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| 8-K - 8-K - PATTERSON UTI ENERGY INC | d819594d8k.htm |
 Bank of America Merrill Lynch
2014 Global Energy Conference
November 13, 2014
Exhibit 99.1 |
 Forward Looking Statements
2
This material and any oral statements made in connection with this material
include "forward-looking statements" within the meaning of
the Securities Act of 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 future are forward-looking statements and are inherently uncertain. The
opinions, forecasts, projections or other statements other than
statements 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 results could
differ materially from those discussed in such forward-looking
statements. Important factors that could cause actual results to differ
materially 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 Company
or
the
SEC.
These
filings
are
also
available
through
the
Company’s
web
site at http://www.patenergy.com
or through the SEC’s Electronic Data Gathering
and Analysis Retrieval System (EDGAR) at
http://www.sec.gov. We undertake no
obligation to publicly update or revise any forward-looking
statement. Statements made in this presentation include
non-GAAP financial measures. The required reconciliation to
GAAP financial measures are included on our website and at the end of
this presentation. |
 Patterson-UTI Energy is a leading
Patterson-UTI Energy is a leading
provider of contract drilling and
provider of contract drilling and
pressure pumping services
pressure pumping services
3 |
 Contract Drilling
•
High quality fleet of land drilling
rigs including 142 APEX
®
rigs
•
Leader in walking rig technology for
pad drilling applications
•
Large footprint across North
American drilling markets
Patterson-UTI reported results for the nine months ended September 30,
2014 4 |
 Pressure Pumping
•
High quality fleet of modern pressure
pumping equipment
•
A leader in natural gas bi-fuel
technology
•
Strong reputation for regional
knowledge and efficient operations
Patterson-UTI reported results for the nine months ended September 30,
2014 5 |
 Contract Drilling |
 7
Contract Drilling Capital Expenditures and Acquisitions
($ in millions)
Investing in Our Drilling Rig Fleet
More
More
than
than
$5
$5
billion
billion
invested
invested
since
since
2005
2005
2014 Capital expenditure forecast as of October 23, 2014
|
 A Rig Fleet Transformation
8
Patterson-UTI Energy Total Rig Fleet |
 …and Expected as of September 30, 2015
APEX-XK
1500™
APEX-XK
1000™ APEX
WALKING ®
APEX 1500
®
APEX 1000
®
Total APEX
®
Rigs
Class
APEX
®
Rigs as of November 13, 2014
61
4
49
44
11
169
9/30/2015
A leader in high specification drilling rigs
A leader in high specification drilling rigs
34
4
49
44
11
142
11/13/2014
APEX
®
Rig Fleet
9 |
 Permian Basin
54 Rigs
Large Geographic Footprint
10
PTEN’s Active U.S. Land Drilling Rigs
as of November 2014
East Texas
15 Rigs
Appalachia
36 Rigs
North Texas
6 Rigs
Rockies
33 Rigs
South Texas
39 Rigs |
 Why invest in APEX
®
rigs?
…the impact has been transformative! |
 Increasing APEX
®
Drilling Activity
12
Active APEX
®
Rig Count |
 PTEN Relative Active Rig Count by Rig Class
13 |
 Greater Stability of Utilization
14
APEX
®
Rig Utilization |
 Improving Average Rig Revenue Per Day
15
Patterson-UTI Total Average Rig Revenue Per Day
Excludes
early-termination
revenues
during
the
third
and
fourth
quarter
of
2013
of
$3,600
per
day
and
$130
per
day,
respectively. |
 Adjusted EBITDA Contribution from High
Specification Rigs
16
Preferred rigs account for approximately
89% of Adjusted EBITDA in Contract Drilling
Excludes
early-termination
revenues
during
the
third
and
fourth
quarter
of
2013
of
$62.8
million
and
$2.4
million,
respectively. |
 Why invest in APEX
®
rigs?
