Patterson-UTI: The Cyclical Bottom Is Still Ahead
Patterson-UTI: Investors Are Anticipating An Upcycle
A New Patterson-UTI Energy
Tue, Jul. 12, 10:58 AM
- Forum Energy Technologies (FET +3.6%) is downgraded to Underweight from Neutral with a $10 price target at J.P. Morgan, which says expectations "have run too hard too fast" with other North American beta plays, and "a re-rating could lead to underperformance [in H2 2016] relative to equipment peers."
- FET shares have risen significantly since February on better expectations for normalized activity in the next cycle, but the firm sees the possibility for a retreat as expectations reset in H2 if oil prices struggle to move higher and rig counts remain volatile.
- JPM's other North American onshore Underweight-rated stocks that could underperform in a retrench in expectations include Helmerich & Payne (HP +4.2%) and Patterson-UTI Energy (PTEN +2.6%).
Mon, Jul. 11, 3:59 PM
- Patterson-UTI (PTEN -1.6%) is lower despite earning an upgrade to Buy from Hold with a $25 price target, lifted from $19, at Jefferies, which believes PTEN is positioned to benefit from increased hydraulic fracturing demand expected over the next several years.
- The firm foresees PTEN's pumping division revenues and EBITDA at a respective 15% and 45% higher in 2020 than the peak quarterly run-rate of the prior cycle, citing on a combination of more equipment and higher per-job profitability.
Wed, Jun. 1, 3:54 PM
- Land-based oil drillers "all look overvalued," Credit Suisse analysts say as they downgrade Helmerich & Payne (HP -2.1%), Patterson-UTI Energy (PTEN -2%) and Precision Drilling (PDS -4.6%) to Underperform from Neutral, and Nabors Industries (NBR -3.8%) to Neutral from Outperform, predicting current spot rates likely will fall when incremental rigs go to work.
- Among the group, the firm sees HP as "the worst offender" on valuation, with overly optimistic assumptions for $35K spot market dayrates and forgiveness of deferred tax liabilities still not enough to justify the current price based on its rig count, while NBR is "the relative winner due to its international exposure."
- The firm prefers Baker Hughes (BHI +0.1%) and Halliburton (HAL -0.1%) in the sector due to their North American exposure and expectations of execution, while Schlumberger (SLB -0.6%) "has valuation headwinds and issues with exploration, deepwater and international exposure, but longer-term exposure to the stock is essential."
- Now read Moody's: Drillers will be the last to recover in the oil patch (May 16)
Fri, Apr. 15, 12:39 PM
- Investor hopes of further gains in oil prices are unrealistic, and expectations for U.S. onshore drilling stocks are sporting inflated multiples, J.P. Morgan analysts say as they reduce ratings where expectations may have jumped too far too fast.
- The firm downgrades Helmerich & Payne (HP -2.6%) and Patterson-UTI (PTEN -3.6%) to Underweight from Neutral with respective $39 and $13 price targets, saying that while both have strong management teams and solid execution should continue, it is "skeptical of the macro environment required to deliver on the current elevated multiples embedded in each stock."
- Superior Energy (SPN -1.2%) is downgraded to Neutral from Overweight with a $13 price target, with JPM saying SPN has faced several challenges in recent quarters and likely will have a difficult H1, although cost adjustments should provide some support to the company in H2.
- Now read Anadarko, Antero upgraded; Southwestern, EP Energy cut at J.P. Morgan
Fri, Mar. 18, 12:24 PM
- Patterson-UTI (PTEN -5.4%), Superior Energy Services (SPN -6.5%) and Forum Energy Tech (FET -3.3%) are downgraded to Neutral from Buy at Citigroup, which believes the market may have gotten ahead of itself for the stocks.
- “For those already reflecting recovery multiples, we expect oil betas to begin diminishing or the stocks to simply take a pause in the absence of additional catalysts near term," Citi analyst Scott Gruber writes.
- The firm maintains its Buy ratings on Halliburton (HAL -1.1%) and U.S. Silica (SLCA -3.5%), saying the consensus 2018 recovery earnings estimates for the two high-quality companies remain too low.
Dec. 11, 2015, 11:46 AM
- Investors should buy oil services stocks with exposure to onshore oil production on weakness going forward, Citi analyst Scott Gruber says in "a deliberately early call."
- Onshore oil businesses are set to recover because OPEC does not appear able to meet global demand after 2016, Gruber says, adding that the rally in the companies likely will be "powerful" when it arrives.
- Gruber continues to name Halliburton (HAL -1.7%) and Baker Hughes (BHI -4.7%) as his top picks, but he also believes small and mid-cap names in the sector will rally; he upgrades C&J Energy (CJES -4.8%), Nabors Industries (NBR -3.2%), Patterson-UTI (PTEN -2.2%), Superior Energy (SPN -3.8%) and Weatherford (WFT -6.2%) to Buy from Hold, and raises Helmerich & Payne (HP -2%) and National Oilwell Varco (NOV -1.4%) to Neutral from Sell.
