Onshore contract driller
Patterson-UTI Energy Inc.
) reported higher-than-expected first-quarter 2012 results, owing
to higher U.S. rig activity levels.
Earnings per share came in at 62 cents, well ahead of the Zacks
Consensus Estimate of 57 cents. Revenues at $745.9 million were
above our projection of $732.0 million.
Compared with the year-ago period, Patterson-UTI's adjusted
earnings per share improved by a handsome 34.8% (from 47 cents to
62 cents), while revenues surged 31.6%, reflecting major growth
from contract drilling activities, where day rates kept improving
and activity levels got benefited from the addition of 5 new Apex
Rig Count Statistics
The number of operational rigs during the quarter averaged 237
(224 rigs located in the U.S. and 13 in Canada), compared with 207
average rigs operating in the first quarter of 2011 and 232 rigs
operating in the December quarter.
: Revenue totaled $489.5 million (65.6% of the total revenue), up
approximately 29.7% year over year. Average revenue per operating
day was $22,650, up 11.9% year over year, while average direct
costs per operating day increased 11.5% year over year to $13,080.
Additionally, the average number of rigs operating jumped
from 207 in the year-ago quarter to 237, driving the segment
operating profit to $111.8 million (as against $80.5 million in the
: Recorded revenues of $241.7 million, a rise of 34.6% year over
year, mainly reflecting continued ramp in customer demand in the
Southwest region that more than made up for the softness in the
Northeast. Consequently, the segment's operating profit of $46.8
million improved over the prior-year's income of $41.4 million.
Oil & Natural Gas
: Revenue generated was $14.7 million, up 41.7% from the year-ago
quarter. This segment posted an operating income of $7.5 million,
up from $4.8 million earned in the prior-year quarter, benefiting
from improved oil and liquids rich drilling activity.
Capital Expenditure & Balance Sheet
During the quarter, Patterson-UTI spent approximately $263.4
million on capital programs (as against $182.6 million in the first
quarter of 2011), of which approximately 76.2% was allocated toward
the Contract Drilling segment. As of December 31, 2011, the company
had $17.8 million in cash and $390.0 million in long-term debt.
Recommendation & Outlook
Patterson-UTI kept improving as they managed to shift people and
equipment to match their rig fleet and keep pace with the changing
trends in capital spending plans of customers. In the near term,
the company continues to forecast strength from U.S. drilling
business, despite the market moving from natural gas to oil and
liquid rich drilling.
However, for the second-quarter, Patterson-UTI projected
weakness in its drilling business due to seasonal slowdown in the
Canadian region. Apart from this, its pressure pumping business
will face occasional challenges owing to decrease demand in natural
gas markets, plus soaring supply of additional frac equipment.
Patterson-UTI, the second-largest North American land drilling
Nabors Industries Ltd
), currently retains a Zacks #4 Rank, which translates into a
short-term Sell rating.
We are maintaining our long-term Neutral recommendation on the
NABORS IND (
): Free Stock Analysis Report
): Free Stock Analysis Report
To read this article on Zacks.com click here.