Patterson-UTI Energy, Inc.

Thank you for standing by. At this time, I would like to welcome everyone to the Paterson UTI Energy First Quarter 2023 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, again, press star one. Thank you. Mike Strickman, Vice President, Investor Relations. You may begin your conference.

Thank you, Cheryl. Good morning. And on behalf of Patterson UTI Energy, I'd like to welcome you to today's conference call to discuss results for the three months ended March 31st, 2023. Participating in today's call will be Andy Hendricks, Chief Executive Officer, and Andy Smith, Chief Financial Officer. A quick reminder that statements made in this conference call that state the company's or management's plans, intentions, targets, beliefs, expectations, or predictions for the future are forward-looking statements. These forward-looking statements are subject to risks and uncertainties as disclosed in the company's SEC filings, which could cause the company's actual results to differ materially. The company undertakes no obligation to publicly update or revise any forward-looking statement. Statements made in this conference call include non-GAAP financial measures. The required reconciliations to get financial measures are included on our website, patenergy.com, and in the company's press release issued prior to this conference call. And now, it's my pleasure to turn the call over to Andy Hendricks for some opening remarks.

Andy? Thanks, Mike. Good morning, and thank you for joining us today for Patterson UTI's first quarter conference call. We are pleased to report another quarter of solid financial results. The exceptional results in our contract drilling segment demonstrate our ongoing ability to capitalize on the robust demand for Tier 1 super spec rigs and the renewal of drilling rig contracts at current rates. During the first quarter, we continued to return capital to shareholders and strengthen our balance sheet at the same time. We repurchased 5.6 million shares of our common stock for $73.6 million. and we repurchased $9 million of long-term indebtedness for only $7.8 million. Our pace of share repurchases accelerated as we believe the price of our shares are disconnected from the underlying fundamentals of our business and represent an outstanding opportunity. Softness in natural gas prices, along with uncertainty regarding the future trajectory of oil prices, led to what we believe to be a transitory and mid-cycle pause in activity. However, we expect relative stability in the rig count for Tier 1 super spec rigs as operator budgets closely align with current crude oil prices due to capital discipline, and current crude oil prices continue to support ongoing drilling and completion activity. The decline in the overall rig count to date during the first quarter has been both nuanced and bifurcated. Lower spec SCR and mechanical rigs were primarily released, and the net result was the high grading of the overall industry rig fleet, driven by various operators. This high grading, which positively impacts well economics, has supported demand across the industry for Tier 1 super spec rigs and maintained a high level of utilization. Looking forward, we expect that improving market fundamentals for oil will positively impact drilling activity levels, although near-term drilling and completion activity may be modestly affected by current natural gas prices. In contract drilling, we will continue to capitalize on our position as a leading provider of Tier 1 super spec rigs, and we'll strategically focus on profitability and cash flow over activity levels. We are confident we we can best help our customers improve their drilling economics through our continued focus on operational excellence. By focusing on the efficiency gains offered by Tier 1 super spec rigs and integrating our latest technology solutions, we help our customers improve their well economics. We anticipate the current natural gas prices will cause a small reduction in our rig count in the near term. However, the continued repricing of below-market rates from contracts signed in previous years to current rates upon contract renewal this quarter is expected to lead to increased margins and increased overall contract drilling profitability in the second quarter. As we move into the second half of the year, we anticipate that our rig count will increase, driven primarily by activity in oil basins. In pressure pumping, the current market environment has resulted in some softness in the spot market for frac spreads. This softness contributed to increased white space in the calendar during the first quarter, which, combined with weather disruptions, reduced utilization. But despite these challenges, I'm pleased that we were able to achieve our expectations for the first quarter revenues and margins due to the strong execution of our pressure pumping team. The pressure pumping industry continues to bifurcate as dual fuel spreads remain in higher demand due to their ability to reduce operators' fuel costs. Currently, eight of our 12 spreads are dual fuel capable. Given the current market environment, we no longer plan to reactivate our 13th spread this year. However, we will continue to convert engines to dual fuel and expect nine of our 12 spreads to be dual fuel capable by the end of this year. In the directional drilling segment, our focus continues to be distinguishing ourselves by leveraging technology, innovation, and emphasizing exceptional service quality and reliability. We've established ourselves as leaders in conventionally drilling U-turn wells, which involves utilizing a high-performance mud motor to drill complex wells shaped like a U, enabling clients to drill 10,000 foot laterals within a single 5,000 foot section. We've even successfully drilled a well in a W shape for a customer recently. Our impact mud motors and Empower MWD systems have demonstrated outstanding reliability, contributing to the reduction in the number of trips required to replace tools, and in turn, boosting operator efficiency. By combining this enhanced efficiency with top-notch service quality that ensures the well bore remains within the pay zone, we can effectively improve overall well economics. As we move forward, we remain dedicated to maintaining our edge in the directional drilling industry by continually refining our technologies, fostering collaboration across our business segments, and delivering reliable and efficient solutions that cater to the evolving needs of our clients. With that, I will now turn the call over to Andy Smith, who will review the financial results for the first quarter. Thanks.