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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

Form 10-Q

 

 

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended June 30, 2020

or

 

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from                     to
Commission file number 1-39270

 

Patterson-UTI Energy, Inc.

(Exact name of registrant as specified in its charter)

 

 Delaware

 

75-2504748

(State or other jurisdiction of incorporation or organization)

 

(I.R.S. Employer Identification No.)

 

 

 

10713 W. Sam Houston Pkwy N, Suite 800

Houston, Texas

 

77064

(Address of principal executive offices)

 

(Zip Code)

(281) 765-7100

(Registrant’s telephone number, including area code)


N/A

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading Symbol

 

Name of each exchange on which registered

Common Stock, $0.01 Par Value

 

PTEN

 

The Nasdaq Global Select Market

Preferred Stock Purchase Rights

 

 

 

The Nasdaq Global Select Market

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.     Yes      No 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).     Yes     No 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act:

 

Large accelerated filer

 

 

Accelerated filer

 

  

Smaller reporting company

 

 

 

 

 

 

 

 

 

Non-accelerated filer

 

 

 

 

 

  

Emerging growth company

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.          

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).     Yes     No 

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

187,406,100 shares of common stock, $0.01 par value, as of July 23, 2020

 

 

 

 


 

PATTERSON-UTI ENERGY, INC. AND SUBSIDIARIES

TABLE OF CONTENTS

 

 

 

PART I — FINANCIAL INFORMATION

 

 

 

 

 

 

Page

ITEM 1.

 

Financial Statements

  

 

 

 

Unaudited condensed consolidated balance sheets

  

3

 

 

Unaudited condensed consolidated statements of operations

  

4

 

 

Unaudited condensed consolidated statements of comprehensive loss

  

5

 

 

Unaudited condensed consolidated statements of changes in stockholders’ equity

  

6

 

 

Unaudited condensed consolidated statements of cash flows

  

7

 

 

Notes to unaudited condensed consolidated financial statements

  

8

ITEM 2.

 

Management’s Discussion and Analysis of Financial Condition and Results of Operations

  

28

ITEM 3.

 

Quantitative and Qualitative Disclosures About Market Risk

  

46

ITEM 4.

 

Controls and Procedures

  

47

 

 

 

 

 

 

 

PART II — OTHER INFORMATION

 

 

 

 

 

 

 

ITEM 1.

 

Legal Proceedings

  

48

ITEM 1A.

 

Risk Factors

 

48

ITEM 2.

 

Unregistered Sales of Equity Securities and Use of Proceeds

 

50

ITEM 6.

 

Exhibits

  

51

Signature  

 

 

  

 

 

 

 

 


 

PART I — FINANCIAL INFORMATION

 

ITEM 1. Financial Statements

The following unaudited condensed consolidated financial statements include all adjustments which are, in the opinion of management, necessary for a fair statement of the results for the interim periods presented.

PATTERSON-UTI ENERGY, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(unaudited, in thousands, except share data)

 

 

June 30,

 

 

December 31,

 

 

2020

 

 

2019

 

ASSETS

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

Cash and cash equivalents

$

246,781

 

 

$

174,185

 

Accounts receivable, net of allowance for credit losses of $12,122 and $6,516

   at June 30, 2020 and December 31, 2019, respectively

 

157,981

 

 

 

339,699

 

Federal and state income taxes receivable

 

8,725

 

 

 

6,397

 

Inventory

 

34,977

 

 

 

36,357

 

Other

 

69,071

 

 

 

75,177

 

Total current assets

 

517,535

 

 

 

631,815

 

Property and equipment, net

 

3,033,829

 

 

 

3,306,677

 

Right of use asset

 

18,699

 

 

 

31,275

 

Goodwill and intangible assets

 

38,336

 

 

 

444,004

 

Deposits on equipment purchases

 

6,676

 

 

 

8,066

 

Other

 

9,730

 

 

 

17,778

 

Total assets

$

3,624,805

 

 

$

4,439,615

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

Accounts payable

$

72,958

 

 

$

170,475

 

Federal and state income taxes payable

 

 

 

 

342

 

Accrued liabilities

 

190,372

 

 

 

219,850

 

Lease liability

 

8,809

 

 

 

9,935

 

Total current liabilities

 

272,139

 

 

 

400,602

 

Long-term lease liability

 

23,556

 

 

 

26,644

 

Long-term debt, net of debt discount and issuance costs of $7,860 and $8,460

   at June 30, 2020 and December 31, 2019, respectively

 

967,140

 

 

 

966,540

 

Deferred tax liabilities, net

 

115,740

 

 

 

202,959

 

Other

 

17,357

 

