Patterson-UTI Energy | research notes

Patterson-UTI Energy: A Leader in Oilfield Services

Patterson-UTI Energy, Inc. (PTEN) is one of the largest onshore drilling contractors in the United States and internationally. Headquartered in Houston, Texas, the company provides a comprehensive suite of services to energy producers, including contract drilling, pressure pumping, and directional drilling.

History

Patterson-UTI Energy was formed in 2018 through the merger of Patterson Energy Services and UTI Energy. Patterson Energy Services was founded in 1956, while UTI Energy was established in 1978. Both companies had a long history of successful operations in the oil and gas industry.

Core Services

• Contract Drilling: Patterson-UTI Energy owns and operates a fleet of over 1,000 drilling rigs, ranging from land-based to offshore units. The company provides drilling services under contracts with oil and gas companies, covering both horizontal and directional drilling techniques.
• Pressure Pumping: The company's pressure pumping division provides hydraulic fracturing services, which are used to enhance hydrocarbon production from unconventional oil and gas plays. Patterson-UTI Energy has a fleet of over 700 frac pumps and more than 9,000,000 horsepower of pumping capacity.
• Directional Drilling: Patterson-UTI Energy offers directional drilling services, which enable oil and gas companies to access hydrocarbons from complex and challenging geological formations. The company uses advanced drilling technologies to improve wellbore accuracy and efficiency.

Geographic Presence

Patterson-UTI Energy has a significant presence in the following regions:

• United States (West Texas, Bakken, Marcellus, Eagle Ford)
• Canada (Western Canada)
• Middle East (Saudi Arabia, Oman)
• South America (Colombia, Ecuador)

Financial Performance

Patterson-UTI Energy has been a consistent performer in the oilfield services industry. In 2022, the company reported revenue of $5.9 billion and net income of $750 million. The company's financial performance is heavily influenced by the cyclical nature of the oil and gas industry.

Growth Strategy

Patterson-UTI Energy's growth strategy focuses on:

• Expanding its drilling operations in key North American basins
• Expanding its pressure pumping capabilities
• Expanding geographically into new markets
• Enhancing its technology and data analytics capabilities

Outlook

The long-term outlook for Patterson-UTI Energy is positive. The increasing demand for oil and gas, coupled with advancements in drilling technology, is expected to drive growth for the company's services. Additionally, the company's global presence and strong financial position will enable it to capitalize on opportunities in new markets.

Patterson-UTI Energy's Business Model

Patterson-UTI Energy is a leading provider of onshore drilling and pressure pumping services in North America. Its business model primarily consists of:

• Drilling Services: Provides drilling, completion, and intervention services for oil and gas producers using a fleet of over 600 drilling rigs and associated equipment.
• Pressure Pumping Services: Offers hydraulic fracturing, sand control, and other pressure pumping services to enhance oil and gas recovery from wells.
• Directional Drilling: Specializes in complex and directional drilling operations, including horizontal and extended-reach wells.
• Rental Tools: Rents out a wide range of specialized drilling and pressure pumping tools to oil and gas operators.

Advantages over Competitors

Patterson-UTI Energy has several key advantages over its competitors:

• Scale and Diversification: The company's large fleet of drilling rigs, pressure pumping units, and rental tools provides a significant scale advantage. Its diversified service offerings allow it to meet a wide range of customer needs.
• Established Customer Base: Patterson-UTI Energy has a strong customer base consisting of major oil and gas producers in North America. These relationships provide recurring revenue and enable cross-selling opportunities.
• Operational Efficiency: The company has implemented standardized processes and technology to improve operational efficiency, reduce costs, and enhance safety.
• Financial Strength: Patterson-UTI Energy maintains a strong financial position with low debt levels and a solid cash flow. This allows the company to invest in new equipment and technologies to maintain its competitive edge.
• Reputation for Quality and Safety: The company has a strong reputation for providing high-quality services and prioritizing safety in its operations. This attracts customers seeking reliable and trustworthy drilling and pressure pumping partners.
• Technological Innovation: Patterson-UTI Energy invests in research and development to introduce innovative technologies, such as advanced drilling systems and remote monitoring capabilities, which improve efficiency and reduce operational costs.
• Global Expansion: The company has expanded its operations into international markets, including the Middle East and Latin America, to diversify its revenue streams and pursue growth opportunities.

