Patterson-UTI Earnings & Revs Beat

Zacks

Onshore contract driller, Patterson-UTI Energy Inc. (PTEN) reported better-than-expected first-quarter 2013 results. The outperformance was primarily driven by the increased use of high specification APEX rig fleet in contract drilling operations.

Patterson-UTI’s earnings per share (EPS) came in at 38 cents, beating the Zacks Consensus Estimate of 36 cents. Quarterly total revenue of $667.0 million was also above our projection of $641.0 million.

Comparing year over year, however, Patterson-UTI’s earnings per share fell 38.7% (from 62 cents to 38 cents), and revenues dropped 10.6%. The profit decline reflects difficult market conditions.

Rig Count Statistics

The number of operational rigs during the reported quarter averaged 199 (188 located in the U.S. and 11 in Canada) compared with 237 in the first quarter of 2012.

Segmental Performance

Contract Drilling: Segment revenues totaled $419.1 million (62.8% of the total revenue), down 14.4% year over year. Average revenues per operating day was $23,410, up 3.4% year over year, while average direct costs per operating day increased 5.5% year over year to $13,800. Segment operating profit decreased to $72.5 million from $111.8 million in the year-ago quarter.

Pressure Pumping: Revenues of $231.2 million were down 4.4% year over year. Segment operating profit decreased to $28.5 million from $46.8 million in the prior-year quarter due to challenging market conditions. Despite unfavorable market situations, this segment delivered much better results than expected.

Oil & Natural Gas: Revenues were $16.8 million, up 14.0% from the year-ago quarter. Operating income of $6.2 million was down from $7.5 million earned in the prior-year quarter.

Capital Expenditure & Balance Sheet

During the quarter, Patterson-UTI spent approximately $174.2 million on capital programs (against $263.4 million in the first quarter of 2012). As of Mar 31, 2013, the company had $144.0 million in cash and $697.5 million in long-term debt (including current portion).

Zacks Rating

Patterson-UTI currently retains a Zacks Rank #3 (Hold).

However, there are certain other companies in the contract drilling service industry that are expected to outperform over the short term. These include Tesco Corporation (TESO) with a Zacks Rank #1 (Strong Buy), and Hercules Offshore Inc. (HERO) and Vantage Drilling Company (VTG) with a Zacks Rank #2 (Buy).
 

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