Patterson-UTI: The Cyclical Bottom Is Still Ahead
Patterson-UTI: Investors Are Anticipating An Upcycle
A New Patterson-UTI Energy
Apr. 21, 2015, 9:54 AM
- Patterson-UTI Energy (NASDAQ:PTEN) says it agrees to pay $14.5M to settle U.S. Equal Employment Opportunity Commission claims that it tolerated racial and ethnic discrimination and harassment on its drilling rigs and punished individuals who complained.
- The EEOC claimed that since at least 2006, PTEN assigned minorities to the lowest level jobs, failed to train and promote minorities, and disciplined and demoted minority employees disproportionately.
- The agency estimates that at least 1,000 people were affected.
Apr. 9, 2015, 5:48 PM
- Sell-rated Helmerich & Payne (NYSE:HP) has the greatest risk for negative revisions among its oilfield services peers, Citi analyst Scott Gruber writes, since earnings compression is happening faster at peers; 2016 estimates are above consensus for Patterson-UTI Energy (NASDAQ:PTEN), RPC (NYSE:RES) and Superior Energy (NYSE:SPN), partly reflecting improvement in pressure pumping margins given a lack of contract roll.
- Gruber also thinks consensus estimates are too optimistic, pricing in a full recovery in one year; the Street expects HP’s land business to generate $400M in sales in FY 2016, which Gruber estimates would require a spot dayrate of more than $30K/day or a rig count of ~270, which would be within 5% of the prior peak.
- HP currently trades at 1.7x 2016 consensus price to book value vs. 1.1x for PTEN, 1.1x for Precision Drilling (NYSE:PDS) and 0.9x for Nabors Industries (NYSE:NBR); Gruber says history suggests downside risk to 1x as HP's return on equity likely will fall to 3% in 2016.
Feb. 18, 2015, 3:15 PM
- RBC analysts think it's time to position for an oil recovery by buying oilfield services stocks such as Schlumberger (SLB -1.2%), Patterson-UTI (PTEN -0.4%), Nabors Industries (NBR +2.5%) and Precision Drilling (PDS +0.4%).
- The firm believes oil prices will bottom in H1 2015, improves during H2 and averages at least $75/bbl in 2016, and sees U.S. land drillers and intensive service companies providing the best returns in the early phases of cycle recovery.
- RBC notes that three of the top five performing stocks in the sector off the lows since 1997 have been PTEN, PDS and NBR; the firm considers SLB and NBR as best ideas, while PTEN is a small-cap best idea.
Feb. 10, 2015, 6:47 PM
- Figuring the debt markets are a bit more rational than the equity markets right now, Wunderlich analysts look to the bond market for some clues about energy investing.
- The firm finds that where Chesapeake Energy's (NYSE:CHK) debt is trading now as "quite refreshing" given the strong balance sheet the company has built, strengthening its conviction that CHK is a Best idea among oil stocks; others holding up well, it says, are financially strong names such as XEC, CXO, EGN, EOG, GPOR, MTZ, NBL, PTEN, PDCE, PXD and ROSE.
- In other cases, the debt is providing “equity-like returns” for investors who want to move out of stocks and into bonds, with the firm mentioning AREX, BBG, CWEI and NOG.
Feb. 5, 2015, 2:26 PM
- Patterson-UTI Energy (PTEN +4.4%) enjoys solid gains after Q4 earnings more than tripled from the same quarter last year and revenue climbed 37% Y/Y to $901M.
- Still, the land rig provider warns that 2015 will be "challenging," having received indications that customers could terminate a number of longer-term contracts early.
- PTEN says it plans to reduce 2015 capital spending by 29% to $750M, cutting its construction schedule in half to 16 new high-tech APEX rigs; it adds that headcount "decreased at a slightly higher rate," without providing additional details.
- PTEN's decision mirrors rival Helmerich & Payne's announcement last week that it would halve its FlexRig construction program, cut 2K jobs and reduce spending by 16%.
- Expects revenue from its pressure-pumping business to fall by 25% Q/Q, hurt mainly by weak prices and lower utilization of its rigs, after rising 70% Y/Y to $397.7M in Q4.
