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Patterson-UTI Energy in 4Q16: Key Drivers, Then and Now

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PTEN’s revenue by segment

From 4Q15 to 4Q16, Patterson-UTI Energy’s (PTEN) Contract Drilling segment revenue fell ~33%. Its Pressure Pumping segment witnessed a 20% revenue decline during the same period. However, revenues from both these segments rose in 4Q16 over 3Q16. These two segments accounted for 98% of PTEN’s total revenues in 4Q16.

Notably, Patterson-UTI makes up 0.02% of the iShares Russell 3000 ETF (IWV), which tracks the Russell 3000 Index (RUA-INDEX) and consists of 3,000 large companies in the US. The energy sector accounts for 6.2% of IWV. RUA-INDEX has risen 15% in the past year.

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Factors that drove PTEN’s performance

The following factors acted as negative drivers in 4Q16:

  • 44% lower operating rigs in the Contract Drilling segment in 4Q16 over 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

The following factors acted as positive drivers in 4Q16:

  • 24% higher average revenue per total job in contract drilling
  • 6% average higher US rig count, as compared to 3Q16, reaching 66 

Net income for PTEN versus peers

By comparison, Helmerich & Payne (HP) recorded a $103-million net loss in 2016. Weatherford International (WFT) recorded a ~$3.4-billion net loss in 2016. (For more on Weatherford’s 4Q16 earnings, see Market Realist’s Did Weatherford International Meet 4Q16 Estimates?)

On February 1, WFT signed an alliance with Nabors Industries (NBR). (For more, check out Market Realist’s Nabors’ Alliance with Weatherford: How Did the Market Respond?)

Continue to the next part for a look at Patterson-UTI Energy’s correlation to the US rig count.

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