Patterson-UTI Energy’s Strategies: How to Outperform the Industry

Patterson-UTI Energy’s stock price and key drivers

In the past year, as of March 20, 2017, Patterson-UTI Energy’s (PTEN) stock has risen 45%. In Market Realist’s Patterson-UTI Energy Faces Headwinds despite Strong Guidance, we analyze PTEN’s value drivers and the factors affecting them. In this series, we’ll investigate key metrics like valuations, short interest, and correlation coefficient, concluding with a look at the latest analyst recommendations.

In the past year, Patterson-UTI Energy has outperformed the VanEck Vectors Oil Services ETF (OIH), an ETF tracking an index of 25 OFS (oilfield equipment and services) companies, rising ~11% as of March 20. The Energy Select Sector SPDR ETF (XLE), the broader energy industry ETF, has gained 10% in the past year, while Halliburton has gained 16% over the same period, outperforming the SPDR S&P 500 ETF (SPY). The Dow Jones Industrial Average (DJIA-INDEX) has risen 19% in the past year.

Patterson-UTI Energy’s Strategies: How to Outperform the Industry

The WTI (West Texas Intermediate) crude oil price has recovered 30% during the same period. You can check out the latest on crude oil prices in Is It the Beginning of a Bear Market for Crude Oil? Meanwhile, the hike in crude oil prices has led to a 66% rise in the US rig count in the past year. You can read up on how top OFS companies like Schlumberger (SLB) and National Oilwell Varco (NOV) have been faring recently in Energy’s Price Recovery Prompts an Oilfield Services Revival.

Will Patterson-UTI Energy’s new rig design improve returns?

PTEN’s proprietary APEX-XC rigs are expected to offer a pad-optimal design, with greater clearance for walking, larger drill pipe racking capacity, and a higher-torque top drive.

Mark S. Siegel, PTEN’s Chairman, commented on Patterson-UTI Energy’s strategies in the 4Q16 press release, stating: “During 2017, we will introduce our new APEX-XC rig design to the market. This enhanced design is based on our experience as a leading high-spec drilling company and incorporates many of the features sought by a broad customer base of E&P companies, which are constantly seeking greater efficiency.”

Continue to the next part for a look at Patterson-UTI Energy’s historical valuation multiples.