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Patterson-UTI (PTEN) Q3 Earnings & Revenues Beat, Stock Up

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Patterson-UTI (PTEN) Q3 Earnings & Revenues Beat, Stock Up

Patterson-UTI (PTEN) bought back 2.9 million shares for $50 million during the third quarter.

Patterson-UTI Energy, Inc. PTEN recently reported third-quarter adjusted net loss per share of 10 cents, narrower than the Zacks Consensus Estimate of 12 cents. The company’s performance also, improved from the year-ago loss of 16 cents per share, as North American shale drilling picked up amid rebounding oil prices.

Moreover, revenues of $867.5 million rose from $685 million in the year-ago quarter. The figure also beat the Zacks Consensus Estimate of $840 million. The top-line growth was owing to higher revenues from the Contract Drilling and Pressure Pumping segments.

Patterson-UTI shares jumped more than 16% after the energy equipment maker's third-quarter results beat estimates.

 

Patterson-UTI Energy, Inc. Price, Consensus and EPS Surprise

 

Patterson-UTI Energy, Inc. Price, Consensus and EPS Surprise | Patterson-UTI Energy, Inc. Quote

Segmental Performance

Contract Drilling: This segment’s revenues totaled $365.3 million in the quarter, up from $301.6 million in the year-ago period.

Overall average revenues per operating day increased to $22,280 from $20,320 in the third quarter of 2017. Moreover, average margin per operating day came in at $8,470, up from $7,730 in the year-ago quarter. The segment also gained from a rise in both operating days (from 14,841 to 16,394) and the number of operational rigs (from 161 to 178), owing to resilient operations of the company.

However, the segment recorded operating loss of $42.7 million, significantly wider than $20.4 million incurred in the year-earlier quarter. Direct operating costs rose 21.1% year over year to $226.4 million.

Pressure Pumping: Revenues of $421.6 million increased from the year-ago sales of $362.4 million. The segment reported operating loss of $1.5 million against $16.8 million profit in the prior-year quarter. The decline occurred due to rise in average direct operating costs per total job in the quarter.

Directional Drilling: Directional Drilling — Patterson-UTI’s newest unit following the acquisition of MS Directional — recorded third-quarter 2018 revenues of $51.6 million. The segment reported operating loss of $9 million.

Other Operations: Revenues came in at $29 million compared with $20.9 million in the year-ago quarter. Quarterly loss came in at $4.9 million compared with $6.5 million in the year-ago quarter. Direct operating costs increased from $14.6 million in the year-ago period to $20.4 million.

Direct Operating Costs

The company incurred direct operating expenses of $634.1 million, reflecting a jump from $491.9 million in the year-ago quarter.

Share Repurchase

During the third quarter, the company bought back 2.9 million shares for $50 million. At present, the company has $200 million remaining under its share repurchase program.

The company has decided to pay a regular quarterly dividend of 4 cents (16 cents on an annualized basis) on Dec 20, 2018 to its shareholders of record as of Dec 6, 2018.

Capital Expenditure

During the quarter, Patterson-UTI spent approximately $162.8 million on capital programs (versus $143.1 million in the third quarter of 2017). In the first nine months of 2018, capital expenditure amounted to $480.6 million.

Balance Sheet

As of Sep 30, 2018, the company had $214 million in cash and cash equivalents, and a long-term debt of $1,119 million.

Guidance & Outlook

The company expects an average rig count of 182 in the fourth quarter. Patterson-UTI expects around 127 rigs, on an average, to be operational in the fourth quarter under term contracts, and 81 within the next four quarters.

Although the company is upbeat about onshore drilling and completion activities, it expects the pressure pumping segment to witness a small retreat. While the company expects global energy demand to rise in the coming years, supply will likely face disruptions.

Zacks Rank & Key Picks

Currently, Houston, TX-based Patterson-UTI has a Zacks Rank #3 (Hold). Investors interested in the energy sector can opt for some better-ranked stocks given below:

El Dorado, AR-based Murphy Oil Corporation MUR carries a Zacks Rank #1 (Strong Buy). The company’s sales for 2018 are expected to grow more than 20% from 2017. You can see the complete list of today’s Zacks #1 Rank stocks here.

Brazilian state-run Petroleo Brasileiro S.A. or Petrobras PBR has a Zacks Rank #2 (Buy). Its earnings for 2018 are expected to surge more than 100% from the 2017 level.

Woodlands, TX-based Anadarko Petroleum Corporation APC holds a Zacks Rank #2. The company’s earnings for 2018 are expected to surge more than 250% year over year.

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