PATTERSON UTI ENERGY INC - Quarter Report: 2025 March (Form 10-Q)

ITEM 2.

Unregistered Sales of Equity Securities and Use of Proceeds

ITEM 5.

PART I — FINANCIAL INFORMATION

ITEM 1. Financial Statements

The following unaudited condensed consolidated financial statements include all adjustments which are, in the opinion of management, necessary for a fair statement of the results for the interim periods presented.

PATTERSON-UTI ENERGY, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(unaudited, in thousands, except share data)


	March 31, 2025	December 31, 2024
ASSETS
Current assets:
Cash, cash equivalents and restricted cash	$	$
Accounts receivable, net of allowance for credit losses of $ and $ at March 31, 2025 and December 31, 2024, respectively
Inventory
Other current assets
Total current assets
Property and equipment, net
Operating lease right of use asset
Finance lease right of use asset
Goodwill
Intangible assets, net
Deposits on equipment purchases
Other assets


Total assets	$	$
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	$
Accrued liabilities
Operating lease liability
Finance lease liability
Current maturities of long-term debt
Total current liabilities
Long-term operating lease liability
Long-term finance lease liability
Long-term debt, net of debt discount and issuance costs of $ and $ at March 31, 2025 and December 31, 2024, respectively
Deferred tax liabilities, net
Other liabilities
Total liabilities
Commitments and contingencies (see Note 9)
Stockholders’ equity:
Preferred stock, par value $; authorized shares, shares issued
Common stock, par value $; authorized shares with and issued and and outstanding at March 31, 2025 and December 31, 2024, respectively
Additional paid-in capital
Retained deficit	()	()
Accumulated other comprehensive loss	()	()
Treasury stock, at cost, and shares at March 31, 2025 and December 31, 2024, respectively	()	()
Total stockholders’ equity attributable to controlling interests
Noncontrolling interest
Total equity
Total liabilities and stockholders’ equity	$	$

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

PATTERSON-UTI ENERGY, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited, in thousands, except per share data)

2025

2024

Operating revenues:

Drilling Services

Completion Services

Drilling Products

Other

Total operating revenues

Operating costs and expenses:

Drilling Services

Completion Services

Drilling Products

Other

Depreciation, depletion, amortization and impairment

Selling, general and administrative

Merger and integration expense

Other operating expense (income), net

()

Total operating costs and expenses

Operating income

Other income (expense):

Interest income

Interest expense, net of amount capitalized

()

Other income

Total other expense

()

Income before income taxes

Income tax expense

Net income

Net income attributable to noncontrolling interest

Net income attributable to common stockholders

Net income attributable to common stockholder per common share:

Basic

Diluted

Weighted average number of common shares outstanding:

Basic

Diluted

Cash dividends per common share

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

PATTERSON-UTI ENERGY, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(unaudited, in thousands)


	2025	2024
Net income	$	$
Other comprehensive loss:
Foreign currency translation adjustment, net of taxes of $ for all periods	()	()

Comprehensive income
Less: comprehensive income attributable to noncontrolling interest
Comprehensive income attributable to common stockholders	$	$

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

PATTERSON-UTI ENERGY, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(unaudited, in thousands)

Common Stock

Additional
Paid-in
Capital

Retained
Deficit

Accumulated Other
Comprehensive
Loss

Treasury
Stock

Noncontrolling
Interest

Total

Number of
Shares

Amount

Balance, December 31, 2024

()

Net income

—

Distributions to noncontrolling interest

—

()

Foreign currency translation adjustment

—

()

—

()

Vesting of restricted stock units

()

—

Stock-based compensation

—

Payment of cash dividends ($ per share)

—

()

—

()

Dividend equivalents

—

()

—

()

Purchase of treasury stock

—

()

—

()

Balance, March 31, 2025

()

Common Stock

Additional
Paid-in
Capital

Retained
Earnings

Accumulated Other
Comprehensive Income
(Loss)

Treasury
Stock

Noncontrolling
Interest

Total

Number of
Shares

Amount

Balance, December 31, 2023

()

Net income

—

Foreign currency translation adjustment

—

()

—

()

Vesting of restricted stock units

()

—

Stock-based compensation

—

Payment of cash dividends ($ per share)

—

()

—

()

Dividend equivalents

—

()

—

()

Purchase of treasury stock

—

()

—

()

Balance, March 31, 2024

()

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

PATTERSON-UTI ENERGY, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited, in thousands)


	Three Months Ended March 31,
	2025		2024
Cash flows from operating activities:
Net income	$		$
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, depletion, amortization and impairment


Deferred income tax expense
Stock-based compensation

Net gain on asset disposals	()		()


Other	()
Changes in operating assets and liabilities:
Accounts receivable	()
Inventory			()
Other current assets
Other assets
Accounts payable
Accrued liabilities	()		()
Other liabilities	()		()
Net cash provided by operating activities

Cash flows from investing activities:


Purchases of property and equipment	()		()


Proceeds from disposal of assets
Other	()		()
Net cash used in investing activities	()		()

Cash flows from financing activities:
Purchases of treasury stock	()		()
Dividends paid	()		()






Payments of finance leases	()		()
Other	()		()
Net cash used in financing activities	()		()
Effect of foreign exchange rate changes on cash, cash equivalents and restricted cash	()
Net decrease in cash, cash equivalents and restricted cash	()		()
Cash, cash equivalents and restricted cash at beginning of period
Cash, cash equivalents and restricted cash at end of period	$		$

Supplemental disclosure of cash flow information:
Net cash received (paid) during the period for:
Interest, net of capitalized interest of $ in 2025 and $ in 2024	$	()	$	()
Income taxes			()
Non-cash investing and financing activities:
Net decrease in payables for purchases of property and equipment	$	()	$	()
Net increase in deposits on equipment purchases	()		()

Purchases of property and equipment through exchange of lease right of use asset
Derecognition of right of use asset	()		()

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

PATTERSON-UTI ENERGY, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

$ Restricted cash Total cash, cash equivalents and restricted cash$ $

and do not provide customers with options to purchase the underlying asset.

to days.

We do not have any significant contract asset balances. Contract liabilities include prepayments received from customers prior to the requested services being completed. Once the services are complete and have been invoiced, the prepayment is applied against the customer’s account to offset the accounts receivable balance. Also included in contract liabilities are payments received from customers for reactivation or initial mobilization of newly constructed or upgraded rigs that were moved on location to the initial well site. These payments are allocated to the overall performance obligation and amortized over the initial term of the contract. Total contract liability balances were $ million and $ million as of March 31, 2025 and December 31, 2024, respectively. We recognized $ million of revenue during the three months ended March 31, 2025 that was included in the contract liability balance at the beginning of the period. Revenue related to our contract liabilities balance is expected to be recognized through 2028. The $ million current portion of our contract liability balance is included in “Accrued liabilities” and the $ million noncurrent portion of our contract liability balance is included in “Other liabilities” in our consolidated balance sheets.

Contract Costs

Costs incurred for newly constructed rigs or rig upgrades based on a contract with a customer are considered capital improvements and are capitalized to drilling equipment and depreciated over the estimated useful life of the asset.

