Patterson-UTI Energy (PTEN) 25 Jul 242024 Q2 Earnings call transcript

Thank you for standing by. My name is Danica, and I will be your conference operator today. At this time, I would like to welcome everyone to the Patterson-UTI Second Quarter 2024 Earnings Conference Call. [Operator Instructions].

I would now like to turn the call over to Mike Sabella, Vice President, Investor Relations. ahead. go Please

Good call operator. welcome Patterson-UTI's to Thank discuss morning, our conference to results. second earnings you, and quarter XXXX

today President Hendricks, Andy Officer. are Executive me and Financial Smith, and Officer; Chief With Chief Andy

in measures are a uncertainties are that to company's targets, the considered These call the beliefs, forward-looking As this or no made included as patenergy.com; website, predictions in update in plans, statements or refer the statements statements. made takes the financial to that call. I on which in or subject the reminder Statements filings, call for and and conference could release to management's issued turn actual Executive expectations now company's company's company's disclosed differ to conference conference intentions, risks forward-looking are call company the financial materially. The Officer. include SEC Hendricks, this forward-looking non-GAAP future statements. over cause reconciliations publicly prior results Andy are to this Chief will required to measures. our revise obligation The press any GAAP Patterson-UTI's to

Thank our and welcome earnings quarter call. Mike, second you, conference to

We been business the managing macro way the through are environment. our with current pleased we've

our a deploying We are of that Free maximize looks to returns operating focused on through flow strong business. capital-efficient demonstrating in resiliency half, the strategy was our cash cycle. the the first

proving lower cash net a company million in used NexTier we June the environments. capability XX a flow debt, these through key to out it after steady shares including and to year, flow macro prove of dividend flow the all continuing this we've million, transactions cash is are the September free and free cash XX pay Ulterra businesses, We for combine the or was effective. XX, free reason Since generation leases. The of repurchase close our just our and $XXX XXXX, potential

strategy allocation our losers the years. value shareholders. high-return in capital there to It's investments oilfield for and that next We increasingly and capital to to the our direct winners continue clear several maximize over will use the be will

service offering Our Patterson-UTI deliver both of customers we activity, their a one are investors. provide an Even superior growth recognize with returns provider technology returns integrated of can our customers, that service capital-efficient over is of is growth our the aspect and and maximizing right to crucial. By several next who for delivering industry we confident suite the years. can that for differentiated and just services path we outside service differentiated and a see for partnering pricing

largest As our we We in to to one drilling market. leverage have position position a of Shale's U.S. for our aim shareholders. companies, growth and drive the completions unique

first entered our customer where products an fully services We use our pad. across entire performance-based completion and with will integrated arrangement a the contract, drilling have recently and core

our we We to to are differentiated for excited and our good offer path to This opportunity replicate. for feedback a efficient improve drilling customers, by value position there our create for unique initial approach completion returns opportunities growth difficult capital an shareholders. that By the leveraging and offering. see would create are growth to be believe a long-term integrated could

operating in team is monitor completion to enabled and our Our systems, digital We maximize assets by both allowing other better in utilize order customers offering customers efficiency from costs. sets and believe This in operating integrated oilfield as drilling the unique U.S. services. seeing of our every results more field competitor with seamlessly us nearly reduce leader shale. to a the we have and created apart they our

demand discussion excited this for potential been There in power well increasingly our lot completion we both the power as industries. a in are strategy we has industry the as have traditional In oil services. increasing other and and our gas markets, addition in of drilling in about the year the to around

in facilities demand. are center demand consumption search. centers. standard data the an growing around the are energy we power their to built of and is local network An electrify all of real. component utilities of the of for search the server. a power Outside continuing data not discussions customers to the previous data Xx as E&Ps, And individual today new a in requires AI of E&P hear XXx Our takes utilities outside Internet production energy server supply amount a The all position

an high-voltage specializes in engineering which and rig dating power, controls, from to electrical and a battery we medium proprietary acquisition an engineering, used enhance established automation, this energy position micro storage has technology to developed electrical have technology where solution. At Patterson-UTI resources grids and business offering. drilling the electrical in of business, we manufacturing Patterson-UTI, back primarily our controls XXXX our have

also project, the operates microgrid has facilities. cranes that team components and vessels, a On company centers, delivery. recent discussions we supplied a to microgrid supplied further builds are this team marine for However, components and production and dredge systems and possible data to vessels, in

through deliver natural built manage and large gas years volumes to out power generation large several NexTier, field. capabilities we in of last have the facilities our Over provide the and

natural gallon CNG of has field this X billion NexTier diesel by Our roughly our cubic gas equipment. of business integrated the critical million million-horsepower supplied to years. business June, feet our past gas organically fueling equivalent providing over natural or gas mass has XX customers. reached significantly natural gas-powered XXX we delivered Launched several XXXX, In and grown over in in for

XXXX. We be expect than to XX% XXXX volumes in from up more

systems of our capacity gas-powered X of fleets hour our than delivery put majority fueling gigawatt annually, are in we with our preferred provider frac more perspective, own fleets. natural and operate The the third-party gas electricity. To for natural gas generate our multiple capacity also could natural CNG

