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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
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CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): December 6, 2023
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Patterson-UTI Energy, Inc.
(Exact name of Registrant as Specified in Its Charter)
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Delaware |
1-39270 |
75-2504748 |
(State or Other Jurisdiction of Incorporation ) |
(Commission File Number) |
(IRS Employer Identification No.) |
10713 W. Sam Houston Pkwy N., Suite 800, Houston, Texas |
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77064 |
(Address of Principal Executive Offices) |
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(Zip Code) |
Registrant’s Telephone Number, Including Area Code: 281-765-7100
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instructions A.2. below):
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
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Title of each class |
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Trading Symbol |
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Name of each exchange on which registered |
Common Stock, $0.01 Par Value |
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PTEN |
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The Nasdaq Global Select Market |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.☐
Item 7.01. Regulation FD Disclosure.
Patterson-UTI Energy, Inc. will deliver an investor presentation that includes the slides attached as Exhibit 99.1 to this Current Report on Form 8-K, which are incorporated herein by reference.
The information furnished pursuant to Item 7.01, including Exhibit 99.1, shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, shall not otherwise be subject to the liabilities of that section and shall not be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, unless specifically identified therein as being incorporated therein by reference. The furnishing of these slides is not intended to constitute a representation that such information is required by Regulation FD or that the materials they contain include material information that is not otherwise publicly available.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits:
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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Date: December 6, 2023 |
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Patterson-UTI Energy, Inc. |
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By: |
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/s/ C. Andrew Smith |
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Name: C. Andrew Smith |
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Title: Executive Vice President and Chief Financial Officer |
December 6, 2023 Investor Presentation
Forward Looking Statements & Disclosures This material and any oral statements made in connection with this material include "forward-looking statements" within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934. Statements made which provide the Company’s or management’s intentions, beliefs, expectations or predictions for the future are forward-looking statements and are inherently uncertain. The opinions, forecasts, projections or other statements other than statements of historical fact, including, without limitation, plans and objectives of management of the Company are forward-looking statements. It is important to note that actual results could differ materially from those discussed in such forward-looking statements. Important factors that could cause actual results to differ materially include the risk factors and other cautionary statements contained from time to time in the Company’s SEC filings, which may be obtained by contacting the Company or the SEC. These filings are also available through the Company’s web site at http://www.patenergy.com or through the SEC’s Electronic Data Gathering and Analysis Retrieval System (EDGAR) at http://www.sec.gov. We undertake no obligation to publicly update or revise any forward-looking statement. Reconciliation of Non-GAAP Financial Measures Statements made in this presentation include non-U.S. GAAP financial measures. The required reconciliations to U.S. GAAP financial measures are included on our website and/or at the end of this presentation.
Who We Are
