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Patterson-UTI Q4 Loss Narrower than Expected, Sales Beat

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Onshore contract driller Patterson-UTI Energy Inc.PTEN reported loss per share of 40 cents, narrower the Zacks Consensus Estimate for a loss of 48 cents. The outperformance could be attributed to good execution and reduction in the cost structure.

However, Patterson-UTI's performance deteriorated from the year-ago profit of 39 cents per share amid a rapid decline in rig activity.

Patterson-Uti Energy Inc. (PTEN) Street EPS & Surprise Percent - Last 5 Quarters | FindTheCompany

Revenues of $338.6 million were down 62% from the year-ago quarter but were higher than the Zacks Consensus Estimate of $323 million.

Segmental Performance

Contract Drilling: This segment's revenues totaled $202.3 million (60% of total revenue), down 59% year over year.

Average revenues per operating day decreased to $24,240 from $24,440 in the fourth quarter of 2014, while average direct costs per operating day came in at $12,640, down from $14,010 in the year-ago quarter.

In particular, the segment was impacted by a steep decline in both the operating days (from 20,139 to 8,344) and the number of rigs operational (from 219 to 91) on the back of a freefall in oil and gas prices.

Consequently, the segment recorded operating loss of $25.5 million as against a profit of $93 million earned in the year-earlier quarter.

Pressure Pumping: Revenues of $131.7 million were down 67% year over year. Moreover, the segment reported a loss of $37.8 million, as against earnings of $37.4 million in the prior-year quarter. The segment was negatively impacted by reduced spending from exploration and production firms that has resulted in depressed activity levels. To make matters worse, even the work that has been available is making less profits.

Oil and Natural Gas Production and Exploration: Revenues came in at $4.6 million, 60% lower than the year-ago quarter. The commodity price downturn meant that the unit incurred a quarterly loss of $2.9 million, which was still narrower than the loss of $14.8 million recorded in year-ago quarter. The improvement could be attributed to the absence of impairments in the quarter under review.

Direct Operating Costs

The company - which counts Nabors Industries Ltd. NBR , Helmerich & Payne Inc. HP and Precision Drilling Corp. PDS as its peers - reported direct operating expenses of $226.8 million, reflecting a 62% decrease from $599.3 million reported in the year-ago quarter.

Capital Expenditure & Balance Sheet

During the quarter, Patterson-UTI spent approximately $135.6 million on capital programs (as against $314.6 million in the fourth quarter of 2014). As of Dec 31, 2015, the company had $113.3 million in cash and $855 million in long-term debt (including current portion).

Outlook

Patterson-UTI management admitted having limited visibility over its business beyond the first quarter of 2016. However, it believes that the plummeting commodity prices will crush rig counts further.

Patterson-UTI expects an average of 59 rigs to be operational during the first quarter. The Zacks Rank #5 (Strong Sell) stock also anticipates an average of 46 rigs to be under term contract for the entire 2016.

In pressure pumping, the company expects first quarter revenues to fall 25% from the fourth quarter.

Patterson-UTI pegged its 2016 capital spending projection at $190 million.

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PATTERSON-UTI (PTEN): Free Stock Analysis Report

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


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

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