Patterson-UTI Energy Company

Overview

Patterson-UTI Energy Company is a leading provider of onshore contract drilling and pressure pumping services to the oil and gas industry in the United States. The company operates in the following segments:

• Contract Drilling: Provides drilling services, including directional drilling, horizontal drilling, and well completions, to oil and gas producers.
• Pressure Pumping: Offers hydraulic fracturing and other pressure pumping services to stimulate oil and gas production from wells.
• Service Rigs: Provides specialized equipment and services for well servicing, workovers, and other operations.

Market Position

• One of the largest onshore contract drilling companies in the United States.
• Operates a fleet of over 600 drilling rigs.
• Top-tier provider of pressure pumping services with a significant market share.

Financial Performance

Recent Results:

• Revenue: $4.3 billion in 2021
• Net income: $366 million in 2021

Outlook:

• Improving market conditions with increasing drilling activity.
• Strong demand for pressure pumping services.
• Continued focus on cost optimization and efficiency.

Strengths

• Diversified revenue streams from both drilling and pressure pumping segments.
• Strong customer relationships with major oil and gas companies.
• Extensive industry experience and technical expertise.
• Large and modern fleet of equipment.

Opportunities

• Increasing exploration and production activity in US onshore basins.
• Growing demand for hydraulic fracturing services due to unconventional oil and gas development.
• Opportunities for market share gains through acquisitions or strategic partnerships.

Challenges

• Fluctuations in oil and gas prices can impact industry activity levels.
• Competition from other drilling and pressure pumping companies.
• Regulatory and environmental compliance requirements.

Management Team

• William H. Restrepo, President and CEO
• David G. Cullinane, CFO
• John R. Johnson, COO

Headquarters

• Houston, Texas

Stock Performance

• Traded on the New York Stock Exchange (NYSE: PTEN)
• Current market capitalization: Approximately $1.9 billion

Industry Analysis

The onshore contract drilling and pressure pumping industry is highly cyclical, reflecting the fluctuations in oil and gas prices. However, the long-term outlook is positive due to increasing demand for energy and the continued development of unconventional oil and gas resources.

Competitors

Patterson-UTI Energy faces competition from other major drilling and pressure pumping companies, including:

• Halliburton
• Schlumberger
• Baker Hughes
• Nabors Industries

Similar Companies to Patterson-UTI Energy that Customers May Also Like:

Helmerich & Payne (HP)

• HomePage: https://www.helmerichpayne.com/
• Reasons customers may like HP:
  • Leading provider of drilling and production services for the oil and gas industry.
  • Extensive fleet of modern drilling rigs and production platforms.
  • Strong track record of safe and efficient operations.

Nabors Industries

• HomePage: https://www.nabors.com/
• Reasons customers may like Nabors:
  • Global provider of drilling, completion, and production services.
  • Largest onshore drilling contractor in the United States.
  • Expertise in both conventional and unconventional drilling methods.

Baker Hughes

• HomePage: https://www.bakerhughes.com/
• Reasons customers may like Baker Hughes:
  • Integrated oilfield services company offering a wide range of products and services.
  • Leading provider of drilling equipment and technologies.
  • Strong presence in both exploration and production sectors.

NOV

• HomePage: https://www.nov.com/
• Reasons customers may like NOV:
  • Global manufacturer of oilfield equipment and services.
  • Extensive product line including drilling rigs, wellheads, and valves.
  • Focus on innovation and technology development.

Schlumberger

• HomePage: https://www.slb.com/
• Reasons customers may like Schlumberger:
  • World's largest oilfield services company.
  • Extensive portfolio of technologies and services for exploration, drilling, and production.
  • Leader in reservoir characterization and simulation.

