Attached files
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| 8-K - FORM 8-K - PATTERSON UTI ENERGY INC | d310009d8k.htm |
 Patterson-UTI
Patterson-UTI
Energy,
Energy,
Inc.
Inc.
Meetings
Meetings
With
With
Investors
Investors
March
March
2012
2012
Exhibit 99.1 |
 2
2
Forward Looking Statements
This material and any oral statements made in connection with this material
This material and any oral statements made in connection with this
material include "forward-looking statements" within the
meaning of the Securities Act of include "forward-looking
statements" within the meaning of the Securities Act of 1933 and the
Securities Exchange Act of 1934. Statements made which provide
1933 and the Securities Exchange Act of 1934. Statements made which
provide the Company’s or management’s intentions, beliefs,
expectations or predictions for the Company’s or management’s
intentions, beliefs, expectations or predictions for the future are
forward-looking statements and are inherently uncertain. The the
future are forward-looking statements and are inherently uncertain. The
opinions, forecasts, projections or other statements other than statements of
opinions, forecasts, projections or other statements other than
statements of historical fact, including, without limitation, plans and
objectives of management of historical fact, including, without
limitation, plans and objectives of management of the Company are
forward-looking statements. It is important to note that actual
the Company are forward-looking statements. It is important to note
that actual results could differ materially from those discussed in such
forward-looking results could differ materially from those discussed
in such forward-looking statements. Important factors that
could cause actual results to differ materially statements.
Important factors that could cause actual results to differ materially
include the risk factors and other cautionary statements contained from time to
include the risk factors and other cautionary statements contained from
time to time in the Company’s SEC filings, which may be obtained by
contacting the time in the Company’s SEC filings, which may be
obtained by contacting the Company or the SEC. These filings are also
available through the Company or the SEC. These filings are also
available through the Company’s web
Company’s web
site at http://www.patenergy.com
site at http://www.patenergy.com
or through the SEC’s Electronic Data Gathering
or through the SEC’s Electronic Data Gathering
and
and
Analysis
Analysis
Retrieval
Retrieval
System
System
(EDGAR)
(EDGAR)
at
at
http://www.sec.gov.
http://www.sec.gov.
We
We
undertake
undertake
no
no
obligation to publicly update or revise any forward-looking
statement. Statements obligation to publicly update or revise any
forward-looking statement. Statements made in this
presentation include non-GAAP financial measures. The required
made in this presentation include non-GAAP financial measures. The
required reconciliation to GAAP financial measures are included on our
website and at the reconciliation to GAAP financial measures are
included on our website and at the end of this presentation.
end of this presentation. |
 3
Presentation
•
•
PTEN Overview
PTEN Overview
•
•
The Energy Environment
The Energy Environment
•
•
PTEN’s Land Drilling Business
PTEN’s Land Drilling Business
•
•
PTEN’s Well Stimulation Business
PTEN’s Well Stimulation Business
•
•
PTEN Investment Highlights
PTEN Investment Highlights
•
•
Conclusions
Conclusions
A Transformation in the Energy Industry…
A Transformation in the Energy Industry…
…A Transformation at PTEN |
 4
Overview of Patterson-UTI Energy, Inc.