Remaining Performance Obligations

We maintain a backlog of commitments for contract drilling services under term contracts, which we define as contracts with a duration of six months or more. Our contract drilling backlog in the United States as of March 31, 2025 was approximately $ million. Approximately % of our total contract drilling backlog in the United States at March 31, 2025 is reasonably expected to remain at March 31, 2026. We generally calculate our backlog by multiplying the dayrate under our term drilling contracts by the number of days remaining under the contract. The calculation does not include any revenues related to fees for other services such as for mobilization, other than initial mobilization, demobilization and customer reimbursables, nor does it include potential reductions in rates for unscheduled standby or during periods in which the rig is moving or incurring maintenance and repair time in excess of what is permitted under the drilling contract. For contracts that contain variable dayrate pricing, our backlog calculation uses the dayrate in effect for periods where the dayrate is fixed, and, for periods that remain subject to variable pricing, uses commodity pricing or other related indices in effect at March 31, 2025. In addition, our term drilling contracts are generally subject to termination by the customer on short notice and provide for an early termination payment to us in the event that the contract is terminated by the customer. For contracts on which we have received notice for the rig to be placed on standby, our backlog calculation uses the standby rate for the period over which we expect to receive the standby rate. For contracts on which we have received an early termination notice, our backlog calculation includes the early termination rate, instead of the dayrate, for the period over which we expect to receive the lower rate. Please see “Our current backlog of contract drilling revenue may decline and may not ultimately be realized, as fixed-term contracts may in certain instances be terminated without an early termination payment” included in Item 1A of our Annual Report.

$ Work-in-process Finished goods Inventory$ $

$ Workers’ compensation receivable Prepaid expenses Other Other current assets$ $

$ Oil and natural gas properties Buildings Rental equipment Land Total property and equipment Less accumulated depreciation, depletion, amortization and impairment()()Property and equipment, net$ $

Depreciation and depletion expense on property and equipment of approximately $ million and $ million was recorded in the three months ended March 31, 2025 and 2024, respectively.

We review our long-lived assets, including property and equipment and definite-lived intangible assets, for impairment whenever events or changes in circumstances indicate that the carrying amounts of certain assets may not be recovered over their estimated remaining useful lives (“triggering events”). In connection with this review, assets are grouped at the lowest level at which identifiable cash flows are largely independent of other asset groupings. We estimate the undiscounted future cash flows over the life of the primary asset in an asset group. These estimates of cash flows are based on historical cyclical trends in the industry as well as our expectations regarding the continuation of these trends in the future. Provisions for asset impairment are charged against income when estimated future cash flows, on an undiscounted basis, are less than the asset’s net book value. Any provision for impairment is measured at fair value.

During 2024, negative market indicators such as lower industry-wide drilling rig and pressure pumping fleet count forecasts, increased volatility and pricing declines in the pressure pumping market, and continued efficiency gains and technology advancements reducing operating days led to our reduced outlook for activity. The reduction in activity forecasts, the decline in the market price of our common stock, and the results of the fair value determination of certain of our reporting units, were triggering events indicating that certain of our long-lived tangible and definite-lived intangible assets may have been impaired. We deemed it necessary to perform recoverability tests on our asset groups within our completion services reporting unit and our Latin American contract drilling asset group as of September 30, 2024. Future cash flows were estimated over the expected remaining life of the primary asset for each asset group, and we determined that, on an undiscounted basis, expected cash flows exceeded the carrying value of the asset groups. As such, no impairment was indicated for our long-lived tangible or definite-lived intangible assets.

During the first quarter of 2025, the majority of our primary market indicators stabilized as did management’s outlook on future activity. As such, we concluded there was no indication of a triggering event related to our long-lived tangible and definite-lived intangible asset groups as of March 31, 2025.

additions or impairments to goodwill. As of March 31, 2025 and December 31, 2024, our goodwill balance was $ million. reporting units; completion services, which was primarily comprised of our hydraulic fracturing operations and other integrated service offerings, and cementing services.

Goodwill Impairment Assessment

In connection with this 2024 assessment, we estimated the fair value of the drilling products and the completion services reporting units using the income approach. Under this approach, we used a discounted cash flow model, which utilized present values of cash flows to estimate fair value. Forecasted cash flows reflected known market conditions in the third quarter of 2024 and management's anticipated business outlook for each reporting unit. Future cash flows were projected based on estimates of revenue growth rates, gross profit, selling, general and administrative expense, changes in working capital, and capital expenditures. The terminal period used within the discounted cash flow model for each reporting unit consisted of a % growth estimate. Future cash flows were then discounted using a market-participant, risk-adjusted weighted average cost of capital of % for the drilling products reporting unit and % for the completion services reporting unit. Financial and credit market volatility directly impacts our fair value measurement through the weighted average cost of capital used to determine a discount rate. During times of volatility, significant judgment must be applied to determine whether credit market changes are a short-term or long-term trend.

In connection with this 2024 assessment, we estimated the fair value of the cementing services reporting unit in our completion services operating segment using a market approach. The market approach was based on trading multiples of earnings before interest, taxes, depreciation and amortization for companies comparable to the cementing services reporting unit.

For purposes of our 2024 assessment, the forecast for the completion services reporting unit assumed lower activity in 2025 compared to average activity levels for full year 2024 and increases in estimated activity of % to % beginning in 2026 through 2029. Those estimates were based on future drilling rig and pressure pumping fleet count forecasts during the third quarter of 2024 and estimated market share. Additionally, the forecast reflected the expectation that industry-wide pricing pressure would persist

million impairment charge to goodwill for the completion services reporting unit during the third quarter of 2024.

The forecast for the drilling products reporting unit assumed continued growth domestically as well as in international markets. Geopolitical instability in regions in which we expect to maintain and grow market share, a global decrease in the demand of drilling products, or other unforeseen macroeconomic considerations could negatively impact the key assumptions used in our goodwill assessment for our drilling products reporting unit.

During the first quarter of 2025, the majority of our primary market indicators stabilized as did management’s outlook on future activity. As such, as of March 31, 2025, we determined there were no events that would indicate the carrying value of goodwill may not be recoverable or that potential impairment exists.

Subsequent to March 31, 2025, global economic conditions deteriorated, in part, because of recently enacted trade policies and tariffs implemented by the United States and other governments, as well as uncertainty regarding potential future changes to global trade policies and tariffs. Additionally, subsequent to March 31, 2025, several OPEC+ countries announced plans to phase out existing crude oil output cuts earlier than anticipated. These developments and geopolitical tensions have introduced increased uncertainty in global energy markets, which has contributed to a decline in our share price, lowered crude oil futures prices and increased uncertainty regarding the future economic environment in which we operate. The recent deterioration in macroeconomic conditions and the decline in our share price occurred after the balance sheet date and do not reflect conditions that existed as of March 31, 2025. Accordingly, these developments have not been reflected in the unaudited condensed consolidated financial statements for the three months ended March 31, 2025.

While the full effects are yet to be determined, prolonged trade tensions and sustained lower crude oil futures prices could adversely affect our future outlook on activity and profitability. If these conditions persist or deteriorate further, or if other unforeseen macroeconomic conditions emerge, they could negatively impact the key assumptions used in our goodwill assessment for our drilling products and cementing services reporting units. A decrease in fair value resulting from unfavorable changes to these assumptions, or others, could result in goodwill impairment in future periods that could be material to our results of operations and financial statements as a whole. We are unable to reasonably estimate the magnitude or timing of any such potential impacts.

Intangible Assets —

$()$ $ $()$ Developed technology () () Trade name () () Other () () Intangible assets, net$ $()$ $ $()$

million and $ million was recorded for the three months ended March 31, 2025 and 2024, respectively.

$ Workers’ compensation liability Property, sales, use and other taxes Insurance, other than workers’ compensation Accrued interest payable Deferred revenue Thereafter Total$

million primarily for the benefit of various insurance companies as collateral for retrospective premiums and retained losses that could become payable under the terms of the underlying insurance contracts and compliance with contractual obligations. These letters of credit expire annually at various times during the year and are typically renewed. As of March 31, 2025, amounts had been drawn under the letters of credit. As of March 31, 2025, we had $ million in surety bond exposure issued as financial assurance on an insurance agreement.

As of March 31, 2025, we had commitments to purchase major equipment totaling approximately $ million.

Our completion services segment has entered into agreements to purchase minimum quantities of proppants from certain vendors. As of March 31, 2025, the remaining minimum obligation under these agreements was approximately $ million, of which approximately $ million and $ million relate to the remainder of 2025 and 2026, respectively.

