Key Drivers And FY2025 Outlook: Patterson-UTI Energy’s (PTEN) completion activity performance took a beating as its largest customers reduced sequential activity after reaching their annual production targets. In 2025, it expects to benefit from the wellsite integration revenue growth as more customers look to enhance returns by leveraging increased efficiencies. It also plans to increase the deployment of its natural gas-powered Emerald line of completion equipment by 29%.
Management expects that natural gas-directed drilling and completion activity could increase later this year. In Q1 2025, an average of 64 rigs are expected to operate under term contracts. Backed by strong cash flows, it plans to return “at least 50% of our adjusted free cash flow” to investors through dividends and share repurchases. Read more about PTEN in our previous article here.
The Segment Results Analyzed: Quarter-over-quarter, PTEN’s revenues in the Drilling Services segment decreased by 3% in Q4 2024. Average revenue per operating day decreased while gross profit decreased by 5% in Q4 compared to Q3. The resilience reflected the solid performance of the Tier 1 rigs.
Revenues from the Completion Services segment decreased steeply, by 22%, after it increased briefly in the previous quarter. Adjusted gross profit also declined sharply (by 25%) in Q4. Many of PTEN’s long-term dedicated customers reduced completion activity. Despite that, it made gains in proppant sourcing and logistics services and secured work with several new customers during the quarter.
Revenues from the Drilling Products segment decreased by 3%, quarter-over-quarter, while gross profit declined by 11%. A $3 million non-cash charge associated with the step up to a fair value of our drill bits reduced the segment’s gross profit.
Cash Flows And Share Repurchase: PTEN’s cash flow from operations increased by 17% in FY2024 compared to a year ago. Its FCF increased by 27% during this period. It repurchased shares worth $20 million in Q4. The company currently has $759 million remaining for share repurchase.
Thanks for reading the PTEN Take Three, designed to give you three critical takeaways from PTEN’s earnings report. Soon, we will present a second update on PTEN earnings, highlighting its current strategy, news, and notes we extracted from our deeper dive.
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