Patterson-UTI Energy (PTEN) 24 Oct 242024 Q3 Earnings call transcript

Good morning. Thank you for standing by. My name is Prilla, and I will be your conference operator today.

At this time, I would like to welcome everyone to the Patterson-UTI Third Quarter 2024 Earnings Conference Call. you. Thank Instructions] [Operator

like the now Michael over Sabella. to would conference turn to I

may You begin.

Good welcome results. morning, Conference operator. Smith, and you, Thank and and Officer; discuss are Hendricks, Andy third Chief today Executive Call Financial to our quarter me XXXX Officer. With Chief Andy President to Earnings Patterson-UTI's

cause forward-looking beliefs, refer company's or considered management's As subject a obligation made These in to materially. risks the or company's are and no future the company's forward-looking uncertainties that statements. publicly predictions to as SEC in this disclosed filings the actual any which intentions, are the takes to targets, revise expectations statements differ to results update reminder, The statements company conference statements. or could for call that forward-looking plans, are

prior made financial patenergy.com, Statements to in press reconciliation non-GAAP this our include website, on issued call this in The company's and financial required measures. conference to measures the conference included call. are GAAP release

I will to Andy turn Executive over Patterson-UTI's Chief Hendricks, Officer. the now call

and Patterson-UTI. year have been been to merging Welcome our and prices It's conference with NexTier call. macro Ulterra first year shifting and after services since quarter our NexTier, the leading earnings integrated Mike. industry our environment basins, solidified earnings position across for have and moves third and transformative player call Thanks, These X challenging successfully gas a activity strategic oilfield acquiring sector. Despite including has oil a as in the natural fluctuations we Ulterra. in key

term free in year excellence progress the believe have company for are for given we our investors. the long stayed operational We for and on over will and cash have segments backdrop, for well we All our made the value X performing flow of our shareholders. create just customers and that focused the

your integration. all work this crucial We and the success you employees dedication a the to of thank and of to done without begun we to unlock to more have are to many process We our want it I There commercial in been grateful of synergies. believe realize are smoother have potential extend efficient. opportunities starting you, our the contributions making just for could and we and to the sincere not operations, whose value company. hard are our further true we've integrate only

and integrated drilling returns. completions relationships and process success base strengthening financial a positioning Our broader with across the us for approach is and customer long-term entire strong

Patterson-UTI. market, Even think there's for room in growth still challenging capital-efficient a we profitable for

transaction $XXX X the cash closed, the almost since free we million In generated first quarters, of flow.

We total dividends The million have shareholders cash is net repurchases to and share share cash repurchases and $XXX debt, our XX% amounts to market current returned including flow of steady down used while while cap, free by paying that to dividend a net leases, through make reducing including our our of leases. X%. debt,

and there broad for scale compete year position any This in demand and Patterson-UTI's points to service cycle. and different well through offerings be We strength past showcased in fluctuating combined our services always that recognize our resilience has can the us size, market.

an agreement. our On products integrated a we chapter a our fully arrangement services new drilling first entire deliver and in shared exciting call, we using marking had a into under suite of entered news how broad pad, previous earnings that we performance-based completion customer value. our and This across is

for companies we models As with returns. best be shale premium evolves, will differentiated business believe positioned

for to driving companies shale, largest and the our term accretive our while deliver drilling in investors. to we are long completion of returns As in ability over one results our confident U.S. the best-in-class customers

been benefiting results from integrated this are Patterson-UTI The and approach. have our customer Both very encouraging.

to relative path ahead the accretive returns on complete are track business. We schedule expect our to overall of and

of unique being approach. close attention new customers the by Our and that are success potential market, the several to are paying strategy integrated commercial our is noticed there

are strategy could with significant We in a have upside. similar we commercial discussions this other for concept, think and potential customers

integration Performance a to along Center, PTEN truly The up and strategy be from opportunities has to our our teams, to This this by and enabled finish. our be potential our track our situation, we to customers will their with investors. commercial bring the digitally wellsite to significant value cutting-edge customers, start full will pad able think shaping where be is win-win

Rather anticipating shale phase. into the than direction lead our to market, we are to reacting company next its its and positioning

On rig drilling, Tier XXXX X through relatively to into the the and based year based on high-spec rigs drilling our and we contracts large the programs. of expect front see steady a also our our macro customer on in count for rest

However, fluctuate weaker time, see from could older at the overall the same demand rig count E&Ps. industry assets may lower-spec as smaller

within spending likely In which half through before completions, customers is in continue we activity flex frac impact XXXX. their activity recovering the to first expect to of to year-end budget, maintain will

somewhat On activity. optimism reinforcing for the we've side, long-term commodity about recently, seen the natural outlook stabilized gas prices our gas natural

to some take it the domestic fully demand market point and natural in rebalance, will LNG time gas to stabilizing online. market should some the we for come takeaway have While upside rises XXXX and is begins think some at as

quarter, a ongoing Basin. Permian observed of during slight driven primarily takeaway oil from M&A gas activity On natural third the the we customer-specific front, by constraints the and softening

remain we next steady into forward, activity expect all Going year. will

towards oil our third the our less move fluctuations do customers prices seen change we the their reduced expect not business. any we Over oil absent couple has in plans declined years, in to an customer the relative plans, change in responsive of cyclicality our prices, and end quarter, which to extended of have not customers recently. we past When the been what commodity the see to did of have

in to a of half deployment. we in this been advantage plans seen market for flow. we strong capital approach the free cash the an have Even are and second our disciplined has year, stability we challenging This as long-term generating make we have business, maintained

rig Looking ahead, be levels. we essentially average with from XXXX XXXX count our steady below in current anticipate activity will slightly

