Patterson-UTI Energy (PTEN) Q3 2024 earnings summary

Executive summary

• Reported Q3 2024 revenue of $1.36 billion, a 34% year-over-year increase, and an adjusted net income of $2 million, excluding significant non-recurring charges.

• Net loss attributable to common shareholders was $979 million, driven by an $885 million goodwill impairment and a $114 million asset retirement/abandonment charge.

• Integration of NexTier and Ulterra has strengthened the business, delivering operational synergies and robust free cash flow, with over 15% of market capitalization returned to shareholders in the past year.

• Entered a joint venture in the UAE (Turnwell Industries) with ADNOC Drilling and SLB to drill and complete 144 unconventional wells, marking international expansion.

• Returned $366 million to shareholders in the first nine months of 2024 through share repurchases and dividends.

Financial highlights

• Q3 2024 revenue: $1.36 billion; adjusted EBITDA: $275 million; adjusted net income: $2 million; reported net loss: $979 million ($2.50 per share).

• Free cash flow for the first nine months: $322 million; cash from operations: $860 million.

• Cash and equivalents at September 30, 2024: $115 million; available borrowing capacity: $613 million.

• Returned $71 million to shareholders in Q3 via $0.08/share dividend and $40 million in share repurchases.

• Share repurchase authorization remaining at $780 million as of September 30, 2024.

Outlook and guidance

• Expect steady Tier 1 rig count through year-end and into 2025, with industry-wide rig count potentially declining as lower-spec assets are retired.

• Completion activity anticipated to decline in Q4 due to seasonality and budget constraints, but expected to recover in H1 2025.

• 2025 activity levels projected slightly below 2024, with rig count stable; modest improvement in natural gas markets possible later in 2025.

• 2024 capital expenditures forecasted below $700 million, with Q4 capex around $150 million.

• Maintain commitment to return at least 50% of free cash flow to shareholders.