Mon, May 11, 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.
Thu, May 7, 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.
Mon, Apr. 27, 5:30 PM
- Land drilling activity cuts that began late last year are nearing an end with the bottom likely this quarter, Goldman Sachs says as it upgrades land drillers Patterson-UTI Energy (NASDAQ:PTEN), Nabors Industries (NYSE:NBR) and Helmerich & Payne (NYSE:HP) to Buy from Neutral.
- Goldman believes the sharp reduction in rig activity - with rig declines reaching 900-plus rigs on average in Q2 2015 v- has started the self-correcting mechanism in oil supply, and that oil production should flatten in Q2 and is unlikely to grow Y/Y by Q4; the firm now expects the U.S. land rig count to increase by ~430 rigs by year-end 2016, with the horizontal rig count increasing by nearly 300 rigs.
- Earlier: Helmerich & Payne upgraded to Buy from Neutral at Goldman
Thu, Apr. 23, 6:07 AM| Comment!
Tue, Apr. 21, 7:30 PM
- There’s not much value to be found in the stock market by traditional metrics, but the equity strategists at Jefferies think they’ve found five companies that are still bargains.
- The firm cites HollyFrontier (NYSE:HFC), Reliance Steel (NYSE:RS) and Universal (NYSE:UVV) as three value picks whose assets are at least double their liabilities, their long-term debt is less than their working capital, each has enjoyed positive earnings growth the past five years and made consecutive dividend payouts over the past decade, and their P-E ratio is less than 15x over the past 10 years, among other criteria.
- Patterson-UTI Energy (NASDAQ:PTEN) and Tidewater (NYSE:TDW) are seen as more aggressive value picks, meaning their current ratio of assets to liabilities is higher than 1.5x, long-term debt is less than 110% of working capital, and current price-to-book ratio is 1.2x.
- “Investors ought to be mindful that the market is no longer inexpensive,” the Jefferies strategists sum up.
Tue, Apr. 21, 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.
Thu, Apr. 9, 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.
Wed, Feb. 18, 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.
Tue, Feb. 10, 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.
Thu, Feb. 5, 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.
Thu, Feb. 5, 6:03 AM| Comment!
Wed, Feb. 4, 5:30 PM
- ABB, ADS, AINV, AMSC, APO, ARW, AZN, BCE, BCO, BDC, BDX, BLL, BR, CFX, CHTR, CI, CMI, COTY, CSL, DFT, DLPH, DNKN, EL, EQM, EQT, ETR, FBP, FIS, GLT, GPI, GPK, GRA, GRUB, ICE, IT, IVC, KORS, LAZ, LIOX, LQDT, MDSO, MMP, MMS, MSCI, NGD, NUS, ODFL, OZM, PBH, PM, PPL, PRGO, PRLB, PTEN, RFP, RSTI, SBH, SIRI, SNA, SNCR, SPH, SQNS, TDC, TE, TEVA, TW, USG, UTEK, VLP, VMC, VSH, XYL
Mon, Feb. 2, 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.
Mon, Feb. 2, 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.
Wed, Jan. 28, 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
Wed, Jan. 7, 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."
PTEN vs. ETF Alternatives
Patterson-UTI Energy Inc is a provider of contract services to the oil and natural gas industry. It operates in three segments namely contract drilling services, pressure pumping services, and oil and natural gas exploration and production.
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