PTEN is Confident despite Energy Market Uncertainty



Patterson-UTI Energy’s segment wise performance

From 4Q14 to 4Q15, all of Patterson-UTI Energy’s (PTEN) segments saw lower revenues. The Pressure Pumping segment suffered the highest revenue decline of 67% while the Contract Drilling segment was relatively resilient with a 59% fall. These two segments accounted for 99% of PTEN’s 4Q15 revenues.

With respect to operating income, all of PTEN’s segments witnessed losses in 4Q15. Peer Core Laboratories’ (CLB) 4Q15 adjusted operating income decreased by 57% compared to 4Q14. CLB’s market capitalization stands at $4.25 billion compared to PTEN’s $2.08 billion.

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PTEN’s 4Q15 performance

Factors that affected PTEN’s 4Q15 performance included:

  • 58% fall in PTEN’s average Contract Drilling rig count in operation
  • 55% fall in Pressure Pumping average margin per job
  • significant fall in Oil and Natural Gas Production and Exploration margin

A better margin per operating day in Contract Drilling, as well as a higher average revenue per fracturing job, partially mitigated these negative factors. Patterson-UTI Energy comprises 0.17% of the Vanguard Energy ETF (VDE).

Management comments

Patterson-UTI Energy’s chief executive officer, William Andrew Hendricks, expressed his confidence over the company’s long-term outlook despite the current uncertainty in the energy market. In the company’s 4Q15 press release, he noted, “While there is no visibility currently into a recovery, we remain confident in the long-term outlook for our company. We are financially strong, and with 161 Apex rigs and more than one million horsepower of pressure pumping equipment, we have the kind of high-quality equipment that we expect to be in greatest demand during a recovery.”

Next, we will discuss Patterson-UTI Energy’s returns.


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