Patterson Uti Energy Inc (PTEN)

[OilStockReport]

3rd quarter management comments:

Douglas J. Wall, Patterson-UTI's Chief Executive Officer, stated, "Our average number of rigs operating in the third quarter increased to 178 rigs, including 170 in the United States and 8 in Canada. This compares to an average of 156 rigs operating in the second quarter, including 154 in the United States and 2 in Canada. Reduced Canadian drilling activity in the second quarter was a result of the annual spring breakup."

Mr. Wall added, "Average revenue per operating day for the third quarter of 2010 increased by $810 to $17,730, compared to $16,920 for the second quarter of 2010. Average direct operating costs per operating day for the third quarter of 2010 increased to $10,670 from $10,520 for the second quarter of 2010. Average margin per operating day for the third quarter of 2010 increased by $670 to $7,060 from $6,390 for the second quarter of 2010.

"We are continuing to see increases in our rig count. We estimate that our October rig count will increase to an average of 192 rigs operating, comprised of 180 in the United States and 12 in Canada. Our average number of rigs operating in the United States has increased by 72 since December 2009. Dayrates have also been continuing to increase with rig demand.

"During the third quarter of 2010 we had an average of approximately 54 rigs operating under long-term contracts. Based on contracts currently in place, we expect to have an average of approximately 68 rigs during the fourth quarter of 2010 and 65 rigs during 2011 operating under long-term contracts.

"We activated five new Apex™ rigs during the third quarter, bringing our total to 12 new Apex™ rigs activated during the first three quarters of 2010. In October, three new additional Apex™ rigs were activated, and we now expect to activate a total of 21 new Apex™ rigs in calendar year 2010, with two additional new Apex ™ rigs from the 2010 program being activated in early 2011. All of these rigs are covered by term contracts. For our 2011 Apex™ program, we are planning to add 21 new Apex™ rigs.

"This quarter's results also reflect record revenues and profits for Universal Well Services, Inc., our pressure pumping subsidiary that services the Appalachian region. These results reflect the efficient deployment of new equipment for the Marcellus Shale, an increase in activity levels in other traditional work, as well as increased pricing," he concluded.

Mark S. Siegel, Chairman of Patterson-UTI, stated, "We have recently completed acquisition and financing transactions in furtherance of our strategic objectives to build value for shareholders and expand our core businesses. Earlier this month, we completed the acquisition of pressure pumping and wireline assets for approximately $238 million in an all cash transaction; entered into a new bank facility that includes a $400 million revolving credit line and a four-year $100 million term loan; and completed a private placement of $300 million in principal amount of ten-year, senior unsecured notes with an interest rate of 4.97%."

Mr. Siegel further stated, "With the acquisition, our pressure pumping businesses now operate throughout Texas and the Appalachian region, with a substantial amount of the services being provided in the Barnett, Eagle Ford and Marcellus Shales as well as the Permian Basin. Our pressure pumping equipment now totals approximately 431,000 horsepower, including 340,000 fracturing horsepower and 91,000 horsepower used in cementing, acidizing and nitrogen stimulation. In addition, approximately 38,000 horsepower of pressure pumping equipment is currently on order and expected to be delivered over the next five months. For 2011, we are evaluating how much additional pressure pumping equipment to order. We also now have a fleet of 26 wireline units.

"The financings provide us with substantial flexibility to strategically continue with the expansion of our fleets with new technology drilling rigs and pressure pumping equipment to service the growing shale markets," he concluded.