Why Customers May Like These Companies:

• Reputation and Experience: All these companies have a proven track record in the oil and gas industry, providing customers with confidence in their capabilities.
• Comprehensive Services: They offer a wide range of services, enabling customers to meet their drilling and production needs from a single source.
• Technological Expertise: These companies invest heavily in research and development, providing customers with access to the latest technologies and innovations.
• Global Presence: They operate in multiple regions around the world, allowing customers to leverage their expertise and capabilities regardless of their location.
• Financial Stability: These companies have strong financial positions, ensuring that they can continue to invest in their businesses and meet customer needs.

1948:

• C.J. Patterson, Sr. and D.K. Caldwell Sr. found Patterson Truck Lines, Inc. in Breckenridge, Texas.

1952:

• Patterson Truck Lines expands into oilfield hauling.

1957:

• The company acquires United Truck Lines, Inc. and renames itself Patterson-UTI Trucking Company.

1965:

• Patterson-UTI acquires Allied Chemical's oilfield truck and equipment fleet.

1968:

• The company goes public on the American Stock Exchange.

1973:

• Patterson-UTI acquires UTI Corporation, a manufacturer of oilfield equipment.

1980s:

• The company expands internationally, acquiring operations in Canada, Europe, and the Middle East.

1993:

• Patterson-UTI opens a Caterpillar dealership in West Texas.

1997:

• The company acquires the drilling business of Phillips Petroleum.

2000s:

• Patterson-UTI continues to grow through acquisitions, including the purchase of Major Drilling Group and Energy Industries.

2008:

• The company acquires the wireline and pumping services division of Schlumberger.

2011:

• Patterson-UTI shareholders approve the merger with Energy Partners, Ltd., creating the largest onshore contract drilling company in North America.

2014-2016:

• The company faces financial challenges due to the decline in oil prices.

2017:

• Patterson-UTI undergoes a financial restructuring and emerges from Chapter 11 bankruptcy.

2018:

• The company acquires Deluxe Well Services.

2019:

• Patterson-UTI sells its directional drilling business to National Oilwell Varco.

2020s:

• The company continues to focus on its core businesses of contract drilling and pressure pumping.

Last Three Years

2020

• Q1: Reported a net loss of $56.7 million.
• Q2: Announced a cost-cutting plan that included layoffs and reducing executive compensation.
• Q3: Reported a net loss of $13.9 million.
• Q4: Reported a net income of $11.1 million.

2021

• Q1: Reported a net income of $28.8 million.
• Q2: Reported a net income of $44.7 million.
• Q3: Reported a net income of $56.1 million.
• Q4: Reported a net income of $72.2 million.

2022

• Q1: Reported a net income of $84.6 million.
• Q2: Reported a net income of $102.4 million.
• Q3: Reported a net income of $121.6 million.
• Q4: Results not yet released.

Recent Timelines

November 2022:

• Patterson-UTI announced the acquisition of Lonestar Rig Technologies for approximately $100 million.

February 2023:

• The company announced a joint venture with Halliburton to develop and deploy electric drilling rigs.

March 2023:

• Patterson-UTI announced a partnership with NOV to provide integrated drilling and completion solutions.

Patterson-UTI Energy: A Shining Star in the Energy Industry

As a dedicated employee of Patterson-UTI Energy for over five years, I am thrilled to share my overwhelmingly positive experience with this exceptional company.

Growth Opportunities Unlimited

At Patterson-UTI, growth is not just a buzzword but a tangible reality. The company invests heavily in its employees, providing a wide range of training and development programs. I have personally witnessed countless colleagues advance their careers with the support and encouragement of their managers.

A People-First Culture

Patterson-UTI prioritizes the well-being of its employees. The company fosters a supportive and inclusive environment where individuals are valued for their contributions. Flexible work arrangements, generous benefits, and an emphasis on work-life balance demonstrate Patterson-UTI's genuine commitment to its employees' happiness and success.

Innovation and Excellence

The company is constantly pushing the boundaries of innovation in the energy industry. Our state-of-the-art equipment and technologies are a testament to Patterson-UTI's dedication to delivering exceptional services. The company's focus on safety, efficiency, and environmental responsibility is commendable.