•
One of the “Big 3”
US land drillers (drilling
~65% of total 2011 revenues)
•
One of the top pressure pumping companies in
the US (pressure pumping ~33% of total 2011
revenues)
•
Substantial investment in new drilling and
pressure pumping equipment
•
Strong history of creating shareholder equity
•
Trading at a substantial discount to both its
historical valuation and its peers |
 Changing Energy Environment
5
Source: US Energy Information Administration, Short-Term Energy Outlook,
February 7, 2012 Decades of Declining US Crude Oil
Production… Reversed in 2009
4.0
4.5
5.0
5.5
6.0
6.5
7.0
7.5 |
 Changing Energy Environment
6
Source: US Energy Information Administration, Short-Term Energy Outlook,
February 7, 2012 Petroleum Imports as a Percent of Total
Consumption… More Demand Being Satisfied With US Production
0%
10%
20%
30%
40%
50%
60%
70% |
 7
Changing Energy Environment –
North America Land-Based Energy
Unconventional drilling and well completion has
Unconventional drilling and well completion has
evolved:
evolved:
•
•
A “manufacturing”
A “manufacturing”
approach to drilling and
approach to drilling and
well completion
well completion
•
•
Focus on oil & liquids rich plays
Focus on oil & liquids rich plays
•
•
Unconventional drilling and well completion
Unconventional drilling and well completion
techniques being applied to historically
techniques being applied to historically
conventional basins
conventional basins |
 Changing Energy Environment –
Changing Energy Environment –
Land-Based Drilling
Land-Based Drilling
PTEN’s
PTEN’s
Drilling
Drilling
Business
Business |
 9
PTEN’s Drilling Business
Preferred Rigs as of December 31, 2011
Preferred Rigs as of December 31, 2011
30 new rigs planned in 2012
30 new rigs planned in 2012
175 by the end of 2012
175 by the end of 2012
PTEN has more than 145 of these preferred rigs
…and Expected as of December 31, 2012
…and Expected as of December 31, 2012
APEX 1500
APEX 1500
APEX 1000
APEX 1000
APEX Walking
APEX Walking
Total New Rigs
Total New Rigs
Other Electric Rigs
Other Electric Rigs
Class
Class
38
38
13
13
40
40
91
91
54
54
12/31/2011
12/31/2011
61
61
15
15
45
45
121
121
54
54
12/31/2012
12/31/2012
TM
TM
TM
TM
TM
TM |
 10
PTEN’s Drilling Business
30 New Rigs expected to be added in 2012
30 New Rigs expected to be added in 2012
121
27
New APEX™
Rigs Have Significantly
Increased Fleet Quality.
0
20
40
60
80
100
120
140 |
 PTEN’s Drilling Business
11
Strong US Rig Count 2010 -
Current
0
50
100
150
200
250
2009
2010
2011 |
 12
PTEN’s Drilling Business
•
•
Increasing focus on oil & liquids rich plays
Increasing focus on oil & liquids rich plays
–
–
Horizontal drilling techniques developed for shale gas have
Horizontal drilling techniques developed for shale gas have
been a “game changer”
been a “game changer”
for oil and liquids rich shales
for oil and liquids rich shales
–
–
Approximately 60% of PTEN operating rigs are drilling for oil
Approximately 60% of PTEN operating rigs are drilling for oil
or liquids
or liquids
–
–
“Fit-for-purpose”
“Fit-for-purpose”
rigs are very active in oil & liquids rich
rigs are very active in oil & liquids rich
plays, but not all oil & liquids rich plays require
“fit-for- plays, but not all oil & liquids rich plays
require “fit-for- purpose”
purpose”
rigs (i.e. Permian and Mississippi Lime)
rigs (i.e. Permian and Mississippi Lime)
•
•
Decreasing Dry Gas Exposure
Decreasing Dry Gas Exposure
–
–
Less than 30 rigs in the US drilling for dry gas under
Less than 30 rigs in the US drilling for dry gas under
contracts that are well-to-well or that have an initial term of
contracts that are well-to-well or that have an initial term of
less than one year
less than one year
–
–
Expect continued rig movement from dry gas to oil and
Expect continued rig movement from dry gas to oil and
liquids rich areas
liquids rich areas |
 13
PTEN’s Active Rigs in Unconventional Areas
PTEN’s Active Rigs in Unconventional Areas
as of February 2012
as of February 2012
Bakken
Bakken
Haynesville
Haynesville
Marcellus
Marcellus
Barnett
Barnett
20 Rigs
PTEN’s Drilling Business
Eagle Ford
