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How Patterson-UTI Energy’s Management Sees 2Q17

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Jul. 18 2017, Published 1:24 p.m. ET

PTEN management views

Patterson-UTI Energy’s (PTEN) management believes that its merger with Seventy Seven Energy has consolidated PTEN’s position in drilling and pressure pumping activity.

After the combination, PTEN now has a fleet of ~200 high-specification rigs. In the company’s 1Q17 press release, PTEN’s CEO (chief executive officer) William A. Hendricks stated: “The merger with Seventy Seven Energy expanded our geographic footprint in pressure pumping to include the Mid-Continent.”

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Hendricks also stated: “Currently, we have approximately 850,000 frac horsepower in Texas, 350,000 frac horsepower in Appalachia and 300,000 frac horsepower in Mid-Continent. With approximately 1.5 million horsepower in only three regions, we maintain considerable local scale for strong regional efficiencies.”

Benefits from acquisition of Seventy Seven Energy

PTEN’s management has noted the following benefits from the merger:

  • higher volumes of sand transportation by rail and truck to the wells
  • increased efficiencies in procuring chemicals, sand, and maintenance spares
  • new business line additions from Great Plains Oilfield Rental to leverage PTEN’s vast operational footprint and infrastructure

PTEN’s management views for 2Q17

PTEN’s management also expects the following:

  • 2Q17 revenues from the pressure pumping business to reach $275 million, or 95% higher than in 1Q17, led by higher shale activity and improved pricing for PTEN’s services
  • 2Q17 revenues to be boosted by revenues from Seventy Seven Energy
  • the Pressure Pumping segment’s gross margin to remain nearly unchanged in 2Q17 from 1Q17

You can read more about the merger in Market Realist’s Oilfield Services Deal: PTEN Will Acquire Seventy Seven Energy.

PTEN makes up 0.20% of the iShares Core S&P Mid-Cap ETF (IJH). IJH has risen 14% in the past year, compared with the 4% decline in PTEN’s stock price during the same period.

Next, we’ll discuss PTEN’s value drivers in 1Q17.

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