Leadership with Vision

Patterson-UTI is fortunate to have an exceptional leadership team that inspires innovation, collaboration, and growth. The company's leaders are accessible, approachable, and genuinely interested in empowering employees to reach their full potential.

Industry Recognition

Patterson-UTI's reputation for excellence is widely recognized within the energy industry. The company has consistently received awards for its safety record, customer service, and financial performance. This recognition is a testament to the hard work and dedication of Patterson-UTI employees at all levels.

Conclusion

In conclusion, I highly recommend Patterson-UTI Energy as an employer to anyone seeking growth, fulfillment, and a positive work environment. The company's unwavering commitment to innovation, its people-first culture, and its relentless pursuit of excellence make it a truly exceptional organization. I am proud to be a part of the Patterson-UTI team and look forward to continued growth and success in the years to come.

Unlock the Power of Energy Solutions with Patterson-UTI Energy

Harness the unwavering reliability and expertise of Patterson-UTI Energy, a leading provider of onshore drilling and production services. With our customer-centric approach and unwavering commitment to innovation, we empower our clients to navigate the complexities of the energy landscape.

Unmatched Drilling Capabilities

Our state-of-the-art drilling rigs and cutting-edge technologies deliver exceptional performance and efficiency. No matter the terrain or drilling conditions, our experienced crews and advanced equipment ensure optimal results.

Comprehensive Production Services

From well completions to production optimization, we provide a full suite of production services designed to maximize output and minimize downtime. Our experienced engineers utilize industry-leading practices to optimize well performance and extend the life of your assets.

Vertical Integration for Seamless Operations

As a vertically integrated company, Patterson-UTI Energy offers a comprehensive end-to-end solution for our clients. Our in-house rig manufacturing, drilling, and production capabilities streamline operations, reduce costs, and enhance efficiency.

Unrivaled Customer Service

We believe in building lasting relationships with our clients. Our dedicated account managers and technical support team provide personalized assistance throughout your project, ensuring your needs are met promptly and effectively.

Safety and Environmental Stewardship

Safety is paramount at Patterson-UTI Energy. Our rigorous safety protocols and comprehensive training programs ensure the well-being of our employees and the protection of the environment. We are committed to operating responsibly and minimizing our environmental footprint.

Join the Energy Revolution

Partner with Patterson-UTI Energy and experience the power of a trusted, innovative, and customer-focused energy partner. Let us help you unlock your energy potential and drive your business forward.

Visit our website today at https://www.patenergy.com to learn more about our comprehensive services and schedule a consultation. Together, we can shape the future of energy.

Main Suppliers of Patterson-UTI Energy Company

Patterson-UTI Energy Company is a leading provider of drilling and completion services to the oil and gas industry in North America. The company has a diverse supplier base that provides it with a wide range of goods and services, including drilling equipment, drilling fluids, completion fluids, and other materials.

Here is further detail on some of the company's key suppliers:

Drill Bits and Drilling Equipment:

• NOV Downhole (https://www.nov.com/en/businesses/downhole)
• Baker Hughes (https://www.bakerhughes.com/)
• Schlumberger (https://www.slb.com/)
• Halliburton (https://www.halliburton.com/)
• Weatherford International (https://www.weatherford.com/)

Drilling Fluids and Completion Fluids:

• MI Swaco (https://www.miswaco.com/)
• Schlumberger (https://www.slb.com/)
• Halliburton (https://www.halliburton.com/)
• Baker Hughes (https://www.bakerhughes.com/)
• NOV Mud Systems (https://www.nov.com/en/businesses/fluid-systems)

Other Materials and Services:

• Cat Rental Stores (https://www.catrental.com/) - Rental equipment and services
• Cummins (https://www.cummins.com/) - Engines and power generation equipment
• Weatherford International (https://www.weatherford.com/) - Downhole tools and services
• Baker Hughes (https://www.bakerhughes.com/) - Artificial lift systems and services
• Schlumberger (https://www.slb.com/) - Seismic imaging and software solutions

These are just a few of the many suppliers that provide goods and services to Patterson-UTI Energy Company. The company's strong relationships with its suppliers help it to maintain a competitive edge in the oil and gas industry.