Our our integration, the displacement believe success stems fuels in plus diesel fleets. from on we leads industry which frac dual-fuel

upside and cost shows for enhancing over the customers more fallback fleets fuel future. diesel marketability displacement We've data electric see is and diesel assets. This where expanded beyond compared there history several the also crucial midstream production frac gas-powered savings our natural this with maximizing platform space Our of to in XX% option. the our potential reliability related is and years as more of servicing competitors, no

We lead extend challenges with their using introducing gas minimize in blending that new currently fuel to innovation further overall are in many will gas. our customers CNG believe the technology more This field costs we consistently. helps overcome field their

fueling greatest natural technology businesses our gas potential extend in blending with treatment power optimizes the oil is At Our gas various our substantial Basin, in where Patterson-UTI, gas Permian scenarios beyond including basins, most complex. the usage field operations. natural

and for center. Integration the complemented to each oilfield. and production data Controls we're Engineering a of delivery customers' deliver outside recovery. large of the business E&P services as X we inside facilities rig and a There we exploring Power, and supply suite automation gas and services our And beyond is areas opportunities of natural business both one demand these power Electrical U.S. significant assets. to further and growth other see Our where our just power provide services in count for capital-efficient broad

the in markets and the early deepwater acquired still Our anticipated in Drilling Middle opportunities revenue offshore stages in East Ulterra markets, With and And capital to potentially when is Ulterra. we in generated enhance large of international beginning of the over we North growth returns our into time. Mexico. And the ahead has segment allocation strong use Products market. Guyana Sea, to we the tapping of realizing we is the continue will Gulf the this believe our just strategy this

free in to to of expect We at shareholders to the million least year. use return generate the best remainder $XXX away are we commitment XXXX for flow X cash our are to evaluating this quarters and the

We growth. should the impact will highest investments. return focus amplify on the expected from operational This

activity gas basins in have second steadied and On the slightly natural the third prices the improved early quarter start macro quarter. of gas natural front, since the in

through natural the relatively steady of expect rest for We outlook XXXX. a activity gas

there ahead online. increased and drilling and for to gas basins come is to completion XXXX, in natural demand rises as activity takeaways starts Looking domestic LNG potential

Mexico declines from disruption slightly customer-specific rest as activity in basins these the oil with steady recent West side, our in short-term course New has as well capital slight gas this Patterson-UTI our lower backdrop, likely We have outlook and anticipate oil the in year. Against oil takeaway their deployment. the in from run believe activity. disciplined the basins On through Texas constraints of remained trended M&A churn and a natural relatively

market as bottoming flow. Even seems the in half, we to the free strong second be are cash generating

anticipate gas activity, markets we of a growth since than slowing count shale our over Patterson-UTI's last the rig but market longer The market with levels. In impact the a recovery ahead, has our start current saw outperformed in the rig segment, Drilling from Looking release U.S. year. is better we period. steady broader natural from activity Services markets shale oil XXXX some in modest and in

space quarter, increased and count year. By customers as In customers outperform for In rigs. prepare margins see compared our U.S., the for remain currently activity the In through quarter rest manage relatively use the compared to year, end we as of XXX budgets are customer cycles. Our began the to is the rigs a Completion we steady the the we conversations with operating customers quarter. XXXX, to third equipment. the We the larger high-grade suggesting those are of completion second Services, trough believe first nearing for the continue likely we are to activity year. improvement that year likely XXX to previous in the modest saw to operating white of rig rest their could the

year. second were In basins. In and quarter, improve technologies. we rest space elevated to Services activity our activity While accretive than electric pump to some anticipated, customer white hours quarter was equipment, from Completion our in through reduction in which segment activity the third space gas there XX% other frac do approximately some the the more generated of white with QX, expected slightly we in returns expect natural of compared our compared was the will

in by capable We our natural gas. approximately to equipment XX% of grow. of are powered activity fleets being active expect Currently, our electric to continue of share to

and at frac of reliability month we natural per gas round operating out the The new been to operation, added hours supports team to quarter XXX our success been and our second equipment business the We continue the of of electric great great these have fleet demonstrate has feedback equipment. fleets. great. Each result for we results that should capabilities is our and our has as fleets the operated a in fueling customer least roll of latest excellent electric that of which

next flexible We meet are market technologies, next-generation extremely a to our in manner. and capital-efficient needs remain and offerings years needs. our to the over customer We with we'll refine continue maximize with several addressing the solutions frac returns

another drill achieving segment Products strong, count, Drilling trend per impacted international outperformed the revenues to to and record The in bits. revenue in drills sequential laterals again and Ulterra's In quarter. Internationally, our in our expect quarter, in spring up and revenue Arabia, U.S. we percent normal quarter rig. with impressed longer U.S. year we in requires rig footage the with the towards by the benefit breakup, the more second year-over-year. more Results Saudi remained particularly continue improvement mid-teens progress, industry Ulterra third in the starting each change per rig expected be be

experiencing Additionally, is the but we small market, growth in where growing the share. have offshore segment market a