There is some gas time delays. not this although natural on at we next LNG year, improvements in based it for potential facility planning markets for industry are modest later

company the free appropriate for that working We for think capitalize cost ensure are while on room evolves has this cash to structure the is as Patterson-UTI the to generating environment. still future We opportunities there flow. strong market

are returning shareholders. cash committed We to to

M&A our In the third Services a basins. oil count in reduction to rig saw in slight we mainly due our segment, Drilling and customer early quarter,

our exceeded to expectations. Revenue progressed. gross slight day our margin challenging activity Our while adjusted daily structure, natural continues in a the capital saw gas again, to drilling quarter on remain even continue market. demonstrating per stable commitment return a increase on to our cost focus as Once we

count currently steady In and We rest activity rig the the U.S., XXX believe gas natural XXX operating we oil our are operating and likely remain began rigs. year the steady rigs fourth in through to both basins. is quarter with the of

We the our continues industry, U.S. while we operate see the one company we towards quality potential the at steady industry industry. level of activity the for the rigs. rig the Tier somewhat of to X a time, For for highest the This believe compared to provides overall lower, same count fleets move overall in the to rig move

we integrated up Completion saw a In was slightly services. towards as mix sequentially revenue shift more Services,

activity some we fixed gross that Natural quarter. Although and fourth quarter in profit completion up impacted second completion the that see did sequentially seasonality will the customers as holiday maintain to caused usual the sequentially. the unplanned activity on slowing segment leverage gaps to decline completion activity their to anticipate also was look cost decline We of combination a adjusted budgets. gas and compared

electric that of electric are financial delivering segment should the have been to from returns results hours pump We again see by fourth We higher-than-average to frac which quarter. to fully the generated fleets in see average. percentage Completion our continue equipment increase strong compared our the Services deployed,

to as Even our electric we high-grade fourth CapEx in to our our continue the fleet. expectation, increased as we recently XXX,XXX lowered horsepower XXXX we quarter

of and completion we the our Patterson-UTI, since industry are merged given time this we In trends. the during with pleased businesses year performance NexTier

upgrading to natural the the industry contributed We free while fleet able has capital maintained company. of discipline quality XX% this also and fleet, have to flow horsepower in cash with of entire strong our We generation being highest relative the believe our by significantly the our powered is peers approximately be gas. of one to

delivering Over free strong our shareholder and in secure commitment underscores technology for financial significant simultaneously a our dual the focus landscape. cash past investments made work on year, we value flow enhancing to competitive investors. business while future This growth our in have discipline to

declined. count revenue our sequentially in industry segment improving Drilling rig the Products Results with even the strong in as U.S. remained

customer addition, done excellent broader through In market service. the has outperforming team job an the superior

Services of one and our most Over year, been the our the exciting Products has coordination Drilling the teams developments team. past Drilling between

Since we Ulterra upside year, product logic industrial still the deliver has transaction this our market a We rigs drill more on think own there closed than a opportunity bits to our our strong by of which the as is to customers. unique to increased share the shows XX%, last M&A. we significant see

international and front, UAE joint the announced excited SLB. we subsidiaries Drilling previously the agreement a of signed venture On ADNOC also are in have with to

wells named Turnwell contract been in and to created has a We XXX company unconventional interest drill a for ADNOC. hold will complete XX% a newly Industries, awarded which

We region a of in expertise to participation what gain years a believe that as will in multiple will allows with drilling result activity, limited provide and ADNOC a unconventional the we capital project be and contribution. begins our could presence us valuable groundbreaking completion

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

attributable for $XXX per of a of million. and goodwill, asset shareholders $XXX to This charge in and or merger We $X.XX $X Thanks, the million million share third quarter net loss Andy. impairment integration a $X,XXX reported Total quarter. revenue reported common in was included expenses. $XXX million retirement an million the

asset million. impairment, our retirement the net and adjusted $X merger been have charge would goodwill Excluding integration income and expenses,

the million, which the also Adjusted previously mentioned excludes EBITDA quarter $XXX for items. totaled special

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

NexTier zero XXXX. of the previously a the of was to quarter, an deal during year stock-for-stock was $XXX transaction related on was a a the the merger that the XX, price that goodwill next million of reported with announcement market As time The at at the merger. charge noted, to recorded premium June share negotiated of third impairment we

transaction equity date. transaction, price the at the XXXX, in The Patterson-UTI's higher XX% goodwill recognition based announcement relative the equity segment. recorded X, to share the was higher reporting resulted the Services This of consideration recorded impairment share price time our Completion leading related the closed on higher to September consideration, from on was goodwill which to

drilling comprising components of Services would in for marketability fleet rig to to our On spare expected utility based demand will used components be a longer that to rigs evaluated marketed and rigs to the equipment. rigs necessary our retired. periodic rigs working are rigs those basis, rigs, other transferred or condition, by inactive of The to type. Drilling of The rigs for that no continuing on components to marketed our other with be are expenditures remaining we and are as evaluate condition these yards the bring active be

X third to the identified we XXXX, of be XX retired. rigs In and non-Tier legacy equipment quarter

significant view U.S., and are our in have return ever updated commercial unlikely activity to the believe the opportunity industry work these outlook limited capital to Given on drilling with for rigs investment. our we

charge million XXXX. in to third $XXX quarter a recorded this We of related the retirement