…the outlook remains strong! |
 18
U.S. Rig Count % by Drilling Type
Continued Demand for APEX
®
Rigs
Source: Baker Hughes North America Rotary Rig Count
|
 AC-powered rigs represent only half
of the horizontal rig count
Total U.S. Horizontal Rig Count by Power Type
Continued Demand for APEX
®
Rigs
Analysis from Patterson-UTI Energy based on data from RigData and company
filings. 19 |
 Why invest in APEX
®
rigs?
…Patterson-UTI is a technology leader!
|
 APEX WALKING
®
Rigs
21
•
Capable of walking with drill pipe
and collars racked in derrick
•
Full multi-directional walking
capability
•
Walking times average 45 minutes
for 10’
–
15’
well spacing
http://patenergy.com/drilling/technology/apexwalk
21 |
 Strong Demand for Pad Drilling
22
•
Pad drilling is contributing to
increasing rig efficiency
•
Pad drilling capable rigs are
highly utilized
•
Most new APEX
®
rigs
completed in 2014 are
expected to have walking
systems
http://patenergy.com/drilling/technology
22 |
 APEX-XK™
Rig Walking on Pad
23
http://patenergy.com/drilling/technology/apexwalk/
Video of
APEX-XK™
Rig
23 |
 The APEX-XK
™
24
•
Enhanced mobility including more
efficient rig up and rig down
•
Greater clearance under rig floor for
optional walking system
•
Advanced environmental spill
control integrated into drilling floor
•
Minimized number of truck loads for
rig moves
•
Available in both 1500 HP and 1000
HP
http://patenergy.com/drilling/technology
24 |
 Enhancing our Position in Pad Drilling
25
Walking Systems Can be Added to Any Rig in Our Fleet…
…Allowing for True Multi-Directional Pad Drilling Capabilities
25 |
 Enhancing our Position in Pad Drilling
26
http://patenergy.com/drilling/technology
26 |
 Early Adopter of Natural Gas Engines
27
http://patenergy.com/drilling/technology
27 |
 Using Natural Gas as a Fuel Source
28
•
First contract driller to use GE’s
Waukesha natural gas engines on
a modern land rig
•
49 rigs currently configured to use
natural gas as the primary fuel
source including 9 natural gas
powered rigs and 40 bi-fuel
capable rigs
•
We plan to add GE Waukesha
engines to one additional rig and
upgrade six additional rigs with bi-
fuel systems
•
Natural gas powered rigs can
result in up to 80% lower fuel
costs
http://patenergy.com/drilling/technology
28 |
 Pressure Pumping |
 Investing in Pressure Pumping
30
Pressure Pumping Capital Expenditures and Acquisitions
($ in millions)
More Than $1 billion invested since 2005
2014 Capital expenditure forecast as of October 23, 2014
|
 Growing Pressure Pumping Business
31
Investments in Pressure Pumping…
…Have Increased Fleet Size and Quality |
 Southwest Region:
Northeast Region:
Fracturing horsepower: 614,000
Other horsepower: 31,500
Fracturing horsepower: 304,000
Other horsepower: 55,300
A Significant Player in Regional Markets
Pressure Pumping Areas
32
Horsepower distribution as of October 23, 2014 |
 A Leader in Bi-Fuel Technology
•
Engines can burn a fuel mix
comprised of up to 70% natural
gas
•
Comparable torque and
horsepower to an all diesel engine
•
Reduces operating costs by
lowering fuel costs
•
Good for environmental
sustainability
http://patenergy.com/pressurepumping/services
33 |
 A Leader in Bi-Fuel Technology
34
http://patenergy.com/pressurepumping/services
34 |
 A Leader in Bi-Fuel Technology
35
•
One of the largest bi-fuel frac
fleets in the Marcellus
•
Approximately 1,700 stages
completed using natural gas as a
fuel source
•
Replaced more than 983,000
gallons of diesel with cleaner
burning natural gas
•
Eliminated 7.4 million pounds of
transportation loads on local
roads
http://patenergy.com/pressurepumping/services
35 |
 Comprehensive Lab Services
http://patenergy.com/pressurepumping/services
36 |
 Financial Flexibility |
 Investing in Our Company
38
Capital Expenditures and Acquisitions
($ in millions)
2014 Capital expenditure forecast as of October 23, 2014
$598
$637
$445
$453
$976
$1,012
$974
$662
$1,300
2006
2007
2008
2009
2010
2011
2012
2013
2014E |
 Strong Financial Position
39
•
History of returning capital to investors
–
Cash Dividend
•
Initiated cash dividend in 2004
•
Doubled quarterly cash dividend to $0.10 per share in February
2014
–
Stock Buyback
•
Total of $857 million repurchased since 2005
•
Repurchased $85.8 million of stock in 2013 at an average
price of $20.83
•
Approximately $187 million remaining authorization as of
September 30, 2014
•
Returned approximately $1.3 billion to shareholders since
2005 |
 Strong Financial Position
40
Total Liquidity
($ in millions)
Liquidity defined as end of period cash plus availability under revolving line
of credit *
From September 30, 2014 through October 23, 2014, the Company borrowed $170
million under the revolving credit facility, leaving approximately $290
million available as of October 23, 2014.