enhance us excited various cash position relatively grow stable, products next will customers and and flow shale development business to suite returns phase us enhancing as our returns the our a enterprise. about several into if remains free Even lead across very are can our prospects. to own that explore continue our our activity shale We investments future to U.S. Strategic positions uniquely avenues we of over believe while next help services of our years. We their returns. its also

review results turn it I'll now will second who Andy the quarter. Smith, over the for to financial

and reported Thanks, Adjusted totaled the This also second quarter million, to integration of and $XX a EBITDA $X.XX the $X.XXX million mentioned revenue quarter. $XX previously which for the integration or was income attributable Andy. per quarter share expenses. common million expenses. for shareholders included We excludes Total merger billion. the reported in $XXX merger net in

count quarter XXX shares with XXX we during Our the outstanding. was and exited weighted million average share QX, shares million

free flow the of the Our $XXX cash million. year was for half first

an including used During dividend the to $XXX and million repurchase per XX million second we quarter, shares. share shareholders, returned $XXX million to $X.XX

with stock. and and since including the and leases, accelerated given share addition repurchase the we used This X In acquisition, full intrinsic we Ulterra quarter, share opportunistically repurchase XX $XXX profit quarters debt, second net million we a days. $XXX was In Drilling steady the have $XXX quarter. cost dividend. In closed merger Patterson-UTI $XX,XXX, our to value an reducing second share adjusted per the prior price dislocation of slight of Contract our the totaled During gross rig U.S. program quarter. during Drilling rig $XX,XXX. between paying revenue million to our view rig is Services a the of again $XX,XXX the per NexTier we adjusted Services shares. the Average of in XX,XXX revenue Drilling, operating operating average average day was million a per day The increase totaled profit day gross was million. segment, quarter from

Our revenue stronger June currently for term under third contracts in ending over of of average for slightly operating of XXXX. XXXX drilling an June quarter average we future and X expected. On per expect in day we place, the rigs XX, approximately on million rigs XX during contracts we contracts term quarters XX, term $XXX revenue. operating the was an of XX than contracts rigs providing dayrate the Based drilling U.S., had under

In our contract Drilling mostly was million quarter international businesses revenue besides million. an of drilling U.S. Services with $XX gross drilling, is profit $XX which directional and drilling, other second contract adjusted

quarter, contract are lower a absorption U.S. impacting profit gross adjusted per drilling drilling, we cost operating of The U.S. that contract a the rigs margins average XXX in roughly our active business. is of function For expect $XX,XXX. rollovers with lower fixed contract for to day and rig count third

Completion we from profit adjusted Revenue profit segment down Aside in Drilling, compared quarter. with $XXX other to of Contract second services $XXX an U.S. the totaled the adjusted to second million. million gross quarter gross slightly our for be expect drilling Services

on As white fleets. quarter saw small space number a expected, of increased calendar the second in dedicated we

third to other budgets gas spend operations dedicated an hours the our compared year. during space in addition, Texas white to several the in as activity see basins. our completion pumping was operations line with In do within we fleets quarter. reduced West saw although their We natural look expectations in from Revenue in increase normal the our quarter, elevated see customers for

the Services slightly, steady. adjusted quarter, in higher we expect basins increase driven activity oil For third profit natural Completion basins gas to by gross mostly with

Second was spring revenue the In $XX gross was which to industry totaled in compared to quarter. continues to the The products in strong company pricing. international down improved due to the penetration breakup were per see U.S., steady while sequentially. did quarter quarter market million, Adjusted first million. revenue decline profit Canada segment drilling revenues prior revenue and X% see rig steady $XX normal as compared a the

slightly expect third the as count. spring For another to decline see totaled $X adjusted U.S. with quarter. offsetting the post in the activity the rig million growth million gross quarter, for internationally as profit. mostly of we of in $XX Drilling Canadian Products results the quarter a well quarter improve breakup, revenue normal compared to We Other second return

$XX We Reported profit quarter second expect the million. flat other and in third and administrative expenses gross second quarter. quarter were with the adjusted selling, revenue to be general

SG&A expense expect the $XXX $XX depreciation, total totaled basis depletion, impairment quarter, second amortization expenses we for of consolidated and For QX, million. million. On a

third and quarter, we depletion, impairment expect of For approximately million. depreciation, $XXX amortization the expense total

natural new $XX electric total final Drilling was million QX, Completion largely and During a Drilling in the slipped $X $XX quarter, in our payment well corporate. frac portion some $XXX $XX the CapEx and below in gas for into CapEx during as million equipment million was of including budget million, as as in equipment million QX. Services, Products Services, other fueling

our equipment total fueling natural quarter, million, payment new the the for as electric the business. attributable equipment CapEx with additional For final well of roughly third we $XXX gas frac our increase to as expect on

below CapEx do in excited to our big activity recovery count. year. of a our to we long-term the improve in CapEx back about for flexibility expect time, We We million. relative the our to begin position the competitive $XXX U.S. this XXXX. Further, and spend Patterson-UTI half the will company, in original improve for in we we some and of see prospects opportunities rig industry are are the to At optimistic budget retain budget our further

revolving million credit maturities as XXXX. with senior well We on We cash do any closed hand. $XX not until million note as facility $XXX our nothing have QX on in drawn

strong We expect the half third of the in the year. cash free to quarter generate second another and quarter flow of in

adjusted to XX% approximately XXXX. expect in to flow We cash of EBITDA convert our free

has an Board $X.XX approved QX. Our dividend per share for

expect For cash shareholders. free XXXX, million return we represents repurchase pay shares, usual commitment XX% our to flow to more to use to least than at dividends of $XXX and which

it I'll to now for back Andy closing Hendricks turn remarks.