Certain subsidiaries we acquired in the Ulterra acquisition are defendants in a claim brought by a subsidiary of NOV Inc. alleging breach of a license agreement related to certain patents. Such subsidiaries have asserted defenses to the claim and are defending vigorously against this claim.

10.

per share to be paid on June 16, 2025 to holders of record as of June 2, 2025. The amount and timing of all future dividend payments, if any, are subject to the discretion of the Board of Directors and will depend upon business conditions, results of operations, financial condition, terms of our debt agreements and other factors. Our Board of Directors may, without advance notice, reduce or suspend our dividend for any reason, including to improve our financial flexibility and position our company for long-term success. There can be no assurance that we will pay a dividend in the future.

Share Repurchases and Acquisitions — In September 2013, our Board of Directors approved a stock buyback program. In February 2024, our Board of Directors approved an increase of the authorization under the stock buyback program to allow for an aggregate of $ billion of future share repurchases. All purchases executed to date have been through open market transactions. Purchases under the buyback program are made at management’s discretion, at prevailing prices, subject to market conditions and other factors. Purchases may be made at any time without prior notice. There is no expiration date associated with the buyback program. As of March 31, 2025, we had remaining authorization to purchase approximately $ million of our outstanding common stock under the stock buyback program. Shares of stock purchased under the buyback program are held as treasury shares.

$ Purchases pursuant to stock buyback program Acquisitions pursuant to long-term incentive plans

Treasury shares at March 31, 2025

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options were granted during the three months ended March 31, 2025 or 2024. $ Exercised$ Expired$

Outstanding at March 31, 2025

Exercisable at March 31, 2025

Restricted Stock Units (Equity Based) — For all restricted stock unit awards made to date, shares of common stock are not issued until the units vest. Restricted stock units are subject to forfeiture for failure to fulfill service conditions and, in certain cases, performance conditions. Forfeitable dividend equivalents are accrued on certain restricted stock units that will be paid upon vesting. We use the straight-line method to recognize periodic compensation cost over the vesting period.

$ Granted$ Vested()$ Forfeited()$

Non-vested restricted stock units outstanding at March 31, 2025

As of March 31, 2025, we had unrecognized compensation cost related to our unvested restricted stock units totaling $ million. The weighted-average remaining vesting period for these unvested restricted stock units was years as of March 31, 2025.

Restricted Stock Units (Liability Based) — We converted cash-settled performance based units that had been granted by NexTier Oilfield Solutions Inc. (“NexTier”) into our cash-settled restricted stock units in connection with our merger with NexTier. These awards were accounted for as liability classified awards and remeasured at fair value at each reporting period. Compensation expense was recorded over the vesting period and was initially based on the fair value at the award conversion date. Compensation expense was subsequently remeasured at each reporting date during the vesting period based on the change in our stock price. Dividend cash equivalents are not paid on cash-settled units. We settled the NexTier cash-settled performance based units in January 2025, with a cash payment of $ million.

Performance Unit Awards — We have granted share-settled performance unit awards to certain employees (the “Performance Units”) on an annual basis since 2010. The Performance Units provide for the recipients to receive shares of common stock upon the achievement of certain performance goals during a specified period established by the Compensation Committee. The performance period for the Performance Units is generally the period commencing on April 1 of the year of grant, except as described below for the Performance Units granted in May 2024.

The performance goals for the Performance Units are tied to our total shareholder return for the performance period as compared to total shareholder return for a peer group determined by the Compensation Committee. For the performance units granted in April 2022, the peer group includes one market index. The performance goals are considered to be market conditions under the relevant accounting standards and the market conditions were factored into the determination of the fair value of the respective Performance Units. For the Performance Units granted in April 2022 and May 2023, the recipients will receive the target number of shares if our total shareholder return during the performance period, when compared to the peer group, is at the 55th percentile. If our total shareholder return during the performance period, when compared to the peer group, is at the 75th percentile or higher, then the

times the target number of shares. If our total shareholder return during the performance period, when compared to the peer group, is at the 25th percentile, then the recipients will only receive one-half of the target number of shares. If our total shareholder return during the performance period, when compared to the peer group, is between the 25th and 55th percentile, or the 55th and 75th percentile, then the shares to be received by the recipients will be determined using linear interpolation for levels of achievement between these points.

The Performance Units granted in May 2024 (the “2024 Performance Units”) are subject to separate performance periods—a performance period (the “First Performance Period”), a performance period (the “Second Performance Period”) and a performance period (the “Third Performance Period”), each commencing on April 1, 2024. One-third of the total target number of shares subject to the 2024 Performance Units may become earned in respect of each performance period based on our total shareholder return during such performance period (the target number of shares eligible to vest in the applicable performance period, the “Performance Period Target Amount”). The recipients will earn the Performance Period Target Amount if our total shareholder return during the applicable performance period, when compared to the peer group, is at the 55th percentile. If our total shareholder return during the applicable performance period, when compared to the peer group, is at the 75th percentile or higher, then the recipients will earn times the Performance Period Target Amount. If our total shareholder return during the applicable performance period, when compared to the peer group, is at the 25th percentile, then the recipients will only earn one-half of the Performance Period Target Amount. If our total shareholder return during the applicable performance period, when compared to the peer group, is between the 25th and 55th percentile, or the 55th and 75th percentile, then the shares to be earned by the recipients will be determined using linear interpolation for levels of achievement between these points. Notwithstanding the foregoing, a number of shares no greater than the Performance Period Target Amount may be earned for each of the First Performance Period and the Second Performance Period, unless our total shareholder return during the Third Performance Period is greater than our total shareholder return for, as applicable, the First Performance Period and/or the Second Performance Period, in which case, the number of shares earned in respect of the First Performance and/or the Second Performance Period, as applicable, will be determined as if our total shareholder return during the Third Performance Period was our total shareholder return during the First Performance Period and/or the Second Performance Period, as applicable. If our total shareholder return during the Third Performance Period is or negative, no more than the aggregate target number of shares subject to the 2024 Performance Units may be earned, regardless of results during the First Performance Period and the Second Performance Period. A full service vesting period applies to the Performance Units and no shares will vest and be delivered in respect of the 2024 Performance Units until after the completion of the Third Performance Period.

The payout under the 2024 Performance Units may not exceed the target number of shares if our absolute total shareholder return is negative or .

In May 2024, shares were issued to settle the 2021 Performance Units. The Performance Units granted in 2022 have reached the end of their performance period, and we expect shares will be issued to settle the 2022 Performance Units. The Performance Units granted in 2023 and 2024 have not reached the end of their respective performance periods.

Because the Performance Units are share-settled awards, they are accounted for as equity awards and measured at fair value on the date of grant using a Monte Carlo simulation model.

$ $ $

$ $ NAThree months ended March 31, 2024NA$ $ $

As of March 31, 2025, we had unrecognized compensation cost related to our unvested Performance Units totaling $ million. The weighted-average remaining vesting period for these unvested Performance Units was years as of March 31, 2025.

12.

%, compared with % for the three months ended March 31, 2024. The difference in effective income tax rates between the periods was primarily attributable to the impact of permanent differences against earnings between periods.

In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized, and when necessary, valuation allowances are provided. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. We assess the realizability of our deferred tax assets quarterly and consider carryback availability, the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment.

We continue to monitor income tax developments in the United States and other countries where we have legal entities. We will incorporate into our future financial statements the impacts, if any, of future regulations and additional authoritative guidance when finalized.

13.

$ Weighted average number of common shares outstanding, excluding non-vested restricted stock unitsBasic net income per common share$ $ DILUTED EPS:Net income attributable to common stockholders$ $ Weighted average number of common shares outstanding, including non-vested restricted stock units Diluted net income per common share$ $ Potentially dilutive securities excluded as anti-dilutive

14.

segments: (i) drilling services, (ii) completion services, and (iii) drilling products. The CODM evaluates segment performance based primarily on segment operating income (loss).