Nov. 30, 2015, 2:23 PM
- The "lower for longer" consensus on crude oil prices is overly conservative, and prices will begin bouncing back next year, Guggenheim analysts say as they upgrade the oil services sector to Buy and see plenty of upside for the major players given current market conditions.
- Guggenheim is calling for oil prices to return to $100/bbl by 2018, and sees 10% upside across the board for oil services stocks in the next year resulting from the group's unique exposure to crude prices.
- Within the group, the firm prefers Rowan (RDC +1.8%) and Atwood Oceanics (ATW +1.6%), as their backlogs should help reduce near-term risk, RDC has no newbuild commitments and ATW is finalizing a contract in Brazil for one of its two uncontracted rigs, utilization in the Middle East (NYSE:RDC) and Australia (NYSE:ATW) should be resilient on a relative basis, and both have fleets that make them more interesting M&A candidates.
- Upgraded to Buy from Neutral: CAM, RIG, NE, OII, PACD, DO, ESV, CLB, OIS, HP, NBR, CRR, NOV, DRQ, FI, PTEN, SSE, FTI, CJES, FET, SPN.
Jul. 27, 2015, 12:57 PM
- Patterson-UTI (PTEN -2.7%) is downgraded to Accumulate from Buy with an $18 price target, cut from $27, at Global Hunter, which calls into question the timing and trajectory of a North American onshore recovery due to the more uncertain E&P spending outlook.
- Hunter says it still believes onshore service activity is bottoming, and favors PTEN's positioning relative to peers, but it expects investors will focus on 2016, and the firm's EPS estimate for 2016 is 18% below consensus.
- While the firm believes activity levels likely have stabilized, it assumes a more moderate slope to the recovery in both contract drilling and pressure pumping.
Jul. 17, 2015, 11:32 AM
- Offshore drillers are significantly underperforming the broader market following cautious commentary from Schlumberger (SLB -0.1%) despite its Q2 earnings beat, a contract termination and an analyst downgrade.
- On its earnings call this morning, SLB said it expects little improvement in pricing levels in the near future and declines in activity for offshore drillers, while land rigs provide a more attractive opportunity and better margins.
- For its Q3, SLB foresees a further 5%-6% decline in Q/Q revenue as well as lower EPS, and says the $0.77 consensus is a realistic number.
- Yesterday, ConocoPhillips (COP -1.8%) said it plans to cut future deepwater exploration spending, particularly in its operated Gulf of Mexico program; in light of the decision, COP is terminating a contract for an Ensco (ESV -4.9%) deepwater drill ship.
- Also, UBS today downgraded National Oilwell Varco (NOV -1.5%) to Sell from Neutral.
- SDRL -6.4%, RIG -4.7%, RDC -6%, DO -3.3%, ATW -4.2%, HP -1.2%, PTEN -1.2%, PACD -5.7%.
May 26, 2015, 3:58 PM
- Land drillers Patterson-UTI Energy (PTEN -6.1%), Nabors Industries (NBR -6.1%) and Weatherford (WFT -2.7%) are downgraded to Underperform from Outperform at CLSA, based on its belief that oil prices remain vulnerable.
- CLSA describes the advancement of unconventional drilling and completion as one of the most disruptive technologies in oilfield history, an achievement that likely will derail the normalization of a cycle and trigger a number of structural consequences; the firm says it favors maintstays such as Halliburton (HAL -1.1%) and Schlumberger (SLB -1.4%) "that have and will continue to facilitate the change, not those that will be impaired by the change."
May 11, 2015, 11:49 AM
- It's time to "take profits and... a summer vacation" in onshore oil services stocks such as National Oilwell Varco (NOV -2.8%), Weatherford International (WFT -2.7%), Patterson-UTI Energy (PTEN -3.7%) and RPC (RES -4%), Citigroup's Scott Gruber says.
- The onshore service stocks are discounting at least 400 horizontal rigs returning to service, yet quick-to-market tight oil means supply concerns likely will manifest as soon as the rig count begins to rally, the firm says.
- Citi downgrades NOV to Sell from Neutral given risk of backlog cancellations, continued EPS compression and valuation, and believes a recovery multiple is not warranted for the stock until backlog growth resumes; the firm also cuts RPC to Sell, reiterates its Sell rating on Helmerich & Payne (HP -2%), and lowers WFT and PTEN to Neutral from Buy.
May 7, 2015, 11:59 AM
- UBS says it's time to buy the big three names in land drilling - Helmerich & Payne (HP -2.6%), Nabors Industries (NBR -4.2%) and Patterson-UTI Energy (PTEN -2.6%) - as they take market share from the weaker companies while lower oil prices wash out the weaker hands.
- The firm also notes the group is not taking the public relations beating that some of the fracking giants are from the likes of David Einhorn.
- The three companies are taking it on the chin today, but they recently reported better than expected Q1 results on improved rig revenues, even as revenues typically fell due to reduced rig activity.
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.
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. 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%).
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
Other News & PR