• Total Revenue: $1.162 billion for the fourth quarter.
• Net Loss: $52 million or $0.13 per share for the fourth quarter.
• Adjusted EBITDA: $225 million for the fourth quarter.
• Adjusted Free Cash Flow: $523 million for the year 2024.
• Share Count Reduction: Reduced by over 6% during 2024.
• Dividend: $0.08 per share for the fourth quarter.
• Share Repurchase: $20 million used to repurchase approximately 2.6 million shares in Q4.
• Net Debt Reduction: Reduced by nearly $100 million including leases.
• Drilling Services Revenue: $408 million for the fourth quarter.
• Completion Services Revenue: $651 million for the fourth quarter.
• Drilling Products Revenue: $87 million for the fourth quarter.
• SG&A Expenses: $73 million for the fourth quarter.
• Capital Expenditures: $678 million for the year 2024.
• Cash on Hand: $241 million at the end of Q4.
• Operating Rigs: 107 rigs in operation as of the report.

• Warning! GuruFocus has detected 4 Warning Sign with PTEN.

Release Date: February 06, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Patterson-UTI Energy Inc (NASDAQ:PTEN) delivered strong free cash flow in 2024, allowing significant capital returns to shareholders, including a 6% reduction in total share count.
• The company successfully integrated its operations with NexTier and Ulterra, enhancing efficiencies and streamlining costs.
• PTEN's drilling product segment outperformed industry activity, with revenue down less than 5% despite a more than 10% decline in the industry rig count.
• The company is transitioning to more integrated and performance-based agreements, which are expected to drive enhanced margins.
• PTEN's flexible approach to technology deployment, including the expansion of its Emerald line of 100% natural gas-powered equipment, positions it well for future growth.

Negative Points

• PTEN reported a net loss attributable to common shareholders of $52 million in the fourth quarter of 2024.
• The company faced pricing pressure in its completion services segment, with pricing expected to come down year-over-year.
• There is uncertainty regarding the macro environment and potential activity levels in the natural gas sector, which could impact future performance.
• PTEN's capital expenditures were reduced in 2024, which may limit the pace of future growth and technology deployment.
• The company faces challenges in the power generation market, with high capital costs and competitive pressures potentially limiting returns.

Q & A Highlights

Q: Can you provide more details on the financial benefits of performance-based contracts and their impact over the next few years? A: William Hendricks, President and CEO, explained that Patterson-UTI has been involved in various performance contracts for years, focusing on efficiency and production. The integration of operations in 2024 has allowed them to offer a broader range of services, improving efficiencies and reducing costs for customers. While it's early to quantify the financial impact, the feedback has been positive, indicating potential growth in this area.

Q: With the anticipation of increased natural gas activity, are you seeing any early signs of customer interest in ramping up activity? A: William Hendricks noted that while some customers are managing their budgets cautiously, there is optimism about the macro environment. The demand for natural gas is expected to rise, particularly in 2026 and 2027, driven by LNG projects and midstream company forecasts. This suggests potential upside in natural gas activity in the coming years.

Q: How will capital expenditures be allocated across different business lines in 2025? A: C. Andrew Smith, CFO, stated that approximately 35% of CapEx will be allocated to drilling, 50% to completions, and the remainder to products and other segments. This allocation reflects the company's focus on enhancing its service offerings and maintaining a competitive edge.

Q: What is the outlook for US drilling margins, and are there any factors that could impact them in 2025? A: William Hendricks mentioned that with a steady rig count expected in 2025, pricing for rigs is anticipated to remain stable. The company is optimistic about potential margin improvements through technology deployments and other initiatives, despite the current market conditions.

Q: How is Patterson-UTI approaching the mobile power market, and what are the criteria for investing in this area? A: William Hendricks highlighted that Patterson-UTI is taking a cautious approach to the mobile power market, focusing on projects that offer reasonable returns. The company is exploring opportunities to integrate power solutions with its existing services, leveraging its expertise in power generation to provide value-added solutions for customers.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.