Onshore contract driller, Patterson-UTI Energy Inc. PTEN declared that its May 2015 drill rig count averaged at 123–122 rigs in the U.S. and 1 in Canada. This marks a steep decline from 133 rigs operational in April.
Patterson-UTI further added that for the two months ending May 31, its rig count averaged 126 in the U.S. and 2 in Canada.
The weak crude pricing environment has forced most drillers to cut back on the number of rigs. Also, fewer new contracts and declining dayrates have made maintaining profitability a challenge. Retiring rigs is therefore an effective way to curb operating expenses.
Moreover, Patterson-UTI has been undertaking other measures like lowering capital spending to tackle the pricing woes. The company has announced a 29% cut in its 2015 spending.
Patterson-UTI is a major onshore contract driller in the U.S. with over 239 land-based rigs that operate primarily in the oil and natural gas producing regions of North America.
On Apr 23, the company had reported better-than-expected first-quarter 2015 earnings on higher rig revenues and lower costs. The company has a large, high-quality fleet of drilling rigs, which include the technologically advanced ‘Apex’ rigs – the key to the company’s success.
However, with the company’s rig count declining earnings and cash flows are likely to be affected in the upcoming quarters. Negative earnings estimate revisions for the current quarter as well as the current year suggest bearishness ahead.
Currently, Patterson-UTI carries a Zacks Rank #3 (Hold).
Better-ranked players from the oil and gas drilling industry include New Source Energy Partners L.P. NSLP, Ocean Rig UDW Inc. ORIG and North Atlantic Drilling Limited NADL. All these stocks hold a Zacks Rank #2 (Buy).
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