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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 September 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.

187,493,775 shares of common stock, $0.01 par value, as of October 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

  

29

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)

 

 

September 30,

 

 

December 31,

 

 

2020

 

 

2019

 

ASSETS

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

Cash and cash equivalents

$

303,741

 

 

$

174,185

 

Accounts receivable, net of allowance for credit losses of $10,996 and $6,516

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

 

131,329

 

 

 

339,699

 

Federal and state income taxes receivable

 

4,778

 

 

 

6,397

 

Inventory

 

33,693

 

 

 

36,357

 

Other

 

58,569

 

 

 

75,177

 

Total current assets

 

532,110

 

 

 

631,815

 

Property and equipment, net

 

2,893,172

 

 

 

3,306,677

 

Right of use asset

 

17,679

 

 

 

31,275

 

Goodwill and intangible assets

 

33,151

 

 

 

444,004

 

Deposits on equipment purchases

 

4,728

 

 

 

8,066

 

Other

 

10,385

 

 

 

17,778

 

Total assets

$

3,491,225

 

 

$

4,439,615

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

Accounts payable

$

74,367

 

 

$

170,475

 

Federal and state income taxes payable

 

 

 

 

342

 

Accrued liabilities

 

181,560

 

 

 

219,850

 

Lease liability

 

7,470

 

 

 

9,935

 

Total current liabilities

 

263,397

 

 

 

400,602

 

Long-term lease liability

 

20,738

 

 

 

26,644

 

Long-term debt, net of debt discount and issuance costs of $7,634 and $8,460

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

 

967,366

 

 

 

966,540

 

Deferred tax liabilities, net

 

102,747

 

 

 

202,959

 

Other

 

17,414

 

 

 

9,250

 

Total liabilities

 

1,371,662

 

 

 

1,605,995

 

Commitments and contingencies (see Note 9)

 

 

 

 

 

 

 

Stockholders' equity:

 

 

 

 

 

 

 

Preferred stock, par value $0.01; authorized 1,000,000 shares, no shares issued

 

 

 

 

 

Common stock, par value $0.01; authorized 400,000,000 shares with 270,861,290 and

   269,372,257 issued and 187,476,087 and 192,035,870 outstanding at

   September 30, 2020 and December 31, 2019, respectively

 

2,708

 

 

 

2,694

 

Additional paid-in capital

 

2,895,753

 

 

 

2,875,680

 

Retained earnings

 

582,360

 

 

 

1,294,902

 

Accumulated other comprehensive income

 

5,005

 

 

 

5,478

 

Treasury stock, at cost, 83,385,203 and 77,336,387 shares at

   September 30, 2020 and December 31, 2019, respectively

 

(1,366,263

)

 

 

(1,345,134

)

Total stockholders' equity

 

2,119,563

 

 

 

2,833,620

 

Total liabilities and stockholders' equity

$

3,491,225

 

 

$

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

 

 

Nine Months Ended

 

 

September 30,

 

 

September 30,

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Operating revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Contract drilling

$

115,054

 

 

$

317,035

 

 

$

553,552

 

 

$

1,037,565

 

Pressure pumping

 

71,973

 

 

 

208,637

 

 

 

256,613

 

 

 

707,246

 

Directional drilling

 

10,271

 

 

 

47,037

 

 

 

56,498

 

 

 

150,214

 

Other

 

9,843

 

 

 

25,743

 

 

 

36,785

 

 

 

83,363

 

Total operating revenues

 

207,141

 

 

 

598,452

 

 

 

903,448

 

 

 

1,978,388

 

Operating costs and expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Contract drilling

 

59,117

 

 

 

188,934

 

 

 

309,664

 

 

 

609,928

 

Pressure pumping

 

63,721

 

 

 

176,306

 

 

 

234,844

 

 

 

585,191

 

Directional drilling

 

9,754

 

 

 

56,215

 

 

 

54,348

 

 

 

143,919

 

Other

 

8,665

 

 

 

31,759

 

 

 

33,775

 

 

 

71,144

 

Depreciation, depletion, amortization and impairment

 

157,319

 

 

 

400,764

 

 

 

517,201

 

 

 

823,862

 

Impairment of goodwill

 

 

 

 

17,800

 

 

 

395,060

 

 

 

17,800

 

Selling, general and administrative

 

22,355

 

 

 

34,231

 

 

 

76,692

 

 

 

101,680

 

Credit loss expense

 

 

 

 

 

 

 

5,606

 

 

 

3,594

 

Restructuring expenses

 

 

 

 

