Summary of Patterson-UTI's Q2 2026 Earnings Call

1Key Financial Results and Metrics

Total Revenue: $1.228 billion, a 10% increase from Q1 2026.

Net Loss: $20 million, or $0.05 per share, impacted by $21 million in non-cash charges related to exiting the Colombian Contract Drilling business.

Adjusted EBITDA: $232 million.

Operating Days: 8,361 with an average of 92 operating rigs.

Capital Expenditures: $156 million in Q2, with a full-year expectation of approximately $600 million.

Cash Position: $203 million on hand, with no debt under the revolving credit facility.

Quarterly Dividend: $0.10 per share, payable September 15, 2026.

2Strategic Updates and Business Highlights

The company emphasized its technology leadership and competitive advantage in the U.S. shale market, focusing on high-spec rigs and natural gas-powered completion equipment.

Strong demand from private E&Ps is driving activity, with public E&Ps expected to follow suit.

Completion Services saw improved pricing and utilization, with a focus on retiring older diesel equipment in favor of more efficient gas-powered assets.

The Drilling Products segment achieved its highest revenue since acquiring Ulterra, with record international revenue despite geopolitical challenges.

Patterson-UTI is exiting its Contract Drilling operations in Colombia due to aging assets and unfavorable political conditions.

3Forward Guidance and Outlook

Drilling Services: Expected average rig count of approximately 100 rigs in Q3 2026, with adjusted gross profit projected at $145 million.

Completion Services: Anticipated adjusted gross profit of approximately $140 million for Q3, supported by high utilization and pricing improvements.

Drilling Products: Expected adjusted gross profit of around $40 million in Q3, with continued growth anticipated.

The company expects free cash flow to improve in the second half of 2026 and significantly in 2027, with a commitment to return at least 50% of adjusted free cash flow to shareholders.

4Bad News, Challenges, or Points of Concern

The net loss in Q2 was attributed to non-cash charges, highlighting potential risks associated with asset write-downs.

Working capital needs increased due to rising activity levels, which could pressure cash flow in the short term.

The company faces challenges from geopolitical instability in the Middle East, which could impact logistics and operations.

The exit from Colombia reflects a strategic retreat from a market that has become less favorable, raising concerns about the viability of operations in certain international markets.

5Notable Q&A Insights

Management noted that private E&Ps are currently leading the rig count recovery, with discussions with public E&Ps gaining momentum for future activity.

The pricing environment for both drilling and completion services is improving, with expectations for continued upward pressure due to equipment shortages.

The company is focused on upgrading its rig fleet to meet evolving customer demands for higher capacity and efficiency, with significant investments planned for 2027.

Management provided insights into the competitive landscape, emphasizing the importance of technology and operational efficiency in capturing market share. Overall, Patterson-UTI is positioned for growth amid a recovering market, with a strategic focus on technology and high-spec equipment to meet evolving customer needs. However, challenges related to geopolitical risks, working capital pressures, and the exit from Colombia remain points of concern.