Drilling Services — represents our contract drilling, directional drilling, oilfield technology and electrical controls and automation businesses.

Completion Services — represents the combination of our well completion business, which includes hydraulic fracturing, wireline and pumping, completion support, cementing and our legacy pressure pumping business.

Drilling Products — represents our manufacturing and distribution of drill bits business.

$ $ $

Direct operating costs (1)

Selling, general and administrative

Depreciation, amortization and impairment (1)

Segment operating income (loss) (3)

$ $()$ $ Reconciliation of revenue:Total segment revenues from external customers$

Other revenues (4)

Total consolidated revenues$ Reconciliation to consolidated income (loss) before income taxes:

Segment operating income (3)

Other (4)

Corporate()Interest income Interest expense()Other income Income before income taxes$ Drilling ServicesCompletion ServicesDrilling ProductsTotalFor the three months ended March 31, 2024Revenues from external customers$ $ $ $

Direct operating costs (1)

Selling, general and administrative

Depreciation, amortization and impairment (1)

Other segment items (2)

() ()

Segment operating income (3)

$ $ $ $ Reconciliation of revenue:Total segment revenues from external customers$

Other revenues (4)

Total consolidated revenues$ Reconciliation to consolidated income (loss) before income taxes:

Segment operating income (3)

Other (4)

Corporate()Interest income Interest expense()Other income Income before income taxes$

(1)The significant expense categories and amounts align with the segment-level information that is regularly provided to the chief operating decision maker.

(2)Other segment items for each reportable segment includes other operating expenses (income).

(3)Segment operating income (loss) is our measure of segment profitability. It is defined as revenue less operating expenses, selling, general and administrative expenses, depreciation, amortization and impairment expense and other operating expenses (income).

(4)Other includes our oilfield rentals business and oil and natural gas working interests.

$ Completion Services Drilling Products Segment capital expenditures$ $ Other Corporate Total capital expenditures$ $ 1,510,360 100.0 %

Results of Operations

The following tables summarize results of operations by business segment for the three months ended March 31, 2025, December 31, 2024, and March 31, 2024:


	Three Months Ended
	March 31,		December 31,		March 31,		% Change
Drilling Services	2025		2024		2024		Sequential		Year-over-year

	(dollars in thousands)
Revenues	$	412,860	$	408,385	$	457,573	1.1	%	(9.8)	%
Direct operating costs	247,629		245,480		271,737		0.9	%	(8.9)	%
Adjusted gross profit (1)	165,231		162,905		185,836		1.4	%	(11.1)	%
Selling, general and administrative	3,945		4,741		3,879		(16.8)	%	1.7	%
Depreciation, amortization and impairment	84,972		85,174		92,345		(0.2)	%	(8.0)	%

Operating income	$	76,314	$	72,990	$	89,612	4.6	%	(14.8)	%
Capital expenditures	$	73,458	$	54,321	$	82,793	35.2	%	(11.3)	%

Operating days – U.S. (2)	9,573		9,617		11,024		(0.5)	%	(13.2)	%
Average revenue per operating day – U.S. (2)	$	35.72	$	35.29	$	35.68	1.2	%	0.1	%
Average direct operating costs per operating day – U.S. (2)	$	19.55	$	19.57	$	19.51	(0.1)	%	0.2	%
Average adjusted gross profit per operating day – U.S. (2)	$	16.17	$	15.72	$	16.17	2.9	%	0.0	%

(1)Adjusted gross profit is defined as revenues less direct operating costs (excluding depreciation, amortization and impairment expense). See Non-GAAP Financial Measures below for a reconciliation of GAAP gross profit to adjusted gross profit by segment.

(2)Operational data relates to our contract drilling business. A rig is considered to be operating if it is earning revenue pursuant to a contract on a given day.

Sequential quarter comparison

Generally, the revenues in our drilling services segment are most impacted by two primary factors: our contract drilling day rates and our average number of rigs operating.

Revenues and direct operating costs, both on a total and per operating day basis, were relatively flat between sequential quarters.

Capital expenditures increased primarily due to spending related to maintenance capital and the timing of order placement that more heavily impacted the first quarter of 2025.

Year-over-year quarter comparison

Revenues and direct operating costs decreased due to a decrease in operating days for our U.S. contract drilling operations.

The decrease in depreciation, amortization and impairment expense was attributable to a lower depreciable asset base in the first quarter of 2025, in part, due to the abandonment of 42 legacy non-super-spec rigs and equipment in the third quarter of 2024.

Capital expenditures decreased primarily due to reduced investment in our ancillary drilling services not included within our contract drilling business.


	Three Months Ended
	March 31,		December 31,		March 31,		% Change
Completion Services	2025		2024		2024		Sequential		Year-over-year

	(dollars in thousands)
Revenues	$	766,080	$	650,848	$	944,997	17.7	%	(18.9)	%
Direct operating costs	657,681		555,527		745,594		18.4	%	(11.8)	%
Adjusted gross profit (1)	108,399		95,321		199,403		13.7	%	(45.6)	%
Selling, general and administrative	11,409		9,703		10,964		17.6	%	4.1	%
Depreciation, amortization and impairment	115,826		135,852		148,680		(14.7)	%	(22.1)	%

Other operating income, net	—		—		(9,870)		NA		(100.0)	%
Operating income (loss)	$	(18,836)	$	(50,234)	$	49,629	(62.5)	%	NA
Capital expenditures	$	62,173	$	61,469	$	123,377	1.1	%	(49.6)	%

Sequential quarter comparison

Completion services revenues and direct operating costs increased primarily due to seasonal recovery as customer budgets reset in the first quarter. The higher revenues and direct operating costs were primarily from our fracturing operations, which increased $86 million and $82 million, or 17% and 18%, respectively. The increases were primarily activity driven, with pumping hours increasing 23% during the first quarter of 2025.

Depreciation, amortization and impairment expense decreased primarily due to $20.8 million of accelerated depreciation recognized in the fourth quarter of 2024.

Year-over-year quarter comparison

Completion services revenues and direct operating costs decreased primarily due to lower activity in our fracturing operations. Revenues and direct operating costs from our fracturing operations decreased by $170 million and $84 million, or 21% and 13%, respectively.

Depreciation, amortization and impairment expense decreased primarily due to fewer capital additions placed in service relative to asset retirements between the periods.

Other operating income, net in the first quarter of 2024 was due to a gain on legal settlement.

We reduced capital expenditures in response to the changing macroeconomic conditions between the periods.


	Three Months Ended
	March 31,		December 31,		March 31,		% Change
Drilling Products	2025		2024		2024		Sequential		Year-over-year

	(dollars in thousands)
Revenues	$	85,663	$	86,522	$	89,973	(1.0)	%	(4.8)	%
Direct operating costs	46,940		49,186		48,630		(4.6)	%	(3.5)	%
Adjusted gross profit (1)	38,723		37,336		41,343		3.7	%	(6.3)	%
Selling, general and administrative	9,119		10,209		7,661		(10.7)	%	19.0	%
Depreciation, amortization and impairment	22,876		27,328		27,182		(16.3)	%	(15.8)	%
Operating income (loss)	$	6,728	$	(201)	$	6,500	NA		3.5	%
Capital expenditures	$	18,222	$	15,834	$	15,586	15.1	%	16.9	%

Sequential quarter comparison

Revenues and direct operating costs were relatively flat between sequential quarters.

Direct operating costs and depreciation, amortization and impairment expense were approximately $0.6 million and $2.3 million higher than they would have otherwise been for the three months ended March 31, 2025, respectively, as a result of the step up to fair value of our drill bits in accordance with purchase accounting. For the three months ended December 31, 2024, direct operating costs and depreciation, amortization and impairment expense were approximately $3.1 million and $6.1 million higher than they would have otherwise been, respectively, as a result of the step up to fair value of our drill bits.

