What does Patterson-UTI Energy’s management think?
Patterson-UTI Energy’s (PTEN) chairman Mark S. Siegel observed that the pace of recovery in the OFS (oilfield services and equipment) industry picked up during 4Q16. It was led by higher drilling and pressure pumping activity. That’s expected to benefit PTEN.
In the company’s 4Q16 press release, Siegel noted, “With the industry land rig count approximately doubling from the trough, we are encouraged by the recent uptick in activity and pricing and believe 2017 will be an exciting year for Patterson-UTI.”
Management views for 1Q17
- PTEN’s operated average US rig count is expected to rise 21.0% in 1Q17 compared to 4Q16.
- Management estimates that PTEN can potentially upgrade 39 additional 1,500 horsepower APEX rigs to super-spec (high-specification) rigs.
- PTEN expects pressure pumping revenues to rise 25.0% in 1Q17 over 4Q16.
- Its pressure pumping gross margin is expected to rise to the low teens.
PTEN’s rig count and contract outlook
PTEN’s drilling backlog was $417.0 million on December 30, 2016, a 41.0% fall compared to a year ago. PTEN management expects ~29.0% of this 2016 backlog to remain after 2017. Backlog is calculated by multiplying the day rate under term drilling contracts by the number of days remaining under the contract. In 1Q17, management expects its rig count to rise 21.0% over 4Q16.
PTEN and Seventy Seven Energy transaction
In January 2017, PTEN filed an initial form S-4 registration statement with the SEC (U.S. Securities Exchange Commission) regarding its bid to acquire Seventy Seven Energy (SVNT). Earlier, on December 12, 2016, PTEN disclosed that it agreed to acquire Seventy Seven Energy, a contract drilling, pressure pumping, and oilfield rental services provider. You can read more on the acquisition in Market Realist’s Oilfield Services Deal: PTEN Will Acquire Seventy Seven Energy.
PTEN makes up 0.25% of the iShares Core S&P Mid-Cap (IJH). The energy sector makes up 3.3% of IJH.
Next, we’ll take a look at Patterson-UTI Energy’s revenue and earnings.