Andy. Thanks,

remain of we achieve in potential While this of advance remainder the account to recovery a number capital-efficient a after we the year. expect year, rig market for the initiatives of in the to U.S. have overall growth steady

for are customers returns suite of and products excited for extremely value shareholders. We accretive add our think use completion our and integrated about and can offering, the services and to drilling we our potential significant our we deliver for

unique difficult believe deliver in capital-efficient next companies over and our With our fueling which be time. process the the growth will deliver the excited offerings to we each and are cash forms: electrons a drives for investors. differentiated have Our outside sizable and electrical maintaining business. free finally, to and future of operational unique upside and to we should a of Power power And the think footprint to other, our we strong maximizing us the both. business And think the at we primary We there's Services cycle look and oilfield. We're controls to the forward highest assets. society produce Patterson-UTI, we we comes over that X that is to They oilfield substantial while one the today, natural Patterson-UTI. a abilities can complementary replicate. flow services, Energy help and inside very about are quality both hydrocarbon chains and best including engineering in customer, at gas proving help leaders committed the

free least cash the return flow to our and that commitment capital free next flow several over annual years see continued to continue towards at investment, strong We on will including basis. investors direct our cash of the highest XX% we to return an

to products of provide people's world work, would thank our employees oil for efforts successes their I gas with to lives better. for the like make help and all that hard and the

we'd that, the Q&A. With like now open for to lines

to I'll hand Danica. So it over

Raymond question with first comes James. Jim Rollyson Your Instructions] [Operator from

So Andy, exciting next us and about, that of outlook And X the to X uses? for just that the that And business, go could other Power the magnitude of frame you you industrial talked up and for a years business? today? gas bit Solutions kind CNG your obviously, maybe kind oil could in business where you do between think of and

Yes.

I is more underappreciated. explain our section that's it to highlight to business a think do it. We wanted to of this and

very We We natural engineering have gas, we electrical along large actually controls create a fueling in both CNG operate with facilities. We compress CNG, it. gas business X and and natural position. deliver compressed

well that deliver trailer systems over in truck field. XXX out to the We have

And a very space. this in position so we have large

it it's earlier, we're -- out much put to hard is, gas-powered context, it into X to as field natural give mentioned I the To but describe today. there million-horsepower in it exactly roughly, equipment powering how

of providing on a some year gigawatt terms it of natural roughly To is Some into gas basis. with and of of other different an of that annualized companies. hour how energy, electricity in per convert the that measure equivalent be of would we're a ours that's much

are -- probably the growth that's about potential. is excited underappreciated. this these large future a We're So business

data in there's growth. to the natural do outside fleets, centers, which our that think to sources. electric areas about we for in to high likely time, we're systems. we are future data areas that our more fuel that the then starting fueling relocate expand, -- lots have close been centers just like continue discussion this. We're industry, of with over instance, These continue frac to to power gas some As work we'll of own And

next those doing these think the businesses we years, of upside significant few over things. we'll so And types see in

bit business to little on kind north of is. to revenue to of Today, color this you how more is give that on a Yes. million big business $XXX this Jim, just business. follow bit a

it's sizable business So pretty certainly not insignificant, a already.

multiples Got it. lot like hold. follow-up, these a things gears that of go Andy. then a could That it helps. And switching up And maybe for if sounds take

between a about your your some of fuel guys the you Just initial fleets you dual e-fleets, reaction but frac how of and just lot performance? thinking you for find long Universal to game, curious NexTier. reactions from of Patterson, of newer of that the your How now economics? been have running hear both And to the there. that Kind since initial you're competitors, a running part curious kind obviously we about time,

for which efficiencies on we're Yes. be it full trying fuel relying we've the force, certainly before electric to running go to been years And that, been were about year still I come. fleets guess But that path heavily almost down. testing now. to we Tier seeing. we're the think X dual will a excited we've in going industry I for decide But

I see because as can want to why before, to that's measured our capital. that's electric, out be So electric, in switch with capital a I and be our important on deployment said wholesale still efficient we we don't and

from are we it. take-up But good seeing

ability really service run testament that's a in good fleets frac that operating high their success. quality. we've a had mentioned, company general today, to But I and quality we're As service the as to NexTier

We're And what seeing excited and just But right with so of level we're the service do. the fits these to deploying efficiencies we'll ones delivering really that right they time. this in with fleets started we're of level about grow high at. that -- we over continue quality the and now

with comes Our from Jayaram next question Arun JPMorgan.

your elaborate today. maybe working like project you're I that completion you if and integrated Andy, offering, on wondering sounds could a Yes, have it drilling was you on

through by contractor maybe of Wondering that if you to what wondering X, maybe plus doing historical the services. potential hit bundling talk us the equals could of don't as was on a the the about in I walk field, you X could X precisely get if and you're discounting So that. this? kind how expand you And

Yes, sure.