Building a North American Oilfield Services Leader Total Company Revenue ($) 1978 1980 2001 2010 2017 2021 Pro Forma 2023E Patterson Drilling formed First frac job for Universal Pressure Pumping Patterson Energy and UTI Energy merge PTEN acquires Key Energy Services’ pressure pumping assets PTEN acquires Seventy Seven Energy PTEN acquires Pioneer Energy with operations in U.S. and Colombia PTEN merges with NexTier Completion Solutions to create an industry leading drilling and completions services provider PTEN acquires Ulterra Drilling Technologies to establish a leading position of PDC bits and broaden its international footprint $6.7B OUR HISTORY $1.4B $2.4B $0.8B 2nd Largest OFS Provider in NAM by Revenue *2023E Pro Forma revenue includes actual reported pro forma results for the combined companies for the 9 months ended September 30, 2023 plus revenue guidance for the fourth quarter ended December 31, 2023
Active Markets International markets primarily represented by drilling product sales over 30 countries A firm foundation established in U.S. Shale… With a diverse international footprint… Founded Average Daily Trading Volume1,2 1978 $87 M Market Cap1 $4.9 B Employees 10,800 Enterprise Value1 $6.2 B Corporate HQ Houston District Locations Corporate HQ U.S Operating Regions 1Source: Bloomberg as of 12/04/2023 2Average daily trading volume from close of Patterson-UTI – NexTier merger
Hydraulic Fracturing Wireline Operations Natural Gas Fueling Oilfield Logistics Cementing 3.3 Million Hydraulic Horsepower1 Completion Services Patterson-UTI | Service and Product Lines Building a Sustained Operating Advantage Other businesses includes Patterson Petroleum and Great Plains Oilfield Rental. 1Reflects deployed and idle equipment capacity. 2Drilling Products revenue from non-U.S. operations from close of Ulterra acquisition through 09/30/23. 131 Tier 1 Super-Spec Drilling Rigs1 APEX Drilling Fleet Wellbore Navigation Drilling Technology Electronics Manufacturing Directional Drilling Drilling Services Torque Control Bits High-Flow Rate Bits Vibration-Dampening Bits High Efficiency Bits Downhole Tools 30% Drilling Products Revenue from International2 Drilling Products
Operational Excellence
Key Takeaways Strong Fundamentals for Our Differentiated Service Equipment Utilization remains high for equipment that improves efficiency and/or lowers costs at the wellsite Strong Capital Structure Investment Grade credit rating at all 3 major rating agencies Predictable Capital Allocation Strategy; Focus on Strong FCF Generation Sustain our competitive advantage; return 50%+ of FCF to shareholders Significant Upside from Synergy Capture High conviction in our ability to capture at least $200 million in synergies from PTEN/NEX merger Deliver on Sustainability Goals within our Returns Framework Remain a leader in low emissions oilfield technology
Drilling & Completions | Industry Fundamentals OFS improved industry fundamentals Industry Bifurcation: Top 5 drilling contractors now make up a substantial portion of the active super-spec rigs Equipment Differentiation: Walking-capable super-spec rigs enable maximum pad site efficiency Returns-Focused Strategy: Providers reaching upgrade cycle maturity are best positioned to generate strong financial returns and return cash to shareholders Drilling Industry Fundamentals Industry Bifurcation: Top 5 completion service providers now make up a substantial portion of the Frac industry and of the natural gas-enabled portion Equipment Differentiation: Natural gas-enabled fleets create value in proportion to their fuel costs savings Returns-Focused Strategy: A shift in investment strategy has created a scenario where high utilization and strong returns should last several years Frac Industry Fundamentals
Enabled for Efficiency | Drilling Services and Products Real-time collection, aggregation, visualization and analysis of data delivered seamlessly from active drilling rigs Digital Operations, in Real-Time. Hi-line power-capable wellsite energy storage solution to optimize fuel efficiency, reducing fuel emissions and cost More Power. Less Carbon Drilling Products & Services: DRILLING PLATFORM DELIVERS ULTIMATE OPERATING OUTPERFORMANCE Performance-driven drilling rig process automation platform that delivers rig efficiency Intelligent. Optimized. Automation. Year-Over-Year Change 4Q23E vs. 4Q22 Actual Peer Group Includes: H&P North America Solutions, Nabors Industries Lower 48, Precision US Contract Drilling. 4Q23E includes peer guidance where available, Bloomberg consensus as of 12/04/2023 where no guidance was available