Main Customers (or Downstream Companies) of Patterson-UTI Energy

Patterson-UTI Energy provides drilling and completion services to oil and gas producers in the United States and internationally. Its main customers include:

Name | Website ---|---| ConocoPhillips | https://www.conocophillips.com/ Devon Energy Corporation | https://www.devonenergy.com/ EOG Resources, Inc. | https://www.eogresources.com/ ExxonMobil Corporation | https://www.exxonmobil.com/ Hess Corporation | https://www.hess.com/ Marathon Oil Corporation | https://www.marathonoil.com/ Occidental Petroleum Corporation | https://www.oxy.com/ Pioneer Natural Resources Company | https://www.pxd.com/ Shell Offshore, Inc. | https://www.shell.us/business-customers/offshore-oil-and-gas.html TotalEnergies EP USA, Inc. | https://www.totalenergies.us/en/ Valero Energy Corporation | https://www.valero.com/

Detailed Profile of Main Customers:

ConocoPhillips: A global energy company with operations in more than 30 countries. It is involved in all aspects of the oil and gas industry, from exploration and production to refining and marketing. ConocoPhillips is a major customer of Patterson-UTI Energy's drilling services.

Devon Energy Corporation: An independent oil and gas company headquartered in Oklahoma City, Oklahoma. It is one of the largest oil and gas producers in the United States. Devon Energy is a significant customer of Patterson-UTI Energy's completion services.

EOG Resources, Inc.: An independent oil and gas company headquartered in Houston, Texas. It is the largest natural gas producer in the United States. EOG Resources is a major customer of Patterson-UTI Energy's drilling and completion services.

ExxonMobil Corporation: The world's largest publicly traded energy company. It operates in more than 200 countries and territories. ExxonMobil is a major customer of Patterson-UTI Energy's offshore drilling services.

Hess Corporation: A global energy company with operations in the United States, Guyana, and Southeast Asia. It is involved in all aspects of the oil and gas industry, from exploration and production to refining and marketing. Hess is a customer of Patterson-UTI Energy's drilling and completion services.

Marathon Oil Corporation: An integrated energy company headquartered in Houston, Texas. It is involved in all aspects of the oil and gas industry, from exploration and production to refining and marketing. Marathon Oil is a customer of Patterson-UTI Energy's drilling and completion services.

Occidental Petroleum Corporation: An international oil and gas company headquartered in Houston, Texas. It is involved in all aspects of the oil and gas industry, from exploration and production to refining and marketing. Occidental Petroleum is a customer of Patterson-UTI Energy's drilling and completion services.

Pioneer Natural Resources Company: An independent oil and gas company headquartered in Irving, Texas. It is the largest oil producer in the United States. Pioneer Natural Resources is a customer of Patterson-UTI Energy's drilling and completion services.

Shell Offshore, Inc.: A subsidiary of Shell plc, one of the world's largest oil and gas companies. Shell Offshore operates in the United States Gulf of Mexico. It is a major customer of Patterson-UTI Energy's offshore drilling services.

TotalEnergies EP USA, Inc.: A subsidiary of TotalEnergies SE, one of the world's largest energy companies. TotalEnergies EP USA operates in the United States. It is a major customer of Patterson-UTI Energy's drilling and completion services.

Valero Energy Corporation: An independent refiner and marketer of petroleum products. It is headquartered in San Antonio, Texas. Valero Energy is a customer of Patterson-UTI Energy's drilling and completion services.

Key Revenue Streams of Patterson-UTI Energy Company

Patterson-UTI Energy Company is a leading provider of onshore drilling and completion services in the United States. The company's primary revenue streams are derived from the following activities:

1. Drilling Services

• Contract Drilling: Patterson-UTI provides drilling services to exploration and production (E&P) companies under long-term contracts. These services include drilling new wells, workovers, and plugging and abandonment (P&A) operations.
• Day Rate Drilling: In addition to contract drilling, Patterson-UTI also provides day rate drilling services, where it charges E&P companies a fixed daily rate for its drilling rigs.
• Directional Drilling: The company offers directional drilling services, which involve drilling wells at angles to reach target formations that may not be accessible through vertical drilling.

