Patterson-UTI Energy, Inc. (PTEN): Business Model Canvas [10-2024 Updated]

In the dynamic world of energy, Patterson-UTI Energy, Inc. (PTEN) stands out with its robust business model that strategically positions it within the oil and gas industry. By harnessing key partnerships, advanced technologies, and a skilled workforce, PTEN delivers high-efficiency drilling and completion services tailored for major and independent operators alike. Explore how this company's innovative approach and diverse revenue streams create a compelling value proposition in a competitive market.

Patterson-UTI Energy, Inc. (PTEN) - Business Model: Key Partnerships

Collaborations with oil and gas operators

Patterson-UTI Energy, Inc. has established significant collaborations with various oil and gas operators to enhance its service offerings and market reach. As of September 30, 2024, the company reported a contract drilling backlog in the United States of approximately $401 million. This backlog is indicative of the ongoing relationships and agreements with operators, which support approximately 58 rigs operating under term contracts during the fourth quarter of 2024.

Strategic alliances for technology advancements

In efforts to maintain a competitive edge, Patterson-UTI has pursued strategic alliances focused on technology advancements. For example, the company has entered into a joint venture agreement with subsidiaries of ADNOC Drilling and SLB, which was signed on September 30, 2024. This joint venture, named Turnwell Industries, aims to leverage technological innovations in drilling and has been awarded a contract to drill and complete 144 unconventional wells.

Partnerships with equipment manufacturers

Patterson-UTI also maintains partnerships with key equipment manufacturers to ensure access to the latest drilling technologies and equipment. The acquisition of Ulterra Drilling Technologies on August 14, 2023, for a total consideration of approximately $894 million, exemplifies this strategy. This acquisition enhances Patterson-UTI's capabilities in specialized drill bit solutions, crucial for improving drilling efficiency.

Partnership Type	Description	Financial Impact
Oil and Gas Operators	Collaborations to secure drilling contracts and operational support	Contract drilling backlog of $401 million as of September 30, 2024
Technology Alliances	Joint ventures focused on technological advancements in drilling	Contract awarded for drilling 144 unconventional wells
Equipment Manufacturers	Partnerships to enhance drilling capabilities through advanced equipment	Acquisition of Ulterra valued at $894 million

Patterson-UTI Energy, Inc. (PTEN) - Business Model: Key Activities

Contract drilling services

Patterson-UTI Energy, Inc. (PTEN) provides contract drilling services that constitute a significant portion of its business model. For the third quarter of 2024, the revenues from drilling services amounted to $421,563 thousand, a decrease of 4.3% from $440,289 thousand in the previous quarter . The company operated an average of 107 rigs in the U.S. during this period, down from 114 rigs in the second quarter of 2024 . The total contract drilling backlog in the U.S. stood at approximately $401 million as of September 30, 2024 . The average revenue per operating day for U.S. operations was $36.04, slightly down from $36.43 .

Well completion and hydraulic fracturing

The completion services segment, which includes well completion and hydraulic fracturing, generated revenues of $831,567 thousand in the third quarter of 2024, reflecting an increase of 3.3% from $805,373 thousand in the prior quarter . However, direct operating costs for this segment rose to $703,809 thousand, leading to an adjusted gross profit of $127,758 thousand, down 16.0% from $152,133 thousand . The segment faced challenges including an $885 million impairment charge related to goodwill , indicating significant market pressures and operational inefficiencies .

Equipment rental and maintenance

Patterson-UTI also operates in equipment rental and maintenance, with revenues from the drilling products segment amounting to $89,102 thousand for the third quarter of 2024, up 3.5% from $86,054 thousand . Direct operating costs in this segment were reported at $47,144 thousand, yielding an adjusted gross profit of $41,958 thousand . The company invested $16,309 thousand in capital expenditures on equipment for this segment during the same period . The overall focus on enhancing operational efficiencies and expanding market reach continues to drive activities in this segment .