Year-over-year quarter comparison

Revenues and direct operating costs were relatively flat between the quarters.

Direct operating costs and depreciation, amortization and impairment expense were approximately $0.6 million and $2.3 million higher than they would have otherwise been for the three months ended March 31, 2025, respectively, as a result of the step up to fair value of our drill bits in accordance with purchase accounting. For the three months ended March 31, 2024, direct operating costs and depreciation, amortization and impairment were approximately $2.2 million and $5.8 million higher, respectively, as a result of the step up to fair value of our drill bits.


	Three Months Ended
	March 31,		December 31,		March 31,		% Change
Other	2025		2024		2024		Sequential		Year-over-year

	(dollars in thousands)
Revenues	$	15,934	$	16,380	$	17,817	(2.7)	%	(10.6)	%
Direct operating costs	9,164		9,466		11,178		(3.2)	%	(18.0)	%
Adjusted gross profit (1)	6,770		6,914		6,639		(2.1)	%	2.0	%
Selling, general and administrative	204		59		240		245.8	%	(15.0)	%
Depreciation, depletion, amortization and impairment	6,336		4,790		5,411		32.3	%	17.1	%
Operating income	$	230	$	2,065	$	988	(88.9)	%	(76.7)	%
Capital expenditures	$	3,596	$	2,894	$	3,797	24.3	%	(5.3)	%

(1)Adjusted gross profit is defined as revenues less direct operating costs (excluding depreciation, depletion, amortization and impairment expense). See Non-GAAP Financial Measures below for a reconciliation of GAAP gross profit to adjusted gross profit by segment.

Sequential quarter comparison

Revenues and direct operating costs were relatively flat between sequential quarters.

Depreciation, depletion, amortization and impairment expense increased primarily due to a $1.7 million impairment charge recorded in our oil and natural gas properties business during the first quarter of 2025.

Year-over-year quarter comparison

Revenues and direct operating costs decreased primarily due to lower activity as a result of lower crude oil and natural gas market prices. Oil prices averaged $71.78 per barrel in the first quarter of 2025, as compared to $77.50 per barrel in the first quarter of 2024.


	Three Months Ended
	March 31,		December 31,		March 31,		% Change
Corporate	2025		2024		2024		Sequential		Year-over-year

	(dollars in thousands)
Selling, general and administrative	$	42,253	$	48,367	$	42,240	(12.6)	%	0.0	%
Merger and integration expense	$	432	$	3,460	$	12,233	(87.5)	%	(96.5)	%
Depreciation	$	1,856	$	1,455	$	1,338	27.6	%	38.7	%
Other operating expense, net	$	2,950	$	2,673	$	3,919	10.4	%	(24.7)	%

Interest income	$	1,464	$	928	$	2,189	57.8	%	(33.1)	%
Interest expense, net of amount capitalized	$	(17,697)	$	(17,725)	$	(18,335)	(0.2)	%	(3.5)	%
Other income (expense)	$	1,968	$	(1,333)	$	850	NA		131.5	%
Capital expenditures	$	4,382	$	5,832	$	1,388	(24.9)	%	215.7	%

Sequential quarter comparison

Selling, general and administrative expense decreased primarily due to certain severance costs incurred in the fourth quarter that did not recur as well as a continued focus on cost reduction efforts.

Other income (expense) during the first quarter of 2025 included $1.4 million of income from an unconsolidated joint venture.

Year-over-year quarter comparison

Merger and integration expense decreased due to the passage of time since closing the NexTier merger and the Ulterra acquisition in third quarter of 2023.

Income Taxes

Our effective income tax rate fluctuates from the U.S. statutory tax rate based on, among other factors, changes in pretax income in jurisdictions with varying statutory tax rates, the impact of U.S. state and local taxes, the realizability of deferred tax assets and other differences related to the recognition of income and expense between GAAP and tax accounting.

Our effective income tax rate for the three months ended March 31, 2025 was 51.9%, compared with (3.9)% for the three months ended December 31, 2024. The difference in effective income tax rates between the periods was primarily attributable to the impact of valuation allowances on deferred tax assets between periods, as well as the impact of goodwill impairments and permanent differences against earnings between periods.

Our effective income tax rate for the three months ended March 31, 2025 was 51.9%, compared with 27.9% for the three months ended March 31, 2024. The difference in effective income tax rates between the periods was primarily attributable to the impact of permanent differences against earnings between periods.

Liquidity and Capital Resources

Our primary sources of liquidity are cash and cash equivalents, availability under our Credit Agreement and cash provided by operating activities. As of March 31, 2025, we had approximately $499 million in working capital, including $223 million of cash and cash equivalents, and approximately $498 million available under our Credit Agreement.

On January 31, 2025, we entered into the Credit Agreement, which amended and restated the Prior Credit Agreement. The commitments under the Credit Agreement are $500 million, and the loans and commitments under the Credit Agreement mature on January 31, 2030.

The Credit Agreement provides for a committed senior unsecured credit facility that permits aggregate revolving credit borrowings of up to $500 million, with a letter of credit sub-facility of $100 million and a swing line sub-facility that, at any time outstanding, is limited to the lesser of $50 million and the amount of the swing line provider’s unused commitment. Subject to customary conditions, we may request that the lenders’ aggregate commitments be increased by up to $200 million, not to exceed total commitments of $700 million.

Loans under the Credit Agreement bear interest by reference, at our election, to the SOFR rate (plus a 0.10% per annum adjustment) or base rate, in each case subject to a 0% floor. The applicable margin on SOFR rate loans varies from 1.25% to 2.25% and the applicable margin on base rate loans varies from 0.25% to 1.25%, in each case determined based on our credit rating. As of March 31, 2025, the applicable margin on SOFR rate loans was 1.75% and the applicable margin on base rate loans was 0.75%. A letter of credit fee is payable by us equal to the applicable margin for SOFR rate loans times the daily amount available to be drawn under outstanding letters of credit. The commitment fee rate payable to the lenders varies from 0.15% to 0.35% based on our credit rating.

None of our subsidiaries are currently required to be a guarantor under the Credit Agreement. However, if any subsidiary guarantees or incurs debt, which does not qualify for certain limited exceptions and is otherwise, in the aggregate with all other similar debt, in excess of Priority Debt (as defined in the Credit Agreement), such subsidiary is required to become a guarantor under the Credit Agreement.

The Credit Agreement contains representations, warranties, affirmative and negative covenants and events of default and associated remedies that we believe are customary for agreements of this nature, including certain restrictions on our ability and the ability of each of our subsidiaries to grant liens and on the ability of each of our non-guarantor subsidiaries to incur debt. If our credit rating is below investment grade at both Moody’s and S&P, we will become subject to a restricted payment covenant, which would generally require us to have a Pro Forma Debt Service Coverage Ratio (as defined in the Credit Agreement) greater than or equal to 1.50 to 1.00 immediately before and immediately after making any restricted payment. Restricted payments include, among other things, dividend payments, repurchases of our common stock, distributions to holders of our common stock or any other payment or other distribution to third parties on account of our or our subsidiaries’ equity interests. Our credit rating is currently investment grade at both credit rating agencies. The Credit Agreement also requires that our total debt to capitalization ratio, expressed as a percentage, not exceed 50% as of the last day of each fiscal quarter. The Credit Agreement generally defines the total debt to capitalization ratio as the ratio of (a) total borrowed money indebtedness to (b) the sum of such indebtedness plus consolidated net worth, with consolidated net worth determined as of the end of the most recently ended fiscal quarter. We were in compliance with these covenants at March 31, 2025.

On March 16, 2015, we entered into a Reimbursement Agreement (as amended from time to time, the “Reimbursement Agreement”) with The Bank of Nova Scotia (“Scotiabank”), pursuant to which we may from time to time request that Scotiabank issue an unspecified amount of letters of credit. As of March 31, 2025, we had $38.8 million in letters of credit outstanding under the Reimbursement Agreement.

