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| Statement |
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| Completion activity was relatively steady throughout the fourth quarter, with strong fundamentals for natural gas power equipment as well as strong demand for our wellsite integration services with good customer alignment that kept us working through more of the holidays than we anticipated |
| After finishing a stronger than expected fourth quarter -- for the first quarter, we expect completion services revenue of $940 million to $950 million with an adjusted gross profit of $190 million to $200 million |
| Our leadership position in both US onshore drilling and completions is allowing us to strengthen partnerships with the leading US shale operators that place a high value on our technology and on our top-tier assets, which in turn is allowing us to outperform the industry |
| We are very pleased with our results and the fourth quarter profitability and free cash flow highlights the benefit of the combined company |
| As we reflect on this past year, we take great pride in our achievements |
| We're performing really well |
| It was a great year, and we're looking forward to another good year '24, especially free cash flow and returning cash to shareholders |
| We delivered extremely strong results while at the same time successfully closing and integrating two transactions |
| By the way, really good progress |
| All that is to say our business is performing very well and we have high conviction that we have the right strategy in place |
| We anticipate 2024 will be another year of strong results and considerable free cash flow |
| And so our teams have done a great job |
| This high-grading process positions Patterson-UTI favorably and aligns us with our customers as the industry transitions to manufacturing mode |
| The acquisitions of NexTier and Ulterra will significantly strengthen the Patterson-UTI's competitive position over the long term as we realize the benefits of our combined expertise and continue to advance our technology lead over much of the oilfield |
| This should offer a tailwind for our company as the entire industry looks to grow returns in a capital constrained environment |
| So we feel very good about that $200 million |
| For Patterson-UTI, the benefit from that as these efficiency gains can largely be seen through our own improved capital efficiency, and we have worked to reduce our capital intensity even as we have improved operationally |
| And so that's where you know, we'll get some improved profitability from that horsepower that's working in the field second and third quarters going forward |
| This steady outlook presents us with opportunities to enhance our returns and grow our profits in the most capital-efficient manner |
| While we do not see a benefit to adding drilling or completion capacity into the US shale market, we do have several levers that we will focus on this year that should help us improve our returns as the year progresses |
| Our rig technology offerings have momentum with growing demand for our process and equipment automation packages |
| Alternative power solutions that use natural gas and high-line electricity to power our rigs and numerous other applications that improve efficiencies, minimize the environmental footprint and add value to the drilling process |
| Our customers value the uplift provided by these technology offerings and given the value that can be unlocked, we expect our rig count will continue to outperform the industry |
| These new technologies consistently earn a higher return over the diesel equivalent that they are replacing, which should allow us to grow profits even at a steady activity level |
| Andy Hendricks Saurabh, as you mentioned, Kenny and the team are doing a great job |
| You know what they did year over year, '23 over '22, was huge in terms of improving our performance in the field to sustain the activity levels that we had and outperform the others, but also raised the profitability per rig at the same time |
| Andrew Smith Yeah, I would also point out on that one again and Andy mentioned but I would just highlight it that really the productivity gains that we're getting, again, kind of pushing that fully integrated wellsite offering onto the legacy EPP fleets is really improvement as well and overall profit |
| Ulterra is expected to grow revenue and EBITDA in 2024 compared to 2023 with potential for a record free cash flow generation that surpasses any period in the company's history prior to our acquisition |
| The presence in these global markets will be a long-term opportunity for our company and should offer our investors growth for the next several years or more |
| Ulterra's international revenue is expected to grow in the high-teens percent year over year, highlighting strong prospects in various global markets across the world |
| Statement |
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| And I realize that natural gas is trading at a low level, and there's probably some concerns over that market |
| But it's also worth noting that the Patterson-UTI rig count in the Northeast and the Haynesville combined is down just five rigs total over the past year, even as the industry has reduced activity in those basins by more than 30 rigs over that same time |
| Notably, on several recent occasions, we have displaced the third party 100% natural gas-powered electric fleet with one of our natural gas dual fuel fleets |
| We're going to have some softening in the overall market |
| The industry rig count exited 2023 over 20% lower than historical |
| The average adjusted rig gross profit per day was $16,330, a $1,910 per day decrease from the prior quarter |
| We're anticipating some softness |
| So I take a longer-term view and I recognize there's going to be some softness |
| And obviously, guidance is for 120, so implying things come down |
| On the natural gas side, yes, there could be some decline in industry activity in the near term, but we do not expect it will be material to our business over the long term |
| Maybe we could see some more softness in Q2 |
| Excluding the previously mentioned revenue and costs in the prior quarter, adjusted rig gross profit per day would have declined just $70 from the prior quarter |
| I think there still is some uncertainty out there |
| And you saw how we performed last year in a market where the overall Baker Hughes count went down |
| But the market softened |
| Over the near term, the outlook for US shale activity continues to reflect the expected reduced cyclicality in our sector |
| On the oil front, according to various data sources, including the EIA, US shale oil production appears to have stabilized, a function of the decline in activity over the past year |
| A sequential decline of $1,830 per day was primarily attributable in the absence of the benefit of $2,630 per day from the recognition of previously deferred revenue in the prior quarter |
| We are making this transition to electric and other natural gas-powered assets, even as CapEx for the combined completions company is expected to be down significantly from 2023 |
| In drilling, if natural gas activity does fall slightly, we would anticipate only a slight decline to our own activity levels, although we are halfway through this first quarter and we haven't seen much change from our customers |
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