Patterson-UTI Energy Inc. enjoyed substantially better results in the second quarter compared to a year ago when the contract drilling and pressure pumping firm recorded a net loss. That’s thanks to more business in Appalachia as well as in West and South Texas, executives told financial analysts Thursday.
“With respect to the market outlook for 2010, we remain cautiously optimistic,” Chairman Mark S. Siegel said during a conference call with financial analysts. “We feel very strongly about the long-term potential for natural gas in North America and have taken steps to enhance our position to take advantage of this.”
Siegel said the Houston-based company expects shale plays and other unconventional resources to continue to change the gas supply equation, “and ultimately the demand equation in North America. We fully expect the demand for oil and gas will improve as the economy improves, but we won’t try to set a date for the economic recovery.”
Patterson-UTI reported net income of $29.5 million, 19 cents/share, for the second quarter, compared to a net loss of $17.7 million, minus 12 cents/share, for the quarter ended June 30, 2009. Revenues for the second quarter were $307 million, compared to $140 million for the second quarter of 2009. Results for the most recent quarter include an after-tax profit of $12.9 million, 8 cents/share, from the sale of certain rights in oil and gas working interests.
“Our average number of rigs operating in the second quarter increased to156 rigs, including 154 in the United States and two in Canada,” said CEO Douglas J. Wall. “This compares to an average of 142 rigs operating in the first quarter, including 130 in the United States and 12 in Canada. Reduced Canadian drilling activity in the second quarter is a result of the annual spring breakup.
“Average revenue per operating day for the second quarter increased by $480 to $16,920, compared to $16,440 for the first quarter of 2010. Average direct operating costs per operating day for the second quarter decreased slightly to $10,520 from $10,540 for the first quarter of 2010. Average margin per operating day for the second quarter increased by $490 to $6,390 from $5,900 for the first quarter of 2010.
Consistent with industrywide data (see Daily GPI, July 27), the company continues to see increases in rig counts for its U.S. land drilling operations along with a seasonal rebound in Canadian activity, Wall said. He estimated that Patterson-UTI’s July rig count will have increased to an average of 171 rigs operating, composed of 164 in the United States and seven in Canada. The company’s average number of rigs operating in the United States has increased by 56 since December. “The market for shale-suitable rigs has tightened considerably, and dayrates across the rig fleet have been increasing,” Wall said.
“During the second quarter of 2010 we had an average of approximately 46 rigs operating under long-term contracts. Based on contracts currently in place, we expect to have an average of approximately 53 rigs during the second half of 2010 and 47 rigs during 2011 operating under long-term contracts,” he said.
Recently Patterson-UTI said it would expand its pressure pumping services for hydraulic fracturing operations in the Barnett and Eagle Ford shales, and in the Permian Basin, after striking a $237.7 million cash deal with Key Energy Services Inc. (see Daily GPI, July 7).
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