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Patterson-UTI (PTEN) Q4 Loss Wider Than Expected, Stock Up

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Patterson-UTI Energy (PTEN - Free Report) stock has rallied 15.4% since its fourth-quarter earnings announcement on Feb 10. While the oilfield services company suffered a bottom-line miss, investors cheered the upbeat outlook provided by Patterson-UTI to go with the doubling of its dividend. As a result, the bullish commentary propelled PTEN’s share price to a new 52-week high of $14.13 during the trading session on Feb 17.

What Did Patterson-UTI’s Earnings Unveil?

Patterson-UTI reported a fourth-quarter 2021 adjusted net loss of 38 cents per share, wider than the Zacks Consensus Estimate of a loss of 35 cents. The underperformance reflects increased costs and expenses that pushed the company’s showpiece Contract Drilling segment to incur a loss more than anticipated.  

However, the loss was narrower than the year-ago quarter's loss of 57 cents per share on accelerated rig activity.

The company’s total quarterly revenues of $466 million surpassed the Zacks Consensus Estimate of $442 million. Moreover, the top line improved by an impressive 110.9% on a year-over-year basis.
In good news for investors, Patterson-UTI raised its quarterly dividend by 100% to 4 cents per share (or 16 cents per share annualized). The increased dividend is payable on Mar 17, 2022 to its shareholders of record as of Mar 3, 2022.

Segmental Performances

Contract Drilling: Revenues totaled $230.9 million, up almost 100% from the last year’s fourth-quarter figure of $115.6 million, due to higher activity, pricing strength and the contribution from the Pioneer Energy acquisition. Despite revenues, the unit lost $264.3 million in the fourth quarter, wider than the year-ago loss of $61.5 million, plagued by a rise in the average rig cost per day and non-cash impairment charges.

Pressure Pumping: Revenues of $183.3 million rose 130.6% from the year-ago figure of $79.5 million due to better pricing. However, the segment’s operating loss widened to $41.4 million from $31.8 million in the fourth quarter of 2020 and also fared poorer than the Zacks Consensus Estimate of a loss of $13 million. The broader loss is attributable to much higher operating expenses as well as depreciation, amortization and impairment costs.
 

Directional Drilling: Revenues summed $35.2 million, up 108.9% year over year, due to higher activity levels and a favorable job mix. However, the segment posted an operating loss of $20.7 million, deteriorating from a loss of $5.7 million reported in the corresponding quarter of 2020 and also comparing unfavorably to the consensus mark of a $4 million loss, attributable to non-cash inventory write-offs.
 

Other Operations: Revenues were $17.1 million, 92.9% more than the year-ago quarter’s $8.9 million, as activity levels improved. The unit also posted a narrower quarterly loss of $727 thousand compared with a loss of $6.1 million recorded in the year-ago quarter.

Capital Expenditure & Financial Position

In the fourth quarter of 2021, PTEN spent $76.2 million on capital programs (compared with $10.4 million in the fourth quarter of 2020). As of Dec 31, 2021, the company had $117.5 million of cash and cash equivalents and $852.3 million as long-term debt.

PattersonUTI Energy, Inc. Price, Consensus and EPS Surprise

PattersonUTI Energy, Inc. Price, Consensus and EPS Surprise

PattersonUTI Energy, Inc. price-consensus-eps-surprise-chart | PattersonUTI Energy, Inc. Quote

Outlook

Patterson-UTI sees continued strength in drilling and pressure pumping markets. The company believes that its high-quality assets put it in a great position to take advantage of this growth.

Based on contracts currently in place, Patterson-UTI expects its first-quarter 2022 rig count to average 51 rigs under term contracts. As the onshore driller foresees a ramp-up in the drilling activity, the company expects an addition of about 10 rigs to 116 rigs, on average.

For 2022, PTEN expects adjusted EBITDA to be more than $450 million and exceed the company’s Capex forecast of approximately $350 million by over $100 million.

Zacks Rank & Key Picks

Patterson-UTI currently has a Zacks Rank #2 (Buy). Other top-ranked players from the energy space are Denbury Inc. (DEN - Free Report) , Ranger Oil (ROCC - Free Report) and ExxonMobil (XOM - Free Report) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Denbury stock has rallied 68.4% in a year. The Zacks Consensus Estimate for Denbury’s 2022 earnings has been revised upward three times over the past 60 days.

The Zacks Consensus Estimate for DEN’s 2022 earnings is projected at $6.47 per share, which is an increase of about 154.7% from the projected year-ago earnings of $2.54.

The Zacks Consensus Estimate for Ranger Oil’s 2022 earnings is projected at $9.29 per share, which is an increase of a massive 162.3% from the projected year-ago earnings of $3.54.

ROCC beat the Zacks Consensus Estimate for earnings in three of the trailing four quarters, the average being around 25%. Ranger Oil’s stock has increased 87.8% in a year.

ExxonMobil beat the Zacks Consensus Estimate for earnings in all the trailing four quarters, the average being around 5.8%. ExxonMobil’s stock has gone up 42.5% in a year.

XOM is valued at around $328 billion. The Zacks Consensus Estimate for ExxonMobil’s 2022 earnings has been revised upward by about 15.1% over the past 60 days from $5.95 to $6.85 per share.