During year, quarter. the generated with we in X more cash $XXX $XXX million of flow of months free generated million the third the first than

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

addition we In This and net paying we $XXX closed shares. debt, full reducing million used steady the a NexTier Ulterra including in to quarter fourth to since have dividend. the repurchase leases acquisition, and merger is

is totaled cap, Our down of market X%. full while including in to net and same cash the that the current since first leases our over shareholders Ulterra quarter XX% returned closed, time debt, the acquisition NexTier merger

share by period. that count have time lowered X% We our same over

days. third cost Services profit day per million revenue $XXX operating our average $XX,XXX, revenue was X,XXX gross $XX,XXX. segment, quarter rig rig rig totaled Contract $XX,XXX. average was of Average The Drilling we $XXX million. with adjusted operating day day adjusted In In and gross per was per U.S. profit Drilling, totaled

recent We steady pricing continue a mostly our assets. day to steady top-tier per relatively revenue see with for

our improvement also cost We saw quarter. a sequential per during day in the

XX, place, drilling On revenue. of drilling we during XXXX term September had XX, rigs currently expect XX operating U.S., rate operating for an over rigs approximately the Based we ending providing under September contracts rigs fourth of X contracts an of average XX in in day the on $XXX quarters term future the contracts for under of contracts quarter million at XXXX. average

besides an compared $XX higher adjusted In Drilling, million. our Drilling, Drilling to mostly Directional third market other in drilling an revenue was U.S. international which quarter million services with share the businesses driven Contract and is by gross results saw Contract We gains $XX quarter, Drilling and profit improvement of second Directional margins. our

For the profit slightly fourth per expect in we with rigs adjusted XXX U.S. Drilling, less $XX,XXX. average quarter than to gross of operating Contract day active

our rate. continues reset in business reduction of contract churn in the margins is contract current as book drilling The market a function the to to

the are encouraged recent of by we term However, rates. contract resiliency

to gross to third drilling services other compared Aside be quarter. from U.S. slightly expect Contract the Drilling, adjusted down we profit

quarter Completion in totaled more $XXX saw a integration in Services segment additional jobs We adjusted the million with gross towards Revenue on a of $XXX slight increase for our profit completion-related an million. third shift with revenue services.

However, leverage fleets of on fleets those gaps, quarter. which cost fixed to second experienced compared the several impacted our unplanned

a was quarter. second basins increase of in to mostly in The natural an function the higher gas activity relative revenue

the the maintain holiday to quarter, budgets, compared expect associated downtime we there pumping within see activity to normal seasonality. spending while fourth to additional with their flex quarter customers lower our as During also hours is completion third

we quarter, approximately $XX profit Services fourth to the Completion For million. be gross adjusted expect

higher relative is our in first of likely expectations the the see adjusted to believe the XXXX for Completion this We Services half year. of profit half second gross segment to

mostly million, Third Products quarter profit gross result the of totaled a following was $XX breakup. sequentially. the The revenue Adjusted million. of $XX was X% higher sequential which Drilling in normal activity spring increase resumption in was improvement normal Canada revenue

we industry operations on U.S., see and U.S. saw count lower as share continue margins. U.S. rig the even to gains in margins strong revenue In higher our a

revenue slight and U.S. For the compared driven rig in to increase to a while decline fourth slightly expected quarter, in revenue sequential the international lower Drilling in Products count. quarter, the our profit industry a is gross third we on growth expect by business, adjusted business

adjusted Other in $XX gross for million quarter $X the revenue with totaled million profit.

gross We fourth adjusted flat profit expect other quarter the be to revenue quarter. and third with

selling, Reported in administrative third were the and quarter general expenses $XX million.

million, basis total of excluding mentioned approximately we million. amortization $XX a impairment for quarter, $XXX and was the from previously depletion, asset goodwill of expect QX, million third expenses On expense consolidated the which For SG&A depreciation, retirement. the $XXX impairment totaled drilling rig

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

including QX, During other $XX million million Drilling at Completion Services, $XXX $X Products CapEx and million Drilling total Services, in $XX in in was in million, $XX million corporate.

expect CapEx CapEx of For $XXX brings around year the we full total roughly million, fourth $XXX million. quarter, to expectation which our

We in expected way year our are CapEx our the proud original have is budget. managed CapEx this of we to our in materially below XXXX, come and

horsepower what fleets electric budget the the of original the highest rig with and one Yet quality next-generation in we than more we are drilling industry. year in the exiting expected

make discipline. while to a focus also targeted across all next-generation on strict maintaining businesses continue investments will equipment We capital in our

nothing we rating investment-grade allows us in credit XXXX. as our have closed a have protects capital, rating. rating $XXX The drawn recently until focused We lower cash note our million that credit facility structure rating. managing on our any a affirmed We well as cash in $XXX on capital credit are investment-grade million way All not maturities QX a hand. our revolving maintain do with three cost of agencies and senior on -- to

adjusted We XXXX in EBITDA generate XXXX, free in the work quarter. approximately of flow cash expect in convert of to in to prepayments cash fourth expect received to XX% flow XXXX. including another still we free quarter strong customer our We performed for

for shareholders and XXXX. for our approved Board $XX Our pay of repurchases third dividend returned QX. to we through share we will has dividend After million million dividends. at an return in QX, the least million share to have in shareholders our $XXX $X.XX goal have $XXX $XXX for quarter, Year-to-date we million our to reached per consisting

to our uses cash, continuing are further option all We including to accelerate repurchases. share the explore of