208
283
398
244
387
273
571
710
499
0
100
200
300
400
500
600
700
800
2006
2007
2008
2009
2010
2011
2012
2013
3Q14*
Year End
Line of Credit Availability
Cash |
 Strong Financial Position
41
Net Debt to Capital Ratio
$600 million of debt not due until at least 2020
$600 million of debt not due until at least 2020
*
From September 30, 2014 through October 23, 2014, the Company borrowed $170
million under the revolving credit
facility,
leaving
approximately
$290
million
available
as
of
October
23,
2014.
6%
2%
-4%
-2%
15%
13%
18%
14%
18%
-10%
0%
10%
20%
30%
40%
50%
2006
2007
2008
2009
2010
2011
2012
2013
3Q14*
Year End |
 Strong Financial Returns
42
Growth in Per-Share Book Value |
 Why Invest in Patterson-UTI Energy?
•
Continuing Transformation
–
Committed to high-spec land rigs where
demand remains strong
–
Creating value through focus on well
site execution
•
Technology leader
–
Leader in walking rigs for pad drilling
–
Innovator in use of natural gas as a fuel
source for both drilling and pressure
pumping
•
Financially flexible
–
Strong balance sheet
–
History of share buybacks
–
Dividends
43 |
 Bank of America Merrill Lynch
2014 Global Energy Conference
November 13, 2014 |
 Additional References |
 Active in Unconventional Plays
46
PTEN’s Active Rigs in Unconventional Areas
as of November 2014 |
 Term Contract Coverage
•
Based on term contracts in place as of October 23, 2014
–
An average of 157 rigs expected under term contract in the
fourth quarter of 2014
–
An average of 93 rigs expected under term contract during
2015
•
Drilling term contract revenue backlog of $1.7 billion at September
30, 2014
•
PTEN expects to continue signing term contracts
Improving earnings visibility and returns stability
47 |
 Strong Financial Position
•
Total liquidity of approximately $499 million*
–
$38.6 million of cash at September 30, 2014
–
$460 million revolver availability at September 30, 2014*
•
$646 million net debt at September 30, 2014*
–
18.4% Net Debt/Total Capitalization*
–
$300 million of 4.97% Series A notes due October 5, 2020
–
$300 million of 4.27% Series B notes due June 14, 2022
–
$85 million of 5-year term loan
•
No equity sales in last 14 years
•
Reduced share count by 26.0 million shares since
2005
48
*
From September 30, 2014 through October 23, 2014, the Company borrowed $170
million under our revolving credit facility, leaving approximately $290
million available as of October 23, 2014. |
 Three Months Ended
September 30,
Nine Months Ended
September 30,
2014
2013
2014
2013
Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization
(Adjusted EBITDA)(1):
Net income
$
15,976
$
74,420
$
105,081
$
171,418
Income tax expense
7,556
43,301
50,403
98,957
Net interest expense
6,759
7,210
20,812
20,494
Depreciation, depletion, amortization and impairment
237,825
140,734
538,573
414,351
Adjusted EBITDA
$
268,116
$
265,665
$
714,869
$
705,220
Total revenue
$
845,628
$
730,907
$
2,281,072
$
2,057,262
Adjusted EBITDA margin
31.7%
36.3%
31.3%
34.3%
Adjusted EBITDA by operating segment:
Contract drilling
$
202,804
$
217,289
$
557,674
$
532,812
Pressure pumping
62,795
50,677
157,913
171,471
Oil and natural gas
11,449
10,225
29,423
35,591
Corporate and other
(8,932)
(12,526)
(30,141)
(34,654)
Consolidated Adjusted EBITDA
$
268,116
$
265,665
$
714,869
$
705,220
(1)
The company makes use of financial measures that are not calculated in
accordance with U.S. generally accepted accounting principles (“GAAP”) to help in the
assessment of ongoing operating performance. These non-GAAP financial
measures are reconciled to their most directly comparable GAAP measures in the tables
above. We define Adjusted EBITDA as net income plus net interest
expense, income tax expense and depreciation, depletion, amortization and
impairment expense. We present Adjusted EBITDA because we believe it
provides additional information with respect to both the performance of our fundamental business activities and
our ability to meet our capital expenditures and working capital
requirements.
