Patterson-UTI Energy: Q2 TAKE THREE

Patterson-UTI (PTEN) expects cautious operator behavior in Q3 2025 due to oil price volatility and macroeconomic uncertainty. The U.S. natural gas activity may see modest improvement driven by domestic and global LNG demand. The company anticipates flat activity and full utilization of its Tier IV dual-fuel assets, as well as technological advances in the Completion Services segment. Despite steady asset utilization, PTEN's cash flows plunged year-over-year.

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Industry Drivers and Q3 Outlook: Patterson-UTI Energy's (PTEN) management anticipates crude oil price volatility and macroeconomic uncertainties that will prompt energy operators to remain cautious. The U.S. oil production may likely go through a severe impact. Natural gas activity, on the other hand, may improve slightly in Q3. The US natural gas directed activity can witness long-term upside due to a rising domestic demand and growing global demand for U.S. LNG. The company also expects its FCF to increase in 2H 2025.

PTEN also achieved a few key technological developments in hydraulic fracturing in Q2. Its EOS Completions Platform includes Vertex frac automation, real-time cloud-based data feeds through the FleetStream digital solution, and the Lateral-Science machine learning application. It also deployed the Vertex frac pump controls automation in the Bakken and Appalachia. In the Completion Services segment, PTEN expects activity to remain steady in Q3, with utilization remaining full. In Q3, the segment gross profit will likely remain unchanged compared to Q2.

The Segment Results Analyzed : Quarter-over-quarter, PTEN's revenues in the Drilling Services segment decreased marginally (2% down) in Q2 2025. Although natural gas rig count in the Appalachia and the Haynesville shales remained steady, the loss of rigs in the Permian caused a revenue loss in Q2.

Revenues from the Completion Services segment decreased by 6% in Q2. Adjusted gross profit also decreased (by 8%) in Q2. The drop in revenue can be attributed to “white space from customer-specific gaps in our calendar.” However, the company’s natural gas-powered assets and Tier IV dual-fuel assets remained fully utilized during the quarter. Revenues from the Drilling Products segment increased by 3%, quarter-over-quarter, while gross profit improved by 1%.

Cash Flows and Share Repurchase : PTEN's cash flow from operations decreased by 38% in 6M 2025 compared to a year ago. Its FCF dipped by 80% during this period. It repurchased shares worth $16 million in Q2.

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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