2. Completion Services

• Pressure Pumping Services: Patterson-UTI provides pressure pumping services, which involve injecting fluids and proppants into oil and gas wells to fracture the rock formation and enhance production.
• Cementing Services: The company offers cementing services, which involve placing cement in the wellbore to protect the casing and prevent fluid migration.
• Stimulation Services: Patterson-UTI provides stimulation services, such as acidizing and perforating, to improve the flow of oil and gas from wells.

Estimated Annual Revenue

The estimated annual revenue for Patterson-UTI Energy Company's key revenue streams are as follows:

| Revenue Stream | Estimated Annual Revenue | |---|---| | Drilling Services | $2.5 - $3.0 billion | | Completion Services | $1.5 - $2.0 billion |

Total Estimated Annual Revenue: $4.0 - $5.0 billion

It's important to note that these are estimates and the actual revenue may vary depending on market conditions, customer demand, and other factors.

Patterson-UTI Energy's Key Partners

Drilling Contractors

• Halliburton (www.halliburton.com)
  • Provides drilling services, technologies, and products
• Schlumberger (www.slb.com)
  • Offers a wide range of drilling equipment and services
• Baker Hughes (www.bakerhughes.com)
  • Supplies drilling systems, tools, and services

Oilfield Services Providers

• Weatherford (www.weatherford.com)
  • Offers drilling, production, and intervention services
• National Oilwell Varco (www.nov.com)
  • Provides drilling equipment, systems, and automation technology
• GlobalSantaFe (www.globalsantafe.com)
  • Offers drilling and rig services

Energy Companies

• Chevron (www.chevron.com)
  • Major oil and gas producer
• ExxonMobil (www.exxonmobil.com)
  • Global oil and gas company
• BP (www.bp.com)
  • Integrated energy company

Equipment Manufacturers

• Caterpillar (www.caterpillar.com)
  • Supplies drilling rig engines and components
• General Electric (www.ge.com)
  • Provides turbines and other equipment for drilling rigs
• Rolls-Royce (www.rolls-royce.com)
  • Offers engines and propulsion systems for drilling vessels

Technical Services Providers

• Fugro (www.fugro.com)
  • Provides geotechnical and survey services
• CGG (www.cgg.com)
  • Offers seismic data acquisition and imaging services
• Schlumberger Information Solutions (www.sis.slb.com)
  • Provides data management and analytics services

Financial Institutions

• JPMorgan Chase (www.jpmorganchase.com)
  • Provides financing and banking services
• Bank of America (www.bankofamerica.com)
  • Offers credit and investment services
• Wells Fargo (www.wellsfargo.com)
  • Provides commercial and consumer banking services

Key Cost Structure of Patterson-UTI Energy

1. Drilling Services

• Estimated Annual Cost: $2.5 - $3.0 billion
• Includes costs associated with drilling and completing oil and gas wells, including:
  • Labor (rig crews, engineers, geologists)
  • Rigs (leasing, maintenance, upgrades)
  • Equipment (drill bits, drill pipe, casing)
  • Materials (cement, drilling fluids)
  • Fuel and utilities

2. Pressure Pumping Services

• Estimated Annual Cost: $1.5 - $2.0 billion
• Involves providing high-pressure water and sand mixtures to fracture oil and gas formations, enhancing well productivity. Includes:
  • Equipment (pumps, hoses, frac tanks)
  • Chemicals (proppants, acid)
  • Labor (pump operators, engineers)
  • Fuel and utilities

3. Production Services

• Estimated Annual Cost: $0.5 - $1.0 billion
• Provides services to optimize and maintain oil and gas production, including:
  • Well servicing (repairs, maintenance)
  • Artificial lift systems (pumps, compressors)
  • Well stimulation (acidizing, fracturing)
  • Labor (field technicians, engineers)

4. Directional Drilling Services

• Estimated Annual Cost: $0.2 - $0.5 billion
• Specializes in drilling precise trajectories for oil and gas wells, enabling access to complex reservoirs. Includes:
  • Advanced drilling rigs
  • Directional drill bits and steerable tools
  • Labor (directional drillers, engineers)

5. Other Costs

• Estimated Annual Cost: $0.3 - $0.6 billion
• Includes expenses such as:
  • General and administrative
  • Research and development
  • Marketing and sales
  • Lease expenses (offices, yards)
  • Insurance
  • Interest on debt

Patterson-UTI Energy is a leading provider of onshore drilling and pressure pumping services in North America. The company's operations are primarily focused on the United States, with a presence in the major oil and gas producing basins.

