Onshore contract driller, Patterson-UTI Energy Inc.PTEN announced that its Feb 2016 drill rig count averaged 70 in the U.S. and four in Canada.
Patterson-UTI further added that for the two months ending Feb 29, its rig count averaged 74 in the U.S. and four in Canada.
The latest rig count marks a substantial decrease from the company's year-ago average rig count of 164 in the U.S. and nine in Canada. Also, the rig count for the two months ending Feb 29saw a decline from the prior-year level of 177 rigs in the U.S. and nine rigs in Canada.
The weak crude pricing environment has forced most drillers to cut back on the number of rigs. Also, fewer new contracts and declining dayrates have made maintaining profitability a challenge. Retiring rigs, therefore, is an effective way to curb operating expenses.
Moreover, Patterson-UTI has been undertaking measures like lowering capital spending to tackle the pricing woes. Patterson-UTI pegged its 2016 capital spending projection at $190 million.
Patterson-UTI is a major onshore contract driller in the U.S. with over 239 land-based rigs that operate primarily in the oil and natural gas producing regions of North America.
On the earnings front, the company reported better-than-expected numbers in the past quarter because of reduction in cost structure and good execution. The company has a large, high-quality fleet of drilling rigs, which include the technologically advanced 'Apex' rigs - the key to its success.
However, with the company's rig count declining, earnings and cash flows are likely to be affected in the upcoming quarters. Negative earnings estimate revisions for the current quarter as well as the current year suggest further bearishness ahead.
Currently, Patterson-UTI carries a Zacks Rank #5 (Strong Sell).
Some better-ranked players from the oil and gas drilling industry are Diamond Offshore Drilling, Inc. DO , Independence Contract Drilling, Inc. ICD and Seadrill Partners LLC SDLP . All these stocks hold a Zacks Rank #2 (Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days.Click to get this free report >>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report