Power Solutions NexHUB Digital Operations Innovative Engineering Integrated Wireline $7M/Fleet Potential Annual Incremental Adjusted EBITDA & Capex Reduction Value per Fleet with fully realized Integrated Solutions Last-Mile Logistics Completions Capex will continue to target growth in our successful wellsite integration strategy Expands value creation opportunities for investors and customers alike Value synergies not inclusive of Product Service Line Profit Fully Integrated Completions Wellsite Wireline Pumpdown Power Solutions CNG Fueling NexMile Logistics IntelliStim™ Engineering / Client Natural Gas-Powered Fleet Integration STAND ALONE FULLY INTEGRATED Continuously advancing our wellsite integration strategy over time: Creating Value at the Wellsite Integrated Completions INTEGRATED WITH DIGITAL PRECISION
Wellsite Efficiency Delivered WITH Capital Efficiency Patterson-UTI has benefited in the era of increased efficiency PTEN has significantly improved drilling and completion efficiency, helping keep US shale competitive in the global oil and natural gas cost curve Operators benefit from lower cost and more efficient operations; Service providers have benefit as well, with rising margins and lower capital intensity CAPITAL EFFICIENCY NEXTIER COMPLETIONS FLEET EFFICIENCY PUMP-HRS PER DAY (ALL REGIONS) 14% IMPROVEMENT 83% IMPROVEMENT PATTERSON-UTI DRILLING RIG EFFICIENCY ANNUAL DRILLED LATERAL PRODUCTION FEET PER RIG (MIDLAND BASIN) 12023E is actual reported results for Patterson-UTI through September 30, 2023 plus consensus estimates for the quarter ended December 31, 2023; 2Adjusted EBITDA margin calculated as adjusted EBITDA as a % of total revenue. 1 2
Capital Allocation Framework
Capital Allocation Framework Maximize Shareholder Value And Financial Returns Organic Investing Strategy Targeting High FCF Conversion Invest to protect and extend our operational advantage, Capex can be scaled in proportion to match opportunity set Strategic Allocation Target maximum return on capital, increase shareholder return program, and/or further strengthen balance sheet, option to participate in strategic M&A Target Sustained Free Cash Flow Winning Foundation Allocation Strategy Strong Balance Sheet Maintain Investment Grade Ratings; Low Leverage and Strong Liquidity Repeatable Shareholder Return Program Target return of at least 50% of Free Cash Flow annually to shareholders1; combination of dividends and repurchases 1For purposes of the shareholder return target, the Company defines free cash flow as net cash provided by operating activities less capital expenditures. The shareholder return target, including the amount and timing of any dividend payments and/or share repurchases are subject to the discretion of the Company’s Board of Directors and will depend upon business conditions, results of operations, financial condition, terms of the Company’s debt agreements and other factors.
Investment Grade Capital Structure Financially Positioned for Through-Cycle Resilience TOTAL LIQUIDITY $665 M Includes cash and revolver as of 9/30/2023 LOW LEVERAGE <1 X Net Debt to Consensus1 Q4 Annualized EBITDA CASH BALANCE $67 M Cash Position as of 09/30/2023 INTEREST COVERAGE >20 X Q4 Consensus1 EBITDA to Interest Expense NEAREST SENIOR NOTE MATURITY 2028 CREDIT RATING Investment Grade Moody's, S&P, and Fitch 1Bloomberg Consensus as of 12-04-2023
Deliver a Repeatable Shareholder Return Program $281 million SHARE BUYBACK AUTHORIZATION in place1 Authorization represents 6% of market cap as of 12/04/2023 Could accelerate shareholder returns beyond commitment Board of Directors has approved an $0.08 per share quarterly dividend for the fourth quarter of 2023 We plan to remain flexible with our method of distribution over time to maximize shareholder value Patterson-UTI targets returning at least 50% of its Free Cash Flow to shareholders annually through the cycle 1As of 09-30-2023
Track-Record of Shareholder Returns PTEN has returned more than $1.2 billion to shareholders in the last 10+ years Outperforming the peer average through the cycle Peer group includes HP, BKR, SLB, HAL, LBRT Cash Returned to Shareholders ($) millions Average Annual Shareholder Return as a % of Year-End Market Cap (%) Percent, 2018-2022 1As of 09-30-2023 1
The bottom line… Why invest in Patterson-UTI? Improving cycle dynamics for US onshore More disciplined and mature shale environment should result in shallower cycles and a more predictable operating environment relative to prior cycles Strong demand for our differentiated equipment Large OFS companies with high-quality equipment and strong performance should continue to see high utilization and high returns Well Defined Capital Allocation Strategy Strong capital structure and disciplined investing strategy with focus on FCF generation; commitment to return at least 50% of free cash flow to investors annually
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