Patterson-UTI Soars on Q4 Earnings Beat, Div Hike - Analyst Blog


Onshore contract driller Patterson-UTI Energy Inc. ( PTEN ) reported better-than-expected fourth-quarter 2013 results, owing to improved average rig revenue per operating day along with increased gross margin in the Contract Drilling business unit. The results were however partially offset by hike in operating expenses.  

Patterson-UTI's earnings per share (EPS) (excluding non-cash charge related to the retirement of mechanical drilling rigs) came in at 28 cents, beating the Zacks Consensus Estimate of 22 cents. The figure however decreased 30.0% from the year-ago profits of 40 cents.  

Revenues of $658.8 million surpassed the Zacks Consensus Estimate of $654.0 million and were 0.9% higher than $652.8 million recorded in the year-ago quarter.

Patterson-UTI approved 10 cents per share of quarterly cash dividends, representing a significant sequential hike of 100.0%. The new dividend will be payable on Mar 27, 2014 to the shareholders of record as of Mar 12, 2014.

The company reported fourth-quarter 2013 earnings on Feb 6, 2014, before the opening bell. Following the better-than-expected results along with the dividend increase news, the company closed at $27.87 per share on Thursday, reflecting a significant hike of 13.4% from the closing price on the previous day.

For the year ended Dec 31, 2013, Patterson-UTI reported earnings of $1.07 per share against a profit of $1.90 in 2012. The figure also failed to beat the Zacks Consensus Estimate of $1.13 per share. Revenues of $2.7 billion decreased marginally from the year-ago number.

Rig Count Statistics

The number of operational rigs of Patterson-UTI during the reported quarter averaged 192 (183 located in the U.S. and 9 in Canada) compared with 205 in the fourth quarter of 2012.

Segmental Performance

Contract Drilling: This segment's revenues totaled $412.7 million (62.6% of the total revenue), down 3.0% year over year. Adjusted average revenues per operating day was $23,170, up 3.2% year over year, however, average direct costs per operating day increased a nominal 0.5% year over year to $13,510. Gross margin for the segment came in at 42.0%, an improvement from the year-ago quarter.

The segment's operating profit decreased to $30.4 million from $69.1 million in the year-ago quarter, owing to significant hike in depreciation, amortization and impairment costs.

Pressure Pumping: Revenues of $234.2 million were up 10.5% year over year. However, the segment's operating profit fell to $11.6 million from $34.2 million in the prior-year quarter on decreased level of activity.

Oil & Natural Gas: Revenues were $11.9 million, down 23.5% from the year-ago quarter. Moreover, operating income of $2.8 million decreased 60.8% from fourth-quarter 2012 due to reduced margin.     

Direct operating costs

The company reported direct operating expenses of $426.1 million, indicating a 5.3% hike from $404.7 million reported in the year-ago quarter.

Share Repurchase

During fourth-quarter 2013, Patterson-UTI repurchased roughly 0.9 million shares. Moreover, in full-year 2013, Patterson-UTI repurchased shares worth $85.8 million.

Capital Expenditure & Balance Sheet

During the quarter, Patterson-UTI spent approximately $179.1 million on capital programs (against $229.6 million in the fourth quarter of 2012). As of Dec 31, 2013, the company had $249.5 million in cash and $692.5 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 look at better-ranked players in the energy sector like Helmerich & Payne Inc. ( HP ), Cabot Oil & Gas Corporation ( COG ) and Athlon Energy Inc. ( ATHL ). All these stocks sport a Zacks Rank #1 (Strong Buy).

ATHLON ENERGY (ATHL): Free Stock Analysis Report

CABOT OIL & GAS (COG): Free Stock Analysis Report

HELMERICH&PAYNE (HP): Free Stock Analysis Report

PATTERSON-UTI (PTEN): Free Stock Analysis Report

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Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , Business , Earnings , Stocks

Referenced Stocks: EPS , ATHL , COG , HP , PTEN

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