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

few want a close to takeaways. on Andy. Thanks, key I

First, they proud have we Patterson-UTI are the that capabilities businesses for excited together. product the now have work and at accomplished we're year about all last of teams and and service the over the integrate to

has We an unparalleled completions. important have an created which drilling in market, oilfield and the in services offering company

Drilling, the Contract that the of as possibly in smaller QX in before year-end first in macro rig in XXXX. E&Ps will declines expect the the quarter increasing count some slow overall see I fourth On half for industry

same Tier the relatively high-spec rig high-spec the industry count is continuing This X Patterson-UTI in at grading rigs high and involved programs While drilling larger to that will to time, are steady. due the X we of our be primarily Tier rigs.

the In while will not throughout of is way shape this seasonal quarter XXXX. an market business, representation think do take the fourth we the shows our Completions accurate a slowdown,

through XXXX, think are our As even believe utilized to as remain end there our to well top-tier advantage. fall industry off. we move work negotiations things we that the assets fleet are for the continues positioned are of working We in many lower to

Given of spare and frac of to the indicative the end in likely fleet, tighten completions be through move little QX our for there we XXXX simply, the higher the gas-powered XXXX. frac is capacity capital of setup intensity not very the demand the portion fleet average high fleet. high-end the demand in is as dynamic on Said for could natural

rig in we are the that in average the As the next even essentially through today. be than activity slightly activity we we count budget levels a from where not mentioned, could stable U.S. though worked have I And XXXX XXXX. in believe the lower year, previously for with process

As company total structured CapEx, we that technologies such, anticipate appropriately I and we will for ensure lower higher where of our be than returns. the CapEx invest will for is level XXXX the will in to that XXXX we activity. get continue

We of are our conversions segments. each on in cash focused

asset our rationalizing investing are not certain assets We going competitive forward. in longer we be and no are base that will do believe

been retired years. X for more that than have have rigs XX We idle

investing fleet to and build Additionally, year. equipment new the do by decommissioning of older these for year-end. oversupplied we assets horsepower we in or uncompetitive what market. a We about players completions diesel reduced Tier Patterson-UTI making XX% retiring role path have return Therefore, this are frac is an XXX,XXX And by the a currently industry. in to with our a even are reduce will equipment, for the leadership equipment see X not to electric in X million-horsepower supply nearly of even other taking we

benefits Patterson-UTI, integration to in our deliver size, the are customers. scale At of and to service apparent our ability best-in-class

decisions, customers service are our wellsite more which contractor become and we quality tailwind for on heavy optimistic database As program. of and a Drilling integration make data our will and be offering be selection, increasingly depth focused a of Completions that should driver

and While NexTier starting realize of transaction benefit the we still the our to are significant been and capabilities. commercial realized, there Ulterra synergies from has just fruit low-hanging are remaining, and operational full

to capital have free continue an balance flow We also sheet strong we capabilities. a deliver structure, to investment-grade while technical cash strong our and advancing expect and

drive our accelerating returns repurchases. use which incremental look potentially capital We to could shareholders, continue to our shareholder will for include our to

Q&A, hand I'll lines we'd it to Prilla. for now to over open the like and that, With

Gruber [Operator from of comes Scott Citigroup. the Instructions] Your first line question with

Can for profit can thinking flattish seasonality seems run have kind level mentioned the provide what so kind of lands? seasonality? in of about first you and printed I business you range. of aligns we for lot work in can XQ activity you free But lands any drilling of XQ get half about year back exaggerated XQ, So whether thinking XQ? But rate in the which very year. with of next a forecast. moving think just early higher given next the of provide curious pieces kind the gross on next year, you after that margins a reasonable to to where profit you certainly your to you where through here year realize the there's just feel get Completion, the profit guys here back you Andy, today, next color

Yes.

business, brings activity. that's So certainly reduction as we year. mentioned, I happen of seeing and next don't to especially the going that we but back of is Completions that of equipment at kind We QX, as pace what's think year. I up you'll think year, think to think our of But to for midyear we go this think of are we've the still first And going reset, year a do I back look had work. a the lot we over it's indicative see, start a move not the the half to clear, it of in where the

steady relatively as ramp-up it's think after well. we that So

So in the at terms of margin and structure profitability, we're company. certainly the of looking

And we XXXX the the than we on structure the at XXXX. lower overall As moves company, seen that. made that looking setup believe is already and I of some we've in for are what in we've mentioned, activity slightly

down do going really think that we of customers lots to slowing to that's improve that there's anomaly we're for QX profitability room because in the over the So with quarter. are see an what certainly

will of of had to year. this margins target in up, margins kind move the So certainly profitability that and going we're mid-level we

participation appreciate And And term? going here your certainly on near how be just you great. Is turn to term. can color just And to then sounds It's JV, longer evolve? modest to term? Turnwell I participation advisory? be some would look believe the rigs some to be participating through the just wanted is I it your that. on to term, development. to that like or is interesting JV. but somewhat I So color longer an rigs have you But provide Would very you'll don't near there you contributing aim you're more would bids? pull that pumps, opportunity provide a

Yes.

