Patterson-UTI Reports In-Line Q3 Earnings, Revenues Soar - Analyst Blog

Onshore contract driller Patterson-UTI Energy Inc. (PTEN) reported earnings per share – excluding non-cash charges – of 47 cents, in line with the Zacks Consensus Estimate. The bottom line surged 88% from the year-ago adjusted profit of 25 cents. Increased demand for rigs primarily aided the results, which were however partially offset by considerable higher direct operating expenses. The favorable results led to a 3.3% price rise at NYSE.
 

Revenues of $845.6 million surpassed the Zacks Consensus Estimate of $837 million and were 15.7% higher than $731 million recorded in the year-ago quarter. Higher sales from all the segments led to the improvement.

Rig Count Statistics

The number of operational rigs of Patterson-UTI during the reported quarter averaged 218 (209 located in the U.S. and 10 in Canada) compared with 190 in the third quarter of 2013.

Segmental Performance

Contract Drilling: This segment's revenues totaled $482.2 million (57% of the total revenue), up 5.3% year over year. Average revenues per operating day were $24,010 against $26,250 in the year-ago period. Average direct costs per operating day came in at $13,850, up from $13,750 in the year-earlier quarter.  

The segment's operating profit plummeted to $12.2 million from $116.3 million in the year-ago quarter, owing to significant higher selling, general and administrative expenses.

Pressure Pumping: Revenues of $348.7 million were up 34.5% year over year. Moreover, the segment's operating profits increased to $25.2 million from $16.9 million in the prior-year quarter. The improvements were owing to increased activities supported by 31,500 horsepower capacity of pressure pumping equipment that the company acquired during Jun 2014.

Oil & Natural Gas: Revenues came in at $14.7 million, up 6.5% from the year-ago quarter. However, operating income of $3 million indicated a 44.6% fall from third-quarter 2013, owing to increased impairment of oil and natural gas properties.  

Direct Operating Costs

The company reported direct operating expenses of $562.5 million, reflecting a 25.7% increase from $447.4 million reported in the year-ago quarter.

Guidance

Patterson-UTI expects fourth-quarter revenues from the Pressure Pumping segment to increase sequentially by roughly 10%.

Capital Expenditure & Balance Sheet

During the quarter, Patterson-UTI spent approximately $285.8 million on capital programs (against $150.7 million in the third quarter of 2013). As of Sep 30, 2014, the company had $38.6 million in cash and $685 million in long-term debt (including current portion).

Zacks Ranks

Patterson-UTI currently retains a Zacks Rank #3 (Hold), implying that it is expected to perform in line with the broader U.S. equity market over the next one to three months.  

Meanwhile one can consider better ranked players in the energy sector like Murphy USA Inc. (MUSA), Enbridge Energy Management LLC (EEQ) and Delek Logistics Partners LP (DKL). All the players sport a Zacks Rank #1 (Strong Buy).