EX-99.1 2 d819594dex991.htm EX-99.1

Bank of America Merrill Lynch 2014 Global Energy Conference November 13, 2014 Exhibit 99.1

Forward Looking Statements 2 This material and any oral statements made in connection with this material include "forward-looking statements" within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934. Statements made which provide the Company’s or management’s intentions, beliefs, expectations or predictions for the future are forward-looking statements and are inherently uncertain. The opinions, forecasts, projections or other statements other than statements of historical fact, including, without limitation, plans and objectives of management of the Company are forward-looking statements. It is important to note that actual results could differ materially from those discussed in such forward-looking statements. Important factors that could cause actual results to differ materially include the risk factors and other cautionary statements contained from time to time in the Company’s SEC filings, which may be obtained by contacting the Company or the SEC. These filings are also available through the Company’s web site at http://www.patenergy.com or through the SEC’s Electronic Data Gathering and Analysis Retrieval System (EDGAR) at http://www.sec.gov. We undertake no obligation to publicly update or revise any forward-looking statement. Statements made in this presentation include non-GAAP financial measures. The required reconciliation to GAAP financial measures are included on our website and at the end of this presentation.

Patterson-UTI Energy is a leading Patterson-UTI Energy is a leading provider of contract drilling and provider of contract drilling and pressure pumping services pressure pumping services 3

Contract Drilling • High quality fleet of land drilling rigs including 142 APEX ® rigs • Leader in walking rig technology for pad drilling applications • Large footprint across North American drilling markets Patterson-UTI reported results for the nine months ended September 30, 2014 4

Pressure Pumping • High quality fleet of modern pressure pumping equipment • A leader in natural gas bi-fuel technology • Strong reputation for regional knowledge and efficient operations Patterson-UTI reported results for the nine months ended September 30, 2014 5

Contract Drilling

7 Contract Drilling Capital Expenditures and Acquisitions ($ in millions) Investing in Our Drilling Rig Fleet More More than than $5 $5 billion billion invested invested since since 2005 2005 2014 Capital expenditure forecast as of October 23, 2014

A Rig Fleet Transformation 8 Patterson-UTI Energy Total Rig Fleet

…and Expected as of September 30, 2015 APEX-XK 1500™ APEX-XK 1000™ APEX WALKING ® APEX 1500 ® APEX 1000 ® Total APEX ® Rigs Class APEX ® Rigs as of November 13, 2014 61 4 49 44 11 169 9/30/2015 A leader in high specification drilling rigs A leader in high specification drilling rigs 34 4 49 44 11 142 11/13/2014 APEX ® Rig Fleet 9

Permian Basin 54 Rigs Large Geographic Footprint 10 PTEN’s Active U.S. Land Drilling Rigs as of November 2014 East Texas 15 Rigs Appalachia 36 Rigs North Texas 6 Rigs Rockies 33 Rigs South Texas 39 Rigs

Why invest in APEX ® rigs? …the impact has been transformative!

Increasing APEX ® Drilling Activity 12 Active APEX ® Rig Count

PTEN Relative Active Rig Count by Rig Class 13

Greater Stability of Utilization 14 APEX ® Rig Utilization

Improving Average Rig Revenue Per Day 15 Patterson-UTI Total Average Rig Revenue Per Day Excludes early-termination revenues during the third and fourth quarter of 2013 of $3,600 per day and $130 per day, respectively.

Adjusted EBITDA Contribution from High Specification Rigs 16 Preferred rigs account for approximately 89% of Adjusted EBITDA in Contract Drilling Excludes early-termination revenues during the third and fourth quarter of 2013 of $62.8 million and $2.4 million, respectively.

Why invest in APEX ® rigs? …the outlook remains strong!

18 U.S. Rig Count % by Drilling Type Continued Demand for APEX ® Rigs Source: Baker Hughes North America Rotary Rig Count

AC-powered rigs represent only half of the horizontal rig count Total U.S. Horizontal Rig Count by Power Type Continued Demand for APEX ® Rigs Analysis from Patterson-UTI Energy based on data from RigData and company filings. 19

Why invest in APEX ® rigs? …Patterson-UTI is a technology leader!

APEX WALKING ® Rigs 21 • Capable of walking with drill pipe and collars racked in derrick • Full multi-directional walking capability • Walking times average 45 minutes for 10’ – 15’ well spacing http://patenergy.com/drilling/technology/apexwalk 21

Strong Demand for Pad Drilling 22 • Pad drilling is contributing to increasing rig efficiency • Pad drilling capable rigs are highly utilized • Most new APEX ® rigs completed in 2014 are expected to have walking systems http://patenergy.com/drilling/technology 22

APEX-XK™ Rig Walking on Pad 23 http://patenergy.com/drilling/technology/apexwalk/ Video of APEX-XK™ Rig 23

