Patterson (PTEN) will be our first Sweet 16 company that releases 2nd quarter results on July 28. I plan to read the report carefully and listen to their CC. Then I will post my updated forecast model under the Sweet 16 tab.
I'm very bullish on the onshore drillers as a group (we have six on our Watch List) and I believe PTEN's pressure pumping business (high margins) make them the best buy of the group.
Dan
PTEN
Re: PTEN
Patterson UTI Q2 profit beats Street estimates 07/28 05:40 AM
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* Q2 EPS $0.52 vs est $0.49
* Revenue nearly doubles to $600 mln vs est $587.1 mln
July 28 (Reuters) - Patterson-UTI Energy Inc (PTEN:$32.38,00$-1.18,00-3.52%) posted a forecast-beating profit for the sixth straight quarter, driven mainly by increased activity at its drilling business, and the onshore driller said its rig count continued to increase.
"Activity in our U.S. drilling business continued to increase in the second quarter," Chief Executive Douglas J. Wall said.
The company expects to operate an average of approximately 122 rigs under long-term contracts during the remainder of 2011, Wall said.
Average revenue per operating day rose nearly 4 percent sequentially to $21,000.
The number of rigs operated in the second quarter, however, fell to 202, down about 2.4 percent sequentially, hurt by a slowdown in Canadian drilling activity due to the annual spring breakup.
For April-June, the company reported net income of $81.6 million, or 52 cents a share, compared with $29.5 million, or 19 cents a share. Revenue nearly doubled to $600 million.
Analysts, on average, were expecting a profit of 49 cents a share, on revenue of $587.1 million, according to Thomson Reuters I/B/E/S.
The Houston-based company's shares, which have gained more than half their value so far this year, closed at $32.38 on Wednesday on Nasdaq, valuing the business at $5.19 billion. (Reporting by Anirban Sen in Bangalore; Editing by Prem Udayabhanu) (anirban.sen@thomsonreuters.com; within U.S. +1 646 223 8780; outside U.S. +91 80 4135 5800; Reuters Messaging: anirban.sen.thomsonreuters.com@reuters.net)
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* Q2 EPS $0.52 vs est $0.49
* Revenue nearly doubles to $600 mln vs est $587.1 mln
July 28 (Reuters) - Patterson-UTI Energy Inc (PTEN:$32.38,00$-1.18,00-3.52%) posted a forecast-beating profit for the sixth straight quarter, driven mainly by increased activity at its drilling business, and the onshore driller said its rig count continued to increase.
"Activity in our U.S. drilling business continued to increase in the second quarter," Chief Executive Douglas J. Wall said.
The company expects to operate an average of approximately 122 rigs under long-term contracts during the remainder of 2011, Wall said.
Average revenue per operating day rose nearly 4 percent sequentially to $21,000.
The number of rigs operated in the second quarter, however, fell to 202, down about 2.4 percent sequentially, hurt by a slowdown in Canadian drilling activity due to the annual spring breakup.
For April-June, the company reported net income of $81.6 million, or 52 cents a share, compared with $29.5 million, or 19 cents a share. Revenue nearly doubled to $600 million.
Analysts, on average, were expecting a profit of 49 cents a share, on revenue of $587.1 million, according to Thomson Reuters I/B/E/S.
The Houston-based company's shares, which have gained more than half their value so far this year, closed at $32.38 on Wednesday on Nasdaq, valuing the business at $5.19 billion. (Reporting by Anirban Sen in Bangalore; Editing by Prem Udayabhanu) (anirban.sen@thomsonreuters.com; within U.S. +1 646 223 8780; outside U.S. +91 80 4135 5800; Reuters Messaging: anirban.sen.thomsonreuters.com@reuters.net)
Re: PTEN
Fair Value for PTEN is definitely going higher. I'm working on the forecast model and I should have it posted under the Sweet 16 tab this afternoon. Members can access my current forecast model for each company in the Sweet 16 Growth Portfolio by:
> Log in to website (only EPG members can get to the forecasts and company profiles)
> Click on the Sweet 16 tab
> Click on the company logo for the forecast you want to check
> Each forecast shows my Fair Value calculation and how I arrive at it.
