Patterson-UTI Energy Inc. (NASDAQ:PTEN) Q3 2019 Earnings Conference Call - Final Transcript
Oct 24, 2019 • 10:00 am ET
C. Andrew Smith
non-cash impairment charge, including $173 million in drilling, $20.5 million in pressure pumping, $8.4 million in directional drilling and approximately $0.5 million in our other segment.
These impairment charges include the retirement of 36 legacy non-APEX drilling rigs for which there is limited perceivable opportunity to work at rates and terms, which would justify the activation of the rigs. Additionally, included in the impairment charge is the retirement of approximately 300,000 pressure pumping horsepower.
During the third quarter, we took a $17.8 million non-cash goodwill impairment charge related to all of the goodwill remaining at our Current Power and Great Plains Oilfield Rental businesses. The profitability and resulting cash flow of these businesses is highly correlated to overall oilfield service activity, and as such, have felt the effect of the latest downturn. Included in the direct operating cost of our directional drilling segment is a $17 million -- is $17 million for the write-off of inventory.
Included in the direct operating cost for our Warrior Rig Technologies business, which is in our other segment, is $12.4 million primarily related to the write-off inventory for product lines we no longer intend to support. These product lines generally include hydraulic top drives and first-generation electric top drives.
Additionally, $2.2 million of severance expense is included in SG&A for our other segment, as we have ceased operations in our Calgary location. Included in interest expense is an $8.2 million -- is an $8.2 million make-whole charge incurred in connection with the early repayment of our $30 million Series A senior notes due 2020. Excluding these charges, the majority of which were non-cash, our adjusted EBITDA for the third quarter would have been $143 million.
During the third quarter, capital expenditures totaled $68 million, a 30% reduction from the second quarter. We now expect full-year 2019 CapEx to be approximately $350 million, down from our expectation last quarter of $400 million and down from our original budget for the year of $465 million, as we have quickly reacted to market conditions to reduce spending.
During the third quarter, we reduced our gross debt and pushed our nearest debt maturity to 2022 by using a combination of cash and a new $150 million term loan to repay a $300 million tranche of senior notes that would have been due in 2020.
The new $150 million term loan has current pricing of LIBOR plus 1.18% [Phonetic], which is currently 2.95%, and gives us the ability to continue to reduce debt without prepayment penalty. Our liquidity position remains strong with $165 million of cash on the balance sheet at the end of the quarter, and $600 million available under our undrawn revolving line of credit, which matures in 2024.
At September 30, 2019, our outstanding gross debt balance was $975 million, a $150 million reduction from the end of the prior quarter. Our net debt-to-capital ratio was 21.6% at September 30, 2019. During the third quarter, we repurchased 8.2 million shares of our common stock in the