Hello, everyone. Please mute your microphones before we begin. Thank you. Thank you. So, there, everyone, welcome to NorAm Drilling's Q3 results presentation. My name is Marius Furuly, and I will go through the results together with the company's CEO, Marty L. Jimmerson. We will do this presentation through Teams, obviously, and therefore, I please ask everyone to mute their speakerphone during this session. After we have concluded the presentation, we will do a Q&A, where everyone can ask a question by using the Raise Hand function or simply use the Q&A function. Before we begin, I ask all attendants to pay proper attention to the disclaimer section on page two about forward-looking statements.
So statements made during this presentation are based on various assumptions, many of which are based, in turn, upon further assumptions, including NorAm's management's examination of historical operating trends, data contained in the company's records, and other data available from third parties. Although NorAm believes that these assumptions were reasonable when made, because assumptions are inherently subject to significant uncertainties and contingencies, which are difficult or impossible to predict and are beyond its control, NorAm cannot give any assurance that it will achieve or accomplish these expectations, beliefs, or intentions. No representation or warranty, express or implied, is made as to any information contained herein, and no liability whatsoever is accepted as to any errors, omissions, or misstatements. The company does not accept any liability whatsoever arising directly or indirectly from the use of these materials.
With that, I'd like to give the word over to the company's CEO and CFO on the line from Houston, Marty L. Jimmerson. Thank you.
Thank you, Marius, and we appreciate those who have joined us today to review the third quarter results for NorAm Drilling. We will highlight our third quarter financial results and also provide some commentary on the current market trends and outlook. Turning to page three, highlighting our third quarter results, revenue was $26.6 million, down 24% from the previous quarter. The decline in revenue was primarily attributable to Permian rig counts declining 9% during the quarter. Our fleet utilization was 77.3%, compared to 98.9% in the previous quarter. We had three rigs hot stacked at the end of September and have subsequently reactivated one rig in mid-October. Our clean day rate decreased by 4% to $30,300.
Adjusted EBITDA, defined as earnings before interest, tax, depreciation, and amortization, plus non-cash stock option expense, was $6.9 million, down 52% from the previous quarter. We reported net income after tax of $2 million, or $0.05 per fully diluted share. Our current backlog, as of yesterday, was $17.4 million. Now let's turn to the next page, and we'll review recent events and our outlook. During the third quarter of 2023, rig counts in the Permian Basin declined 29, or 9%, primarily as a result of consolidation of private operator activity from previously announced M&A activity and continued disciplined production plans demonstrated by several E&Ps. The Permian rig counts have held up better than the overall U.S. rig count year-to-date.
As mentioned in our last quarterly earnings call, we started to see private operator activity decline in the Permian. As large operators continue to be focused on maintaining budget and production discipline, and also with announced, they've announced a few M&A transactions, rig demand started to decline during the second quarter, which impacted day rates for renewals and any new opportunities. Based upon current customer discussions, we remain encouraged that market fundamentals are constructive, and we believe Super Spec rigs will remain in high demand in the Permian Basin. Natural gas prices have also stabilized and have now been trading above $3 most recently. Through the remainder of 2023, we expect Permian rig activity level to remain stable, and we remain optimistic that most customers are finalizing their 2024 budgets, which could increase demand for Super Spec rigs in the Permian.
As a matter of fact, we expect to reactivate one additional rig under contract before year end. If natural gas prices continue above $3 or move even higher, that would further increase demand, in our opinion. We remain committed to pursuing opportunities that result in economics that justify operating our high-end Super Spec rigs. We believe that most drillers are maintaining the same financial discipline as us on pricing, and believe day rates for renewals have stabilized. Now, let's turn to some strong market fundamental commentary. Our high-end quality Super Spec rigs continue to demonstrate our efficient results and superior operating performance. As you can see on the chart on the left, we were the top U.S. land driller in terms of average footage drilled per day in the second quarter of this year.
This is a testament to our model of having only Super Spec, Ultra Super Spec rigs upgraded to the most efficient equipment in the market. As DUCs have continued to decline, we believe operators will need to increase drilling to maintain their production over time. With that, please allow me to turn it back to you, Marius.
Thank you, Marty. Sorry, guys, a small technical issue here. I'll try to do this without the rest of the slides, and sorry for that. The Teams function, unfortunately, is not with us today. So we'll continue on page six. In terms of the P&L and operational metrics, the third quarter financial results were impacted by lower utilization, slightly lower day rates, but ordinary OpEx expenses and maintenance were more or less in line with the expectations. We keep our rigs hot stacked for the moment as we expect opportunities to come in the near future. Day rates were down 4% quarter-on-quarter, and we achieved a utilization rate of 77.3% in the quarter.
Ordinary operating expenses were in line with the expectations, and going forward, we expect limited changes in our daily operating costs for active rigs. On the hot stacked rigs, we estimate that our direct average cost will be all in $12,000 per day. And over to the balance sheet, we are close to $50 million of cash at the end of Q3, and the company is debt-free and has a stated policy to distribute all operating cash flow exceeding our self-declared minimum liquidity level of $11 million, including undrawn amounts under a $4.5 million revolving credit facility with U.S. Bank. At the end of the quarter, we had liquidity well above this threshold, and we had no drawn amounts under the revolving credit facility.
With the potential reactivation of rigs, the company expects to use some of this liquidity to fund working capital requirements for putting the rigs back in the market, without compromising our strategy of distributing our excess cash flow to our shareholders. During the quarter, we paid $1.5 million of CapEx related to the final Ultra Super Spec rig upgrades, and for the full-year, 2023, we expect total CapEx of $4.6 million-$5 million in total. In terms of dividends, we paid $9.8 million of dividends or close to NOK 2.37 per share. And subsequent to quarter end, we have paid two monthly dividends in total of $0.08 per share.
