Yahoo Finance Why Patterson-UTI Energy Expressed Confidence in its Outlook
Patterson-UTI Energy's Q1 Earnings: Why the Confidence?
Patterson-UTI Energy’s performance by segment
From fiscal 1Q15 to fiscal 1Q16, all of Patterson-UTI Energy’s (PTEN) segments saw lower revenues. The Pressure Pumping segment suffered the biggest revenue decline (a 61% fall) while the Contract Drilling segment was relatively resilient (a 58% fall). These two segments accounted for 99% of PTEN’s 1Q16 revenues.
All of PTEN’s segments’ operating income fell in 1Q16. The Contract Drilling segment, meanwhile, did record an operating income. The fiscal 1Q16 reported net income for Core Laboratories (CLB) fell 52% from 1Q15. CLB’s market capitalization stands at $5.7 billion compared to PTEN’s $2.9 billion.
Factors that affected PTEN’s 1Q16 performance over a year ago
a 57% fall in PTEN’s average Contract Drilling rigs in operation
a 77% fall in the Pressure Pumping segment’s operating margin
a significant fall in Oil & Natural Gas Production and Exploration margin
A better margin per operating day in Contract Drilling and a higher average revenue per fracturing job partially mitigated these negative factors. Patterson-UTI Energy is 0.19% of the SPDR S&P MidCap 400 ETF (MDY).
Views of Patterson-UTI Energy’s management
Patterson-UTI Energy’s Chairman, Mark S. Siegel, expressed his confidence about the company’s balance sheet strength despite the current energy market uncertainty. In the 1Q16 press release, he said, “Despite limited visibility into a recovery, we remain optimistic about a recovery in our cyclical industry. The severe downturn in the rig count has brought the U.S. rig count to the lowest level in more than 65 years. We believe this unprecedented low level of U.S. drilling activity will further reduce U.S. oil production and help to balance oil supply and demand. At Patterson-UTI, we remain focused on operational execution and preserving the strength of our balance sheet.”
Next, we’ll discuss Patterson-UTI Energy’s returns.
Browse this series on Market Realist:
