Patterson-uti Energy, Inc. · NASDAQ:PTEN
Patterson-uti Energy — Investor Presentation (March 2012)
37 slides from Patterson-uti Energy's investor presentation, Mar 1, 2012
Slide 1: Meetings With Investors
Meetings With Investors Exhibit 99.1 Patterson-UTI Patterson-UTI Energy, Energy, Inc. Inc. Meetings With Investors March March 2012 2012
Slide 2: Forward Looking Statements
2 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
Slide 3: Presentation agenda
3 PTEN Overview The Energy Environment PTEN’s Land Drilling Business PTEN’s Well Stimulation Business PTEN Investment Highlights Conclusions A Transformation in the Energy Industry… Presentation • • PTEN Overview • • The Energy Environment • • PTEN’s Land Drilling Business • • PTEN’s Well Stimulatio
Slide 4: Overview of Patterson-UTI Energy, Inc.
4 One of the “Big 3” US land drillers (drilling ~65% of total 2011 revenues) One of the top pressure pumping companies in the US (pressure pumping ~33% of total 2011 revenues) Substantial investment in new drilling and pressure pumping equipment Strong history of creating shareholder equity Trading
Slide 5: Changing Energy Environment
5 Source: US Energy Information Administration, Short-Term Energy Outlook, February 7, 2012 Decades of Declining US Crude Oil Production… Reversed in 2009 4.0 4.5 5.0 5.5 6.0 6.5 7.0 7.5 Changing Energy Environment
Slide 6: Changing Energy Environment
6 Source: US Energy Information Administration, Short-Term Energy Outlook, February 7, 2012 Petroleum Imports as a Percent of Total Consumption… More Demand Being Satisfied With US Production 0% 10% 20% 30% 40% 50% 60% 70% Changing Energy Environment
Slide 7: Changing Energy Environment – North America Land-Based Energy
7 Unconventional drilling and well completion has evolved: A “manufacturing” approach to drilling and well completion Focus on oil & liquids rich plays Unconventional drilling and well completion techniques being applied to historically conventional basins Changing Energy Environment – North America
Slide 8: PTEN's Drilling Business
PTEN’s Drilling Business Changing Energy Environment – Changing Energy Environment – Land-Based Drilling Land-Based Drilling PTEN’s Drilling Business
Slide 9: PTEN's Drilling Business: Preferred Rigs
9 Preferred Rigs as of December 31, 2011 175 by the end of 2012 …and Expected as of December 31, 2012 APEX 1500 APEX 1000 APEX Walking Other Electric Rigs 38 13 40 54 61 15 45 54 TM TM TM PTEN’s Drilling Business Preferred Rigs as of December 31, 2011 30 new rigs planned in 2012 30 new rigs planned
Slide 10: New APEX Rigs Have Significantly Increased Fleet Quality
10 New APEX ™ Rigs Have Significantly Increased Fleet Quality. 0 20 40 60 80 100 120 140 PTEN’s Drilling Business 30 New Rigs expected to be added in 2012 30 New Rigs expected to be added in 2012
Slide 11: Strong US Rig Count
11 Strong US Rig Count 2010 - Current 0 50 100 150 200 250 2009 2010 2011 PTEN’s Drilling Business
Slide 12: Increasing focus on oil & liquids rich plays
12 Increasing focus on oil & liquids rich plays Horizontal drilling techniques developed for shale gas have been a “game changer” for oil and liquids rich shales Approximately 60% of PTEN operating rigs are drilling for oil or liquids “Fit-for-purpose” rigs are very active in oil & liquids rich play
Slide 13: PTEN's Active Rigs in Unconventional Areas
13 PTEN’s Active Rigs in Unconventional Areas as of February 2012 Bakken Haynesville Marcellus Barnett 20 Rigs Eagle Ford 5 Rigs 7 Rigs 27 Rigs 16 Rigs 28 Rigs 22 Rigs Niobrara 1 Rig Utica 4 Rigs Woodford 5 Rigs Pinedale Piceance PTEN’s Active Rigs in Unconventional Areas as of February 2012 Bakken