So companies do it's spectrum together had out have saw as what of of a of at that one putting the number to were E&P that provide we services we the us we And we there when an the enterprise. things across that look potential. customers can

and package customers And a with E&P it at way we've to the that is so our the in to ability together. us work to companies looking combine both give we upside been since put all what

And definitely is spectrum services package so we're more a the drilling, project in what on than in a efficient it not services. trying our as efficient of but the that, What be and bundled to way a of today the wells. we improve the it's do can in completions, is intended provide more that more to productivity the across

so the scope. intended And that's

We potential drill in It's you rigs, efficient have productivity, our bits connects we analytics so a where And performance in a wells, constraining gas on not make a that place to holistic contract more fracs, drilling sure well completion right It's the we the the the between to the we that number we production. to services tortuosity minimize it the improve and doing the it's directional efficient systems, more to of and then the provide everything upside. this that the do package. have can that together the putting the better data we're the wireline, And do the of the proppant, because on integration have different you data you're all of frac better natural the for manner fuel well systems. trucking, the drilling. all monitor logistics, allows things. we're across production. And placement in efficiency then And allows that the overall the do

but a the for about able work about bringing excited efficiencies participate upside But value the well. think a is this. in that efficient share So the our the the we it's a with E&P going it's as end, provide improve more good things with us Early In project. where way This the off We're services all days. bundling, to be this is is to production we from first we to not it to E&Ps a deal together the an are wells. all about and start. service of and to how can

separate Great. expect a maybe space, is, greater completion than my was you white bit, I services basis. are to sequential thought I a persisting better little the even follow-up on just that wanted more it, you're you bit understand wondering in to And is at could is just efficiency versus maybe you something play, what there natural white if little a a just which driver call grow driving seeing of Or is else gas headwinds Andy, oily maybe of basins. this gains? space? more though maybe

Yes.

because did price we're decided we So the pricing from work anything price explaining the gas point. impact that want overall the that we that more natural for next that than and gaps we're the gas basins What we've planned. work do. this other overall third some seeing services market in important activity up takeaway into when CNG the or pick protect to in white don't competitive pricing margin going important more are we quarter, said have way. think demand where we for market, natural we white going the price. as space softness is of of it I'll to to We And in margin. start space, to on we some future had in for But there's we by having some in this Permian, there our somewhat softness in quarter, what Because natural that negatively industry protect see activity for terms get words, And in the and to our the is current protect it's we segments. We all some do choice. given in potential year is gas in that there's second ourselves to out the think these and upside to goes basins the competitive at it's the or in don't at during see we just try to which still want the

see our to coming right some just because this. more So of there going own work equipment out more rates is are that there's want we to We'd little our don't are that for but space, choice, it's of we and because now. white so sector a upside the us protect certain rather

Derek with question comes from Podhaizer Barclays. Next

is the there. wanted power the conversation. services I power given being sources market these gain back able distributed you able to It Obviously, the fuel CNG demand steam talked to here sounds about like delivery. everything over we to with service power this go being that went to your not to just with out utility seeing some generation we're starting

about the solution the will talked engines just owning you expect you more battery to non-oil energy actual time. megawatt these to and natural some you Maybe do investing on turbines the applications. reciprocating own gas or power plan But in have. over thoughts storage megawatts You gas that around

Yes.

potentially. So

So electricity. operating the some natural today. produce engines produce We're we field also in gas in electricity are to turbines the to field several gas contracting recip

the agreements services And have manage under NexTier so we that natural fueling right gas those under now. we

a drive electricity of own lot megawatts field the systems. our of So in frac to we're producing terms today in

be that. to time, that. to doing in our in do grow to that we do experience the we have capital do And going efficient we I over with I so that way anticipate And anticipate But grow. are

and from systems. we're maintenance I'll tell general, turbine predictability seeing more in you costs in the more reliability, that maintenance

going probably the best think term, we that's to so be over the answer. And long that

industry. have to is within outside still We so things going supply potential about there provide to provide that it of where to backup the a we we're or see do could it's for package. solution I in tell are. bits of all early be days to we see E&P what. know as facilities. Outside natural for pieces, in keep outside a all excited industry, answers production kilowatts system different we to yes, whether not we're of the it's it direction. production it's potentially it's the we a going -- based And just I days a can a things either gas can they I'll can and provide gas and news But types potential together early pull microgrid us, blending you, different the facility CNG those the different or industry, will treatment on backup or we the facilities, how potential provide holistic in the various field, where And think for the into production you'll as facilities, battery or the companies for industry required the good the generating think megawatts within who

the next years. early we're to based having, days think I upside the discussions still So that. in there's few over on it's going be But

quickly uptick of around over In surprise I can exciting. other comments Any in the Frac legacy the some diesel customers applications a few alike. market. X capacity in just investors market. out market seeing the some can this last couple then diesel there. and actually there? talked to this we absorbed Are XXXX appreciate weeks in of all can how do your the move potentially retire thoughts or if that frac to starting activity, we some frac tighter you tightness modest be from capacity attrition tightness, pumps a seeing peers That's and excess accelerated about have get color your of overall and your Tier

Yes.