 

 

9,250

 

Total liabilities

 

1,395,932

 

 

 

1,605,995

 

Commitments and contingencies (see Note 9)

 

 

 

 

 

 

 

Stockholders' equity:

 

 

 

 

 

 

 

Preferred stock, par value $.01; authorized 1,000,000 shares, no shares issued

 

 

 

 

 

Common stock, par value $.01; authorized 400,000,000 shares with 270,569,043 and

   269,372,257 issued and 187,241,124 and 192,035,870 outstanding at

   June 30, 2020 and December 31, 2019, respectively

 

2,706

 

 

 

2,694

 

Additional paid-in capital

 

2,889,163

 

 

 

2,875,680

 

Retained earnings

 

698,286

 

 

 

1,294,902

 

Accumulated other comprehensive income

 

4,787

 

 

 

5,478

 

Treasury stock, at cost, 83,327,919 and 77,336,387 shares at

   June 30, 2020 and December 31, 2019, respectively

 

(1,366,069

)

 

 

(1,345,134

)

Total stockholders' equity

 

2,228,873

 

 

 

2,833,620

 

Total liabilities and stockholders' equity

$

3,624,805

 

 

$

4,439,615

 

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

3


 

PATTERSON-UTI ENERGY, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited, in thousands, except per share data)

 

 

Three Months Ended

 

 

Six Months Ended

 

 

June 30,

 

 

June 30,

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Operating revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Contract drilling

$

171,134

 

 

$

348,138

 

 

$

438,498

 

 

$

720,530

 

Pressure pumping

 

59,533

 

 

 

251,008

 

 

 

184,640

 

 

 

498,609

 

Directional drilling

 

11,742

 

 

 

50,218

 

 

 

46,227

 

 

 

103,177

 

Other

 

7,971

 

 

 

26,401

 

 

 

26,942

 

 

 

57,620

 

Total operating revenues

 

250,380

 

 

 

675,765

 

 

 

696,307

 

 

 

1,379,936

 

Operating costs and expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Contract drilling

 

87,127

 

 

 

201,792

 

 

 

250,547

 

 

 

420,994

 

Pressure pumping

 

56,268

 

 

 

206,137

 

 

 

171,123

 

 

 

408,885

 

Directional drilling

 

12,265

 

 

 

42,102

 

 

 

44,594

 

 

 

87,704

 

Other

 

9,086

 

 

 

17,612

 

 

 

25,110

 

 

 

39,385

 

Depreciation, depletion, amortization and impairment

 

173,085

 

 

 

208,688

 

 

 

359,882

 

 

 

423,098

 

Impairment of goodwill

 

 

 

 

 

 

 

395,060

 

 

 

 

Selling, general and administrative

 

23,991

 

 

 

34,894

 

 

 

54,337

 

 

 

67,449

 

Credit loss expense

 

4,551

 

 

 

3,594

 

 

 

5,606

 

 

 

3,594

 

Restructuring expenses

 

38,338

 

 

 

 

 

 

38,338

 

 

 

 

Other operating expenses (income), net

 

4,753

 

 

 

9,071

 

 

 

5,204

 

 

 

335

 

Total operating costs and expenses

 

409,464

 

 

 

723,890

 

 

 

1,349,801

 

 

 

1,451,444

 

Operating loss

 

(159,084

)

 

 

(48,125

)

 

 

(653,494

)

 

 

(71,508

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other income (expense):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

334

 

 

 

1,756

 

 

 

991

 

 

 

2,788

 

Interest expense, net of amount capitalized

 

(10,984

)

 

 

(13,298

)

 

 

(22,208

)

 

 

(26,282

)

Other

 

85

 

 

 

92

 

 

 

170

 

 

 

209

 

Total other expense

 

(10,565

)

 

 

(11,450

)

 

 

(21,047

)

 

 

(23,285

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss before income taxes

 

(169,649

)

 

 

(59,575

)

 

 

(674,541

)

 

 

(94,793

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income tax benefit

 

(19,317

)

 

 

(10,128

)

 

 

(89,487

)

 

 

(16,732

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

$

(150,332

)

 

$

(49,447

)

 

$

(585,054

)

 

$

(78,061

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss per common share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

$

(0.81

)

 

$

(0.24

)

 

$

(3.10

)

 

$

(0.37

)

Diluted

$

(0.81

)

 

$

(0.24

)

 

$

(3.10

)

 

$

(0.37

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average number of common shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

186,633

 

 

 

207,499

 

 

 

188,654

 

 

 

209,671

 

Diluted

 

186,633

 

 

 

207,499

 

 

 

188,654

 

 

 

