An updated Net Income and Cash Flow Forecast for Patterson-UTI (PTEN) is now available to members under the Sweet 16 Tab. Just click on the PTEN logo.
My new Fair Value estimate is shown at the bottom of the spreadsheet.
PTEN - New Forecast
PTEN - New Forecast
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Citi on PTEN
Patterson-UTI Energy (PTEN)
Lowering Estimates on More Cautious North American View
Reducing Estimates — We have lowered our EPS estimates in 2012 and 2013
to incorporate margin pressures that are likely to affect both drilling and
pressure pumping going forward.
Reducing Contract Drilling Margins — In contract drilling, margins were pressured in
part because PTEN had an unusually large number of conventional rigs activated in
3Q11 relative to previous quarters. These rigs incurred maintenance expenses to meet
customer specifications. Although most of the 3Q11 margin impacts are unlikely to
recur, some of its cost inflation will be structural. Specifically, we believe labor cost
inflation and higher repair expenses will modestly pressure rig margins from $9.0K/day
in 4Q11 to $8.5K/day in 2012 and 2013. At the same time, we forecast that the North
American rig count will grind higher and that PTEN will take share. We believe its
average rig count will increase from 221 rigs in 3Q11 to 233 rigs in 4Q11. Beyond
2011, we expect rig count growth will continue due to its build program and incremental
activations. We are modeling an average of 243 rigs in 2012 and 259 rigs in 2013.
Moderating Pressure Pumping Expansion — In pressure pumping, activity growth
should reflect the full impact of the horsepower added in 3Q11 (+76,250 hp, or 15%) as
well as that expected in 4Q11 (+65,000, or 11%) and in 2012 (+140,000, or 22%).
Margins should expand on higher fixed cost absorption and ongoing efficiency gains.
Still, we believe margin expansion will be limited at best. Industry capacity additions
have tilted various basins closer toward balanced economics, and cost pressures from
sand, water, acid, and other materials are building. Pass-through of these costs is less
explicit in pressure pumping than in drilling contracts.
Reiterate Buy — Over the past few years, PTEN has made investments that have
transformed it into a top-tier provider. Significant expenditures on higher-quality rig and
frac assets (and this quarter’s retirement of 22 uneconomical rigs) have reduced its
operating risk profile even in a moderating growth environment. We have increased
our price target to $26 from $24 to reflect this reduced risk profile.
Lowering Estimates on More Cautious North American View
Reducing Estimates — We have lowered our EPS estimates in 2012 and 2013
to incorporate margin pressures that are likely to affect both drilling and
pressure pumping going forward.
Reducing Contract Drilling Margins — In contract drilling, margins were pressured in
part because PTEN had an unusually large number of conventional rigs activated in
3Q11 relative to previous quarters. These rigs incurred maintenance expenses to meet
customer specifications. Although most of the 3Q11 margin impacts are unlikely to
recur, some of its cost inflation will be structural. Specifically, we believe labor cost
inflation and higher repair expenses will modestly pressure rig margins from $9.0K/day
in 4Q11 to $8.5K/day in 2012 and 2013. At the same time, we forecast that the North
American rig count will grind higher and that PTEN will take share. We believe its
average rig count will increase from 221 rigs in 3Q11 to 233 rigs in 4Q11. Beyond
2011, we expect rig count growth will continue due to its build program and incremental
activations. We are modeling an average of 243 rigs in 2012 and 259 rigs in 2013.
Moderating Pressure Pumping Expansion — In pressure pumping, activity growth
should reflect the full impact of the horsepower added in 3Q11 (+76,250 hp, or 15%) as
well as that expected in 4Q11 (+65,000, or 11%) and in 2012 (+140,000, or 22%).
Margins should expand on higher fixed cost absorption and ongoing efficiency gains.
Still, we believe margin expansion will be limited at best. Industry capacity additions
have tilted various basins closer toward balanced economics, and cost pressures from
sand, water, acid, and other materials are building. Pass-through of these costs is less
explicit in pressure pumping than in drilling contracts.
Reiterate Buy — Over the past few years, PTEN has made investments that have
transformed it into a top-tier provider. Significant expenditures on higher-quality rig and
frac assets (and this quarter’s retirement of 22 uneconomical rigs) have reduced its
operating risk profile even in a moderating growth environment. We have increased
our price target to $26 from $24 to reflect this reduced risk profile.
Re: PTEN - New Forecast
DOWNGRADE: Patterson-UTI (PTEN) downgraded by Global Hunter Securities from Accumulate to Neutral. 10/28 08:55 AM
COVERAGE REITERATED: Patterson-UTI (PTEN) reiterated by Howard Weil. Reiterated rating Market Outperform. 10/28 08:55 AM
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go figure?????????
COVERAGE REITERATED: Patterson-UTI (PTEN) reiterated by Howard Weil. Reiterated rating Market Outperform. 10/28 08:55 AM
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go figure?????????
Re: PTEN - New Forecast
the citi report is so full of subjectivity it is comical. some examples---
<We have lowered our EPS estimates in 2012 and 2013
to incorporate margin pressures that are likely to affect both drilling and
pressure pumping going forward>
<Although most of the 3Q11 margin impacts are unlikely to
recur, some of its cost inflation will be structural.>
<Margins should expand on higher fixed cost absorption and ongoing efficiency gains.
Still, we believe margin expansion will be limited at best.>
<We have lowered our EPS estimates in 2012 and 2013
to incorporate margin pressures that are likely to affect both drilling and
pressure pumping going forward>
<Although most of the 3Q11 margin impacts are unlikely to
recur, some of its cost inflation will be structural.>
<Margins should expand on higher fixed cost absorption and ongoing efficiency gains.
Still, we believe margin expansion will be limited at best.>