Patterson-UTI Energy, Inc. (

PTEN

)

Q4 2011 Earnings Conference Call

February 2, 2012 10:00 AM ET

Executives

Mike Drickamer – Director of Investor Relations

Mark Siegel – Chairman of the Board and Director

Doug Wall – President and Chief Executive Officer

Analysts

Jim Rollyson – Raymond James

Joe Hill – Tudor, Pickering, Holt & Co

Dave Wilson – Howard Weil

Scott Gruber – Sanford Bernstein

John Daniel – Simmons and Company

Justin Sander – RBC Capital Markets

Luke Lemoine – Capital One

Andrea Sharkey – Gabelli & Company

John Tademir – Canaccord Genuity

Waqar Syed – Goldman Sachs

Presentation

Operator

Compare to:
Previous Statements by PTEN
» Patterson-UTI Energy's CEO Discusses Q3 2011 Results - Earnings Call Transcript
» Patterson-UTI Energy's CEO Discusses Q2 2011 Results - Earnings Call Transcript
» Patterson-UTI Energy Inc. F4Q09 (Qtr End 12/31/09) Earnings Call Transcript
» Patterson-UTI Energy, Inc. Q1 2009 Earnings Call Transcript

Good day ladies and gentlemen and welcome to the fourth quarter 2011 Patterson-UTI Energy Incorporated conference call. My name is Jena and I will be your coordinator for today. At this time all participants are in listen-only mode. We will be facilitating a question and answer session towards the end of today’s conference. (Operator Instructions)

As a reminder this conference is being recorded for replay purposes.

I would now like to turn the presentation over to your host for us today Mr. Mike Drickamer, Director of Investor Relations. Please go ahead.

Mike Drickamer

Thank you, Jena. Good morning all in behalf of Patterson-UTI Energy. I would like to welcome you to today’s conference call to discuss the results of the three and twelve months ended December 31, 2011. Participating in today’s call will be Mark Siegel, Chairman; Doug Wall, President and Chief Executive Officer; and John Vollmer, Chief Financial Officer.

Again, just a quick reminder that statements made in this conference call, will state the company's or management's intentions, beliefs, expectations or predictions for the future, are forward-looking statements. It's 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, deterioration of global economic conditions; declines in customer spending, prices that could adversely affect demand for the company's services and their associated effect on rates, utilization, margins and planned capital expenditures; excess availability of land drilling rigs and pressure pumping equipment, including as a result of reactivation or construction; adverse industry conditions; adverse credit and equity market conditions; difficulty in integrating acquisitions; shortages of labor, equipment supplies and material supplier issues; weather, loss of key customers, liabilities from operations, government regulation; 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, which may be obtained by contacting the company or the SEC. These filings are also available through the company's website and through the SEC's EDGAR system. The company undertakes no obligation to publicly update or revise any forward-looking statements.

Statements made in this conference call include non-GAAP financial measures. The required reconciliations to GAAP financial measures are included on our website

www.patenergy.com

and in the company's press release issued prior to this conference call.

And now it's my pleasure to turn the call over to Mark Siegel for some opening remarks. Mark?

Mark Siegel

Mike, thank you. Good morning and welcome to Patterson-UTI’s conference call for fourth quarter 2011. We are pleased that you are able to join us today. As is customary, I will start by briefly reviewing the financial results for the quarter ended December 31 as well as for the full year 2011 and then I will turn the call over to Doug Wall, who will share some detailed comments on each segment's operational highlights for the quarter as well as our outlook. After Doug’s comments, I will share some closing remarks before turning the call over to questions.

As said forth in our earnings press release issued this morning we reported net income of $87.6 million or $0.56 per share for the fourth quarter ended December 31, 2011 and $322 million or $2.06 per share for the full year 2011. EBITDA for the quarter improved to $272 million marking the 10

th

consecutive quarter of EBITDA growth.

The financial results for the fourth quarter include a pretax impairment charge of $11.3 million or $0.05 per share related to the previously announced retirement of 31 drilling rigs. For the full year 2011 we retired a total of 53 drilling rigs as part of an ongoing process by which we evaluate each rig in our fleet. As a result, we incurred an impairment charge of $15.7 million or less than $300,000 per rig.

While we saw sequential growth in both of our core businesses, the growth was primarily attributed to the contract drilling segment. This segment, which accounts for approximately two thirds of our revenue benefited from increasing rig activity driven by continued strength in the oil and liquids rich plays. We have now witnessed through December 30 consecutive months of growth in our U.S. rig count that is starting in July 2009. And I’m very pleased to tell you that our rig count continued to increase in January.

Additionally, the contract drilling business benefited from cost control initiatives that were geared towards reducing the cost of negatively impacted our third quarter. These cost reductions combined with $370 per day increase in average revenue per day in the U.S. led to an increase of $770 in average rig margin per day in the U.S.

Although pressure pumping revenue grew by 7% in the quarter we were disappointed by our results in this segment. At the onset I want you relate that our southwest region performed strongly in the fourth quarter and is continuing to perform well in the first quarter. In the northeast however a variety of factors impacted our pressure pumping revenue growth including certain customer specific delays and less demand for short notice work later in the quarter.

Read the rest of this transcript for free on seekingalpha.com