So let different a that. of me of answer areas couple

We bit the of So Tier operate We X field. the in Tier own do Tier X. I'll start a some with X. still little

investing not certainly Tier X. in are We

hours as out over So goes away X out, [ ] get parking, and it gets cut Tier it time. will

parked Tier seeing to also softness think industry. it the significant companies you're work investment. get don't a easily comes the that equipment X some because think with back I side need will in in other on the the And I market, from

several and for up, the year allowed anticipate we improvements production do in to starts to which LNG both more gas gas later natural the next is market as the The demand go and natural increase starts for Permian, thing reasons, in oil XXXX. other takeaway of for demand with

equipment sold burn that XX% natural gas. see equipment in activity to We're we're convert place demand X easy going Tier of can natural gas. is -- the that there. an for As operating we up, natural out have We're going everything essentially be burns demand on on that the gas. this to not today is start to pick

today is shortage. of that a where we shortage. get So demand Not increase, see of start is the equipment. that cycle there there of shortage into to a will There as we part type that that be a

that high burning going different in turbine pricing also going gas that's the or direct of equipment to to X so and of terms and so And for drive that's completions. in natural going more dual It's drive it's Tier drive more demand. need spec to in margins forms, whether electric drive fuel or

comes Citigroup. with Scott Our next question from Gruber

correct, route that's integrated is provide is bonus X it think come some of cycle so the well? Like back the want the bonus? based interesting. be it? plus about that It's the How it time more structure? X if color Is contract. to about making should And can be we simplistically, performance full If I X. really than pretty upon more the on you the it to I thinking or the

of than Yes. an looks numbers that of It's get into consider you potential we're things do But improving forward rates at entire -- of what there arrangement. on like these first jobs upside impact for on types more ability it's want what over bringing one off, well, it's don't will our out to that with those to market pad. kind from time. this production wells, I positively production the particular

big E&P particular case. there to so And the a be going share to is in that efficiency we're able this component with

model. this about excited we're So

help companies look early area. this do for working it's more there midsized very together. There As we that are since well. been it out E&Ps in I E&Ps the very said, put days. They on We've large that this are

broad potentially of a to that do out and improve to to type help this basket forward there's to production about what talk arrangement there well customers want and on of be for pull so us per we can And them a able production basis.

rig on count? turning should in you given And just drilling contribution around we about And the how bonus to do then you margins think bottom little think about you here? interesting. costs top. where ], we that the a margin about finds in business, kind finding its -- bottom? still Where [ guys day are [indiscernible] back XX Current of $XX,XXX average had just spot rates XQ. Are assuming the forecasting margin That's a then

at are our still about XX% utilization. rigs top-tier So

classify so that seen rigs slowdown spec. count And more we've rig the as non-Tier our on you what X on super are

bottom in to some -- today hard this because I call later think year could improvement the the potential XXXX. be that we for do see

is may get going some of rig into drawn-out there in as customers us storage. steady we this is Could it for is the trough next steady. be we a through of stable it's as of I The later up while more pricing as a think year, kind we later bit tick a count this situation, but for because work rig count we to in little be trough we year. a put as couple think But -- we're year, But of possible. some it's the Permian rigs relatively could for this up us, holding well. think, challenges relatively also gas this still

and protect pricing pricing, and the fall on rigs certain drilling the we're still with there's selective we're being brand in earlier, work level. go for. willing a completions cost not more, equipment could probably work But coverage. on as a allow below market what rig mentioned we the I our count, to lower about fixed With well, again, as And to out couple

from next with Your Piper comes Sandler. Luke Lemoine question

capable you believe percentage burning you the e-fleets are plans natural talk XX% Andy, gas performing. natural year talked maybe you about gas outlook your total around said of for how skew to fleet, now. and more I the higher? about And fleet-wide your right next even has of horsepower e-fleets Can just

we other because right do as of there. sure will that do are, shareholders want sufficient can for have over do good that burn I all There to natural well. in the grow have, want see that say XXX% not to shareholders, to pace now, we're is right do but we but that, demand our We're we grow managing make technologies we time. have measured intend we capital we going to that this But to a the that that to allow capital a return way think gas. return to is yes, out I amount electric just at electric,

next looks like, I earnings think give aspect the business. but maybe our we'll completions grow more we you to new technology on on the call, what plan of that do color

natural are Okay. any related on it XQ as uptick other sounded activity. like that to there And Or outlook, gas the Is your was drivers then primarily pumping correct? here well?

the little maybe a that. in unusual saying we is worked bumping of just against board, we rig, the with where were of on what kind remember, circumstances it's our some gas a completions natural side. think I bit more across general the and drilling had were we couple E&Ps, But the through QX

we're right gap just And challenging for did low so the part of come fill pricing in softer or certain expect up a to the go we do QX. still activity market in and going it just a a to there's not bit of price. But part we're now, and little the that

question from next Your Gengaro with comes Stifel. Stephen

Two for me.

