US contract driller Patterson-UTI Power Inc. expects to see a “substantial” improve within the variety of oil and gasoline rigs in June and July, CEO Andy Hendricks mentioned Thursday.
Hendricks, on a convention name to debate first quarter efficiency and outlook, mentioned confidence was bettering that 2021 could be a powerful yr for enterprise within the Decrease 48.
“Crude oil costs buying and selling in a good vary round $ 60 have supported rising exercise,” he advised traders. “Trying forward, primarily based on conversations with prospects, we now have higher confidence in persevering with to enhance drilling and completion actions.
“We anticipate our platform depend to develop to round 80 platforms over the subsequent three months, with most of this development occurring on the finish of the second quarter and the beginning of the third quarter.”
Drilling and completion exercise by exploration and manufacturing prospects is bettering at a “reasonable tempo,” Hendricks mentioned. “As merchants proceed to train capital self-discipline, we see growing exercise throughout all classes of merchants in the course of the yr.”
The costs of most at present energetic platforms have additionally been reset because the onset of the recession.
“As such, we consider the second quarter day by day margin would be the lowest for this drill cycle.
Within the contract drilling phase, the typical variety of rigs for the primary quarter “improved to 69 rigs from 62 rigs within the fourth quarter,” Hendricks mentioned. “Our platform depend ended the primary quarter at 71 platforms, and we now have already activated two platforms within the second quarter.
“Contemplating the schedule for extra platform reactivations, in addition to inactive however contracted platforms going out of contract, we anticipate a median of 73 platforms for the second quarter.”
The platform’s margins in 1Q2021 had been $ 8,750 / day, together with a good thing about $ 6 million, or $ 960 / day for a gross sales and use tax rebate, and $ 2.3 million, or $ 370 / day, for income that was not acknowledged in 2020 on account of about collectability. “
Excluding the advantages, nevertheless, the typical platform margins “have all the time exceeded our expectations on account of a mix of upper than anticipated revenues and decrease than anticipated prices,” mentioned the CEO.
Common platform income / day and working prices / day improved in comparison with 4Q2020. The proportion of platforms inactive however beneath contract decreased to 7% in 1Q2021, in comparison with 16% in 4Q2020.
On the finish of March, the Houston operator had futures contracts in place for the drilling rigs offering for $ 240 million in day by day drilling income.
“Primarily based on the contracts at present in place, we anticipate a median of 39 platforms working beneath futures within the second quarter,” with round 27 platforms already beneath futures till subsequent March, mentioned Hendricks.
Hit by winter storm Uri, pressurized pumping revenues within the first three months fell to round $ 76 million, with gross margins of minus $ 700,000.
Nonetheless, Hendricks is “inspired by the indicators of bettering costs. We now have been capable of cross larger enter prices to our prospects for issues like sand and trucking and on high of that… we’re beginning to get higher costs for our excessive degree of service.
The corporate averaged seven energetic spreads within the first quarter, with efficient use of 5.5 spreads, Hendricks advised analysts.
“Within the second quarter, we anticipate an enchancment in utilization and we plan to reactivate a further unfold on the finish of the quarter for devoted work.”
Within the directional drilling phase, income elevated sequentially to $ 19.7 million from $ 16.9 million. Gross margin improved to $ 3 million, or 15% of gross sales, from sequential margins of $ 2.2 million, or 13% “because the enterprise continues to enhance” .
The online loss totaled $ 106 million (minus 57 cents / share) in 1Q2021, surpassing the lack of $ 435 million a yr in the past (minus $ 2.28). General income fell to $ 241 million from $ 446 million.
The corporate for 1Q2021 recorded a one-time cost of $ 406 million ($ 1.83 in share), together with an impairment cost of $ 10.6 million for a number of the exploration and manufacturing property.