comments. much.

Operator

ahead. go the Sean of Energy. Please Your next with question, is line Mitchell Daniel from

Sean Mitchell

from any you thanks the you basin otherwise? rank seeing it one in taking the see other? incremental your Permian, or your the survey can Good customers helpful. think Hainesville, demand the guys, from are thank where survey. about you question. around, us the XXXX, are and the of for color It's And around you very or demand you color you greatest more or for When Marcellus give seeing Is demand the form or morning

Andy Hendricks

But We just of but all went all bit some the Bakken increases we the the in be as basins, But seeing well. seeing to check, Mid-Con, more count double rig to the are Permian, through growth this going it's rig little even Utica. Marcellus other day seeing we're others. We're than in in adds primarily basin. the

Sean Mitchell

Is in so a you the companies maybe are in of like you opportunities lots as outside guys have about? then international far, rigs what And Columbia calls I Columbia. service highlighting follow-up, looks that listened oil there thinking any of we've Okay. just to XXXX. know

Andy Hendricks

business expand well down and has execution us, Ecuador, team the give a in they out. That that may is their future really we'll the door business, an reputation. there. how to plays performance how and see doing just Well, next Columbia to but team and that pleased wait It into have for great is that us really have with running that opportunity or

Sean Mitchell

guys. Got it. Thanks

Andy Hendricks

Thanks.

Operator

[Operator Instructions] with Your Pickering of next Partners. is from Smith Please ahead. line the go Energy David question

David Smith

morning. you good my And taking question. for Hey, thank

Andy Hendricks

Good morning.

David Smith

edge you pricing a services, about you edge leading back to you ancillary the you the based including circle ancillary at or months gave Wanted average three Could lower to alternatively just XX services. us ago? XX,XXX update remind to comment please rates the would characterize where day, how relative leading see

Andy Hendricks

want, plus like drill may I ancillary per crew including up it's leading move when may up to on But continue $XX,XXX. rig expect up. now more It's including expect a the through day. Yes, year, horizontal still we're that you edge, next upward $XX,XXX plus or still some for pipe, minus with et count average it moves, type and forklifts seeing into the it cetera. movement But all moving plants next continuing minus out, at services Right to an any rig rigs that around and extra that E&P been we are I move provide, year it all or you that number. to

David Smith

fleet correctly XX? gas-fired [ph] the Okay, Do out that. are I seven you of I appreciate about remember running that

Andy Hendricks

gas. of primarily Yes. are natural run the we frac Seven spreads that

David Smith

of building acquisitions some dual-fuel? for expecting opportunistic do versus cadence with legacy fleet? diesel, of the you about allow tier comment think tier if integrating your know that currently horsepower. fleet So how your opportunistic converting into And seeing Does about be you older on conversions, didn't of equipment the just remainder of that might that the dual are thoughts purchase fuel just on X more any X, pricing what you might – retirement

Andy Hendricks

So we're for get frac still fourth tight, premium white the year. exception Yes, do it'll little here tight next but stay bit tier overall space of seeing X dual-fuel. the in with a market the of quarter, a running we

as do increasing was more And then to this nice describe it's our frac buy I for like will and X it with a when would to it that. would to just we I'm to whoever tuck-in pumps, to opportunity into be able where able and we this sure to was that cadence, be margin and describe some it. to can. do But really there conversions the allow this. out do, pricing tier that really some but were to be it is system a is But others not spread many an so going running push and little we I there a work not bit it us us be unique. do able pleased

David Smith

Good. very That's it much. Thank you me. from

Operator

the comes Morgan of next Stanley. Kutz Please go line from Dan with ahead. Your question

Dan Kutz

Good morning guys. thanks. Hey,

Andy Hendricks

Good morning.

Dan Kutz

that still see the to that of not any wanted this some upgrades and back there to you fleet have frac XXth reactivate the work equipment follow-up you that equipment correctly and investing contemplated kind something line is Just Thanks. plans Or fleet anything idle confirm taking on potential where scenario XXth questioning. some Am really potential I beyond that a beyond in understanding of of putting were you equipment? year? next could and of to any

Andy Hendricks

In we'll our now we're right working is that So continue working XX. XX. view current

haven't these haven't equipment. not But to made we more decision. much to gives do would We decide pumps time Adding or yet. type activate us with we number whether spent that that X XX tier flexibility

evaluate. So, but we'll quarter. do work space may white just quarter, the so Again, we point next decided. haven't trying few do something fourth in getting we fourth that over and were continue was in into no through the XXXX, months there something We in the to to in

new out focus. our XX% a And cash that's our Our flow. there now primary commitment to to right cash focus is returning We've shareholders. return of free got

we're So return maximizing the we're manage the EBITDA can sure make versus that we shareholders. also trying to CapEx, what to to

Dan Kutz

maybe staying theme. And just Great. shareholder the Thanks. returns on

that wanted $XXX that lot which spoke And beyond of million. at to, if the $XXX are is If free that flow cash guys is about I target. out $XXX looking a EBITDA So, to spent. hitting consensus That doesn't just you to XQ conservative maybe assume for gets how then CapEx about I'm million thinking of guide. your that you clarify that's the growth XX% million, we around just XXXX back

buyback bit more there. is million So dividend? that for Thanks. XX% dividend the Just try target, of increases, $XX hit there flywheel that the to XX% year. little of of strategy kind next the a like your to Is get wanted on about is seems dividend kind or and special clarity potential

Andy Hendricks

with I the it where options we've forward. pleased are been described We've think double on all going is what to really the that dividend, now table. we're our intent able

a that table. But cost all $XX try So, will the – on able share million that to buybacks. at be with are rest $XX that we'll free to has the And do to roughly of options look be flow. year cash that million, in out then

Dan Kutz

helpful. I'll turn Understood. back. it that's Thanks,

Andy Hendricks

Thanks.

Operator

now of call. portion Hendricks for closing Q&A the turn the to concludes remarks. Andy This call back I will today's any

Andy Hendricks

the the for I would great Dennis. I again, to Thanks that Patterson-UTI doing. And at you just all to We employees a questions. appreciate today. are Thanks that want thank the lot. call thank everybody joined the like work

Operator

third This the quarter XXXX Energy Thank does for conference your you call. Patterson-UTI earnings conclude participation.

disconnect. now may You

Patterson-UTI Energy (PTEN) 27 Oct 222022 Q3 Earnings call transcript