older are how And from head the about talked of year? into conversations you around price Are Like the you diesel second seeing as this customers pricing. competition You price? assets? about how price thinking are half

pricing So our pumping at services, I'd got But say, at is across Tier this you've equipment there. market, stabilizing spot general, out pressure -- point. in and X pricing the for

because consumed and is enough at produce returns. cash you X say I we're you Tier certainly you're going that out to get can't at to And and to equipment not working higher would equipment can't breakeven think go with level close it's going the the spot pricing Tier probably so pricing I compete see rate levels. compete try and at reinvest. also X Tier tier those with X to But

that time, over so consumed. just And equipment gets

the see general, and to in not think going do going this we're for we we're the relatively majority when pricing that that stable go we lower in I think is at for and think But pricing. market. customers with for point. attrition But the to part at our compete completions of of just about I there So work what out we

And Okay. other then the follow-up completion is another integrated contracts. on the drilling one

talk forward, want you this a of if level of margin know upside. as a I revenue curious, we of a putting a I'm And I'm the mentioned sort it going I think lot becomes understand. high on I the the of at this minutia about don't how on becomes of could market think trying all bigger margin you we from at about we pricing margins? stream And risk? impact think baseline about the piece just as But with it guess about are to if kind that's contracts portfolio? part have to the you contracts. do bigger should think it

going think maybe first, discussions types first when we're on But the we're to arrangements I help wouldn't that at had in the of activity it's a and Look, what the we bringing we're having services in couple these in ways. we have look in doing and place. margin of pad

there's And so in a to the we're to giving saying, those benefits "Hey, We because certainly E&P. here to That's time. discount we're and be out benefits intent the to share bundle. the want not be not going same at able

all we're the we and that that [indiscernible] together, performance add can efficiencies potential seeing in of are provided even and particular processes everything that we production bring services forward. have is now wouldn't there maybe going if that had not in the and to the are we we what provide But contract to the this we're today arrangement that explained

Your next TPH. from question comes Jeff at LeBlanc

natural you that about XXXX, to once we that forward $XXX think in path [indiscernible] the we gas moving, are you fact utilization profit given you XXXX? as the of the towards headwinds given with work think given previously, I somewhat pricing, half this how of see look first glide to alluded curve but should taking Do [indiscernible] outside million particularly and backwardation. gross the a

the whole this debottleneck the worry then answer potentially not that gas gas are about for and a allow By production steady, see our natural E&P catalysts move in producers too. keep least XXXX, activity to their that's takeaway sector. if we do and the not increase on think bit, either there but the to constraints at Permian do the natural XXXX have little should out, that to at positive I think hard help early But I point.

know to demand we there's all some that from be going And LNG.

the wait that to efforts of I that basins. have well, how gas competing new think it's we gas as the natural I in to we'll gas will be see the of demand out going some Henry the into but see coming flows Permian and think do Hub the of natural increasing that's versus balanced between

all certainly is see today, we happening bit little but Timing think, we see are and I XXXX. so year. a predict that next in And some tough upside to from magnitude, where we

Your next RBC question comes from Keith MacKey with Markets. Capital

of Just that press your levels. give release you Can think is of natural reflected mostly current you terms the as in stand up comment particularly first follow about wanted activity gas effects today? the just why to us some on being E&P and more in consolidation in we color

Yes.

on in think In the took I in the have a you consolidation we together as when together going arms have little mean like the that themselves does decide a what year all bit early forward. the pause what you said when of sector. for about like what these lot looks operations come we the this, and E&Ps general, of questions pull a of companies activity operational

and various the mergers way make that E&Ps as right And work operational so its across kind now of their seeing we're industry through these these the work on system decisions.

kind seeing itself just pause through. of we're so And this work

from And so than I now. I it an think we're any that. it is in activity worse don't standpoint right think that gets because of

year. way its as some is of through this there works so And next upside kind into

Got it.

to I year. release And this expect number thinking has approximately second about working question the is into from much Am above capital press XX% is, I Okay. EBITDA to or CapEx just there XX%? Or closer brings that XX% too something the should reading flow on be that language? to of instead cash the noticed my to year cash of at the flow free you in convert free least XX% this of just language changed here we

our have I past, about no for that. relatively I sort you don't prepayments our concern do to especially give can capital change choose as affect you've to just don't language working in us themselves, know there change year-end customers some working intentional. around the planning intention in of that what language know was is some that. heard talk any around we capital, But that do lumpiness say our or significantly. will things It some that was that But and things like around to I

Pant, America. next Your from comes Saurabh of Bank question

start unrelated. I'll maybe Andy, something with

in press about and sheet release of opportunity? should color about look So terms a you Drilling next ADNOC it's the on big that? And May opportunity. signing very realizing us Andy, to early, non-binding or obviously forward that with issued are can but talk that's what potentially? it's steps term in I talking non-binding, a opportunity know we you some give the potentially Just a

