Patterson-UTI (PTEN) Posts Narrower-Than-Expected Q2 Loss

Onshore contract driller Patterson-UTI Energy Inc. (NASDAQ:PTEN) reported loss per share of 58 cents, narrower the Zacks Consensus Estimate of a loss of 63 cents. The bottom line, however, came in much wider than the year-ago quarter loss of 13 cents.

The narrower-than-expected loss could be attributed to good execution and reduction in the cost structure. The positives were offset partially by lower contribution from the Contract Drilling and Pressure Pumping segments following significantly low operational rig counts.

Revenues of $193.9 million plunged 59% from the year-ago quarter but came almost in line with the Zacks Consensus Estimate.

Segmental Performance

Contract Drilling: This segment’s revenues totaled $115.2 million (59.4% of total revenue), down 60% year over year.

Average revenues per operating day decreased to $23,070 from $25,720 in the second quarter of 2015. Average direct costs per operating day came in at $12,770, down from $13,720 in the year-ago quarter.

In particular, the segment was impacted by a steep decline in both operating days (from 11,211 to 4,996) and the number of rigs operational (from 123 to 55).

Consequently, the segment recorded operating loss of $70.5 million. Last year, the company had posted profits of $9.4 million.

Pressure Pumping: Revenues of $73.9 million declined 58.2% year over year. Moreover, the segment reported a loss of $46 million, substantially wider than a loss of $18.7 million in the prior-year quarter. The segment was negatively impacted by an unsustainably low pricing environment.

Oil and Natural Gas Production and Exploration: Revenues came in at $4.7 million, almost 40% lower than the year-ago quarter.

The segment reported earnings of $1.3 million, a massive improvement from a loss of $3.6 million in the year-ago comparable quarter. Lower operating expenses aided the results.

Direct Operating Costs

The company reported direct operating expenses of $134.9 million, down 55% from $299.4 million in the year-ago quarter.

Capital Expenditure & Balance Sheet

During the quarter, Patterson-UTI spent approximately $16.6 million on capital programs (compared with $153.9 million in the second quarter of 2015). As of Jun 30, 2016, the company had $209.6 million in cash and $826.9 million in long-term debt (including current portion).

Outlook

Patterson-UTI projects an average of 45 rigs to be operational during the third quarter. The company also anticipates an average of 42 rigs to be under term contract for the second half of this year.

The company maintained its 2016 capital spending projection at $170 million.

PATTERSON-UTI Price, Consensus and EPS Surprise

PATTERSON-UTI Price, Consensus and EPS Surprise | PATTERSON-UTI Quote

Zacks Ranks

Currently, Patterson-UTI carries a Zacks Rank #3 (Hold).

Some better-ranked players in the energy sector include North Atlantic Drilling Limited (NYSE:NADL) , QEP Resources, Inc. (NYSE:QEP) and Murphy USA Inc. (NYSE:MUSA) . Each of these stocks sports a Zacks Rank #1 (Strong Buy).