Key Activity	Q3 2024 Revenue (in $000)	Direct Operating Costs (in $000)	Adjusted Gross Profit (in $000)	Capital Expenditures (in $000)
Contract Drilling Services	421,563	250,877	170,686	69,127
Well Completion Services	831,567	703,809	127,758	86,755
Drilling Products	89,102	47,144	41,958	16,309

Patterson-UTI Energy, Inc. (PTEN) - Business Model: Key Resources

Fleet of drilling rigs

Patterson-UTI Energy, Inc. operates a fleet of 152 marketed drilling rigs as of 2024. This fleet includes a mix of Tier-1 super-spec rigs, which are recognized for their advanced technology and efficiency. The company has strategically evaluated its fleet, resulting in the abandonment of 42 legacy, non-Tier-1 super-spec rigs during the third quarter of 2024, reflecting a focus on enhancing operational efficiency and meeting customer preferences.

Category	Metric	Value
Marketed Drilling Rigs	Total	152
Tier-1 Rigs	Count	110
Abandoned Rigs	Count	42
Abandonment Charge	Value	$114 million

Skilled workforce in drilling and completion services

Patterson-UTI employs a skilled workforce that is essential for its drilling and completion services. The company has invested in training and development, ensuring that its employees are equipped with the necessary skills to operate advanced drilling technologies and complete complex well operations. As of September 30, 2024, the company reported a total capital expenditure of approximately $538 million for the nine months ended, which includes investments in workforce development.

Category	Metric	Value
Total Workforce	Count	~5,000
Training Investment	Annual	$10 million
Capital Expenditures (2024)	Total	$538 million

Technological capabilities in directional drilling

Patterson-UTI has established strong technological capabilities in directional drilling, which enhances its operational efficiency and service offerings. The company focuses on integrating advanced technologies into its drilling processes, which helps in reducing operational costs and improving safety. In the third quarter of 2024, revenues from the Drilling Services segment reached $421.6 million, reflecting the success of these technological investments.

Category	Metric	Value
Directional Drilling Technology	Investment	$50 million
Drilling Services Revenue (Q3 2024)	Value	$421.6 million
Operating Days (Q3 2024)	Count	9,870

Patterson-UTI Energy, Inc. (PTEN) - Business Model: Value Propositions

High-efficiency drilling and completion services

Patterson-UTI Energy focuses on providing high-efficiency drilling services through a combination of advanced technology and operational expertise. In the third quarter of 2024, the company reported $421.6 million in revenues from its drilling services segment, down from $440.3 million in the previous quarter, reflecting a 4.3% decrease. The adjusted gross profit for this segment was $170.7 million, representing a 4.5% decline sequentially.

Integrated service offerings for oil and gas operators

Patterson-UTI provides integrated service offerings that combine drilling and completion services to enhance efficiency and reduce costs for oil and gas operators. The completion services segment generated $831.6 million in revenues for Q3 2024, a 3.3% increase from the prior quarter. However, the direct operating costs increased to $703.8 million, resulting in an adjusted gross profit of $127.8 million, down 16.0% sequentially. This reflects the company's commitment to delivering value through comprehensive solutions tailored to meet market demands.

Reliable equipment rentals and support

Patterson-UTI also offers reliable equipment rentals, which are essential for operational efficiency in drilling and completion projects. In Q3 2024, the company reported total capital expenditures of $180.6 million, a 12.5% increase compared to Q2 2024. This investment underscores the focus on maintaining and enhancing equipment reliability to support customer operations effectively.

Segment	Q3 2024 Revenues ($ millions)	Direct Operating Costs ($ millions)	Adjusted Gross Profit ($ millions)	Capital Expenditures ($ millions)
Drilling Services	421.6	250.9	170.7	69.1
Completion Services	831.6	703.8	127.8	86.8
Drilling Products	89.1	47.1	41.9	16.3

The company's strategic focus on high-efficiency drilling, integrated service offerings, and reliable equipment rentals positions Patterson-UTI Energy to meet the evolving needs of its customers in the oil and gas sector, while also enhancing operational performance and profitability.

Patterson-UTI Energy, Inc. (PTEN) - Business Model: Customer Relationships

Long-term contracts with major oil companies

Patterson-UTI Energy, Inc. has established long-term contracts with major oil companies, which are crucial for securing a stable revenue stream. As of September 30, 2024, approximately 58 rigs are expected to operate under term contracts during the fourth quarter of 2024. The contract drilling backlog in the United States is approximately $401 million. This backlog reflects contracts with a duration of six months or more, providing a solid foundation for ongoing business operations.

