EX-99.1 2 d35670exv99w1.htm PRESS RELEASE exv99w1
 

Exhibit 99.1
         
For Immediate Release
  Contact:   John E. Vollmer III
 
      SVP & Chief Financial Officer
 
      Patterson-UTI Energy, Inc.
 
      (214) 360-7800
Patterson-UTI Energy Reports Record Results
for First Quarter of 2006
Board Approves Doubling of Cash Dividend;
Glenn Patterson Steps Down as President and C.O.O.
     SNYDER, Texas — May 3, 2006 — PATTERSON-UTI ENERGY, INC. (Nasdaq: PTEN) today announced record results for the first quarter ended March 31, 2006. Net income for the quarter increased by 174 percent to $159 million, or $0.91 per share, from $58 million, or $0.34 per share, for the first quarter ended March 31, 2005. Revenues for the quarter were up by 70 percent to $598 million, compared to $351 million for the first quarter of 2005.
     The Company also announced that its Board of Directors has approved a doubling of the quarterly cash dividend to $0.08 per share, or $0.32 per share on an annualized basis. The quarterly dividend is to be paid to holders of record as of June 15, 2006 and will be paid on June 30, 2006.
     The Company further stated that the Board has accepted the resignation of Glenn Patterson as President and Chief Operating Officer, in connection with his decision to retire from day-to-day responsibilities. Mr. Patterson will continue to be employed by Patterson-UTI Energy as an advisor to the Company. Cloyce A. Talbott, who currently serves as Chief Executive Officer, will assume the added duties of President.
     Mr. Patterson stated, “I had been considering reducing my involvement for quite some time, and in anticipation of this, we have been making the necessary organizational changes to ensure a smooth transition. Now that I am confident that the Company requires less of my attention, I feel free to move forward with my plans to retire from daily involvement.

 

 

     “It has been an honor to work over the years with such an exceptional group of individuals across all of our business segments. Their commitment to operational excellence and outstanding customer service has contributed greatly to our Company’s success,” he added.
     Cloyce A. Talbott stated, “We will all miss Glenn’s involvement in day-to-day activities. However, we have been aware that Glenn has been considering stepping back for quite a while, and we have been working closely with the operations personnel to make this a seamless transfer.”
     Mark S. Siegel, Chairman of Patterson-UTI Energy, stated, “We are delighted that Glenn has agreed to continue as an advisor to the Company allowing us to further benefit from his judgment and experience. As one of the original founders, he has played an enormous role in our success. Glenn built an outstanding team that is well prepared to take the Company forward.”
     Commenting on the results from drilling operations for the just concluded quarter, Mr. Talbott stated, “During the first quarter we continued to experience further increases in pricing, reflecting the continuing demand for our services, along with the ongoing scarcity of land-based drilling rigs. Compared to the fourth quarter of 2005, average revenues per operating day increased by $1,710 to a record $18,840 and our average margins per operating day grew by $1,160 to $10,180.
     He added, “Our rig count also increased sequentially from the fourth quarter of 2005. During the just completed quarter we had an average of 300 rigs operating, including 282 in the U.S. and 18 in Canada. This compares to an average of 292 rigs operating, including 275 in the U.S. and 17 in Canada for the fourth quarter of 2005. As we announced last night, our rig count in the U.S. increased in the month of April 2006 to an average of 283 rigs operating, while our average rigs operating in Canada decreased to 6 rigs, reflecting a decline in drilling activity resulting from the annual spring breakup.
     “We continue to see strong demand and are maintaining our program of activating approximately 30 drilling rigs during 2006, including 7 that have been activated so far this year,” Mr. Talbott added.
     Commenting on the financial results, Mr. Siegel stated, “Our results for this quarter once again demonstrate the earnings leverage we are able to achieve at high levels of rig utilization. While revenues increased by 70 percent, our earnings were up by 174

 

 

percent, demonstrating the economies of scale that we achieve as a result of the investment that we have made in our organization and equipment. We continue to maintain a strong balance sheet and as of March 31, 2006 we had approximately $253 million in cash and cash equivalents, $475 million in working capital and no long-term debt.”
     Mr. Siegel said that in conjunction with the Company’s previously announced stock buy back program, the Company purchased 1.25 million shares of the Company’s Common Stock during April 2006 at a cost of approximately $41 million.
     He added, “The decision to increase the cash dividend demonstrates continued confidence in the Company’s strong cash flow to fund current operations and our expectations for further growth, while allowing us to return capital to our shareholders.”
     All references to “earnings per share” in this press release are diluted earnings per share as defined within the Statement of Financial Accounting Standards No. 128.
     The Company will hold its quarterly conference call to discuss first quarter results today at 10:00 a.m. Eastern (9:00 a.m. Central and 7:00 a.m. Pacific). This call is being Webcast and can be accessed through Patterson-UTI’s Web site at www.patenergy.com or at www.streetevents.com in the Individual Investor Center. Replay of the conference call Webcast will be available through May 17, 2006 at www.patenergy.com and telephone replay of the call will be available through May 5, 2006.
About Patterson-UTI
     Patterson-UTI Energy, Inc. provides onshore contract drilling services to exploration and production companies in North America. The Company owns 403 land-based drilling rigs that operate primarily in the oil and natural gas producing regions of Texas, New Mexico, Oklahoma, Louisiana, Mississippi, Colorado, Utah, Wyoming, Montana, North Dakota, South Dakota and western Canada. Patterson-UTI Energy, Inc. is also engaged in the businesses of pressure pumping services and drilling and completion fluid services. Additionally, the Company has an exploration and production business.
 