Yes. through. things we're working There's some still

do opportunity also before, that said presence a have excited capital-efficient I it Middle excited As our we're East. in the we We're manner. an think to about in expand avenue the to we

still we mentioned, we I progress. did into you that something color a report. with announce ADNOC Drilling we look entered JV it's As form in it's have process, to more to definitive this providing ongoing. non-binding previously in agreement But But more when to this still forward

comment look forward to color, that the Andy more we you a Smith And Andy. And CapEx Perfect. had. Okay. maybe on -- follow-up Andy quick

less more is is was? that How that to more you be a just Andy, color, your in how we original remarks Is magnitude CapEx can little below I maintenance CapEx, for us it should more reduction that million think getting expensive that then base that to potential maintain you prepared assets? you what number. number? the trending? cut $XXX from give And is expect potential opportunity the about it versus level? it Can the the or where think Or

would start then backwards. go the I say from Yes. last me on -- let

say like the in increase rig would in wouldn't anything been I recently significant for change that. of necessarily I say So fleet terms on or or there's maintenance per of maintenance that capital capital, terms any

And manage. But that of some which, side, less to capital -- down. items to under around little under what can more could kind fleet number are long activity, be on be less half why obviously maintenance the we additions little that or things of a kind of are the on a back of and time, those do little and again, maintenance reduce bring to magnitude bit is, seen fair, or to in the some that, a we have the we've of replacement now growth reason like the itself order it's difficult or lent year flexibility lead capital that things

So I number and below out. in. where don't million number million want be think [ a that do I is around come specific $XXX that give to will to called $XXX ], we going -- think that's But I why it

comes Our Mitchell final question from Sean Daniel Partners. with Energy

It there? the like a seems see potentially decent there wise anything is early supply quick on -- growth you chain field bottlenecks there days. Or could anything and do the and a side, CNG the Are component Just profile leading that bottleneck? it's one business. it's see you any got on technology

Well, in some things the have a to path some IP -- interesting is we this. on we one of we're doing, what think

also of these -- long services. terms the we talk talking in the electric it's do things of in in you're in happening to it's how use, but mechanisms potential if are just volumes systems, we to turbine assemble not it But items terms believe power of are there's gas, about the be to the not just natural this of think There gas it's predict because field. about stay and also So to frac, generation well. some working and if process and we're ordering gas we're referring to about and But about we when of we've over we bottlenecks, early natural of lead natural able you some that the about the and completions we as working control been ahead having what's front the the of in equipment. but

teams going the so well field. excited I sure a really where systems be little that new in that with natural the control delivery think we've doing footprint in of more turbine more about also a at to of I'm are good can and site, lead this we're job we in long well. to the items ownership established -- of growing with our but And technology And getting only control think terms the gas as not I able our have been of make

of Andy, and one kind one. more maybe me, last just then for

about to any in you of year you'd the have good happy or Just months share? as kind -- -- guys you think bad you're next year, transaction learned lessons willing be several of kind from

great us say when believe done helped a to You they for do our do These smaller one to fortunate things. late-night these to companies heavy all to [indiscernible] but us. never that bit large X great a hours things one able on was quickly. to everybody one, outside to legal a was the was at Patterson-UTI. in It's all The it. of a get finance want time, the lot same bring we the integration they and have for really can't X help get to benefit are lifting were and that I transactions keeping I teams our teams enough through be this all one. did were little in on -- track

working conference great integration job is done last that together The said is done. team. as everybody a I on believe teams one and pulling have together. operational essentially pulling everything call, We And the

see where we for this have that certainly can You performance new the all to we're customer. have arrangement it we going contract services with that on the this run

NexTier integration right still running We're the now. though on is our because on offering. we're done, suites side it's so upside half think do the exciting even And more for we're to about working into there's us. I the that vertical integration times wireline further bring fleets

get and still I about own There's upside fleet. the our we chemicals our efficiencies services, because upside some by there. completion that of X/X our some on running that think on we're running from potential wireline, on there's probably own

some post us things within to some we're more add integration, like still small upside doing. that offers that, verticals just So what some

There million fraught details standpoint, we would I've never say, echo bringing look, that our will we with all handled the execution together. anybody from Sean, well And I worked that. the beat. And in is customer the don't seamlessly. past, missed together. talk are actually very any would a integration, really teams risk a It around any Yes, it about, acquisition, -- continue. ongoing. again, but in the said very, X company were It I don't I those think they're of in

take office as it's back imagine, could gone better. As and things we'll you -- just together, bringing I like much time, imagine can't around businesses consolidate can really these have that especially been it further, we but

that. internally worked very everybody very really that to appreciative I'm hard So on

I'll more businesses. add. points people the A couple expected in and operations better The are than we both

and So been it's pull of a be going to been lot together That's all fun to with work everybody. it able great.

is integration, it take before to my if do after. other is The team you're time me a telling because vacation take big your have going that you and point won't merger to

turn call to will Andy Hendricks All now right. over for remarks. back the I closing

again. dialing for in across thanks I for I want to our the they today. day. to want Again, it. thank thank everybody what all Appreciate Patterson-UTI teams all do And every

joining. That Thank you, today's call. you Thank everyone. for concludes

may You disconnect. now