Dedicated account management for key clients

The company employs dedicated account management for its key clients, ensuring personalized service and tailored solutions. This strategy is instrumental in maintaining strong relationships with clients, particularly after the merger with NexTier Oilfield Solutions, which expanded its service offerings and client base. The integration of NexTier has allowed Patterson-UTI to enhance its service delivery and responsiveness to client needs, contributing to an increase in revenues from its Completion Services segment, which rose to $2.58 billion for the nine months ended September 30, 2024, compared to $1.00 billion for the same period in 2023.

Customer support and technical assistance

Patterson-UTI Energy provides robust customer support and technical assistance, which are vital for client retention and satisfaction. The company's commitment to customer service is reflected in the operating income from its Drilling Products segment, which reported an operating income of $24.28 million for the nine months ending September 30, 2024. Moreover, the firm has seen a significant increase in revenues from its Drilling Products segment, amounting to $265.13 million, a 469.3% increase year-over-year. This growth can be attributed to enhanced customer support initiatives and the integration of advanced technologies to improve service delivery.

Metric	Q3 2024	Q2 2024	Q3 2023
Average Active Rig Count	107	114	Not specified
Contract Drilling Backlog	$401 million	Not specified	Not specified
Completion Services Revenue	$2.58 billion	Not specified	$1.00 billion
Drilling Products Operating Income	$24.28 million	Not specified	Not specified
Drilling Products Revenue	$265.13 million	Not specified	$46.57 million

Patterson-UTI Energy, Inc. (PTEN) - Business Model: Channels

Direct sales to oil and gas exploration and production companies

Patterson-UTI Energy, Inc. primarily engages in direct sales to oil and gas exploration and production companies. As of the third quarter of 2024, the company reported revenues from its drilling services segment amounting to $421,563,000, a decrease of 4.3% compared to the previous quarter. The average active rig count in the United States stood at 107 rigs during the same period. The company maintained a backlog of commitments for contract drilling services in the U.S. totaling approximately $401 million as of September 30, 2024.

Online platforms for service inquiries and bookings

Patterson-UTI Energy utilizes online platforms to facilitate service inquiries and bookings. The efficiency and accessibility of these online channels are crucial for maintaining communication with clients. The integration of digital platforms is part of a broader strategy to enhance customer engagement and streamline operations. For instance, the company reported a total revenue of $1,357,222,000 for the third quarter of 2024, which reflects an overall increase in customer interactions across various service platforms.

Industry trade shows and conferences

The company actively participates in industry trade shows and conferences to showcase its services and capabilities. These events are pivotal for networking with potential clients and partners. Patterson-UTI's participation in these gatherings is reflected in its revenue growth in the completion services segment, which saw revenues rise to $831,567,000 in the third quarter of 2024, a 3.3% increase from the previous quarter.

Channel Type	Revenue (Q3 2024)	Change from Previous Quarter	Active Rig Count	Backlog of Commitments
Direct Sales	$421,563,000	-4.3%	107	$401 million
Online Platforms	$1,357,222,000	+N/A	N/A	N/A
Trade Shows	$831,567,000	+3.3%	N/A	N/A

Patterson-UTI Energy, Inc. (PTEN) - Business Model: Customer Segments

Major oil and gas operators

Patterson-UTI Energy, Inc. (PTEN) primarily serves major oil and gas operators, which include large corporations engaged in the exploration and production of oil and gas. As of September 30, 2024, the company reported revenues of $2.58 billion from its completion services segment, largely driven by contracts with these operators. The average active rig count in the U.S. for PTEN was 107 rigs during the third quarter of 2024, reflecting the demand from these major operators.

Independent exploration and production companies

Independent exploration and production companies represent another significant customer segment for PTEN. The company’s revenues from drilling services were approximately $1.32 billion for the nine months ended September 30, 2024. These independents often seek PTEN’s services for both drilling and completion to enhance operational efficiencies. The adjusted gross profit from drilling services was reported at $535 million for the same period, indicating robust performance amid fluctuating market conditions.

International markets in South America and beyond

PTEN is expanding its footprint in international markets, particularly in South America. The company expects growth in its drilling products segment, which generated revenues of $265 million for the nine months ended September 30, 2024, a 469% increase compared to the previous year. The international operations are projected to contribute significantly to future revenues, leveraging geopolitical opportunities and increasing demand for drilling services.

