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Patterson-UTI Energy's Q3 Earnings Fall Y/Y, Sales Beat Estimates
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Patterson-UTI Energy, Inc. (PTEN - Free Report) reported third-quarter 2024 breakeven earnings per share, which missed the Zacks Consensus Estimate of a cent. The bottom line declined from the year-ago quarter's level of 20 cents. This year-over-year deterioration was mainly due to poor contribution from the Drilling Services, Completion Services and Other Services segments.
Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.
Total revenues of $1357 million beat the Zacks Consensus Estimate of $1289 million. The top line also increased 34.2% year over year. This outperformance can be attributed to Completion Services segment's increased year-over-year revenue contribution.
Patterson-UTI Energy, Inc. Price, Consensus and EPS Surprise
In the quarter, the company recorded Adjusted EBITDA of $275 million, excluding goodwill impairment, asset retirement charges and merger and integration expenses.
PTEN returned $71 million to its shareholders in the third quarter. In this quarter alone, it utilized $40 million to repurchase more than 4 million shares. Since the close of the NexTier merger and Ulterra acquisition, the company has returned $475 million to its shareholders, including $346 million in share repurchases. As of Sept. 30, there is $780 million remaining in share repurchase authorization.
This leading provider of oilfield services and products to oil and natural gas exploration and production companies will pay its quarterly dividend of 8 cents per share on Dec. 16, 2024, to the company’s shareholders of record as of Dec. 2.
Segmental Performances of Patterson
Drilling Services: Revenues in this segment totaled $422 million, down 13.7% from the prior-year quarter’s figure of $488.8 million. However, the top line beat our projection of $370.1 million.
Operating loss amounted to $34 million compared with operating profit of $114.7 million in the third quarter of 2023. The figure also missed our operating profit estimate of $69.8 million. The company secured approximately $401 million in term contracts for the U.S. drilling rigs as of Sept. 30, 2024.
Completion Services: This segment’s revenues of $832 million rose about 81% from the year-ago quarter’s figure of $459.6 million. Moreover, the metric beat our projection of $814 million.
Operating loss totaled $909 million compared with operating profit of $0.2 million in the third quarter of 2023. Additionally, the figure missed our operating profit estimate of $24.4 million.
Drilling Products: This segment’s revenues of $89 million rose about 91% from the year-ago quarter’s figure of $46.6 million. Additionally, the amount marginally beat our projection of $88 million.
Operating profit totaled $9 million compared with an operating loss of $6.2 million in the third quarter of 2023. Additionally, the figure beat our operating loss estimate of $13.1 million.
Following the Ulterra acquisition, the company has boosted its market share in rigs operated by the U.S. Contract Drilling business by more than 10%.
Other Services: Revenues amounted to $15 million, 13.2% lower than the year-ago quarter’s figure of $16.5 million. Additionally, the figure missed our projection of $16.5 million.
Operating loss amounted to $4 million compared with an operating profit of $0.4 million in the third quarter of 2023. The figure missed our projection of an operating profit of $0.7 million.
PTEN’s Capital Expenditure & Financial Position
In the reported quarter, PTEN spent $181 million on capital programs compared with $160.4 million in the prior year period.
As of Sept. 30, 2024, the company had cash and cash equivalents worth $115 million and long-term debt of $1219.5 million. The company’s debt-to-capitalization was 25%.
This Zacks Rank #4 (Sell) company generated $860 million in cash from operations and $321.7 million in free cash flow.
Houston, TX-based oil and gas drilling company anticipates a steady rig count for its Tier 1 high-spec drilling rigs through the remainder of the year and in 2025. However, fluctuations in the overall industry rig count are expected, with older, lower-spec assets facing reduced demand. Customers are likely to cut completion activity in the fourth quarter, with a recovery projected in the first half of 2025.
In the Drilling Services segment, the company expects to operate an average of 106 U.S. Contract Drilling rigs in the fourth quarter, with adjusted gross profit per operating day slightly under $15,000. This reflects lower revenues due to contract churn and rig mix. Adjusted gross profit in other Drilling Services is also anticipated to decrease slightly compared with the prior quarter.
For the Completion Services segment, PTEN sees activity slowing as customers scale back spending heading into year-end. Adjusted gross profit is expected to be around $85 million in the fourth quarter, with higher projections for the first half of 2025.
In the Drilling Products segment, a slight increase in revenues and adjusted gross profit is anticipated, driven by international growth, while U.S. revenues may decline slightly due to a lower industry rig count.
Other revenues and adjusted gross profit are expected to remain flat compared with the previous quarter. The company’s selling, general and administrative expenses are projected to be approximately $65 million, with depreciation, depletion, amortization and impairment expenses projected to be around $255 million at the same time. PTEN’s capital expenditures (CapEx) are expected to total approximately $150 million. CapEx is projected to stay under $700 million in 2024, focusing on next-gen assets. A commitment to return at least $400 million to its shareholders has been met, with plans to explore high-return opportunities for excess free cash flow.