 

 

 

38,338

 

 

 

 

Other operating expenses (income), net

 

776

 

 

 

(252

)

 

 

5,980

 

 

 

83

 

Total operating costs and expenses

 

321,707

 

 

 

905,757

 

 

 

1,671,508

 

 

 

2,357,201

 

Operating loss

 

(114,566

)

 

 

(307,305

)

 

 

(768,060

)

 

 

(378,813

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other income (expense):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

238

 

 

 

1,693

 

 

 

1,229

 

 

 

4,481

 

Interest expense, net of amount capitalized

 

(11,288

)

 

 

(20,739

)

 

 

(33,496

)

 

 

(47,021

)

Other

 

512

 

 

 

119

 

 

 

682

 

 

 

328

 

Total other expense

 

(10,538

)

 

 

(18,927

)

 

 

(31,585

)

 

 

(42,212

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss before income taxes

 

(125,104

)

 

 

(326,232

)

 

 

(799,645

)

 

 

(421,025

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income tax benefit

 

(12,993

)

 

 

(64,513

)

 

 

(102,480

)

 

 

(81,245

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

$

(112,111

)

 

$

(261,719

)

 

$

(697,165

)

 

$

(339,780

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss per common share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

$

(0.60

)

 

$

(1.31

)

 

$

(3.70

)

 

$

(1.65

)

Diluted

$

(0.60

)

 

$

(1.31

)

 

$

(3.70

)

 

$

(1.65

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average number of common shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

187,280

 

 

 

199,343

 

 

 

188,193

 

 

 

206,191

 

Diluted

 

187,280

 

 

 

199,343

 

 

 

188,193

 

 

 

206,191

 

Cash dividends per common share

$

0.02

 

 

$

0.04

 

 

$

0.08

 

 

$

0.12

 

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

 

 

Nine Months Ended

 

 

September 30,

 

 

September 30,

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Net loss

$

(112,111

)

 

$

(261,719

)

 

$

(697,165

)

 

$

(339,780

)

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustment

 

218

 

 

 

854

 

 

 

(473

)

 

 

2,646

 

Total comprehensive loss

$

(111,893

)

 

$

(260,865

)

 

$

(697,638

)

 

$

(337,134

)

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

 

 

 

 

 

 

 

 

 

 

(697,165

)

 

 

 

 

 

 

 

 

(697,165

)

Foreign currency translation adjustment

 

 

 

 

 

 

 

 

 

 

 

 

 

(473

)

 

 

 

 

 

(473

)

Vesting of restricted stock units

 

1,489

 

 

 

14

 

 

 

(14

)

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation

 

 

 

 

 

 

 

20,087

 

 

 

 

 

 

 

 

 

 

 

 

20,087

 

Payment of cash dividends

 

 

 

 

 

 

 

 

 

 

(15,110

)

 

 

 

 

 

 

 

 

(15,110

)

Dividend equivalents

 

 

 

 

 

 

 

 

 

 

(267

)

 

 

 

 

 

 

 

 

(267

)

Purchase of treasury stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(21,129

)

 

 

(21,129

)

Balance, September 30, 2020

 

270,861

 

 

$

2,708

 

 

$

2,895,753

 

 

$

582,360

 

 

$

5,005

 

 

$

(1,366,263

)

 

$

2,119,563

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

(339,780

)

 

 

 

 

 

 

 

 

(339,780

)

Foreign currency translation adjustment

 

 

 

 

 

 

 

 

 

 

 

 

 

2,646

 

 

 

 

 

 

2,646

 

Exercise of stock options

 

700

 

 

 

7

 

 

 

9,212

 

 

 

 

 

 

 

 

 

 

 

 

9,219

 

Vesting of restricted stock units

 

1,210

 

 

 

12

 

 

 

(12

)

 

 

 

 

 

 

 

 

 

 

 

 

Forfeitures of restricted stock

 

(2

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation

 

 

 

 

 

 

 

30,058

 

 

 

 

 

 

 

 

 

 

 

 

30,058

 

Payment of cash dividends

 

 

 

 

 

 

 

 

 

 

(24,690

)

 

 

 

 

 

 

 

 

(24,690

)

Dividend equivalents

 

 

 

 

 

 

 

 

 

 

(396

)

 

 

 

 

 

 

 

 

(396

)

Purchase of treasury stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(239,494

)

 

 

(239,494

)

Balance, September 30, 2019

 

269,224

 

 

$

2,692

 

 

$

2,866,412

 

 

$

1,388,691

 

 

$

5,133