Patterson-UTI Energy Inc. (NASDAQ:PTEN) Q4 2014 Earnings Conference Call - Final Transcript
Feb 05, 2015 • 09:00 am ET
Good day, ladies and gentlemen, and welcome to the Fourth Quarter 2014 Patterson-UTI Energy Incorporated Earnings Conference Call. My name is Denise, and I'll be the operator for today. (Operator Instructions) As a reminder, this conference is being recorded for replay purposes.
I would now turn the conference over to Mr. Mike Drickamer, Director, IR. Please proceed, sir.
Thank you, Denise. Good morning. On behalf of Patterson-UTI Energy, I'd like to welcome you to today's conference call to discuss the results of the 3 and 12 months ended December 31, 2014. Participating in today's call will be Mark Siegel, Chairman; Andy Hendricks, CEO; and John Vollmer, CFO.
(Forward-Looking Cautionary Statements)
Statements made in this conference call include non-GAAP financial measures. The required reconciliations to GAAP financial measures are included on our website, www.patenergy.com, and in the company's press release issued prior to this conference call.
And now, it's my pleasure to turn the call over to Mark Siegel for some opening remarks. Mark?
Thanks, Mike. Good morning, and welcome to Patterson-UTI's conference call for the fourth quarter of 2014. We are pleased that you are able to join us today. As is customary, I will start by briefly reviewing the financial results for the quarter ended December 31, and then, I will turn the call over to Andy Hendricks, who will share some detailed comments on each segment's operational highlights as well as our outlook. After Andy's comments, I will provide some closing remarks before turning the call over for questions.
Turning now to the fourth quarter. As set forth in our earnings press release issued this morning, we reported net income of $57.6 million, or $0.39 per share. Earnings were impacted by both a non-cash impairment charge to our E&P business of $16.8 million and an increased corporate tax rate associated with the December extension of bonus depreciation provisions for all of 2014. This impairment charge, along with the increase in our effective tax rate, reduced the company's net income per share for the fourth quarter by $0.14.
Before talking about current market conditions, I would like to spend a couple of moments on the non-operating items that affected fourth quarter earnings. First, with respect to the non-cash impairment charge, we assess the carrying value of our E&P properties on a quarterly basis. With a sharp drop in oil prices during the fourth quarter, we reduced the carrying value of certain E&P properties on our balance sheet by $16.8 million.
Second, also affecting fourth quarter earnings was an increase in our effective tax rate to 41.7% from an average rate of 32.4% for the first three quarters of the year, which brought our effective tax rate for the full-year to 36.0%, but also allowed us to file for a cash refund. By way of background, on December 19, Congress approved the Tax Increase Protection Act of 2014, which extended through the end of 2014 various federal income tax provisions that expired at the end of 2013, including bonus depreciation.