Statements made in this press release which state the Company’s or management’s intentions, beliefs, expectations or predictions for the future 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, but are not limited to, declines in oil and natural gas prices that could adversely affect demand for the Company’s services, and their

 

 

associated effect on day rates, rig utilization and planned capital expenditures, adverse industry conditions, difficulty in integrating acquisitions, demand for oil and natural gas, and ability to retain management and field personnel. Additional information concerning factors that could cause actual results to differ materially from those in the forward-looking statements is contained from time to time in the Company’s SEC filings. Copies of these filings may be obtained by contacting the Company or the SEC.

 

 

PATTERSON-UTI ENERGY, INC.
Condensed Consolidated Statements of Income (Unaudited)
(in thousands, except per share amounts)
                 
    Three Months Ended  
    March 31,  
    2006     2005  
REVENUES
   $ 597,733     $ 350,593  
 
                
COSTS AND EXPENSES
                
Direct operating costs (excluding depreciation, depletion and impairment)
     292,265       211,949  
Depreciation, depletion and impairment
     43,549       35,215  
Selling, general and administrative
     12,811       9,673  
Bad debt expense
     600       223  
Embezzlement
     3,780       1,606  
Other
     (871 )     94  
 
            
Total Costs and Expenses
     352,134       258,760  
 
            
 
                
OPERATING INCOME
     245,599       91,833  
 
            
 
                
OTHER INCOME (EXPENSE)
                
Interest expense
     (58 )     (66 )
Interest income
     2,351       433  
Other
     84       4  
 
            
Total Other Income
     2,377       371  
 
            
 
                
INCOME BEFORE INCOME TAXES
     247,976       92,204  
 
                
INCOME TAXES
     89,407       33,984  
 
            
INCOME BEFORE CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE
     158,569       58,220  
 
                
CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE, NET OF RELATED TAX BENEFIT OF $398
     687       —  
 
            
 
                
NET INCOME
   $ 159,256     $ 58,220  
 
            
 
                
NET INCOME PER COMMON SHARE
                
Basic
   $ 0.93     $ 0.34  
 
            
Diluted
   $ 0.91     $ 0.34  
 
            
 
                
AVERAGE COMMON SHARES OUTSTANDING
                
Basic
     171,818       168,757  
 
            
Diluted
     174,313       171,742  
 
            

 

PATTERSON-UTI ENERGY, INC.
Additional Financial and Operating Data (Unaudited)
(dollars in thousands)
                 
    Three Months Ended  
    March 31,  
    2006     2005  
Contract Drilling:
                
Revenues
   $ 508,704     $ 295,389  
Direct operating costs (excluding depreciation)
   $ 233,774     $ 175,466  
Selling, general and administrative
   $ 1,788     $ 1,216  
Operating days
     27,000       23,657  
Average revenue per operating day
   $ 18.84     $ 12.49  
Average direct operating costs per operating day
   $ 8.66     $ 7.42  
Average margin per operating day
   $ 10.18     $ 5.07  
Number of owned rigs at end of period
     403       396  
Average number of rigs owned during period
     403       391  
Average rigs operating
     300       263  
Rig utilization percentage
     74 %     67 %
Capital expenditures
   $ 99,377     $ 57,735  
Pressure Pumping:
                
Revenues
   $ 31,328     $ 16,693  
Direct operating costs (excluding depreciation)
   $ 17,650     $ 10,364  
Selling, general and administrative
   $ 2,986     $ 2,202  
Total jobs
     2,711       1,909  
Average revenue per job
   $ 11.56     $ 8.74  
Average costs per job
   $ 6.51     $ 5.43  
Average margin per job
   $ 5.05     $ 3.31  
Capital expenditures
   $ 9,027     $ 7,658  
Drilling and Completion Fluids:
                
Revenues
   $ 49,181     $ 29,406  
Direct operating costs (excluding depreciation)
   $ 38,186     $ 23,949  
Selling, general and administrative
   $ 2,440     $ 2,195  
Total jobs
     487       527  
Average revenue per job
   $ 100.99     $ 55.80  
Average costs per job
   $ 78.41     $ 45.44  
Average margin per job
   $ 22.58     $ 10.36  
Capital expenditures
   $ 951     $ 586  
Oil and Natural Gas Production and Exploration:
                
Revenues
   $ 8,520     $ 9,105  
Direct operating costs (excluding depreciation, depletion and impairment)
   $ 2,655     $ 2,170  
Selling, general and administrative
   $ 638     $ 501  
Capital expenditures
   $ 4,861     $ 5,021  
Corporate and Other:
                
Selling, general and administrative
   $ 4,959     $ 3,559  
Bad debt expense
   $ 600     $ 223  
(Gain) or loss on sale of assets
   $ (871 )   $ 94  
Embezzled funds and related expenses
   $ 3,780     $ 1,606  
Capital expenditures
   $ —     $ 5,200  
Total capital expenditures, excluding acquisitions
   $ 114,216     $ 76,200  
 
                
 
   March 31,
   March 31,
 
     2006       2005  
 
            
Selected Balance Sheet Data (Unaudited):
                
Cash and cash equivalents
   $ 253,404     $ 68,296  
Current assets
   $ 802,951     $ 400,013  
Total assets
   $ 2,029,210     $ 1,368,523  
Current liabilities
   $ 327,761     $ 199,740  
Long-term debt, less current maturities
   $ —     $ —  
Working capital
   $ 475,190     $ 200,273