Energy Prospectus

Patterson-UTI Energy EPS in-line, beats on revenue • 6:17 AM

Mohit Manghnani, SA News Editor
•Patterson-UTI Energy (NASDAQ:PTEN): Q3 EPS of $0.47 in-line.
•Revenue of $846M (+15.7% Y/Y) beats by $11.05M.

PR----

http://finance.yahoo.com/news/patterson ... 00313.html

The high spec Apex rigs are sold out through mid-2015, but that is the only segment PTEN was clearly reassuring about this morning. Analysts are from Missouri now with the over capacity concern from $80 oil.

An updated Net Income & Cash Flow Forecast model for PTEN has been posted under the Watch List Tab.

My Fair Value Estimate is $42.50, compared to First Call's Price Target of $37.32.

PTEN is generating very strong operating cash flows and as they upgrade their rig fleet to more APEX rigs, the operating cash flows will go up. Plus, the APEX rigs go out under long-term contracts that guarantee future revenues. With so much more visibility of revenues, I could easily justify a much higher valuation. IMO PTEN is evolving into another HP. Their APEX rigs are in high demand and perfect for pad development drilling in the U.S. Shale Plays.

NOTE: Reported earnings include a non-cash write-off of some old rigs. Ignore EPS and focus on CFPS which came in well above my forecast.

COVERAGE REITERATED: Patterson-UTI (PTEN) reiterated by Howard Weil. Reiterated rating Sector Outperform.
BRIEFING.COM 8:15 AM ET 10/24/2014

and then this-----------

COVERAGE REITERATED: Patterson-UTI (PTEN) reiterated by Wunderlich. Reiterated rating Hold.
BRIEFING.COM 5:24 AM ET 10/24/2014

The concerns I'm seeing center around margins in pressure pumping where PTEN was a little light according to Johnson Rice, for example.

I suspect that those thin margins are the result of integrating the acquisitions into the family.