Eagle Ford
5 Rigs
7 Rigs
27 Rigs
16 Rigs
28 Rigs
22 Rigs
Niobrara
Niobrara
1 Rig
Utica
Utica
4 Rigs
Woodford
5 Rigs
Woodford
5 Rigs
Pinedale
Piceance |
 14
PTEN’s Drilling Business
PTEN has designed three types of land rigs
PTEN has designed three types of land rigs
for these “new wells”:
for these “new wells”:
•
•
Each designed to meet customer demands in
Each designed to meet customer demands in
different markets
different markets
–
–
Each has specific applications for which it is “most suitable”
Each has specific applications for which it is “most suitable”
•
•
Significance:
Significance:
–
–
Drilling is an integral part of the well “manufacturing”
Drilling is an integral part of the well “manufacturing”
business
business
•Fast drilling and “speedy”
•Fast drilling and “speedy”
rig moves
rig moves
–
–
APEX Walking ™
APEX Walking ™
rigs and APEX 1000™
rigs and APEX 1000™
rigs provide access
rigs provide access
to certain “challenging well locations”
to certain “challenging well locations”
|
 15
PTEN’s Drilling Business
APEX 1000™
APEX 1500™
APEX Walking™
•1000 HP drawworks
•Small footprint, big rig
capability
•Fast move & rig-up
•Walking system is an
optional feature
•1500 HP drawworks
•Great all purpose rig
•Fast move & rig-up
•Ideal for Eagle Ford,
Barnett, and Haynesville
•1000 to 2000 HP
drawworks
•Able to move in all
directions
•Able to “walk”
with mast
up and drill pipe/collars
in the derrick
•A leadership position in
this “fit-for-purpose”
rig
category |
 PTEN’s Drilling Business
Video of Walking Rig Moving
Video of Walking Rig Moving |
 17
PTEN’s Drilling Business
•
•
PTEN has approximately 180 other rigs in the
PTEN has approximately 180 other rigs in the
fleet of which approximately 100 are active
fleet of which approximately 100 are active
–
–
Major upgrade program has provided:
Major upgrade program has provided:
–
–
PTEN commitment to customers and service
PTEN commitment to customers and service
•
•
PTEN’s large fleet provides substantial
PTEN’s large fleet provides substantial
“upside”
“upside”
if drilling continues to increase
if drilling continues to increase
Major rig refurbishments
Major rig refurbishments
Enhanced mobility
Enhanced mobility
Iron roughnecks and other automation
Iron roughnecks and other automation
Improved mud systems
Improved mud systems |
 18
PTEN’s Drilling Business
•
•
Long term contracts*
Long term contracts*
–
–
PTEN expects to average 120 rigs under term
PTEN expects to average 120 rigs under term
contract in 2012 including 131 in the first quarter
contract in 2012 including 131 in the first quarter
–
–
Approximately 60% of active rigs in the US are
Approximately 60% of active rigs in the US are
committed under term contracts
committed under term contracts
–
–
Term contracts have an initial duration of at least
Term contracts have an initial duration of at least
12 months
12 months
–
–
Provides estimated future dayrate drilling revenue
Provides estimated future dayrate drilling revenue
stream of approximately $1.8 billion for 2012 and
stream of approximately $1.8 billion for 2012 and
beyond
beyond
–
–
Continued customer interest in term agreements
Continued customer interest in term agreements
with PTEN
with PTEN
* As of February 4, 2012
* As of February 4, 2012 |
 Changing Energy Environment –
Changing Energy Environment –
Well Stimulation
Well Stimulation
PTEN’s
PTEN’s
Pressure
Pressure
Pumping
Pumping
Business
Business |
 20
PTEN’s Pressure Pumping Business
•
•
Changing Significance of Well Stimulation
Changing Significance of Well Stimulation
–
–
Shale and other unconventional plays changed the
Shale and other unconventional plays changed the
business
business
–
–
Changing equipment (“quints”) and crew
Changing equipment (“quints”) and crew
competencies
competencies
–
–
Key to unlocking long laterals and greatly increased
Key to unlocking long laterals and greatly increased
shale production
shale production
Substantial increases in horizontal completions
Substantial increases in horizontal completions
Increasing number of stages per well
Increasing number of stages per well
