PATTERSON UTI ENERGY INC Q4 FY2024 earnings call

• Focus on differentiating through value-based solutions and broad service/product portfolio. - Managing cost structure by streamlining and aligning with activity levels. - Capital allocation focus on returning at least 50% of adjusted free cash flow to shareholders and investing in higher-return projects. - Technology advancements in drilling (e.g., Apex rigs, CoreTex automation) and completions (e.g., Emerald natural gas-powered frac equipment). - Well site integration driving value for customers and shareholders, with growth in international product sales. - Power generation capabilities with experience in mobile power and potential to support increasing power demand in the oilfield and beyond.

Drilling Services: Fourth quarter revenue was $408 million with adjusted gross profit totaling $163 million. In US contract drilling, there were 9,617 operating days, average rig revenue per day was $35,300, average rig operating cost per day was $19,600, and average adjusted rig gross profit per day was $15,700. Completion Services: Fourth quarter revenue totaled $651 million with an adjusted gross profit of $95 million. Drilling Products: Fourth quarter revenue was $87 million with an adjusted gross profit of $37 million. Other Revenue: Totaled $16 million for the quarter with $7 million in adjusted gross profit.

• Expect significant free cash flow generation in 2025 and commit to returning at least 50% of adjusted free cash flow to shareholders via dividends and share buybacks. - CapEx expected to be approximately $600 million in 2025, lower than 2024. - Board approved $0.08 per share dividend for the first quarter of 2025, payable on March 17th.

• Market uncertainties affecting oilfield services demand. - Commodity price fluctuations impacting drilling and completions activity. - Competition in the oilfield services industry, including from other high-end service providers.

Q: Saurabh Pant asked about completions pricing and cost-cutting.

A: Andy Hendricks said pricing is coming down but 90% of discussions are in the rearview mirror, and Andy Smith mentioned streamlining back office processes and discretionary cost spend.

Q: Eddie Kim asked about completions pricing dynamics.

A: Andy Hendricks stated pricing is down year over year, with q2/q3 likely being the bottom in financial results.

Q: Kurt Hallead asked about power business long-term opportunities.

A: Andy Hendricks said it's a longer-term play in the Permian with multiple opportunities, not rushing in, and may be a separate segment in the future.

Q: Jeffrey LeBlanc asked about retirements in the frac business.

A: Andy Smith said they'll retire older equipment as it reaches the end of its life and replace with natural gas-burning equipment.

Q: Doug Decker asked about U.S. Drilling margins and 1Q being the margin trough.

A: Andy Hendricks said there are efforts to deploy new technology and streamline costs to improve margins throughout the year.