Because I'm not able to share my screen, I will jump directly over to the Q&A session, and I encourage everyone with questions to either use the Q&A function or unmute yourself to ask a question. Sorry about the technical delays.
Hi, guys. Will Moller, Greenlight here. Can you hear me?
Yes.
All right. I have a... Hopefully, an easy one. If you guys were to... I, I know, I appreciate very much that you are being disciplined and not accepting low rates. But to help us bound what the downside could be to rates, if you were to instead take a strategy of trying to get utilization back up, what do you think the rate is that you could achieve today, if you wanted to, you know, in not as quickly as possible, but in a measured manner, get all of your rigs working without necessarily waiting for things to improve? Thanks.
Yeah, a great question, and we remain confident that there's only a small amount of contract drillers that are at the bottom end of the day rate range. We continue to believe that, as we refer to it, the clean day rate, before we have additional equipment, extra personnel, et cetera, is in the mid-$20,000 range. And we're confident that it's mid-$20,000s to upper $20,000s for both new opportunities and contract renewals. And I remain encouraged that this is a that strategy will result in us getting all of our rigs back to work within the next kind of 30-60, maybe even 90 days, but I think 30-60 days.
Thanks, Marty.
Andreas, we see you have a question.
Hey, Marty.
Good afternoon.
Good afternoon. What do you think about the DUCs? I mean, why are they so low? I mean, we have had a declining oil price, that's fine, but, but still, you know, it's, it should still be good economics. Why is it just decreasing, decreasing? Is there something wrong with the statistics, or is it just, you know, the E&P companies holding back and, and waiting for 2024 capital budgets?
Yeah, thanks, Andreas. I think it's really a function of two factors. You know, the DUC count continues to decline, which leads you to believe that most of the more economical DUCs have already been completed. And so you're getting a deterioration in expected economics for the remaining DUCs. We've always said that we still believe that a good portion of the DUCs may not be economically viable. Then you couple in, as you suggested, the operational and financial discipline that most operators are living by, and they're not committing any capital to completing those wells. So I do believe it's a combination of both. I don't foresee, in the near term, any significant production resulting from completing these DUCs, and our operators are gonna have to continue to drill to maintain production.
Okay. And a follow-up, Marty and Marius, you had a nice, like, working capital release. I think it was, like, $9 million or something this quarter. What do you think about the next quarter? Is it gonna be a little bit the other way, or is it gonna be flat?
Yeah, yeah, Marius, I'll take a crack at it. I think it's gonna be flat, Andreas. You know, we've reactivated one rig. You know, first of all, our revenues have come down a little bit, so we've benefited from the cash collections from that runoff. Revenues have, as we see it, are flat. Our accounts payable and CapEx is normal. So I would expect working capital, despite needing to tie up some working capital as we reactivate rigs, should be fairly normal.
... Okay, thank you. Hope there are more questions-
Thank you.
because the noise is gone now, so
Yeah, so sorry about that. It's unfortunately there was a lag in Teams. Hopefully it's gone now. I would encourage, if there was someone who had a question earlier in the session that was not answered due to this noisy, loud sound, please feel free to ask again, and sorry about that.
I suppose I'll ask one more, Will at Greenlight. Any chance you just sort of give us whatever color you've got on, I'd call it the, the rate of inbound calls, and if there's been any change over the last month or two, in either direction?
Yeah, Will, good to catch up again. So I would say that the inbound calls that we've received have changed in characteristics over the last kind of two weeks. You know, most operators have already kind of completed their plans for 2023, and most inquiries are now related to 2024. But we still do have some inbounds for 2023 activity, but most people are looking into 2024. I would say near term, probably the next 30, 45 days, any new opportunities are probably more associated with high grading of underperforming rigs, where they see an Ultra Super Spec rig opportunity like ours. But as we get into 2024, we're hearing more, albeit kind of modest at this point, until the 2024 budgets are finalized, more associated with incremental rig additions as we move forward.
I think that's all from you guys.
All right. Okay, here's another one from Tom. Tom, please, unmute.
Yes, hello. I just had a quick question. Did I understand you correctly when you said that the last two rigs will be operational within the 30-60-day window from now? And if that was the case, could you just say, does that turnover-wise, has the same, equal as you had on the other nine, nine rigs?
Yeah. So we currently have two stacked rigs. We do, and they're hot stacked. We're actively marketing them. They're crewed, ready to go. I do expect that we will return one of those rigs to work before year-end, under contract. And we have active discussions ongoing for the remaining rig, for early 2024 opportunities. We believe the current day rate opportunities are anywhere from the mid- to upper $20,000 range. So it will be virtually in line with our current average day rate, maybe slightly lower, but not significantly.
Okay, perfect. Thank you so much.
Thank you, Tom.
You bet. Thank you, Tom.
All right. It seems like there's no further questions. Okay, in that case, I would like to thank you all for attending, and sorry about the technical difficulties we experienced during the call. I encourage you to reach out to us after this call for any follow-up questions. If there was anything unclear during the presentation, we are happy to give you more color. Feel free to reach out to IR, ir@noramdrilling.com, or our Investor Relations hotline. I would like to extend a thank you to all the NorAm Drilling family of workers and people onshore for all the efforts made during the quarter. Thank you. I hope to see you, all of you again, for our next fourth quarter results in February. Thank you.