Having better information than the rest of the pack is how you beat the market on a regular basis.
> Log in to website (only EPG members can get to the forecasts and company profiles)
> Click on the Sweet 16 tab
> Click on the company logo for the forecast you want to check
> Each forecast shows my Fair Value calculation and how I arrive at it.
Having better information than the rest of the pack is how you beat the market on a regular basis.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: PTEN
Increasing active rig count, average dayrates and pressure pumping will significantly increase PTEN's revenues going forward. Also, note that all of the new APEX rigs are now under long-term contracts. - Dan
Douglas J. Wall, Patterson-UTI's Chief Executive Officer, stated, "Activity in our U.S. drilling business continued to increase in the second quarter. As expected, Canadian drilling activity was impacted by the annual spring breakup. Our average number of rigs operating in the second quarter was 202, including 199 in the United States and 3 in Canada. This compares to an average of 207 rigs operating in the first quarter of 2011, including 192 in the United States and 15 in Canada."
Mr. Wall added, "Average revenue per operating day for the second quarter of 2011 increased by $760 to $21,000, compared to $20,240 for the first quarter of 2011. Average direct operating costs per operating day for the second quarter of 2011 increased to $11,880 from $11,730 for the first quarter of 2011. Average margin per operating day for the second quarter of 2011 increased by $600 to $9,110 from $8,510 for the first quarter of 2011.
"We are continuing to see increases in our rig count. We expect our July rig count to average approximately 215 rigs operating, comprised of 205 in the United States and 10 in Canada, which is an increase of 50 rigs in the US and 3 rigs in Canada as compared to July 2010.
"During the second quarter of 2011, we had an average of approximately 107 rigs operating under long-term contracts and have continued to increase our quantity of long-term contracts. Based on contracts currently in place, we expect to have an average of approximately 122 rigs operating under long-term contracts during the remainder of 2011.
"We completed 8 new Apex™ rigs during the second quarter and expect to complete 25 new Apex™ rigs in 2011 and an additional 30 in 2012. With regard to customer contracts for new Apex™ rigs, we entered into long-term agreements for 10 rigs during the second quarter. We currently have long-term contracts for all of the new Apex™ rigs scheduled for delivery in 2011.
"In the second quarter, our pressure pumping business achieved quarterly sequential increases in revenues and operating income of 11% and 22%, respectively. Demand for our pressure pumping services remains high, and we are adding fracturing capacity. We deployed 62,000 horsepower of new fracturing equipment during the first half of 2011, with the vast majority deployed in June. During the second half of 2011, we expect to deploy an additional 142,000 horsepower, with approximately half being activated in the latter part of the third quarter and the remainder being activated in the latter part of the fourth quarter. At this juncture, we expect to add approximately 140,000 horsepower for delivery in 2012," he concluded.
Mark S. Siegel, Chairman of Patterson-UTI stated, "Our drilling and pressure pumping businesses continue to benefit from the increased activity associated with oil and liquids-rich plays in the United States. The increasing number and complexity of wells being drilled has resulted in a shortage of new technology drilling rigs and fracturing horsepower. Current activity levels have supported increased pricing for our drilling and fracturing services and have caused some increase in operating costs, including labor costs.
Mr. Siegel further stated, "In this environment, we have entered into additional long-term contracts for new Apex™ rigs and have expanded our newbuild rig construction program for 2012. We also have approximately 280,000 total horsepower of fracturing equipment planned for the remainder of 2011 and 2012.
Mr. Siegel commented further: "The evolution of our rig and fracturing fleets and their suitability for unconventional plays is evidenced by the portion of our revenues from horizontal and directional wells. For the second quarter, 82% of drilling revenue and 77% of our fracturing revenue was derived from these types of wells."