209,671

 

Cash dividends per common share

$

0.02

 

 

$

0.04

 

 

$

0.06

 

 

$

0.08

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

 

 

 

4


 

PATTERSON-UTI ENERGY, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(unaudited, in thousands)

 

 

Three Months Ended

 

 

Six Months Ended

 

 

June 30,

 

 

June 30,

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Net loss

$

(150,332

)

 

$

(49,447

)

 

$

(585,054

)

 

$

(78,061

)

Other comprehensive income (loss), net of taxes of $0 for all periods:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustment

 

695

 

 

 

848

 

 

 

(691

)

 

 

1,792

 

Total comprehensive loss

$

(149,637

)

 

$

(48,599

)

 

$

(585,745

)

 

$

(76,269

)

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

 

 

 

5


 

PATTERSON-UTI ENERGY, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(unaudited, in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

Common Stock

 

 

Additional

 

 

 

 

 

 

Other

 

 

 

 

 

 

 

 

 

 

Number of

 

 

 

 

 

 

Paid-in

 

 

Retained

 

 

Comprehensive

 

 

Treasury

 

 

 

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Earnings

 

 

Income (Loss)

 

 

Stock

 

 

Total

 

Balance, December 31, 2019

 

269,372

 

 

$

2,694

 

 

$

2,875,680

 

 

$

1,294,902

 

 

$

5,478

 

 

$

(1,345,134

)

 

$

2,833,620

 

Net loss

 

 

 

 

 

 

 

 

 

 

(585,054

)

 

 

 

 

 

 

 

 

(585,054

)

Foreign currency translation adjustment

 

 

 

 

 

 

 

 

 

 

 

 

 

(691

)

 

 

 

 

 

(691

)

Vesting of restricted stock units

 

1,197

 

 

 

12

 

 

 

(12

)

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation

 

 

 

 

 

 

 

13,495

 

 

 

 

 

 

 

 

 

 

 

 

13,495

 

Payment of cash dividends

 

 

 

 

 

 

 

 

 

 

(11,364

)

 

 

 

 

 

 

 

 

(11,364

)

Dividend equivalents

 

 

 

 

 

 

 

 

 

 

(198

)

 

 

 

 

 

 

 

 

(198

)

Purchase of treasury stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(20,935

)

 

 

(20,935

)

Balance, June 30, 2020

 

270,569

 

 

$

2,706

 

 

$

2,889,163

 

 

$

698,286

 

 

$

4,787

 

 

$

(1,366,069

)

 

$

2,228,873

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

Common Stock

 

 

Additional

 

 

 

 

 

 

Other

 

 

 

 

 

 

 

 

 

 

Number of

 

 

 

 

 

 

Paid-in

 

 

Retained

 

 

Comprehensive

 

 

Treasury

 

 

 

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Earnings

 

 

Income (Loss)

 

 

Stock

 

 

Total

 

Balance, December 31, 2018

 

267,316

 

 

$

2,673

 

 

$

2,827,154

 

 

$

1,753,557

 

 

$

2,487

 

 

$

(1,080,448

)

 

$

3,505,423

 

Net loss

 

 

 

 

 

 

 

 

 

 

(78,061

)

 

 

 

 

 

 

 

 

(78,061

)

Foreign currency translation adjustment

 

 

 

 

 

 

 

 

 

 

 

 

 

1,792

 

 

 

 

 

 

1,792

 

Exercise of stock options

 

700

 

 

 

7

 

 

 

9,212

 

 

 

 

 

 

 

 

 

 

 

 

9,219

 

Vesting of restricted stock units

 

777

 

 

 

8

 

 

 

(8

)

 

 

 

 

 

 

 

 

 

 

 

 

Forfeitures of restricted stock

 

(2

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation

 

 

 

 

 

 

 

20,388

 

 

 

 

 

 

 

 

 

 

 

 

20,388

 

Payment of cash dividends

 

 

 

 

 

 

 

 

 

 

(16,843

)

 

 

 

 

 

 

 

 

(16,843

)

Dividend equivalents

 

 

 

 

 

 

 

 

 

 

(236

)

 

 

 

 

 

 

 

 

(236

)

Purchase of treasury stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(163,371

)

 

 

(163,371

)

Balance, June 30, 2019

 

268,791

 

 

$

2,688

 

 

$

2,856,746

 

 

$

1,658,417

 

 

$

4,279

 

 

$

(1,243,819

)

 

$

3,278,311

 

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

 

 

 

 

6


 

PATTERSON-UTI ENERGY, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited, in thousands)

 

Six Months Ended

 

 

June 30,

 

 

2020

 

 

2019