Patterson-UTI Energy’s net debt-to-EBITDA
Patterson-UTI Energy’s (PTEN) net debt-to-TTM (trailing-12-month) EBITDA (earnings before interest, tax, depreciation, and amortization) trended upward from fiscal 2Q15 through fiscal 2Q16. In 2Q16, Patterson-UTI Energy’s net debt-to-EBITDA was 2.7x, or 208% higher than one year previously.
Remember, net debt-to-EBITDA reflects how easily a company can repay its debts from its operational earnings and available cash. Peer RPC, Inc.’s (RES) net debt was a negative $141 million by the end of 2Q16, as compared to PTEN’s $617 million. But RPC has no long-term debt, and it has a positive cash balance, which leads to negative net debt. Notably, PTEN makes up 0.56% of the WisdomTree SmallCap Dividend ETF (DES).
Patterson-UTI Energy’s indebtedness
PTEN’s net debt-to-TTM-EBITDA multiple started increasing from fiscal 2Q15 until fiscal 2Q16. In 2Q16, its total debt fell by 5% over 2Q15, and its cash and marketable securities increased significantly during that period, leading to a 23% lower net debt. However, PTEN’s TTM EBITDA decreased by 75% during that period, and so in effect, its net debt-to-EBITDA ratio rose significantly.
What happened after PTEN amended its credit facility?
On June 30, PTEN repaid $230 million debt, which reduced its debt to capitalization to 22%. PTEN does not have any term-debt maturities until October 2020. PTEN recently amended its credit facility. Through the amendment, PTEN extended the maturity date of $357.9 million in revolving credit commitments to certain lenders until March 2019.
Continue to the next part for a discussion of Patterson-UTI Energy’s free cash flows.