Douglas J. Wall, Patterson-UTI's Chief Executive Officer, stated, "Activity in our U.S. drilling business continued to increase in the second quarter. As expected, Canadian drilling activity was impacted by the annual spring breakup. Our average number of rigs operating in the second quarter was 202, including 199 in the United States and 3 in Canada. This compares to an average of 207 rigs operating in the first quarter of 2011, including 192 in the United States and 15 in Canada."
Mr. Wall added, "Average revenue per operating day for the second quarter of 2011 increased by $760 to $21,000, compared to $20,240 for the first quarter of 2011. Average direct operating costs per operating day for the second quarter of 2011 increased to $11,880 from $11,730 for the first quarter of 2011. Average margin per operating day for the second quarter of 2011 increased by $600 to $9,110 from $8,510 for the first quarter of 2011.
"We are continuing to see increases in our rig count. We expect our July rig count to average approximately 215 rigs operating, comprised of 205 in the United States and 10 in Canada, which is an increase of 50 rigs in the US and 3 rigs in Canada as compared to July 2010.
"During the second quarter of 2011, we had an average of approximately 107 rigs operating under long-term contracts and have continued to increase our quantity of long-term contracts. Based on contracts currently in place, we expect to have an average of approximately 122 rigs operating under long-term contracts during the remainder of 2011.
"We completed 8 new Apex™ rigs during the second quarter and expect to complete 25 new Apex™ rigs in 2011 and an additional 30 in 2012. With regard to customer contracts for new Apex™ rigs, we entered into long-term agreements for 10 rigs during the second quarter. We currently have long-term contracts for all of the new Apex™ rigs scheduled for delivery in 2011.
"In the second quarter, our pressure pumping business achieved quarterly sequential increases in revenues and operating income of 11% and 22%, respectively. Demand for our pressure pumping services remains high, and we are adding fracturing capacity. We deployed 62,000 horsepower of new fracturing equipment during the first half of 2011, with the vast majority deployed in June. During the second half of 2011, we expect to deploy an additional 142,000 horsepower, with approximately half being activated in the latter part of the third quarter and the remainder being activated in the latter part of the fourth quarter. At this juncture, we expect to add approximately 140,000 horsepower for delivery in 2012," he concluded.
Mark S. Siegel, Chairman of Patterson-UTI stated, "Our drilling and pressure pumping businesses continue to benefit from the increased activity associated with oil and liquids-rich plays in the United States. The increasing number and complexity of wells being drilled has resulted in a shortage of new technology drilling rigs and fracturing horsepower. Current activity levels have supported increased pricing for our drilling and fracturing services and have caused some increase in operating costs, including labor costs.
Mr. Siegel further stated, "In this environment, we have entered into additional long-term contracts for new Apex™ rigs and have expanded our newbuild rig construction program for 2012. We also have approximately 280,000 total horsepower of fracturing equipment planned for the remainder of 2011 and 2012.
Mr. Siegel commented further: "The evolution of our rig and fracturing fleets and their suitability for unconventional plays is evidenced by the portion of our revenues from horizontal and directional wells. For the second quarter, 82% of drilling revenue and 77% of our fracturing revenue was derived from these types of wells."
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: PTEN
The growth of PTEN's pressure pumping is really driving future revenues.
Pressure Pumping was 33.4% of revenues in Q2. Demand is sky high and PTEN is adding more equipment. A lot more early in 2012.
My Fair Value estimate is only 6X CFPS. With a lot more long-term contracts their rigs and red hot demand for pressure pumping, a higher multiple is definitely justified.
Pressure Pumping was 33.4% of revenues in Q2. Demand is sky high and PTEN is adding more equipment. A lot more early in 2012.
My Fair Value estimate is only 6X CFPS. With a lot more long-term contracts their rigs and red hot demand for pressure pumping, a higher multiple is definitely justified.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group