Important Energy Earnings So Far
While it is early in the earnings season, there have been a few key energy releases thus far. Let us glance through a couple of them.
Liberty Energy (LBRT - Free Report) , the Denver-CO-based oil and gas equipment company, announced an adjusted net income of 45 cents per share, which missed the Zacks Consensus Estimate of 55 cents. This was primarily due to poor equipment and services execution and lower activity in the reported quarter. Additionally, the bottom line declined from the year-ago quarter’s reported figure of 86 cents due to a year-over-year increase in costs and expenses.
Ahead of the earnings release, LBRT’s board of directors announced a dividend of 8 cents per common share payable on Dec. 20, to its stockholders of record as of Dec. 6. This dividend represents a 14% increase from the prior regular quarterly dividend of 7 cents per share. In the quarter, Liberty returned $51 million to its shareholders through a combination of share repurchases and cash dividends.
Energy infrastructure provider, Kinder Morgan, Inc. (KMI - Free Report) reported third-quarter adjusted earnings per share of 25 cents, which missed the Zacks Consensus Estimate of 27 cents. The bottom line was flat year over year. The weakness in quarterly results was caused by lower contributions from the Products Pipelines and CO2 business segments.
KMI also announced a quarterly cash dividend of 28.75 cents per share for the third quarter of 2024 (annualized dividend of $1.15), implying a 2% increase from the third-quarter 2023 level. The dividend is payable on Nov. 15, 2024, to its shareholders of record as of Oct. 31.
Schlumberger Limited (SLB - Free Report) , a Houston, TX-based oil and gas equipment and services provider announced third-quarter earnings of 89 cents per share (excluding charges and credits), which beat the Zacks Consensus Estimate of 88 cents. The bottom line also increased from the year-ago quarter’s 78 cents. The strong quarterly earnings were primarily driven by broad-based earnings growth and margin expansion, especially in the Middle East, Asia and offshore North America. Additionally, cost optimization, greater adoption of digital solutions and contributions from long-cycle deepwater and gas projects played significant roles.
SLB reported a free cash flow of $1.81 billion in the third quarter. As of Sept. 30, the company had approximately $4.46 billion in cash and short-term investments. At the end of the quarter, it registered a long-term debt of $11.86 billion.
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Patterson-UTI Energy's Q3 Earnings Fall Y/Y, Sales Beat Estimates
Patterson-UTI Energy, Inc. (PTEN - Free Report) reported third-quarter 2024 breakeven earnings per share, which missed the Zacks Consensus Estimate of a cent. The bottom line declined from the year-ago quarter's level of 20 cents. This year-over-year deterioration was mainly due to poor contribution from the Drilling Services, Completion Services and Other Services segments.
Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.
Total revenues of $1357 million beat the Zacks Consensus Estimate of $1289 million. The top line also increased 34.2% year over year. This outperformance can be attributed to Completion Services segment's increased year-over-year revenue contribution.
Patterson-UTI Energy, Inc. Price, Consensus and EPS Surprise
Patterson-UTI Energy, Inc. price-consensus-eps-surprise-chart | Patterson-UTI Energy, Inc. Quote
In the quarter, the company recorded Adjusted EBITDA of $275 million, excluding goodwill impairment, asset retirement charges and merger and integration expenses.
PTEN returned $71 million to its shareholders in the third quarter. In this quarter alone, it utilized $40 million to repurchase more than 4 million shares. Since the close of the NexTier merger and Ulterra acquisition, the company has returned $475 million to its shareholders, including $346 million in share repurchases. As of Sept. 30, there is $780 million remaining in share repurchase authorization.
This leading provider of oilfield services and products to oil and natural gas exploration and production companies will pay its quarterly dividend of 8 cents per share on Dec. 16, 2024, to the company’s shareholders of record as of Dec. 2.
Segmental Performances of Patterson
Drilling Services: Revenues in this segment totaled $422 million, down 13.7% from the prior-year quarter’s figure of $488.8 million. However, the top line beat our projection of $370.1 million.
Operating loss amounted to $34 million compared with operating profit of $114.7 million in the third quarter of 2023. The figure also missed our operating profit estimate of $69.8 million. The company secured approximately $401 million in term contracts for the U.S. drilling rigs as of Sept. 30, 2024.
Completion Services: This segment’s revenues of $832 million rose about 81% from the year-ago quarter’s figure of $459.6 million. Moreover, the metric beat our projection of $814 million.
Operating loss totaled $909 million compared with operating profit of $0.2 million in the third quarter of 2023. Additionally, the figure missed our operating profit estimate of $24.4 million.
Drilling Products: This segment’s revenues of $89 million rose about 91% from the year-ago quarter’s figure of $46.6 million. Additionally, the amount marginally beat our projection of $88 million.