Feb. 5, 2015, 6:03 AM
- Patterson-UTI Energy (NASDAQ:PTEN): Q4 EPS of $0.53 beats by $0.03.
- Revenue of $901M (+36.8% Y/Y) beats by $13.94M.
Feb. 4, 2015, 5:30 PM
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Feb. 2, 2015, 6:55 PM
- Jefferies downgrades nine oil services stocks (NYSEARCA:OIH), noting there is still “material downside” to consensus estimates from lower oil prices.
- Despite its medium-term negative view on oil, Jefferies adds that it expects oil prices to start to recover in 2015 with prices rising to levels that support oil services in 2016; yet the firm does not expect the sector to recover quickly, and sees deepwater drilling particularly sluggish on high costs and “flat-to-modestly-lower activity.”
- Downgraded to Underperform: FTI, NBR, PTEN, RIG.
- Downgraded to Hold: CAM, PES, PDS, SLCA, FMSA.
Feb. 2, 2015, 5:57 PM
- "It’s not the darkest just before the dawn... it’s the darkest in the middle of the night" for the oilfield services stocks, Wunderlich's Jason Wangler writes in forecasting more pain ahead for Basic Energy Services (NYSE:BAS), Key Energy Services (NYSE:KEG), Patterson-UTI (NASDAQ:PTEN) and Pioneer Energy Services (NYSE:PES).
- The firm sees the large amount of equipment to be delivered in 2015 in an already oversupplied market, E&P companies focused on cost reductions, and dogfights for every dollar as "a recipe for a big leg down" in the oilfield services sector going forward.
- Wangler thinks BAS and KEG could be the most impacted given their Permian exposure and segments that are so focused on rig count levels; PTEN and PES also are likely have a tough road ahead given their business outside of drilling rigs has minimal contracts.
Jan. 28, 2015, 3:59 PM
- Energy stocks are broadly lower as Nymex crude oil futures fell another $1.68/bbl (-3.6%) to $44.53 after today's inventory report showed the largest weekly supply buildup since 1982, but drilling contractor are whacked with especially large losses.
- Examples: NBR -11.7%, PTEN -8.6%, PES -10.9%, PDS -12.3%, KEG -6.5%; Helmerich & Payne (NYSE:HP), which reportedly has launched a round of steep layoffs, -6.3%.
- Among independent producers: DNR -9.7%, NFX -4.6%, SM -8.6%, SGY -10%, SD -9.7%, EOG -5.3%, PXD -6.8%, QEP -6%, APC -4.2%, XEC -3%.
- ETFs: XLE, ERX, VDE, OIH, XOP, ERY, FCG, DIG, GASL, DUG, IYE, XES, IEO, IEZ, PXE, PXI, FENY, PXJ, RYE, FXN, DDG
Jan. 7, 2015, 3:23 PM
- Oil driller Helmerich & Payne (HP -6.5%) is the day's biggest S&P 500 loser after saying rates for its high-tech rigs have tumbled 10% Q/Q and warns of more softness ahead because of falling crude oil prices.
- "Drilling activity and spot dayrate pricing are now expected to significantly decline in the U.S.," HP says in a presentation which indicates deteriorating utilization and dayrates among land drillers is spreading farther and faster than expected.
- HP says the idle and available number of its FlexRigs has risen to 26 from 15 since Dec. 11, and sees expects to see another 40-50 FlexRigs become idle in the next 30 days from its current total of 287 but does not foresee further idling beyond that point.
- SunTrust analysts think HP’s rig count will wind up lower by the mid-30s in percentage Q/Q, cutting their 2015 EPS estimates on HP to $2.60, well below the consensus of $5.56, and slashing their price target to $56 from $70.
- Credit Suisse's James Wicklund, who offered little optimism for the oil service sector today, also slashed his estimates on land drillers HP, Nabors Industries (NBR -3.6%), Precision Drilling (PDS -2.1%) and Patterson-UTI (PTEN -3.6%) - "the result is ugly."
Dec. 23, 2014, 6:19 PM
- Although the energy sector led today's stock advance, a raft of companies downgraded by Global Hunter mostly took it on the chin - none more so than Key Energy (NYSE:KEG), which plunged 15% after shares were cut to Reduce from Neutral with a $1.50 price target that was reduced from $2.50.