Slide 14: Three types of land rigs designed for new wells
14 PTEN has designed three types of land rigs for these “new wells”: Each designed to meet customer demands in different markets Each has specific applications for which it is “most suitable” Significance: Drilling is an integral part of the well “manufacturing” business rig moves APEX Walking ™ rig
Slide 15: APEX 1000, APEX 1500 and APEX Walking rigs
15 APEX 1000™ APEX 1500™ APEX Walking™ •1000 HP drawworks •Small footprint, big rig capability •Fast move & rig-up •Walking system is an optional feature •1500 HP drawworks •Great all purpose rig •Fast move & rig-up •Ideal for Eagle Ford, Barnett, and Haynesville •1000 to 2000 HP drawworks •Able to
Slide 16: Video of Walking Rig Moving
PTEN’s Drilling Business Video of Walking Rig Moving Video of Walking Rig Moving
Slide 17: Other rigs in the fleet
17 PTEN has approximately 180 other rigs in the fleet of which approximately 100 are active Major upgrade program has provided: PTEN commitment to customers and service PTEN’s large fleet provides substantial “upside” if drilling continues to increase Major rig refurbishments Enhanced mobility Iron
Slide 18: Long term contracts
18 Long term contracts* PTEN expects to average 120 rigs under term contract in 2012 including 131 in the first quarter Approximately 60% of active rigs in the US are committed under term contracts Term contracts have an initial duration of at least 12 months Provides estimated future dayrate drilli
Slide 19: PTEN's Pressure Pumping Business
PTEN’s Pressure Pumping Business Changing Energy Environment – Changing Energy Environment – Well Stimulation Well Stimulation PTEN’s Pressure Pumping Business
Slide 20: Changing Significance of Well Stimulation
20 Changing Significance of Well Stimulation Shale and other unconventional plays changed the business Changing equipment (“quints”) and crew competencies Key to unlocking long laterals and greatly increased shale production Substantial increases in horizontal completions Increasing number of stages
Slide 21: A Significant Player in Growing Markets
21 Fracturing horsepower: 288,500 Other horsepower: 20,270 Frac Crews under contract : 3 Fracturing horsepower: 261,000 Other horsepower: 61,300 Frac Crews under contract: 2 A Significant Player in Growing Markets Approximately 155,000 HP under term contract 47% 53% Fracturing Horsepower Southwest R
Slide 22: Recent Investments in Pressure Pumping
22 Recent Investments in Pressure Pumping… … Have Increased Fleet Size and Quality * Includes acquisition of pressure pumping assets from Key Energy 0 200 400 600 800 2006 2007 2008 2009 2010* 2011 2012E Fracturing Horsepower Other Horsepower Year End PTEN’s Pressure Pumping Business 140,000 HP expe
Slide 23: Strong Growth in Pressure Pumping
23 Strong Growth in Pressure Pumping 2006 2007 2008 2009 2010 2011 146 203 217 161 351 846 2006 2007 2008 2009 2010 2011 55 79 62 29 103 267 Revenues ($MM) EBITDA ($MM) PTEN’s Pressure Pumping Business
Slide 24: Service Intensity By Region
24 Service Intensity By Region Average Horsepower Per Well (000s HP)* *Source: Simmons & Company Equity Research 35 35 30 24 16 Eagle Ford Utica Marcellus Permian (Horizontal) Permian (Vertical) PTEN’s Pressure Pumping Business
Slide 25: Increasing Service Intensity: Eagle Ford Shale
25 Increasing Service Intensity Eagle Ford Shale *Source: Simmons & Company Equity Research Frac Stages* 2008 2009 2010 2011E Leading Edge 11 15 17 18 32 2008 2009 2010 2011E Leading Edge 3,700 4,350 5,500 6,000 9,200 Lateral Length* PTEN’s Pressure Pumping Business
Slide 26: Increasing Service Intensity: Marcellus Shale