moving with participate the opportunities to resources. which unconventional excited over JV. ADNOC production for over process. is this partner that in time the in they wanted about their needle the with long this as they to We're to work So for pleased as seek us a term project, we're this develop excited really I'm

in plan we've to to some forward. people So which we're started the that already since initially go direction move providing signing to expertise, JV over

to now, we'll for over and that working program. going people expertise, owns ADNOC number rigs it's their that a slowly add there be them so And are on into with that system already project. help There's the currently of to drilling

buying are how may our we're hurdle They the is to in in of what capital of for deploying tenets and capital. be discussions with be the U.S. the part doing we to other clear has simple international like we very of spend increase opportunities the a we're shares the We rig in of count. things may to But own one that growth that. back markets have careful

standpoint. And shareholders, it And so to it capital that because plans if deployment we makes move our cash primary impact rigs from to over direction, also, our sense which there doesn't will in a is return focus. be it

So there we're I that that returning through say priorities be that working time, still at and potential us shareholders. do to could cash but to still that. are for would our this

line Stephen Gengaro of question with next comes Stifel. Your from the

start. two me, think I'll I maybe for but

what and in? of to you think where to the about is term of equipment some there pumping closer attrition think us maybe of older And type look a see the gauge You balance? kind it's kind the medium expect retiring horsepower. like kind 'XX, How when do of you about talked about get you And versus way mentioned industry you fits attrition and supply/demand older you pressure sort a 'XX, of how some bit that should of like for back oversupplied right to new frac, sort frac now.

the out overall, there making the the taking get in saying I spectrum think take the equipment. at equipment. of a look, wanted with role out announcements these seeing end approximately newer XXX,XXX added we've leadership and that, same older industry of we the time, and We horsepower At attrition. is electric high to are

we the so And that it's think is industry, do for prudent expect for to we this and us, . similar. others prudent

you're if actually that your enough the returns of work equipment. you're basin, Midland you're But doing it working maintain on type think I making not spot you're and depends doing. where to in work probably the

of So you're that. some When at us, the bigger like attrition naturally the getting some same programs you're you're of larger the on from customers. time working for

going maintaining are to in general, higher-end equipment. our but equipment, We be, it's

We have Tier equipment And to we but reinvest that time consumed the X maintenance. as from used some in the of used we during time it year, it. didn't we just

And how it. we that's so see

will you're going believe going a see think from here we're consume reinvest X with flat And fleet, think market, a mix to to activity I in we'll next down, of relatively -- we continue to we're it there the Tier same in as see next of we year. and the little bit our if we're little of overall which to year I going well. other a but we bit won't companies still in it and use

X that seeing think continue what it's equipment And in overall, So that the I players near you're it. think I not smaller own invest. would some because certainly we're investment is the in in that investing only to industry

is seeing the a that's continued trend and doing higher per more fleet. you're horsepower thing to as simul-frac, We're other consuming occasional horsepower amounts The simul-frac, well. of doing we're

activity, activities larger doing and trimul-frac. the overall with industry look more kind when occasional of companies pumping are of simul-frac these And the pressure so at more massed you

been on market. to fill the and in a have in it's of in to fleets cause a it so that is be to going that We're do be I older might so some believe going not to tightness And standpoint. invest the equipment, available it help when it's in XXXX, tight the not going past, from to going

gas gas. of And natural per everything natural use larger have natural You've the want we the that and with got is working. essentially higher amounts can that fleet People primary driver horsepower is programs. burn to gas

again we in So in XXXX, through we relatively tightens market work flat the market a I And the get that's how do it. going even once think see as year. new we

add I it equipment. higher site, But Stephen. mean, Andy a to higher little right, utilization that to again, more that, -- also bit would would that. day. of again, said I I that think equipment on now with add pumping hours XX-plus I Yes, a with we're

market So site. end is efficient same equipment, this should Tier and stands the that on at which we'll And it really stuff. attrition. today on that reason, stands of should reason the I it lower see quantify or at to today, you the attrition that economic you've diesel for the to very But X can't gotten the increase but time, less

think that more the over near that across we we'll out coming see So industry, term. the of

And Okay. other on then of right the services are incremental had there. Matt at the helpful. of of wellsite That's was, across and the that I kind team now kind adding days, the the hard back and fleet? working NexTier company-wide I integration in of kind know Where the question stand profitability very does

done a Yes. job That's with great had. thing they different of, one the NexTier all lines service

solutions was et managing moving NexMile it natural power sand, hydraulic fracturing. So just cetera, It et and [indiscernible], gas, Wireline, contracts, wasn't logistics, cetera.

the more quick acquisition of on that, the last Patterson-UTI subsegments merger then integrating on further merge fleet. were seen on the year, were together, increase that a work legacy various of missing still to as it's the upside fleet there some through gate some we've steady moving coming Patterson-UTI year. the of over There's businesses. year the that. next we of and been more on but we that And we As out of wins those And pieces post

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

has on been just Patterson. the to cash returns. flow for start Maybe priority wanted free Certainly out a

early flow talking of about on buybacks mentioned couple cash it's to to start certainly, you free And this year. But I going You're returns returns million the know call do and of times. have potentially this accelerating XXXX. $XXX a

So we is should fund table? overall I be at Is free just maybe year? could Just free kind out of just know the buyback? cash thinking really if XX% early. you we could this that framework flow? frame number? come million from be returns about use is to off you Is and flow it cash XXXX? the it free debt it's what cash to about should will And it Is potentially on how the how flow And $XXX relative for thinking next of what return? point, Or

