Patterson-UTI: Weather to Affect Q1 Results - Analyst Blog

Onshore contract driller Patterson-UTI Energy Inc. PTEN announced that severe weather conditions in recent months have hampered its first quarter 2014 Appalachian pressure pumping activities.

Patterson-UTI now expects the operations to generate first quarter revenues of about $240 million, with a margin of 17%, lower than the earlier projection. The lowered expectation stemmed from the costs that the company had to bear although equipment and labor failed to work due to the severe weather.

However, the picture is not the same in other operations. Patterson-UTI reported that other activities and regions were not significantly affected by the weather and demand remains robust for both pressure pumping as well as the drilling services business segment.    

Patterson-UTI is a leading onshore contract driller in the U.S. with rigs that operate primarily in the oil and natural gas producing regions of North America. The company has a large, high-quality fleet of drilling rigs. Moreover, the company's technologically advanced ‘Apex' rigs are the key to its success.

The company looks good on the earnings front as well. It has surpassed the Zacks Consensus Estimate in three out of the last four quarters. In the recently reported quarter, Patterson-UTI reported earnings of 28 cents, beating the Zacks Consensus Estimate by 6 cents. Looking forward, these positive results are expected to persist. In the past two months, 9 estimates have gone higher for Patterson-UTI, pegging its first quarter earnings at 29 cents. For the current year as well 11 estimates have moved north, increasing the consensus estimate from $1.13 to $1.35 per share.

Patterson-UTI currently sports a Zacks Rank #1 (Strong Buy), implying that it is expected to significantly outperform the broader U.S. equity market over the next one to three months.

Other players worth considering in the oil and gas drilling sector include Helmerich & Payne Inc. HP, Precision Drilling Corporation PDS and New Source Energy Partners L.P. NSLP. All these stocks sport a Zacks Rank #1.