Onshore contract driller, Patterson-UTI Energy Inc. PTEN declared that its Jun 2015 drill rig count averaged 113–112 rigs in the U.S. and 1 in Canada. This marks a steep decline from 123 rigs that were operational in May.
Patterson-UTI further added that for the three months ending Jun 30, its rig count averaged 122 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, therefore, is 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 the earnings front, the company had reported better-than-expected numbers in the past quarter 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 its 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 Transocean Ltd. RIG, Ocean Rig UDW Inc. ORIG and Atwood Oceanics, Inc. ATW. All these stocks hold a Zacks Rank #2 (Buy).
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