Andy. early. is Yes. Keith, this is It

next We into cycle kind of of budget on are end our going the year. front

certainly I'm out of just And any we general, more have is if of a kind cash in as some we through a free our us can we're commitment going buyback, said doing shareholders. the to do, to recap comfortable kind do to the commit be leverage what pretty kind that not want We're and probably foresee of rating. don't want going in financing exactly the what again, say long-term leverage I so don't to that than anything of I XX% debt goal. very opposite investment-grade would our said necessarily to a and -- your of to call, that's credit with We you'd markets. recap flow jeopardize anything of

our Board. better give us, applicable once to our that I guidance what being really through and with budget gone as XXXX don't actual process but something are So goals we'll for we've our that's quarter conferred next around see

about the year, reduced even things activity of see we is also though a next lower we CapEx. talked overall One slightly that's

next cash producing going be flow year. we're So strong free still to

Yes. up Understood. operationally very -- the pad. bundling. maybe getting early integrated talk job, of just some You've learned about that this close the to you Understood. just I know commercially? clear isn't that's on you're been the lessons Andy, and finishing Can

customers? reception see they that that Do way Just it as the the see curious from to of been well? how has

done hearing so every we we've to and all there's new the Yes. With But we've certainly far well on beat that customer in is with in What we've as the the curve whole move started. really things process some bumps I'm things, process on you going pad this over completions. drilled get what as overall pleased is the very well are

And it's going so overall, really well.

today, is. thing and us interesting and But we'll a understand necessarily to to were that to all to potential customer together, some forward. try places doing in production not would more, we this our most if get their to opportunity see and the think plans as we really about have as like businesses project think run this, we of for them integrate this I what discussion some then services bring what presented I we allow are hadn't for workflows into work allow our

and then, from at than to running me, outperforming excited biggest win. we're potential. same But fact And initially, probably businesses we're more get the products selling time. more have the And so to services we the bonus the that going our would is of for course, about a

who you're for before, discussions I in is on we're days. some And said E&P, early doing project. probably what see again, still E&Ps multinational with a It's this not as other you. We're if this some

got extra out in same the as to that multinational, help some may U.S. need some and about You've help opportunities bring help your support mid-tier some be the offer when you to not a them. not think in for and the doing bolster forward expertise we bring what they're of of different where in you entire offices plenty probably production may and areas them E&Ps staffed the spectrum. our But across in

comes question from next Ati with of the Your Sachs. Modak Goldman line

into talk in for be CapEx as about and I'm Or your next target Do you fleets? then rigid the that you gas the focused back you focus relatively that. CapEx given about return are of on a CapEx, there power needs? have the more just year to So are might curious terms on approach components certain that budget the

flow. get we're to about real free general, an where cash the of I budget specific environment comfortable say, to will going in XX% in operating Yes. But not Again, our I'm pretty we're process. values. starting EBITDA converting we're dollar about just with

based to And you sort think back come of for about you on number. kind XXXX, projections a if of that into you whatever can your so

framework under to we're the likely we'll today really and that's So operate operating under. that that continue continue,

was through you is in good. pretty the work an to for color as mix 'XX and electric last mentioned today? the electric across what number And can Any year maybe what then average fleet it. hours were Got or on on provide efficiency you compare your for the that that comments prepared improvements? fleets we fleets number pumping expectations How does that

of that Good as amount equipment, pumped. question. in you all we've with don't those have increased me. the of experience more electric gain will that numbers I we we hours tell I the front

X very rates. DGB plus with you So competitive they're higher we've on get the substitution what Tier done

general, in working So it's . well.

that for little working in kind up and XX is at And we higher XX the expectation hours certainly And a out bit to that is of pumping just Everything really a all the moving there do our of are electric fleets the time. day today. at minimum. that that's a baseline same

comes question Jayaram of next Arun Your the from line with JPMorgan.

wanted to start with I Andy, Completions.

comment thoughts over perhaps Looking current for share get at bit does of if And think it strategy you to numbers, do few was wondering lost season? during you I RFP the overall in your just important appear PTEN your PTEN just share. How quarters. the the a completions past it has share on just that its back? on is could

Yes. share. we think I don't really any lost

I not is that doing primary is our customers share with and are But different think certainly it some mix focus. plans. what of customer their

our holding see play out own is focus share. cash, be it's margin. I you'll things dollars, we'll think focus is. Our our XXXX That's primary that across it's where But

quarter, have see the in still some of fourth reset to I in show half roughly cases, than share. spend we 'XX customers in same just cases that are, we you'll specific that had customer activity less will they got seeing But think budgeted. we've have wanting that in think where 'XX, the the I you're the first what some increasing the with

just conditions first about as the next Got on think here. general count to of end for about at pricing Andy, help And of But it. the as bit incremental year, about fleet half active premium the market. we us it. think of how quarter, many perhaps back a expect fourth thoughts fleets Got the an you we anomaly into come you? And think

that year think with seen you've -- I'll I the pricing. this start

has under little still We're an bit get bit the 'XX. this seen RFP pressure. into across be Could You've as season year been where we of pressure going pricing industry. more a a through

I and off of as those events pricing be that then behind will we start XXXX think us. really that kind stabilize will --

a year. from level us at back we'll think you'll fleets, the of of think QX, see and of back to I was end In in level where to first the kind active activity first the may overall where I the what not But that quarter. of be this were end get at half, by that horsepower terms it reflects it QX we

line ATB. question Syed the of comes Waqar from Your next with

building e-fleet year? Andy, new do you for have additional next plans

already reset do new we end today. gas. working gas in We will in on we're doing pump for we're may what brought expand that budget have natural We yes, within the instance, we so with to expand We've of XXX% burns bring high technology. Waqar, plans in, electric, the field that CapEx that. in market the the tech but may be natural in bringing a on to higher

which than end mix. will lower be next CapEx higher it's a little all. this the bit budget, electric But one there. I bit that's the can But gas. that will we There's think size natural said think of within not XXX% not everybody invest we've fleet the solutions at to using of continue a out overall fits I year a burn It's other it's year. a

you all taking horsepower are have that the you of have in e-fleet, e-fleet, and e-fleets traditional are type it of their running the are Okay. so they equipment conventional into XXX,XXX Or own on And then you some equipment, like the mixed of fleet? putting your you fleets?