26 Increasing Service Intensity Marcellus Shale *Source: Simmons & Company Equity Research 2009 2010 2011E Leading Edge 6 8 15 28 Frac Stages* 2009 2010 2011E Leading Edge 2,750 4,000 5,000 9,000 Lateral Length* PTEN’s Pressure Pumping Business
Slide 27: PTEN Pressure Pumping Fleet by Age
PTEN Pressure Pumping Fleet by Age >10 Years 5 - 10 Years < 5 Years 12/31/2011 >10 Years 5 - 10 Years < 5 Years 12/31/2012E 27 PTEN’s Pressure Pumping Business More than two-thirds of fracturing More than two-thirds of fracturing horsepower is less than five years old horsepower is less than five ye
Slide 28: PTEN Investment Highlights
PTEN Investment PTEN Investment Highlights Highlights
Slide 29: Strategic Approach
29 Concentrate on two core businesses Plan to continue to grow organically PTEN has the balance sheet and expected cash flow to support continued organic growth in both businesses Acquisitions and dispositions only when the price is right PTEN Investment Highlights - Strategic Approach • • Concentra
Slide 30: Components of Total Revenue and EBITDA
30 Components of Total Revenue EBITDA Contract Drilling 65% Pressure Pumping 33% Oil & Natural Gas 2% Contract Drilling $690,395 Pressure Pumping 266,719 Oil & Natural Gas 40,944 Corporate & Other (34,596) Discontinued Operations (576) PTEN Investment Highlights Components of Total Revenue EBITDA Co
Slide 31: History of returning capital to investors
31 No equity sales in more than 11 years History of returning capital to investors Stock Buyback Cash Dividend Total of $592 million in 2006 through 2008 Initiated cash dividend in 2004 Quarterly dividend currently $0.05 per share PTEN Investment Highlights • • – – Total of $592 million in 2006 thro
Slide 32: PTEN Investment Highlights
32 Leading market position One of the “Big 3” US land drillers One of the largest pressure pumping companies in the US Well positioned to grow organically and through opportunistic acquisition Diverse asset base Drilling rigs well-matched to customers’ needs Well stimulation assets that meet custome
Slide 33: PTEN Investment Highlights
33 Flexible operating model Maximizes earnings growth during periods of increased activity Minimizes costs during periods of low activity Strong cash flow generation Strong management team Prudent financial management Operational management that is customer responsive Proven track record through num
Slide 34: Low valuation relative to peers and historical multiples
34 Low valuation relative to both peers and historical trading multiples Source: Thomson One Financial 0.0 2.0 4.0 6.0 8.0 10.0 12.0 2007 2008 2009 2010 2011 2012 PTEN HP NBR PTEN Investment Highlights 30 – 30 – 40% discount to both peers 40% discount to both peers and historical trading multiples a
Slide 35: Growth in Shareholder Equity
Growth in Shareholder Equity The Warren Buffett Standard 35 0 500 1,000 1,500 2,000 2,500 3,000 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Thousands PTEN Investment Highlights Growth in Shareholder Equity The Warren Buffett Standard
Slide 36: Conclusions
36 Favorable trends are likely to persist in North American oil and natural gas markets US Land Drilling and Pressure Pumping are major beneficiaries of the new trends Patterson-UTI has the right assets: Drilling rigs well-matched to the customers’ needs Well stimulation assets that meet customers’
Slide 37: EBITDA Reconciliation
37 Patterson-UTI Energy, Inc. EBITDA Reconciliation (dollars in thousands) 2011 2010 2009 2008 2007 2006 Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA): Net income (loss) $ 322,413 $ 116,942 $ (38,290) $ 347,069 $ 438,639 $ 673,254 Income tax expense (benefit) 187,938 72,856
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