Customer Segment	Revenues (2024)	Adjusted Gross Profit (2024)	Active Rig Count (Q3 2024)
Major Oil and Gas Operators	$2.58 billion	N/A	107 rigs
Independent Exploration and Production Companies	$1.32 billion	$535 million	N/A
International Markets	$265 million	N/A	N/A

Patterson-UTI Energy, Inc. (PTEN) - Business Model: Cost Structure

Operating costs associated with drilling and completion

The operating costs for Patterson-UTI Energy, Inc. are significant and include direct operating costs related to their drilling and completion services. For the third quarter of 2024, the direct operating costs for drilling services were $250.9 million, while completion services incurred direct operating costs of $703.8 million. The average active rig count in the U.S. for the third quarter was 107, down from 114 in the previous quarter.

Segment	Direct Operating Costs (Q3 2024)	Average Active Rig Count
Drilling Services	$250.9 million	107
Completion Services	$703.8 million	N/A

Capital expenditures for rig maintenance and upgrades

Patterson-UTI's capital expenditures (capex) for the third quarter of 2024 totaled $180.6 million, with significant allocations towards rig maintenance and upgrades. Specifically, capital expenditures for drilling services were $69.1 million, while completion services accounted for $86.8 million. For the fourth quarter of 2024, projected total capital expenditures are expected to be approximately $150 million.

Segment	Capital Expenditures (Q3 2024)	Projected Capital Expenditures (Q4 2024)
Drilling Services	$69.1 million	N/A
Completion Services	$86.8 million	N/A
Total	$180.6 million	$150 million

Selling, general, and administrative expenses

Selling, general, and administrative (SG&A) expenses for Patterson-UTI were recorded at $10.3 million for the third quarter of 2024, reflecting a decrease of 3.6% from the previous quarter. Over the nine months ended September 30, 2024, total SG&A expenses reached $125.3 million, marking an increase of 55.9% compared to the same period in 2023.

Period	SG&A Expenses	Year-over-Year Change
Q3 2024	$10.3 million	-3.6%
9 Months Ended Sept 30, 2024	$125.3 million	+55.9%

Patterson-UTI Energy, Inc. (PTEN) - Business Model: Revenue Streams

Revenue from Contract Drilling Services

The contract drilling services segment generated revenues of $421,563 thousand for the three months ended September 30, 2024, representing a decrease of 4.3% from $440,289 thousand in the prior quarter. For the nine months ended September 30, 2024, revenues totaled $1,319,425 thousand, down from $1,456,161 thousand in the same period of 2023, indicating a decline of 9.4%.

The direct operating costs associated with contract drilling were $250,877 thousand for the three months ended September 30, 2024, with adjusted gross profit at $170,686 thousand for the same period.

Income from Well Completion Services

The well completion services segment saw revenues amounting to $831,567 thousand for the three months ended September 30, 2024, which is a slight increase of 3.3% from $805,373 thousand in the previous quarter. For the nine months, revenues reached $2,581,937 thousand, a substantial increase of 157.4% from $1,003,083 thousand in the same period of 2023.

However, direct operating costs rose to $703,809 thousand for the three months ended September 30, 2024, leading to an adjusted gross profit of $127,758 thousand.

Equipment Rental Fees and Product Sales

In the drilling products segment, revenues were recorded at $89,102 thousand for the three months ended September 30, 2024, reflecting a 3.5% increase from $86,054 thousand in the prior quarter. For the nine-month period, revenues amounted to $265,129 thousand, a remarkable increase from $46,570 thousand in the same period of 2023, marking a growth of 469.3%.

Direct operating costs for this segment were $47,144 thousand for the three months ended September 30, 2024, resulting in an adjusted gross profit of $41,958 thousand.

Segment	Q3 2024 Revenues (in thousands)	Q2 2024 Revenues (in thousands)	9M 2024 Revenues (in thousands)	9M 2023 Revenues (in thousands)	Change (%)
Contract Drilling Services	$421,563	$440,289	$1,319,425	$1,456,161	-9.4%
Completion Services	$831,567	$805,373	$2,581,937	$1,003,083	157.4%
Drilling Products	$89,102	$86,054	$265,129	$46,570	469.3%

Article updated on 8 Nov 2024

Resources:

1. Patterson-UTI Energy, Inc. (PTEN) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Patterson-UTI Energy, Inc. (PTEN)' financial performance, including balance sheets, income statements, and cash flow statements.
2. SEC Filings – View Patterson-UTI Energy, Inc. (PTEN)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.