mix have configurations. a We multiple of

X cases, we'll as And we that. where from Tier Tier with a of at the So location DGB supplement we're running X the zipper. a we've time some we on transition customer X to in well. start same we got where as on also have maybe full DGB and simul-frac, e-fleets couple do on standard some electric e-fleets and e-pumps Tier got full electric a We've DGB

a it's transition. sometimes So

that add gas. natural of Sometimes, displacement overall electric boost a it's the of couple we just to pumps

So things reasons location, we for and of variety depending customer. a do basin on

horsepower or what as Okay. and proportion of DGB And would characterize your you Tier e-fleets? fleets X

mix, probably that Basically, in value said XXX% in natural to they're some Tier there's XX% XX% DGB running combination and still -- today reset. run we're are intend of to what don't customers, fuel X is And around in dual what means natural But gas we've that of so Tier invest electric is X but there what that we mix, a both we Tier continue X. burns even and bringing it's gas. or of to that

Okay. on And question then final Drilling margin bottoming. just

for You is about get into that you $XX,XXX we as do margins see declines guidance have year? bottom additional next the or

yet. not we I'm know sure

think of I on full do to think some year. where are do worked the relatively technical on out I there. it we add-ons steady. is for really that technology rigs that haven't the and some activity us next that budget continue We do helps

are I'll I steady. that. say, things relatively would But on overall, So defer

of next Connor Jensen comes Raymond with question line from Your the James.

opportunities You where to point. with or remaining noted past you've could some there? additional give some this see to additional is synergy done do of integration examples if what Wondering still left you the and uplift NexTier could what Ulterra you there

Yes.

got the we'll it's some now NexTier the of improve. see it's that things of And still now small that So we some out I of bigger the And completion but while business, was and think more fracturing, opportunities our in our talking submitting the there's aren't NexMile doing players Completions earlier, we've it's related on has one submitting, to is especially one necessarily part And on submitting that really goes hydraulic in business and or well. the think fully the more it's growing. And there about I actually to integrated underappreciated, logistics. still where well. Wireline side, drilling, U.S. that relative we're been frac with as

the the for running with So seeing QX. us still some the work bodes XXXX. overall, and we we're down efficient in what teams think of how in they're there services that in And despite happening We're very by seeing really well customers they're some how for good providing our slowing still are customers. businesses, there things good some

it. It of that the is and good the what's color in international? Got outperformance the considering much driving is like how Maybe hear. versus also, U.S. well, That's there additional Ulterra doing reasonably some on to seems environment.

Yes.

I the job. an doing about U.S. earlier, So specifically, we're and market they're in, U.S. you yet But U.S., same down. count continue at strength as potential mentioned there's the they're across doing this the to U.S. I word grow. think I the to the come has I continue still excellent overall rig in with what use the think in show to they outside time, rig produce, And mean count the if

U.S. So I share in think some gaining been the we've

think international to go we're definitely going there. much the room share because gain in I to markets just have so more we

job. And a so they're fantastic just doing

comes from the America. question Saurabh next Your line with of Pant of Bank

a and you if future. flavor Completion on the get to to still side Andy, expect of just don't what mind, for the

the We just can Andy, around you in look year right? back, close million started $XXX with If profitability. to

the you We least true come space, Can are us would at if ending flat, thinking utilization give issues expect. to I'm So of of cost stays back. that Because it calendar million. at that activities/white much And color what space pricing, it give can right? adoption white versus $XX decline us clever some part on some pricing? is how of

certainly No, some there's I think pricing been this year. pressure

the going through that. again Permian RFP with that like of the some first has I down. natural to have gas a of been of in there white as think mix calendar. We've pricing in get of going had half people got year. pressure little a in have do even some processes had come things bids We stabilizes go we We've had basins space on. and But activity next sort bit the the that all in

by stabilizes. QX And most a of having reset impact going little so customers, early of is bit, the activity next we're to pricing because I year. be we're but into think overall the slowdown get do even a really our where though some might down

Okay.

it. Okay. I it. got I got

sounds like profitability get your is to normalize, as starts So it right? So pricing stabilizing, utilization you back?

the seen year stabilizes we've pricing Yes, early I and majority think year. this pressure of the it next

Okay.

