Patterson-UTI Energy Says For Q1, Drilling Products Revenue Is Expected To Be ~$90M, With $50M In Direct Operating Costs And An Adjusted Gross Profit Of $40M

Author: Benzinga Newsdesk | February 14, 2024 07:58pm

 

Outlook

At current commodity prices, we expect oil basin activity to remain relatively steady throughout the year. Activity in natural gas basins could see an impact from current low natural gas prices.

In the Drilling Services segment, we expect to operate an average of 120 U.S. rigs in the first quarter, up from an average of 118 in the fourth quarter. We believe our sequential activity will outperform the industry average in the first quarter. We expect first quarter Drilling Services adjusted gross profit will be relatively flat compared to the fourth quarter, with a relatively flat adjusted gross profit in U.S. Contract Drilling.

Completion Services activity has mostly been steady through the first quarter, although we are seeing some white space as we strategically reposition our fleets in response to natural gas prices. After finishing a stronger than expected fourth quarter, for the first quarter, Completion Services revenue is expected to be $940-950 million with approximately $750 million in direct operating costs and an adjusted gross profit of $190-200 million.

Drilling Products demand is expected to remain steady through the first quarter, given the expectation for a steady market in both the U.S. and International markets relative to what we saw in the fourth quarter. For the first quarter, Drilling Products revenue is expected to be approximately $90 million, with $50 million in direct operating costs and an adjusted gross profit of $40 million. We expect $5 million in non-cash direct operating costs associated with the step-up in value at Ulterra, without which our segment adjusted gross profit expectation would be $45 million.

For the first quarter, Other revenue and adjusted gross profit is expected to be roughly flat with the fourth quarter.

For the first quarter, we expect selling, general and administrative expense of approximately $65 million, and depreciation, depletion, amortization, and impairment expense of approximately $280 million.

For 2024, we expect an effective tax rate of approximately 24%, with annual cash taxes expected to be $35-45 million after utilizing tax attributes to offset a portion of our taxable income.

For 2024, we expect capital expenditures of approximately $740 million, comprised of $285 million for Drilling Services, $360 million for Completion Services, $55 million for Drilling Products, and $40 million for Other and Corporate.

For purposes of the shareholder return target, the Company defines free cash flow as net cash provided by operating activities less capital expenditures. The shareholder return target, including the amount and timing of any dividend payments and/or share repurchases are subject to the discretion of the Company's Board of Directors and will depend upon business conditions, results of operations, financial condition, terms of the Company's debt agreements and other factors.

All references to "per share" in this press release are diluted earnings per common share as defined within Accounting Standards Codification Topic 260.

Posted In: PTEN