Houston drilling rig operator Patterson-UTI Energy is retiring 36 older rigs amid weaker demand from shale fields across the United States and Canada.
In a Thursday morning statement, the company reported a $262 million loss on $599 million of revenue. The figures were down compared to the $75 million loss on $868 million of revenue during the third quarter of 2018.
Patterson-UTI attributed $173 million of this quarter’s $262 million loss to impairment charges related to retiring 36 older drilling rigs, which the company believed would not be likely to be used at rates and terms that would justify their reactivation.
“Given current market conditions and our customer strong preference for super-spec rigs, we believe these rigs have limited commercial opportunity going forward,” Patterson-UTI CEO William “Andy” Hendricks said during a Thursday morning investors call.
Patterson-UTI’s hydraulic fracturing business also saw a decline in revenue, going from $422 million during the third quarter of 2018 to $209 million during the third quarter of this year. Subsequently, the company’s pressure pumping division wrote off $20.5 million of impairment charges related to the retirement of approximately 300,000 of horsepower.
“It’s been a challenging year with the overall decrease in U.S. industry rig count, and the third quarter was the quarter with the fastest decline during the year,” Hendricks said during the call. “For Patterson-UTI, the decrease in our rig count was in line with our expectation, while the decrease in pressure pumping activity was greater than we expected.”
Looking ahead, Hendricks said the company is waiting to learn more about 2020 budgets for its customers. Patterson UTI’s still has hydraulic fracturing equipment with a combined 1.3 million of horsepower and a fleet of 216 drilling rigs, of which an average of 126 rigs are expected to be used during in the fourth quarter.
With roots going back to 1978, Patterson-UTI Energy was was created by the 2001 merger of Patterson Drilling and UTI Energy. Headquartered in Houston, the company employs more than 8,000 people across the United States and Canada.
The company posted a $321 million loss on $3.3 billion of revenue during 2018.