Can frame Smith, Andy million then longer you the just as Andy. across in remind to wait year, that will should market some venture? a across the get CapEx know Turnwell have But And across split then CapEx CapEx it. year? got for a little into to reference, I for details. And next How we Perfect. bake $XXX the us for this I do of in the joint upgrades, maintenance, growth? the various we Okay. buckets

Yes.

minds So have maintenance fleets X because, we retire our CapEx as with forward, anything is growth somewhat to Tier thinking maintenance necessarily again, supply it tricky Is think about market. those incremental characterize? fleets, I as how we or when we don't electric So replace in that the would be start that about you that think you and does going it CapEx?

in items. $XX neighborhood we good that I There items $XX called traditionally we types spend that high-value of are some items on are will returns, return have of these and year. growth every mean very probably million the million those be to

fleet size rest traditional the of as kind the then as the side. of doing the And the at of kind R&M is maintaining well assets capability enhancing maintenance, same time really sort of of which is our it just our really

So forward. year it's very difficult to into maintenance break it this going either and/or

I say next go is, we're give That what forward where number at kind looking next So again, that just would just below CapEx of as quarter. and looking today, year, we pass. we're a is on we'll guidance better first at

Okay.

as planning, for ask on but you question, fair, integrated organization? chain, customers. in one the drilling feedback organization? and somebody to Okay. yourself end ask And asked within an I'll see the Andy. contracts same a know at supply execution you very quick the the biggest feedback technology completion What's I the what's and biggest you advantage that's from the the I'll Patterson-UTI from what's then advantage the What's standpoint? one, No, from the

people excitement teams to across on of type our leads and contagious. is lot excitement a the different the see in more I a and managing of aspects different that this and work. of And talk excitement lot overseeing I the project that I people see to coordinating lines. in that The the are business people. that excitement

to exciting. go that. with that's I'm so And going

Benchmark the Your of next from comes line question Company. Kurt with Hallead

number you kind times of during in know are to you recovery a the be different referenced call again maybe related a going of context beat here drag maybe here just the specifics activity in that for some customers So conviction you just the fourth that Andy, to just in completion I in horse of expect, the quarter. the the

So down clear better to fourth I to just that are telling quarter, in yet, make assuming, are want going -- slow those we're but those the here be but sure you same customers I'm you you of next to on going Is January. kicking got conviction the activity your to into year? the it that because go frac starting you on ready be in stuff have we're recovery underpinning the going

very, going have customers very restart We strong conviction these that in are XXXX. to early

so now we that biggest is cost the through Our balancing can challenge QX restart. right carrying

so service what the first in margins we the And with can But make challenge in completions right always you're else. fourth restart on along the quality in quarter. we when off sure want get safety, that because the for do seeing we with that's important the to quarter is paramount foot everything

restart. to some the going have we very So quarter convictions extra we in are because that carrying are costs they fourth strong

you. Got

a just And Products. maybe Drilling follow-up great. then the on That's Okay.

us Just in an market? you the international year share, flattening activity -- update business been of Saudi. that I guys on were the maybe conversation you of could Drilling an But revenue given how needing help. the to some out have there on the got JV, you about international into that next the months lot think update market percent through relative then Products what and especially think should give and And of what year a first international? you think of X But the can grow so do backdrop, kind which you

not the of over share our has ADNOC still other smaller be is to have I Saudi XX%. because down, there. into Even don't is Drilling a just may others. would count Saudi in of a potential numbers Dhabi me. say that. rig excited compared the relatively new percent for growth. it's the There's of the JV markets. But with part front for markets Ulterra really The of potential factoring though plans. international coming in in to of Yes, lot Abu XX% range I they're exact in about the still Really It's

facility moving a facility full to remanufacturing from a Saudi. manufacturing We're in

of only the in offshore And share well. of has started more the where so there. really markets growth We're to years. anticipate over last over play as some international getting traction couple the we company

So the potential. excited about

a so equipment and really the more can to I the make to and very putting they're selling over nimble sort those and much of it's markets, much have the businesses, you relative big long easier they that, those selling Yes, is where but on I it bits, an and all international if asset think say, be. commitment. and and can product the of the into and economics Completions Kurt, again, add service you to efficient Products, heavy you a much be more And international clear world mean would service-oriented pretty operation drill it's, into -- place term again, side Ulterra a inroads to be would really into larger they're it's around kind our know it's as this, run and markets about Drilling, to a markets Drilling

and sort reach, their to we'll continue do continue they so. international So expand of to

excited pretty So about that.

of from question the final Barclays. comes with Eddie Kim line Your

one Just me. from question

to business a have fairly the called decline completions guided So you and sequential in and steep out others XQ. into

do? to contributing based But of normal anything is and might trying think conversations more spend get kind down XQ? OPEC slowing here? to price you're to that on customers other is mentioned on seasonal you customers off holidays holding waiting oil your be at be what play or Customers budgets. here could within seeing that, that because in on volatility clarity Just You any activity outside to factors of of going there

to question, a and our That's welcome calls. good Yes.

completely So increasing these what baked of steady years I our levels couple budget of plans lot last not of have that they efficiency. until customers early completions has seeing like. to their a have number think the we've around on finished elected what that's clarity the in we're look get going yet next early to And over not customers a of efficiency. In been spend and programs year's on cases, increasing

don't really I think volatility commodities. do in it with to has

I think in on been trading don't or waiting from commodity. I range. within have customers customers they're And more any our commodities changes going hear they've from any a OPEC that been on other because that to what's signal neutral any with

E&Ps I dip didn't want in six case, planning really specific 'XX really prepare and looking overspend had customers get year's better we with the to than some budgets. see what But year In own to our this budget. I at more to reduce we that teams the and cases, we'll pace it's next their year. as things wanted were think working could think into that looks year's for normalized about this budget. And for our or next they be like more into year

of back for conference Andy to Q&A closing that end is And the Hendricks session. turn like remarks. to would our I the

Prilla. Thanks,

shareholders. today. do lot. a just And I want you for again, our all for I'd Patterson-UTI teams everybody to thank once into like So customers for our to call our of dialing work thank the and for all Thanks across that the great

now participating conference Thank and you And you. concludes you disconnect. call. may Thank all for today's this