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Patterson-UTI (PTEN) Stock Down 9.4% Since Q2 Earnings Release

Shares of Patterson-UTI Energy, Inc. PTEN have dropped 9.4% since the company’s second-quarter 2021 earnings announcement on July 29.

This downward stock movement could possibly be triggered by a wider-than-expected loss reported for the second quarter, the sequential increase in operating expenses and a lack of contribution from the company’s contract drilling segment. The decline in price performance has also been induced by falling oil prices over the past few days.

Delving Deeper

Patterson-UTI reported second-quarter adjusted net loss of 54 cents per share, wider than the Zacks Consensus Estimate of a loss of 52 cents.

Bottom-line results can be attributed to a disappointing operating performance at the contract drilling segment, primarily due to less number of operational rigs.

However, the loss was narrower than the year-ago quarter's figure of 56 cents due to higher contribution from pressure pumping and directional drilling segments.

The company’s total quarterly revenues of $291.77 million missed the Zacks Consensus Estimate of $295 million. However, the top line improved 16.8% on a year-over-year basis.

In July, Patterson-UTIagreed to buy Pioneer Energy Services Corp. for $295 million, which comprises the debt load of the latter to be cleared by the former.

The purchase price includes the issuing of up to 26,275,000 shares of Patterson-UTI common stock as well as a cash payment of $30 million. The deal is scheduled to be concluded in the fourth quarter of 2021, contingent on regulatory clearances, usual closing conditions and Pioneer shareholders’ approval.

PattersonUTI Energy, Inc. Price, Consensus and EPS Surprise

PattersonUTI Energy, Inc. price-consensus-eps-surprise-chart | PattersonUTI Energy, Inc. Quote

Segmental Performance

Contract Drilling: Revenues totaled $141.7 million, down 17.2% year over year. The unit lost $58.2 million in the second quarter, wider than the year-ago loss of $30.7 million, plagued by a decrease in both operating days (from 7,450 to 6,652) and the number of rigs operational (from 82 to 73).

Pressure Pumping: Revenues of $112 million rose 88.2% from the year-ago figure of $59.5 million. Moreover, the segment’s operating loss narrowed to $23.9 million from $68.6 million in the second quarter of 2020, attributable to improved pricing and utilization.

Directional Drilling: Revenues summed $24.9 million, up 111.8% year over year. Also, the segment’s operating loss narrowed to $5.1 million from a loss of $14.4 million reported in the corresponding quarter of 2020, attributable to increasing activity, led by 70% growth in the number of rigs on which the company provides directional drilling services.

Other Operations: Revenues were $13.2 million, 65.62% above the year-ago quarter’s $7.97 million. The unit also posted an improved quarterly loss of $3.3 million from a loss of $10.4 million recorded in the year-ago quarter.

Capital Expenditure & Financial Position

In second-quarter 2021, Patterson-UTI spent $38.1 million on capital programs (compared with $49.7 million in the second quarter of 2020). As of Jun 30, 2021, the company had $216.7 million in cash and cash equivalents, and $901.9 million as long-term debt.

This Houston, TX-based company maintained its quarterly dividend of 2 cents a share, payable Sep 16, 2021 to its shareholders of record as of Sep 2, 2021.

Outlook

Based on contracts currently in place, Patterson-UTI expects its third-quarter 2021 rig count to average 37 rigs under term contracts. As the onshore driller foresees a ramp-up in drilling activity, the company expects 81 rigs, on average, indicating a rise from 73 rigs reported in the second quarter of 2021.

For third-quarter 2021, the company expects depreciation, depletion, amortization and impairment expenses to be $141 million while selling, general and administrative expenses are estimated at $23 million.

For 2021, the company expects an effective tax rate of 17%.

Zacks Rank & Key Picks

Patterson-UTI currently has a Zacks Rank #3 (Hold). Some better-ranked players in the  energy  space are Devon Energy Corporation DVN, Matador Resources Company MTDR and Continental Resources, Inc. CLR, each presently flaunting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.


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Devon Energy Corporation (DVN): Free Stock Analysis Report
 
PattersonUTI Energy, Inc. (PTEN): Free Stock Analysis Report
 
Continental Resources, Inc. (CLR): Free Stock Analysis Report
 
Matador Resources Company (MTDR): Free Stock Analysis Report
 
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