Sales Channels

Patterson-UTI Energy generates revenue through the following sales channels:

• Drilling Services: This segment provides drilling services to oil and gas exploration and production companies. These services include drilling new wells, workovers, and re-completions.

• Pressure Pumping Services: This segment provides pressure pumping services to oil and gas exploration and production companies. These services include hydraulic fracturing, acidizing, and cementing.

• Other Services: This segment includes other services such as coiled tubing, fishing and rental tools, and wireline services.

Estimated Annual Sales

According to the company's latest annual report, Patterson-UTI Energy generated the following sales in 2021:

• Drilling Services: $2.3 billion
• Pressure Pumping Services: $1.5 billion
• Other Services: $0.2 billion

Total Annual Sales: $4.0 billion

Breakdown of Sales by Region

The majority of Patterson-UTI Energy's sales are generated in the United States. The company's operations are concentrated in the following regions:

• Permian Basin: $1.7 billion
• Eagle Ford Shale: $0.7 billion
• Bakken Shale: $0.6 billion
• Marcellus Shale: $0.3 billion
• Other: $0.7 billion

Customer Base

Patterson-UTI Energy's customer base includes major oil and gas exploration and production companies such as:

• ExxonMobil
• Chevron
• ConocoPhillips
• Shell
• BP
• EOG Resources
• Pioneer Natural Resources
• Devon Energy
• Marathon Oil
• Anadarko Petroleum

Patterson-UTI Energy's Customer Segments and Estimated Annual Sales

Patterson-UTI Energy, a leading oilfield services provider, primarily serves three customer segments:

1. Exploration and Production (E&P) Companies

• Estimated annual sales: Over 90% of revenue

E&P companies are the primary customers of Patterson-UTI's drilling services. These companies are responsible for exploring for and producing oil and gas reserves. Patterson-UTI provides drilling services to E&P companies both onshore and offshore, with a focus on unconventional shale plays in North America. Some of the major E&P companies that Patterson-UTI serves include:

* ExxonMobil* Chevron* ConocoPhillips* EOG Resources* Pioneer Natural Resources

2. Oilfield Service (OFS) Companies

• Estimated annual sales: Less than 10% of revenue

OFS companies provide a range of services to E&P companies, including drilling, completion, and production services. Patterson-UTI provides drilling services to OFS companies that are contracted by E&P companies to perform drilling operations. Some of the major OFS companies that Patterson-UTI serves include:

* Schlumberger* Halliburton* Weatherford International* Baker Hughes

3. Other

• Estimated annual sales: Negligible

Other customers of Patterson-UTI include independent operators, national oil companies, and government agencies. These customers may purchase drilling services directly from Patterson-UTI or through contracts with E&P or OFS companies.

Estimated Annual Sales

Patterson-UTI Energy's total annual sales vary depending on market conditions and the level of activity in the oil and gas industry. In recent years, the company's annual sales have typically ranged between $2 billion and $3 billion.

Customer Base Concentration

Patterson-UTI's customer base is relatively concentrated, with a significant portion of its revenue coming from a small number of large E&P companies. This concentration can make the company vulnerable to changes in customer demand or the financial health of its major clients.

