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Patterson-UTI Energy Inc PTEN

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Morningstar’s Analysis

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Patterson Sees Modest Q4 Recovery Owing to U.S. Shale Activity Improvement

Preston Caldwell Equity Analyst

Analyst Note

| Preston Caldwell |

Patterson's fourth-quarter revenue improved 7% sequentially, as the company benefited from industrywide improvement in U.S. shale activity. However, the revenue gain lagged key activity metrics, with U.S. drilling and fracking activity up around 25%. This likely reflects the impact of weakened pricing, somewhat offsetting improved volume. Lower pricing also makes sense in light of the sequential drop in adjusted operating income to negative $123 million from $114 million in the prior quarter. At the segment level, the sequential revenue gain was driven by pressure pumping and directional drilling, whereas the decrease in operating income was driven entirely by contract drilling. Our fair value estimate and no-moat rating are unchanged following the results.

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Company Profile

Business Description

Patterson-UTI Energy is one of the largest North America-based land rig drilling contractors. Its fleet consists of about 315 land rigs, which it markets to independents and small producers. The firm also operates a pressure pumping division and owns a small financial interest in oil and gas exploration and production assets in Texas and New Mexico.

10713 West Sam Houston Parkway North, Suite 800
Houston, TX, 77064
T +1 281 765-7100
Sector Energy
Industry Oil & Gas Drilling
Most Recent Earnings Dec 31, 2020
Fiscal Year End Dec 31, 2021
Stock Type Hard Assets
Employees 3,000