Under the terms of the Reimbursement Agreement, we will reimburse Scotiabank on demand for any amounts that Scotiabank has disbursed under any of our letters of credit issued thereunder. Fees, charges and other reasonable expenses for the issuance of letters of credit are payable by us at the time of issuance at such rates and amounts as are in accordance with Scotiabank’s prevailing practice. We are obligated to pay to Scotiabank interest on all amounts not paid by us on the date of demand or when otherwise due at the Prime rate plus 2.00% per annum, calculated daily and payable monthly, in arrears, on the basis of a calendar year for the actual number of days elapsed, with interest on overdue interest at the same rate as on the reimbursement amounts. A letter of credit fee is payable by us equal to 1.50% times the amount of outstanding letters of credit.

We have also agreed that if obligations under the Credit Agreement are secured by liens on any of our or our subsidiaries’ property, then our reimbursement obligations and (to the extent similar obligations would be secured under the Credit Agreement) other obligations under the Reimbursement Agreement and any letters of credit will be equally and ratably secured by all property subject to such liens securing the Credit Agreement.

Pursuant to a Continuing Guaranty dated as of March 16, 2015, our payment obligations under the Reimbursement Agreement are jointly and severally guaranteed as to payment and not as to collection by our subsidiaries that from time to time guarantee payment under the Credit Agreement. None of our subsidiaries are currently required to guarantee payment under the Credit Agreement.

We had $42.8 million of outstanding letters of credit at March 31, 2025, which was comprised of $38.8 million outstanding under the Reimbursement Agreement, $2.0 million outstanding under the Credit Agreement, and $2.0 million outstanding with financial institutions providing for short-term borrowing capacity, overdraft protection and bonding requirements. We maintain these letters of credit primarily for the benefit of various insurance companies as collateral for retrospective premiums and retained losses

which could become payable under terms of the underlying insurance contracts and compliance with contractual obligations. These letters of credit expire annually at various times during the year and are typically renewed. As of March 31, 2025, no amounts had been drawn under the letters of credit. As of March 31, 2025, we had $35.0 million in surety bond exposure issued as financial assurance on an insurance agreement.

Our outstanding long-term debt at March 31, 2025 was $1.2 billion and consisted of $483 million of our 2028 Notes, $345 million of our 2029 Notes, $400 million of our 2033 Notes and $3.2 million of secured equipment financing term loans. We were in compliance with all covenants under the associated agreements and indentures at March 31, 2025.

For a full description of the Credit Agreement, the Reimbursement Agreement, the 2028 Notes, the 2029 Notes, and the 2033 Notes, see Note 8 of Notes to unaudited condensed consolidated financial statements.

Cash Requirements

We believe our current liquidity, together with cash expected to be generated from operations, should provide us with sufficient ability to fund our current plans to maintain and make improvements to our existing equipment, service our debt, pay cash dividends and repurchase our common stock and senior notes for at least the next 12 months.

If we pursue other opportunities that require capital, we believe we would be able to satisfy these needs through a combination of working capital, cash flows from operating activities, borrowing capacity under our revolving credit facility or additional debt or equity financing. However, there can be no assurance that such capital will be available on reasonable terms, if at all.

The majority of our capital expenditures are expected to be used for normal, recurring items necessary to support our business. A portion of our capital expenditures can be adjusted and managed by us to match market demand and activity levels.

We anticipate $44.7 million of expenditures for the remainder of 2025 related to various contractual obligations such as certain commitments to purchase proppants and lease liabilities.

As of March 31, 2025, we had working capital of $499 million, including cash, cash equivalents and restricted cash of $225 million, compared to working capital of $453 million, including cash, cash equivalents and restricted cash of $241 million, at December 31, 2024.

During the three months ended March 31, 2025, our sources of cash flow included:

•$208 million from operating activities, and

•$4.3 million in proceeds from the disposal of property and equipment.

During the three months ended March 31, 2025, our uses of cash flow included:

•$162 million to make capital expenditures for the betterment and refurbishment of drilling services and completion services equipment and, to a much lesser extent, equipment for our other businesses, to acquire and procure equipment to support our drilling services, completion services, drilling products, and other operations,

•$20.3 million for repurchases of our common stock,

•$30.9 million to pay dividends on our common stock,

•$2.6 million for payments related to finance leases, and

•$12.1 million for other investing and financing activities.

We paid cash dividends during the three months ended March 31, 2025 as follows:


	Per Share		Total
			(in thousands)
Paid on March 17, 2025	$	0.08	$	30,877

On April 23, 2025, our Board of Directors approved a cash dividend on our common stock in the amount of $0.08 per share to be paid on June 16, 2025 to holders of record as of June 2, 2025. The amount and timing of all future dividend payments, if any, are subject to the discretion of the Board of Directors and will depend upon business conditions, results of operations, financial condition, terms of our debt agreements and other factors. Our Board of Directors may, without advance notice, reduce or suspend

our dividend for any reason, including to improve our financial flexibility and position our company for long-term success. There can be no assurance that we will pay a dividend in the future.

We may, at any time and from time to time, seek to retire or purchase our outstanding debt for cash through open-market purchases, privately negotiated transactions, redemptions or otherwise. Such repurchases, if any, will be upon such terms and at such prices as we may determine, and will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors. The amounts involved may be material.

In September 2013, our Board of Directors approved a stock buyback program. In February 2024, our Board of Directors approved an increase of the authorization under the stock buyback program to allow for an aggregate of $1.0 billion of future share repurchases. All purchases executed to date have been through open market transactions. Purchases under the buyback program are made at management’s discretion, at prevailing prices, subject to market conditions and other factors. Purchases may be made at any time without prior notice. There is no expiration date associated with the buyback program. As of March 31, 2025, we had remaining authorization to purchase approximately $741 million of our outstanding common stock under the stock buyback program. Shares of stock purchased under the buyback program are held as treasury shares.

Treasury stock acquisitions during the three months ended March 31, 2025 were as follows (dollars in thousands):


	Shares	Cost
Treasury shares at beginning of period	133,440,028	$	1,951,067
Purchases pursuant to stock buyback program	2,078,723	18,062
Acquisitions pursuant to long-term incentive plans (1)	258,558	2,233
Treasury shares at end of period	135,777,309	$	1,971,362

(1)We withheld 258,558 shares during the three months ended March 31, 2025 with respect to employees’ tax withholding obligations upon the vesting of restricted stock units. These shares were acquired at fair market value. These acquisitions were made pursuant to the terms of the Patterson-UTI Energy, Inc. 2021 Long-Term Incentive Plan, as amended and the NexTier Oilfield Solutions Inc. Equity and Incentive Award Plan, and not pursuant to the stock buyback program.

Commitments — As of March 31, 2025, we had commitments to purchase major equipment totaling approximately $111 million. Our completion services segment has entered into agreements to purchase minimum quantities of proppants from certain vendors. As of March 31, 2025, the remaining minimum obligation under these agreements was approximately $18.7 million, of which approximately $13.6 million and $5.1 million relate to the remainder of 2025 and 2026, respectively.

See Note 9 of Notes to unaudited condensed consolidated financial statements for additional information on our current commitments and contingencies as of March 31, 2025.

Operating lease liabilities totaled $45.7 million and finance lease liabilities totaled $23.0 million as of March 31, 2025.

Trading and Investing — We have not engaged in trading activities that include high-risk securities, such as derivatives and non-exchange traded contracts. We invest cash primarily in highly liquid, short-term investments such as overnight deposits and money market accounts.