Operating profit totaled $9 million compared with an operating loss of $6.2 million in the third quarter of 2023. Additionally, the figure beat our operating loss estimate of $13.1 million.
Following the Ulterra acquisition, the company has boosted its market share in rigs operated by the U.S. Contract Drilling business by more than 10%.
Other Services: Revenues amounted to $15 million, 13.2% lower than the year-ago quarter’s figure of $16.5 million. Additionally, the figure missed our projection of $16.5 million.
Operating loss amounted to $4 million compared with an operating profit of $0.4 million in the third quarter of 2023. The figure missed our projection of an operating profit of $0.7 million.
PTEN’s Capital Expenditure & Financial Position
In the reported quarter, PTEN spent $181 million on capital programs compared with $160.4 million in the prior year period.
As of Sept. 30, 2024, the company had cash and cash equivalents worth $115 million and long-term debt of $1219.5 million. The company’s debt-to-capitalization was 25%.
This Zacks Rank #4 (Sell) company generated $860 million in cash from operations and $321.7 million in free cash flow.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Patterson’s Outlook
Houston, TX-based oil and gas drilling company anticipates a steady rig count for its Tier 1 high-spec drilling rigs through the remainder of the year and in 2025. However, fluctuations in the overall industry rig count are expected, with older, lower-spec assets facing reduced demand. Customers are likely to cut completion activity in the fourth quarter, with a recovery projected in the first half of 2025.
In the Drilling Services segment, the company expects to operate an average of 106 U.S. Contract Drilling rigs in the fourth quarter, with adjusted gross profit per operating day slightly under $15,000. This reflects lower revenues due to contract churn and rig mix. Adjusted gross profit in other Drilling Services is also anticipated to decrease slightly compared with the prior quarter.
For the Completion Services segment, PTEN sees activity slowing as customers scale back spending heading into year-end. Adjusted gross profit is expected to be around $85 million in the fourth quarter, with higher projections for the first half of 2025.
In the Drilling Products segment, a slight increase in revenues and adjusted gross profit is anticipated, driven by international growth, while U.S. revenues may decline slightly due to a lower industry rig count.
Other revenues and adjusted gross profit are expected to remain flat compared with the previous quarter. The company’s selling, general and administrative expenses are projected to be approximately $65 million, with depreciation, depletion, amortization and impairment expenses projected to be around $255 million at the same time. PTEN’s capital expenditures (CapEx) are expected to total approximately $150 million. CapEx is projected to stay under $700 million in 2024, focusing on next-gen assets. A commitment to return at least $400 million to its shareholders has been met, with plans to explore high-return opportunities for excess free cash flow.
Important Energy Earnings So Far
While it is early in the earnings season, there have been a few key energy releases thus far. Let us glance through a couple of them.
Liberty Energy (LBRT - Free Report) , the Denver-CO-based oil and gas equipment company, announced an adjusted net income of 45 cents per share, which missed the Zacks Consensus Estimate of 55 cents. This was primarily due to poor equipment and services execution and lower activity in the reported quarter. Additionally, the bottom line declined from the year-ago quarter’s reported figure of 86 cents due to a year-over-year increase in costs and expenses.
Ahead of the earnings release, LBRT’s board of directors announced a dividend of 8 cents per common share payable on Dec. 20, to its stockholders of record as of Dec. 6. This dividend represents a 14% increase from the prior regular quarterly dividend of 7 cents per share. In the quarter, Liberty returned $51 million to its shareholders through a combination of share repurchases and cash dividends.
Energy infrastructure provider, Kinder Morgan, Inc. (KMI - Free Report) reported third-quarter adjusted earnings per share of 25 cents, which missed the Zacks Consensus Estimate of 27 cents. The bottom line was flat year over year. The weakness in quarterly results was caused by lower contributions from the Products Pipelines and CO2 business segments.
KMI also announced a quarterly cash dividend of 28.75 cents per share for the third quarter of 2024 (annualized dividend of $1.15), implying a 2% increase from the third-quarter 2023 level. The dividend is payable on Nov. 15, 2024, to its shareholders of record as of Oct. 31.
Schlumberger Limited (SLB - Free Report) , a Houston, TX-based oil and gas equipment and services provider announced third-quarter earnings of 89 cents per share (excluding charges and credits), which beat the Zacks Consensus Estimate of 88 cents. The bottom line also increased from the year-ago quarter’s 78 cents. The strong quarterly earnings were primarily driven by broad-based earnings growth and margin expansion, especially in the Middle East, Asia and offshore North America. Additionally, cost optimization, greater adoption of digital solutions and contributions from long-cycle deepwater and gas projects played significant roles.
SLB reported a free cash flow of $1.81 billion in the third quarter. As of Sept. 30, the company had approximately $4.46 billion in cash and short-term investments. At the end of the quarter, it registered a long-term debt of $11.86 billion.