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Patterson-UTI: Rigs to Fall 10% in Q3; Pressure Pumping to Also Decline

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Patterson-UTI reported its Q2 2019 results - here are the highlights:

Q3 - 142 Rig Average (Down -10% from Q2)

Andy Hendricks, Patterson-UTI's Chief Executive Officer, stated, "E&P companies are being extra vigilant this year in monitoring their spend due to commodity price volatility and the increased focus on spending within their budgets.  We believe E&P companies are slowing drilling and completion activity to smooth their spending run rate and reduce the risk of budget exhaustion later in the year.  Our rig count, which averaged 158 rigs during the second quarter, is expected to average 142 rigs during the third quarter."

Decline in Active Pressure Pumping Fleets in Q3

Hendricks said: "In pressure pumping, second quarter results were similar to the first quarter as improving operational efficiencies offset a decline in the number of active spreads. We ended the second quarter with 15 active spreads. Pressure pumping gross margin for the second quarter was $44.9 million on revenues of $251 million, compared to first quarter gross margin of $44.9 million on revenues of $248 million. Adjusted EBITDA per spread increased by 18% during the second quarter.

"Across the pressure pumping industry, we expect completion activity will follow drilling activity lower in the third quarter. We expect to maintain 15 active spreads during the third quarter, but we expect lower utilization of the active spreads will negatively impact pressure pumping revenues and margin."

Directional Drilling Margins Improve in Q2

"In directional drilling, gross margin improved to $8.1 million in the second quarter from $7.4 million in the first quarter, as we focused on improving our efficiency and reducing costs. In the second quarter, directional drilling direct operating costs decreased by $3.5 million to $42.1 million, offsetting a $2.7 million reduction in revenues to $50.2 million."