Non-GAAP Financial Measures

Adjusted EBITDA

Adjusted earnings before interest, taxes, depreciation and amortization (“Adjusted EBITDA”) is not defined by accounting principles generally accepted in the United States of America (“GAAP”). We define Adjusted EBITDA as net income (loss) plus income tax expense (benefit), net interest expense, depreciation, depletion, amortization and impairment expense (including impairment of goodwill) and merger and integration expense. We present Adjusted EBITDA as a supplemental disclosure because we believe it provides to both management and investors additional information with respect to the performance of our fundamental business activities and a comparison of the results of our operations from period to period and against our peers without regard to our financing methods or capital structure. We exclude the items listed above from net income (loss) in arriving at Adjusted EBITDA because these amounts can vary substantially from company to company within our industry depending upon accounting methods and book values of assets, capital structures and the method by which the assets were acquired. Adjusted EBITDA should not be construed as an alternative to the GAAP measure of net income (loss). Our computations of Adjusted EBITDA may not be the same

as similarly titled measures of other companies. Set forth below is a reconciliation of the non-GAAP financial measure of Adjusted EBITDA to the GAAP financial measure of net income (loss).


	Three Months Ended
	March 31,		December 31,		March 31,
	2025		2024		2024

	(in thousands)
Net income (loss)	$	1,290	$	(51,392)	$	51,706
Income tax expense	1,390		1,927		19,997
Net interest expense	16,233		16,797		16,146
Depreciation, depletion, amortization and impairment	231,866		254,599		274,956

Merger and integration expense	432		3,460		12,233
Adjusted EBITDA	$	251,211	$	225,391	$	375,038

Adjusted Gross Profit

We define “Adjusted gross profit” as revenues less direct operating costs (excluding depreciation, depletion, amortization and impairment expense). Adjusted gross profit is included as a supplemental disclosure because it is a useful indicator of our operating performance.


	Drilling Services		Completion Services		Drilling Products		Other
	(in thousands)
For the three months ended March 31, 2025
Revenues	$	412,860	$	766,080	$	85,663	$	15,934
Less direct operating costs	(247,629)		(657,681)		(46,940)		(9,164)
Less depreciation, depletion, amortization and impairment	(84,972)		(115,826)		(22,876)		(6,336)

GAAP gross profit (loss)	80,259		(7,427)		15,847		434
Depreciation, depletion, amortization and impairment	84,972		115,826		22,876		6,336

Adjusted gross profit	$	165,231	$	108,399	$	38,723	$	6,770

For the three months ended December 31, 2024
Revenues	$	408,385	$	650,848	$	86,522	$	16,380
Less direct operating costs	(245,480)		(555,527)		(49,186)		(9,466)
Less depreciation, depletion, amortization and impairment	(85,174)		(135,852)		(27,328)		(4,790)
GAAP gross profit (loss)	77,731		(40,531)		10,008		2,124
Depreciation, depletion, amortization and impairment	85,174		135,852		27,328		4,790
Adjusted gross profit	$	162,905	$	95,321	$	37,336	$	6,914

For the three months ended March 31, 2024
Revenues	$	457,573	$	944,997	$	89,973	$	17,817
Less direct operating costs	(271,737)		(745,594)		(48,630)		(11,178)
Less depreciation, depletion, amortization and impairment	(92,345)		(148,680)		(27,182)		(5,411)
GAAP gross profit	93,491		50,723		14,161		1,228
Depreciation, depletion, amortization and impairment	92,345		148,680		27,182		5,411
Adjusted gross profit	$	185,836	$	199,403	$	41,343	$	6,639

Critical Accounting Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make certain estimates and assumptions that affect the reported amounts of assets and

liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from such estimates. There have been no material changes to our critical accounting estimates previously disclosed in Item 7 of our Annual Report.

Recently Issued Accounting Standards

See Note 1 of Notes to unaudited condensed consolidated financial statements for a discussion of the impact of recently issued accounting standards.

Volatility of Oil and Natural Gas Prices and its Impact on Operations and Financial Condition

Our revenues, profitability and cash flows are highly dependent upon prevailing prices for oil and natural gas and expectations about future prices, and upon our customers’ ability to access, and willingness to deploy, capital to fund their operating and capital expenditures. Commodity prices have historically been volatile, but were relatively range-bound from the end of 2022 through the first quarter of 2025. The current demand for equipment and services remains impacted by macro conditions, including commodity prices, geopolitical environment, changes to international tariffs and trade policies, inflationary pressures, economic conditions in the United States and elsewhere, as well as customer consolidation and focus by exploration and production companies and service companies on capital returns. Subsequent to March 31, 2025, global economic conditions deteriorated, in part, because of recently enacted trade policies and tariffs implemented by the United States and other governments, as well as uncertainty regarding potential future changes to global trade policies and tariffs. Additionally, subsequent to March 31, 2025, several OPEC+ countries announced plans to phase out existing crude oil output cuts earlier than anticipated. These developments and geopolitical tensions have introduced increased uncertainty in global energy markets, which has contributed to a decline in our share price, lowered crude oil futures prices and increased uncertainty regarding the future economic environment in which we operate. The recent deterioration in macroeconomic conditions and the decline in our share price occurred after the balance sheet date and do not reflect conditions that existed as of March 31, 2025. Accordingly, these developments have not been reflected in the unaudited condensed consolidated financial statements for the three months ended March 31, 2025. While the full effects are yet to be determined, prolonged trade tensions and sustained lower crude oil futures prices could adversely affect our future outlook on activity and profitability. Oil prices averaged $71.78 per barrel in the first quarter of 2025, as compared to $70.73 per barrel in the fourth quarter of 2024, and closed at $63.48 per barrel on April 21, 2025. Natural gas prices (based on the Henry Hub Spot Market Price) averaged $4.14 per MMBtu in the first quarter of 2025 as compared to an average of $2.45 per MMBtu in the fourth quarter of 2024, and closed at $3.16 per MMBtu on April 21, 2025.

In light of these and other factors, we expect oil and natural gas prices to continue to be unpredictable and to affect our financial condition, operations and ability to access sources of capital. Higher oil and natural gas prices do not necessarily result in increased activity because demand for our services is generally driven by our customers’ expectations of future oil and natural gas prices, as well as our customers’ ability to access, and willingness to deploy, capital to fund their operating and capital expenditures. A decline in demand for oil and natural gas, prolonged low oil or natural gas prices, expectations of decreases in oil and natural gas prices or a reduction in the ability of our customers to access capital would likely result in reduced capital expenditures by our customers and decreased demand for our services, which could have a material adverse effect on our operating results, financial condition and cash flows. Even during periods of historically moderate or high prices for oil and natural gas, companies exploring for oil and natural gas may cancel or curtail programs or reduce their levels of capital expenditures for exploration and production for a variety of reasons, including the depletion of capital expenditure budgets and/or meeting annual drilling and completion targets, which could reduce demand for our services.

Impact of Inflation and Trade Policies

Moderate inflationary pressures and uncertainty regarding recently enacted and potential future changes to international tariffs and trade policies have contributed, or may contribute, to increases in the cost of certain goods, services, and labor. While the full effects are yet to be determined, prolonged trade tensions could, among other things, increase the costs of certain products used in our businesses, such as drill pipe, parts, and electronics. We continue to actively monitor market trends primarily related to sourcing of labor, supplies and equipment.

ITEM 3. Quantitative and Qualitative Disclosures About Market Risk

We may be exposed to certain market risks arising from the use of financial instruments in the ordinary course of business. For quantitative and qualitative disclosures about market risk, see Part II, Item 7A, “Quantitative and Qualitative Disclosures About Market Risk,” in our Annual Report. There have been no material changes in our exposure to market risk.

As of March 31, 2025, we would have had exposure to interest rate market risk associated with any outstanding borrowings and letters of credit that we had under the Credit Agreement and amounts owed under the Reimbursement Agreement.

