Shares of Patterson-UTI Energy, Inc. (NASDAQ: PTEN) rallied more than 10% by 3:00 p.m. EDT on Thursday after the drilling contractor reported stronger-than-expected third-quarter results.
Patterson-UTI Energy recorded $867 million in revenue for the third quarter, which was not only well above the $685 million it posted in the year-ago period but beat the consensus estimate by nearly $23 million. Furthermore, while the company reported an adjusted net loss of $21.1 million, ($0.10 per share), that was $0.02 per share better than analysts' expectations.
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One of the drivers of that better-than-expected showing was the company's pressure pumping business, which does the actual fracking of shale wells. This segment reported higher revenue and margins than anticipated despite deteriorating market conditions due to pipeline issues in the Permian Basin by reducing and consolidating its activities to boost profitability.
Patterson-UTI Energy also noted that utilization for its rigs was strong, which helped boost the average rig revenue per day by $410 from the second quarter to $22,280. While rig operating costs also increased, the company worked to keep the impact of that inflation to a minimum, enabling it to capture a $200 increase in average rig margin per day.
While the company noted that the drilling industry faces some near-term challenges due to pipeline and budgetary constraints, the "fundamentals remain strong for U.S. onshore drilling and completion activity," according to CEO Mark Siegel. He further stated that "the current slowdown in completion activity is leading to an increase in the backlog of wells waiting to be completed, which bodes well for increasing demand for pressure pumping in the not too distant future." That optimistic outlook suggests even better days could be ahead for Patterson-UTI Energy.
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