The APEX-XK ™ 24 • Enhanced mobility including more efficient rig up and rig down • Greater clearance under rig floor for optional walking system • Advanced environmental spill control integrated into drilling floor • Minimized number of truck loads for rig moves • Available in both 1500 HP and 1000 HP http://patenergy.com/drilling/technology 24

Enhancing our Position in Pad Drilling 25 Walking Systems Can be Added to Any Rig in Our Fleet… …Allowing for True Multi-Directional Pad Drilling Capabilities 25

Enhancing our Position in Pad Drilling 26 http://patenergy.com/drilling/technology 26

Early Adopter of Natural Gas Engines 27 http://patenergy.com/drilling/technology 27

Using Natural Gas as a Fuel Source 28 • First contract driller to use GE’s Waukesha natural gas engines on a modern land rig • 49 rigs currently configured to use natural gas as the primary fuel source including 9 natural gas powered rigs and 40 bi-fuel capable rigs • We plan to add GE Waukesha engines to one additional rig and upgrade six additional rigs with bi- fuel systems • Natural gas powered rigs can result in up to 80% lower fuel costs http://patenergy.com/drilling/technology 28

Pressure Pumping

Investing in Pressure Pumping 30 Pressure Pumping Capital Expenditures and Acquisitions ($ in millions) More Than $1 billion invested since 2005 2014 Capital expenditure forecast as of October 23, 2014

Growing Pressure Pumping Business 31 Investments in Pressure Pumping… …Have Increased Fleet Size and Quality

Southwest Region: Northeast Region: Fracturing horsepower: 614,000 Other horsepower: 31,500 Fracturing horsepower: 304,000 Other horsepower: 55,300 A Significant Player in Regional Markets Pressure Pumping Areas 32 Horsepower distribution as of October 23, 2014

A Leader in Bi-Fuel Technology • Engines can burn a fuel mix comprised of up to 70% natural gas • Comparable torque and horsepower to an all diesel engine • Reduces operating costs by lowering fuel costs • Good for environmental sustainability http://patenergy.com/pressurepumping/services 33

A Leader in Bi-Fuel Technology 34 http://patenergy.com/pressurepumping/services 34

A Leader in Bi-Fuel Technology 35 • One of the largest bi-fuel frac fleets in the Marcellus • Approximately 1,700 stages completed using natural gas as a fuel source • Replaced more than 983,000 gallons of diesel with cleaner burning natural gas • Eliminated 7.4 million pounds of transportation loads on local roads http://patenergy.com/pressurepumping/services 35

Comprehensive Lab Services http://patenergy.com/pressurepumping/services 36

Financial Flexibility

Investing in Our Company 38 Capital Expenditures and Acquisitions ($ in millions) 2014 Capital expenditure forecast as of October 23, 2014 $598 $637 $445 $453 $976 $1,012 $974 $662 $1,300 2006 2007 2008 2009 2010 2011 2012 2013 2014E

Strong Financial Position 39 • History of returning capital to investors – Cash Dividend • Initiated cash dividend in 2004 • Doubled quarterly cash dividend to $0.10 per share in February 2014 – Stock Buyback • Total of $857 million repurchased since 2005 • Repurchased $85.8 million of stock in 2013 at an average price of $20.83 • Approximately $187 million remaining authorization as of September 30, 2014 • Returned approximately $1.3 billion to shareholders since 2005

Strong Financial Position 40 Total Liquidity ($ in millions) Liquidity defined as end of period cash plus availability under revolving line of credit * From September 30, 2014 through October 23, 2014, the Company borrowed $170 million under the revolving credit facility, leaving approximately $290 million available as of October 23, 2014. 208 283 398 244 387 273 571 710 499 0 100 200 300 400 500 600 700 800 2006 2007 2008 2009 2010 2011 2012 2013 3Q14* Year End Line of Credit Availability Cash

Strong Financial Position 41 Net Debt to Capital Ratio $600 million of debt not due until at least 2020 $600 million of debt not due until at least 2020 * From September 30, 2014 through October 23, 2014, the Company borrowed $170 million under the revolving credit facility, leaving approximately $290 million available as of October 23, 2014. 6% 2% -4% -2% 15% 13% 18% 14% 18% -10% 0% 10% 20% 30% 40% 50% 2006 2007 2008 2009 2010 2011 2012 2013 3Q14* Year End

Strong Financial Returns 42 Growth in Per-Share Book Value

Why Invest in Patterson-UTI Energy? • Continuing Transformation – Committed to high-spec land rigs where demand remains strong – Creating value through focus on well site execution • Technology leader – Leader in walking rigs for pad drilling – Innovator in use of natural gas as a fuel source for both drilling and pressure pumping • Financially flexible – Strong balance sheet – History of share buybacks – Dividends 43

Bank of America Merrill Lynch 2014 Global Energy Conference November 13, 2014

Additional References

Active in Unconventional Plays 46 PTEN’s Active Rigs in Unconventional Areas as of November 2014