- Also downgraded to Reduce were HERO -6.1%, NBR -3.2%, DO +1.3%.
- Lowered to Neutral were HAL +0.5%, GEOS -8.9%, HP -2.9%, BAS -2.5%, PKD -2.5%, BHI +0.6%, BBEP -0.2%, MEP +0.1%.
- Downgraded to Accumulate: PES -3.5%, PTEN -1.1%, NGLS +2.9%.
- The firm upgraded five stocks - ATW, NOV, OII, RES and SPN - all of which gained in today's trading.
Dec. 18, 2014, 5:54 PM
- Analysts say big U.S. land drillers that operate new, faster rigs are best placed to weather the downturn brought by weaker crude oil prices and could gain market share from smaller drillers with high debt levels and outdated equipment.
- Companies with considerable debt such as Nabors Industries (NYSE:NBR) and small private firms with less efficient rigs will scramble to keep them in operation; those with new rigs, such as Helmerich & Payne (NYSE:HP) at Patteron-UTI (NASDAQ:PTEN), will have more leeway to negotiate lower rates with producers and keep or even expand their business.
- The top 3-4 players had 65%-70% of the most modern rigs and the oil slump gives them a chance to win market share from small firms that make up about half of the U.S. land drilling sector, RBC Capital analyst Kurt Hallead says.
- HP has a debt-to-EBITDA ratio of less than 1, PTEN's is 2.3x while NBR is 7.4x.
Dec. 18, 2014, 9:59 AM
- RBC recommends increasing weightings and exposure to oil service stocks (OIH +2.5%) heading into 2015, as it says oil prices will start to improve in H2 of next year and that oil service stocks typically discount this move by 6-9 months.
- Down cycles such as 2000-02 and 2008-09 suggest North American land drillers and service companies provide the best returns off business cycle lows, RBC says as it expects a similar dynamic this time.
- RBC upgrades Key Energy (KEG +24.6%) and Superior Energy (SPN +7.5%) to Outperform, and downgrades FMC Tech (FTI +1.8%), Franks (FI +4.9%), Oceaneering (OII +0.2%) and Oil States (OIS +2.3%) to Sector Perform; the firm also says since 1985 three of the top five performing stocks off lows have been Patterson-UTI (PTEN +6.6%), Precision Drilling (PDS +4%) and Nabors (NBR +7.2%).
Oct. 27, 2014, 8:55 AM
- Goldman Sachs lowers its ratings on the oil services sector (NYSEARCA:OIH) to Cautious from Attractive and downgrades several specific stocks as it cuts its 2015 oil price forecast.
- U.S. land activity will suffer the biggest impact of the lower price deck, Goldman says, with customer capital spending expected to decline 6% next year vs. its prior outlook for a 9% increase; as a result, the firm now forecasts the horizontal U.S. rig count to fall 7%, or ~200 rigs, over the next 12 months.
- Goldman downgrades Parsley Energy (PE -3.8% premarket), Diamond Offshore (DO -1.5%), Laredo Petroleum (LPI -9%) and Basic Energy Services (BAS -6.2%) to Sell with sharply lower price targets; Patterson-UTI (NASDAQ:PTEN), Pioneer Energy (NYSE:PES) and Emerge Energy (NYSE:EMES) are cut to Neutral.
- The firm adds Oceaneering (OII -0.3%) to its Conviction Buy list; it also removes Halliburton (HAL -1.5%) from the list but maintains its Buy rating on the stock.
Oct. 23, 2014, 6:17 AM
- Patterson-UTI Energy (NASDAQ:PTEN): Q3 EPS of $0.47 in-line.
- Revenue of $846M (+15.7% Y/Y) beats by $11.05M.
Patterson-UTI Energy, Inc. provides onshore contract drilling services to major and independent oil and natural gas operators in the continental United States, Alaska and western and northern Canada. It also provides pressure pumping services to oil and natural gas operators primarily in Texas... More
Sector: Basic Materials
Industry: Oil & Gas Drilling & Exploration
Country: United States
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