Adjusted EBITDA is not defined by GAAP and, as such, should not
be construed as an
alternative to net income (loss) or operating cash flow. We define margin as
revenues less direct operating costs. We present margin because we
believe it to be the component of our earnings most impacted by the
variability in our contract drilling and pressure pumping operations. Margin is not defined by GAAP and, as such,
should not be construed as an alternative to net income (loss).
PATTERSON-UTI ENERGY, INC.
Non-GAAP Financial Measures
49
Non-GAAP Financial Measures (Unaudited)
(dollars in thousands) |
 2013
2012
2011
2010
2009
Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization
(Adjusted EBITDA)(1):
Net income (loss)
$
188,009
$
299,477
$
322,413
$
116,942
$
(38,290)
Income tax expense (benefit)
108,432
176,196
187,938
72,856
(17,595)
Net interest expense (income)
27,441
22,196
15,465
11,098
3,767
Depreciation, depletion, amortization and impairment
597,469
526,614
437,279
333,493
289,847
Net impact of discontinued operations
-
-
(209)
1,778
1,979
Adjusted EBITDA
$
921,351
$
1,024,483
$
962,886
$
536,167
$
239,708
Total revenue
$
2,716,034
$
2,723,414
$
2,565,943
$
1,462,931
$
781,946
Adjusted EBITDA margin
33.9%
37.6%
37.5%
36.7%
30.7%
Non-GAAP Financial Measures
50
PATTERSON-UTI ENERGY, INC.
Non-GAAP Financial Measures (Unaudited)
(dollars in thousands)
(1)
The
company
makes
use
of
financial
measures
that
are
not
calculated
in
accordance
with
U.S.
generally
accepted
accounting
principles
(“GAAP”)
to
help
in
the
assessment
of
ongoing
operating
performance.
These
non-GAAP
financial
measures
are
reconciled
to
their
most
directly
comparable
GAAP
measures
in
the
tables
above.
We
define
Adjusted
EBITDA
as
net
income
plus
net
interest
expense,
income
tax
expense
and
depreciation,
depletion,
amortization
and
impairment
expense.
We
present
Adjusted
EBITDA
because
we
believe
it
provides
additional
information
with
respect
to
both
the
performance
of
our
fundamental
business
activities
and
our
ability
to
meet
our
capital
expenditures
and
working
capital
requirements.
Adjusted
EBITDA
is
not
defined
by
GAAP
and,
as
such,
should
not
be
construed
as
an
alternative
to
net
income
(loss)
or
operating
cash
flow.
We
define
margin
as
revenues
less
direct
operating
costs.
We
present
margin
because
we
believe
it
to
be
the
component
of
our
earnings
most
impacted
by
the
variability
in
our
contract
drilling
and
pressure
pumping
operations.
Margin
is
not
defined
by
GAAP
and,
as
such,
should
not
be
construed
as
an
alternative
to
net
income
(loss). |