Substantially higher HP requirements
Substantially higher HP requirements
Higher pressures and higher volumes
Higher pressures and higher volumes |
 Southwest Region:
21
PTEN’s Pressure Pumping Business
Northeast Region:
Fracturing horsepower: 288,500
Other horsepower: 20,270
Frac Crews under contract : 3
Fracturing horsepower: 261,000
Other horsepower: 61,300
Frac Crews under contract: 2
A Significant Player in Growing Markets
Approximately 155,000 HP under term contract
47%
53%
Fracturing Horsepower |
 22
Recent Investments in Pressure Pumping…
…Have Increased Fleet
Size and Quality PTEN’s Pressure Pumping Business
140,000 HP expected to be added in 2012
140,000 HP expected to be added in 2012
* Includes acquisition of pressure pumping assets from Key Energy
0
200
400
600
800
2006
2007
2008
2009
2010*
2011
2012E
Fracturing Horsepower
Other Horsepower
Year End
771
65 |
 23
Strong Growth in Pressure Pumping
PTEN’s Pressure Pumping Business
2006
2007
2008
2009
2010
2011
146
203
217
161
351
846
2006
2007
2008
2009
2010
2011
55
79
62
29
103
267
Revenues ($MM)
EBITDA ($MM) |
 24
Service Intensity By Region
Average Horsepower Per Well (000s HP)*
PTEN’s Pressure Pumping Business
*Source: Simmons & Company Equity Research
35
35
30
24
16
Eagle Ford
Utica
Marcellus
Permian
(Horizontal)
Permian
(Vertical) |
 25
Increasing Service Intensity
Eagle Ford Shale
PTEN’s Pressure Pumping Business
*Source: Simmons & Company Equity Research
Frac Stages*
2008
2009
2010
2011E
Leading
Edge
11
15
17
18
32
2008
2009
2010
2011E
Leading
Edge
3,700
4,350
5,500
6,000
9,200
Lateral Length* |
 26
Increasing Service Intensity
Marcellus Shale
PTEN’s Pressure Pumping Business
*Source: Simmons & Company Equity Research
2009
2010
2011E
Leading Edge
6
8
15
28
Frac Stages*
2009
2010
2011E
Leading Edge
2,750
4,000
5,000
9,000
Lateral Length* |
 PTEN’s Pressure Pumping Business
More than two-thirds of fracturing
More than two-thirds of fracturing
horsepower is less than five years old
horsepower is less than five years old
PTEN
Pressure Pumping Fleet by Age
>10
Years
5 -
10
Years
< 5
Years
12/31/2011
>10
Years
5 -
10
Years
< 5
Years
12/31/2012E
27 |
 PTEN Investment
PTEN Investment
Highlights
Highlights |
 29
PTEN Investment Highlights -
Strategic Approach
•
•
Concentrate on two core businesses
Concentrate on two core businesses
•
•
Plan to continue to grow organically
Plan to continue to grow organically
–
–
PTEN has the balance sheet and expected cash
PTEN has the balance sheet and expected cash
flow to support continued organic growth in both
flow to support continued organic growth in both
businesses
businesses
–
–
Acquisitions
Acquisitions
and
and
dispositions
dispositions
only
only
when
when
the
the
price
price
is
is
right
right |
 30
PTEN Investment Highlights
Components of
Components of
Total Revenue
Total Revenue
EBITDA
EBITDA
Contract Drilling
Contract Drilling
65%
65%
Pressure
Pressure
Pumping
Pumping
33%
33%
Oil & Natural
Oil & Natural
Gas
Gas
2%
Segment ($ in 000’s)
Segment ($ in 000’s)
Contract Drilling
Contract Drilling
$690,395
$690,395
Pressure Pumping
Pressure Pumping
266,719
266,719
Oil & Natural Gas
Oil & Natural Gas
40,944
40,944
Corporate & Other
Corporate & Other
(34,596)
(34,596)
Discontinued Operations
Discontinued Operations
(576)
(576)
Total
Total
$962,886
$962,886 |
 31
PTEN Investment Highlights
•
No equity sales in more than 11 years
•
History of returning capital to investors
–
Stock Buyback
–
Cash Dividend
Total of $592 million in 2006 through 2008
Total of $592 million in 2006 through 2008
Initiated cash dividend in 2004
Initiated cash dividend in 2004
Quarterly dividend currently $0.05 per share
Quarterly dividend currently $0.05 per share |
 32
PTEN Investment Highlights
•
•
Leading market position
Leading market position
–
–
One of the “Big 3”
One of the “Big 3”
US land drillers
US land drillers
–
–
One of the largest pressure pumping companies in the US
One of the largest pressure pumping companies in the US
–
–
Well positioned to grow organically and through
Well positioned to grow organically and through
opportunistic acquisition
