Patterson-UTI Energy’s performance in fiscal 2016
In 2016, Patterson-UTI Energy (PTEN) recorded $915.8 million in revenues—52% lower compared to 2015. In 2016, the company’s net loss was $318.6 million—a sharp deterioration compared to a net loss of $294.5 million in 2015. In 2016, Patterson-UTI Energy’s earnings were impacted by $288 million in goodwill impairment charges associated with its pressure pumping business, equipment write-downs, and impairment of certain oil and natural gas properties.
Patterson-UTI Energy’s larger market cap peer Helmerich & Payne (HP) recorded a net loss of $103 million in 2016. Weatherford International (WFT) recorded a net loss of ~$3.4 billion in 2016. Read Did Weatherford International Meet 4Q16 Estimates? to learn about Weatherford’s 4Q16 earnings. On February 1, Weatherford International signed an alliance with Nabors Industries (NBR). Read Nabors’ Alliance with Weatherford: How Did the Market Respond? to learn more.
From 4Q15 to 4Q16, Patterson-UTI Energy’s Contract Drilling segment’s revenue fell ~33%. Its Pressure Pumping segment witnessed a 20% revenue decline during the same period. These two segments accounted for 98% of Patterson-UTI Energy’s total revenues in 4Q16.
The Contract Drilling segment saw more operating loss (144% fall) in 4Q16 compared to 4Q15. The Pressure Pumping Solutions segment’s adjusted income was relatively resilient. It fell 6% in 4Q16 compared to a year ago. Patterson-UTI Energy accounts for 0.04% of the Vanguard High Dividend Yield ETF (VYM). The Oil & Gas industry makes up 10.7% of VYM.
Negative factors that drove Patterson-UTI Energy’s performance
- 44% lower operating rigs in the Contract Drilling segment in 4Q16 compared to 4Q15
- 10% lower average revenue per operating day in the Contract Drilling segment
- 40% lower average margin per total job in the Pressure Pumping segment
Positive factors that drove Patterson-UTI Energy’s performance
- 24% higher average revenue per total job in the Contract Drilling segment
- Compared to 3Q16, Patterson-UTI Energy’s average US rig count rose 6% to 66 in 4Q16. In January 2017, the US rig count increased to 76.
As of December 31, 2016, Patterson-UTI Energy had $417 million in revenues contracted under future day rate drilling. In 1Q17, management expects 44 rigs operating under term contracts and an average of 37 rigs during fiscal 2017.
Next, we’ll discuss Patterson-UTI Energy’s returns.