Term Contract Coverage • Based on term contracts in place as of October 23, 2014 – An average of 157 rigs expected under term contract in the fourth quarter of 2014 – An average of 93 rigs expected under term contract during 2015 • Drilling term contract revenue backlog of $1.7 billion at September 30, 2014 • PTEN expects to continue signing term contracts Improving earnings visibility and returns stability 47

Strong Financial Position • Total liquidity of approximately $499 million* – $38.6 million of cash at September 30, 2014 – $460 million revolver availability at September 30, 2014* • $646 million net debt at September 30, 2014* – 18.4% Net Debt/Total Capitalization* – $300 million of 4.97% Series A notes due October 5, 2020 – $300 million of 4.27% Series B notes due June 14, 2022 – $85 million of 5-year term loan • No equity sales in last 14 years • Reduced share count by 26.0 million shares since 2005 48 * From September 30, 2014 through October 23, 2014, the Company borrowed $170 million under our revolving credit facility, leaving approximately $290 million available as of October 23, 2014.

Three Months Ended September 30, Nine Months Ended September 30, 2014 2013 2014 2013 Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (Adjusted EBITDA)(1): Net income $ 15,976 $ 74,420 $ 105,081 $ 171,418 Income tax expense 7,556 43,301 50,403 98,957 Net interest expense 6,759 7,210 20,812 20,494 Depreciation, depletion, amortization and impairment 237,825 140,734 538,573 414,351 Adjusted EBITDA $ 268,116 $ 265,665 $ 714,869 $ 705,220 Total revenue $ 845,628 $ 730,907 $ 2,281,072 $ 2,057,262 Adjusted EBITDA margin 31.7% 36.3% 31.3% 34.3% Adjusted EBITDA by operating segment: Contract drilling $ 202,804 $ 217,289 $ 557,674 $ 532,812 Pressure pumping 62,795 50,677 157,913 171,471 Oil and natural gas 11,449 10,225 29,423 35,591 Corporate and other (8,932) (12,526) (30,141) (34,654) Consolidated Adjusted EBITDA $ 268,116 $ 265,665 $ 714,869 $ 705,220 (1) The company makes use of financial measures that are not calculated in accordance with U.S. generally accepted accounting principles (“GAAP”) to help in the assessment of ongoing operating performance. These non-GAAP financial measures are reconciled to their most directly comparable GAAP measures in the tables above. We define Adjusted EBITDA as net income plus net interest expense, income tax expense and depreciation, depletion, amortization and impairment expense. We present Adjusted EBITDA because we believe it provides additional information with respect to both the performance of our fundamental business activities and our ability to meet our capital expenditures and working capital requirements. Adjusted EBITDA is not defined by GAAP and, as such, should not be construed as an alternative to net income (loss) or operating cash flow. We define margin as revenues less direct operating costs. We present margin because we believe it to be the component of our earnings most impacted by the variability in our contract drilling and pressure pumping operations. Margin is not defined by GAAP and, as such, should not be construed as an alternative to net income (loss). PATTERSON-UTI ENERGY, INC. Non-GAAP Financial Measures 49 Non-GAAP Financial Measures (Unaudited) (dollars in thousands)

2013 2012 2011 2010 2009 Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (Adjusted EBITDA)(1): Net income (loss) $ 188,009 $ 299,477 $ 322,413 $ 116,942 $ (38,290) Income tax expense (benefit) 108,432 176,196 187,938 72,856 (17,595) Net interest expense (income) 27,441 22,196 15,465 11,098 3,767 Depreciation, depletion, amortization and impairment 597,469 526,614 437,279 333,493 289,847 Net impact of discontinued operations - - (209) 1,778 1,979 Adjusted EBITDA $ 921,351 $ 1,024,483 $ 962,886 $ 536,167 $ 239,708 Total revenue $ 2,716,034 $ 2,723,414 $ 2,565,943 $ 1,462,931 $ 781,946 Adjusted EBITDA margin 33.9% 37.6% 37.5% 36.7% 30.7% Non-GAAP Financial Measures 50 PATTERSON-UTI ENERGY, INC. Non-GAAP Financial Measures (Unaudited) (dollars in thousands) (1) The company makes use of financial measures that are not calculated in accordance with U.S. generally accepted accounting principles (“GAAP”) to help in the assessment of ongoing operating performance. These non-GAAP financial measures are reconciled to their most directly comparable GAAP measures in the tables above. We define Adjusted EBITDA as net income plus net interest expense, income tax expense and depreciation, depletion, amortization and impairment expense. We present Adjusted EBITDA because we believe it provides additional information with respect to both the performance of our fundamental business activities and our ability to meet our capital expenditures and working capital requirements. Adjusted EBITDA is not defined by GAAP and, as such, should not be construed as an alternative to net income (loss) or operating cash flow. We define margin as revenues less direct operating costs. We present margin because we believe it to be the component of our earnings most impacted by the variability in our contract drilling and pressure pumping operations. Margin is not defined by GAAP and, as such, should not be construed as an alternative to net income (loss).