opportunistic acquisition
•
•
Diverse asset base
Diverse asset base
–
–
Drilling rigs well-matched to customers’
Drilling rigs well-matched to customers’
needs
needs
–
–
Well stimulation assets that meet customers’
Well stimulation assets that meet customers’
needs
needs
•
•
Favorable industry trends
Favorable industry trends
–
–
Emerging shale and unconventional resource plays
Emerging shale and unconventional resource plays
–
–
US land drilling and pressure pumping are major
US land drilling and pressure pumping are major
beneficiaries of these trends
beneficiaries of these trends |
 33
PTEN Investment Highlights
•
•
Flexible operating model
Flexible operating model
–
–
Maximizes earnings growth during periods of increased
Maximizes earnings growth during periods of increased
activity
activity
–
–
Minimizes costs during periods of low activity
Minimizes costs during periods of low activity
–
–
Strong cash flow generation
Strong cash flow generation
•
•
Strong management team
Strong management team
–
–
Prudent financial management
Prudent financial management
–
–
Operational management that is customer responsive
Operational management that is customer responsive
–
–
Proven track record through numerous cycles
Proven track record through numerous cycles
•
•
Strong financial position
Strong financial position
–
–
Low leverage
Low leverage
–
–
Adequate liquidity to meet medium-term growth and capex
Adequate liquidity to meet medium-term growth and capex
needs
needs |
 PTEN Investment Highlights
34
30 –
30 –
40% discount to both peers
40% discount to both peers
and historical trading multiples
and historical trading multiples
Low valuation relative to both peers
and historical trading multiples
Source: Thomson One Financial
0.0
2.0
4.0
6.0
8.0
10.0
12.0
2007
2008
2009
2010
2011
2012
PTEN
HP
NBR |
 PTEN Investment Highlights
Growth in Shareholder Equity
Growth in Shareholder Equity
The Warren Buffett Standard
The Warren Buffett Standard
35
0
500
1,000
1,500
2,000
2,500
3,000
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
Thousands |
 36
•
•
Favorable trends are likely to persist in North
Favorable trends are likely to persist in North
American oil and natural gas markets
American oil and natural gas markets
•
•
US Land Drilling and Pressure Pumping are major
US Land Drilling and Pressure Pumping are major
beneficiaries of the new trends
beneficiaries of the new trends
•
•
Patterson-UTI has the right assets:
Patterson-UTI has the right assets:
–
–
Drilling rigs well-matched to the customers’
Drilling rigs well-matched to the customers’
needs
needs
–
–
Well stimulation assets that meet customers’
Well stimulation assets that meet customers’
needs
needs
–
–
Operational management that is customer responsive
Operational management that is customer responsive
–
–
Prudent financial management
Prudent financial management
•
•
Long-term record of building shareholder equity
Long-term record of building shareholder equity
Conclusions |
 Non-GAAP Financial Measures
37
Patterson-UTI Energy, Inc.
EBITDA Reconciliation
(dollars in thousands)
2011
2010
2009
2008
2007
2006
Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA):
Net income (loss)
$ 322,413
$ 116,942
$ (38,290)
$ 347,069
$ 438,639
$ 673,254
Income tax expense (benefit)
187,938
72,856
(17,595)
193,490
229,350
360,639
Net interest expense (income)
15,465
11,098
3,767
(923)
(164)
(4,310)
Depreciation, depletion, amortization and impairment
437,279
333,493
289,847
275,990
246,346
193,664
Cumulative effect of change in accounting principle
-
-
-
-
-
(687)
Results of discontinued operations:
Income tax expense (benefit)
(209)
(543)
(2,208)
2,389
2,818
10,628
Net interest expense (income)
-
-
-
7
(4)
(13)
Depreciation
-
166
2,287
2,830
2,860
2,706
Impairment of assets held for sale
-
2,155
1,900
-
-
-
Impairment of goodwill
-
-
-
9,964
-
-
EBITDA
$ 962,886
$ 536,167
$ 239,708
$ 830,816
$ 919,845
$ 1,235,881
Total Revenue
$ 2,565,943
$ 1,462,931
$ 781,946
$ 2,063,880
$ 1,986,096
$ 2,354,228
EBITDA Margin (EBITDA/Total Revenue)
37.53%
36.65%
30.66%
40.26%
46.31%
52.50% |