Loans under the Credit Agreement bear interest by reference, at our election, to the SOFR rate (plus a 0.10% per annum adjustment) or base rate, in each case subject to a 0% floor. The applicable margin on SOFR rate loans varies from 1.25% to 2.25% and the applicable margin on base rate loans varies from 0.25% to 1.25%, in each case determined based on our credit rating. As of March 31, 2025, the applicable margin on SOFR rate loans was 1.75% and the applicable margin on base rate loans was 0.75% A letter of credit fee is payable by us equal to the applicable margin for SOFR rate loans times the daily amount available to be drawn under outstanding letters of credit. The commitment fee rate payable to the lenders varies from 0.15% to 0.35% based on our credit rating. As of March 31, 2025, we had $2.0 million in letters of credit outstanding under the Credit Agreement and, as a result, had available borrowing capacity of approximately $498 million at that date.

Under the terms of the Reimbursement Agreement, we will reimburse Scotiabank on demand for any amounts that Scotiabank has disbursed under any of our letters of credit issued thereunder. We are obligated to pay Scotiabank interest on all amounts not paid by us on the date of demand or when otherwise due at the Prime rate plus 2.00% per annum.

Our functional currency is primarily the U.S. dollar. Approximately 98% of our revenue during the first quarter of 2025 was denominated in U.S. dollars. As such, we do not believe we are significantly exposed to foreign currency exchange rate risk. However, a portion of our revenues in foreign countries are denominated in U.S. dollars, and therefore, changes in foreign currency exchange rates impact our earnings to the extent that costs associated with those U.S. dollar revenues are denominated in the local currency. Similarly, a portion of our revenues are denominated in foreign currencies, but have associated U.S. dollar costs, which also give rise to foreign currency exchange rate exposure.

The carrying values of cash, cash equivalents and restricted cash, trade receivables and accounts payable approximate fair value due to the short-term maturity of these items.

ITEM 4. Controls and Procedures

Disclosure Controls and Procedures — We maintain disclosure controls and procedures (as such terms are defined in Rules 13a-15(e) and 15d-15(e) promulgated under the Exchange Act), designed to ensure that the information required to be disclosed in the reports that we file with the SEC under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), as appropriate, to allow timely decisions regarding required disclosure.

Under the supervision and with the participation of our management, including our CEO and CFO, we conducted an evaluation of the effectiveness of our disclosure controls and procedures as of the end of the period covered by this Quarterly Report on Form 10‑Q. Based on that evaluation, our CEO and CFO concluded that our disclosure controls and procedures were effective as of March 31, 2025.

Changes in Internal Control Over Financial Reporting —There were no changes in our internal control over financial reporting during our most recently completed fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting, as defined in Rule 13a-15(f) under the Exchange Act.

PART II — OTHER INFORMATION

ITEM 1. Legal Proceedings

On February 6, 2023, Grant Prideco, Inc., ReedHycalog UK, Ltd. ReedHycalog, LP, National Oilwell Varco, LP (“NOV”) sued Ulterra Drilling Technologies, LP (“Ulterra”) and several other companies in Texas state court. NOV seeks a declaration that United States Patent No. 8,721,752 (the “’752 Patent”) is a “Licensed RH Patent” per the terms of a license agreement between Ulterra and NOV. NOV also alleges a breach of contract based on the license agreement between NOV and Ulterra and seeks allegedly owed royalties since October 22, 2021. NOV also seeks attorney’s fees.

On February 27, 2023, Ulterra filed a plea to the jurisdiction, and subject thereto, an answer, affirmative defenses and counterclaims. Ulterra’s counterclaims include: (i) declaratory judgments of non-infringement of U.S. Pat. No. 7,568,534 and the ’752 patent; (ii) a declaratory judgment of no royalties after Oct. 22, 2021; (iii) a declaratory judgment that certain other identified patents are expired and therefore not infringed after Oct. 22, 2021; and (iv) a declaratory judgment of no breach of contract. On the same day, Ulterra filed a notice of removal in federal court for the Southern District of Texas, Houston Division (SDTX 4:23-cv-00730), as well as a corresponding notice in Texas state court. NOV moved to dismiss and remand the case back to state court. On February 17, 2024, the Court denied NOV’s motion. On March 19, 2024, Ulterra moved for judgment on the pleadings regarding its declaratory judgment that certain other identified patents are expired and therefore not infringed after October 22, 2021. On February 13, 2025, the motion was granted in part and denied in part.

Discovery is closed and dispositive motions are fully briefed. Trial is currently scheduled for October 27, 2025. An unfavorable judgment or resolution of this claim not covered by indemnity could have a material impact on our financial results.

Additionally, we are party to various other legal proceedings arising in the normal course of our business. We do not believe that the outcome of these proceedings, either individually or in the aggregate, will have a material adverse effect on our financial condition, cash flows or results of operations.

ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds

The table below sets forth the information with respect to purchases of our common stock made by us during the quarter ended March 31, 2025.


Period Covered	Total Number of Shares Purchased(1)	Average Price Paid per Share		Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs	Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs (in thousands) (2)
January 2025	1,444,440	$	8.71	1,288,736	$	747,693
February 2025	886,656	$	8.65	789,987	$	740,872
March 2025	6,185	$	7.94	—	$	740,872
Total	2,337,281			2,078,723

(1)We withheld 258,558 shares during the first quarter of 2025 with respect to employees’ tax withholding obligations upon the vesting of restricted stock units. These shares were acquired at fair market value. These acquisitions were made pursuant to the terms of the Patterson-UTI Energy, Inc. 2021 Long-Term Incentive Plan, as amended and the NexTier Oilfield Solutions Inc. Equity and Incentive Award Plan, and not pursuant to the stock buyback program.

(2)In September 2013, our Board of Directors approved a stock buyback program. In February 2024, our Board of Directors approved an increase of the authorization under the stock buyback program to allow for an aggregate of $1.0 billion of future share repurchases. All purchases executed to date have been through open market transactions. Purchases under the buyback program are made at management’s discretion, at prevailing prices, subject to market conditions and other factors. Purchases may be made at any time without prior notice. There is no expiration date associated with the buyback program.

ITEM 5. Other Information

(c) or trading arrangements for the sale of shares of our common stock in amounts and prices determined in accordance with a formula set forth in each such plan:

ITEM 6. Exhibits

The following exhibits are filed herewith or incorporated by reference, as indicated:








3.1			Restated Certificate of Incorporation of Patterson-UTI Energy, Inc., dated as of June 6, 2024 (filed June 6, 2024 as Exhibit 4.1 to our Registration Statement on Form S-8 and incorporated herein by reference).

3.2			Amended and Restated Bylaws of Patterson-UTI Energy, Inc., effective June 14, 2023 (filed June 15, 2023 as Exhibit 3.1 to our Current Report on Form 8-K and incorporated herein by reference).

10.1			Second Amended and Restated Credit Agreement, dated January 31, 2025, by and among Patterson-UTI Energy, Inc., Wells Fargo Bank, National Association, as administrative agent, letter of credit issuer, swing line lender and a lender and each of the other letter of credit issuers and lenders party thereto with the lenders party thereto (filed February 3, 2025 as Exhibit 10.1 to our Current Report on Form 8-K and incorporated herein by reference).

31.1*			Certification of Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as amended.

31.2*			Certification of Chief Financial Officer pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as amended.

32.1**			Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 USC Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS*			Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

101.SCH*			Inline XBRL Taxonomy Extension Schema Document

101.CAL*			Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF*			Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB*			Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE*			Inline XBRL Taxonomy Extension Presentation Linkbase Document

104			The cover page from our Quarterly Report on Form 10-Q for the quarter ended March 31, 2025, has been formatted in Inline XBRL.


*			filed herewith.
**			furnished herewith.
+			management contact or compensatory plan.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


	PATTERSON-UTI ENERGY, INC.

	By:	/s/ C. Andrew Smith
		C. Andrew Smith
		Executive Vice President and
		Chief Financial Officer
		(Principal Financial Officer and Duly Authorized Officer)

Date: April 29, 2025

PATTERSON UTI ENERGY INC - Quarter Report: 2025 March (Form 10-Q)

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