Value Proposition of Patterson-UTI Energy

Target Audience:

• Oil and gas producers
• Exploration and production (E&P) companies
• Drilling contractors

Value Proposition:

1. Comprehensive Drilling Services

• Provides a full suite of drilling services, including:
  • Land drilling
  • Offshore drilling
  • Directional drilling
  • Horizontal drilling
  • Wireline services

2. Advanced Technology and Equipment

• Utilizes state-of-the-art drilling rigs and equipment to improve efficiency and reduce operating costs.
  • Automated drilling systems
  • Real-time monitoring and data analytics
  • Remote operations

3. Experienced Team

• Employ a highly skilled team with extensive industry expertise.
• Provides specialized knowledge in complex drilling environments.
  • Offshore drilling
  • Unconventional plays

4. Safety and Environmental Compliance

• Prioritizes safety and environmental protection.
• Adheres to industry best practices and regulations.
  • Incident-free operations
  • Environmental stewardship

5. Financial Stability

• Strong financial position with consistent revenue growth.
• Provides stability and continuity to clients.
  • Access to capital for investment and expansion
  • Financial health ensures project completion

6. Customizable Solutions

• Tailors drilling services to meet the specific needs of each client.
• Adapts to changing drilling conditions and market demands.
  • Flexible rig configurations
  • Customized drilling programs

7. Cost Optimization

• Leverages technology and efficiency improvements to reduce operational costs.
• Offers competitive pricing and cost-effective solutions.
  • Automated drilling processes
  • Lean operations

8. Reliability and Performance

• Delivers on commitments and exceeds client expectations.
• Maintains high performance standards and achieves operational targets.
  • On-time project completion
  • Consistent results

9. Customer-Centric Approach

• Focuses on building long-term relationships with clients.
• Provides exceptional customer service and support.
  • Dedicated account managers
  • 24/7 availability

10. Global Reach

• Operates in several countries and provides drilling services in diverse regions.
• Offers access to expertise and resources in multiple basins.
  • International experience
  • Local presence

Financial Risk

• High Debt: Patterson-UTI has a high level of debt compared to its peers, with a debt-to-equity ratio of 1.55x as of Q3 2023. This could make the company vulnerable to financial distress in a downturn.
• Reliance on Oil and Gas: The company's revenues are heavily dependent on oil and gas prices, which can be volatile and subject to geopolitical risks.
• Capital Expenditures: Patterson-UTI has significant capital expenditures to maintain and expand its operations, which could put a strain on its financial resources.

Operational Risk

• Drilling Rig Safety: Drilling operations involve inherent risks, including accidents, blowouts, and equipment failures.
• Environmental Regulations: The company is subject to strict environmental regulations, which could increase its operating costs or lead to legal liabilities.
• Labor Shortages: The industry faces a shortage of qualified workers, which could impact Patterson-UTI's ability to staff its operations.

Reputational Risk

• Environmental Impact: Patterson-UTI's drilling operations have the potential to cause environmental damage, which could harm its reputation and lead to regulatory scrutiny.
• Social Impact: Fracking operations have been linked to negative social impacts, such as water contamination and noise pollution, which could damage the company's reputation and community relations.

Regulatory Risk

• Changing Regulations: The oil and gas industry is heavily regulated, and changes in regulations could impact Patterson-UTI's operations and financial performance.
• Climate Change Mitigation: Governments are increasingly implementing policies to mitigate climate change, which could have implications for the company's long-term viability.

Market Risk

• Competition: Patterson-UTI faces intense competition from other drilling contractors, both domestic and international.
• Technology Disruption: The advent of new technologies, such as horizontal drilling and hydraulic fracturing, could disrupt the traditional drilling industry.
• Economic Slowdown: A global economic slowdown could reduce demand for oil and gas, negatively impacting Patterson-UTI's revenues.

Mitigating Factors

• Experienced Management: Patterson-UTI has a team of experienced executives with a deep understanding of the industry.
• Diversification: The company has a diversified customer base and provides a range of drilling services, which helps to mitigate the impact of any one customer or service line.
• Strong Safety Record: Patterson-UTI has a strong safety record, which helps to reduce the risk of accidents and related costs.

Overall, Patterson-UTI Energy faces a range of risks related to its financial, operational, reputational, regulatory, and market positions. The company's experienced management team, diversified operations, and strong safety record provide some mitigating factors, but investors should be aware of the potential risks before investing.