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1. Company Snapshot

1.a. Company Description

Patterson-UTI Energy, Inc., through its subsidiaries, provides onshore contract drilling services to oil and natural gas operators in the United States and internationally.It operates through three segments: Contract Drilling Services, Pressure Pumping Services, and Directional Drilling Services.The Contract Drilling Services segment markets its contract drilling services primarily in west Texas, Appalachia, Rockies, Oklahoma, South Texas, East Texas, and Colombia.


As of December 31, 2021, this segment had a drilling fleet of 192 marketable land-based drilling rigs.The Pressure Pumping Services segment offers pressure pumping services that consist of well stimulation for the completion of new wells and remedial work on existing wells, as well as hydraulic fracturing, cementing, and acid pumping services in Texas and the Appalachian region.The Directional Drilling Services segment provides a suite of directional drilling services, including directional drilling and measurement-while-drilling services; supply and rental of downhole performance motors; and software and services that enhances the accuracy of directional and horizontal wellbores, wellbore quality, and on-bottom rate of penetration.


It also services equipment to drilling contractors, as well as provides electrical controls and automation to the energy, marine, and mining industries in North America and other markets; and owns and invests in oil and natural gas assets as a non-operating working interest owner located principally in Texas and New Mexico.Patterson-UTI Energy, Inc.was founded in 1978 and is headquartered in Houston, Texas.

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1.b. Last Insights on PTEN

Patterson-UTI Energy's recent performance was positively driven by its narrower Q4 loss and revenue beat, attributed to stronger Completion Services and lower costs. The company's strategy prioritizing cash generation and returns appears justified. With a diversified post-NexTier merger operations, PTEN is poised for resilience despite industry headwinds. Rated a BUY, the company offers an attractive valuation, robust free cash flow, and a 5.8% dividend yield. Institutional investors, such as American Century Companies Inc., have increased their stakes, while others, like Fisher Asset Management LLC, have decreased theirs.

1.c. Company Highlights

2. Patterson-UTI Energy's Strong Q4 2025 Earnings: A Resilient Performance

Patterson-UTI Energy reported a robust fourth quarter 2025, with total revenue reaching $1.151 billion and adjusted EBITDA of $221 million. The company's net loss attributable to common shareholders was $9 million, which translates to an actual EPS of -$0.02, beating estimates of -$0.11. The company's adjusted free cash flow for the year was $416 million, demonstrating strong operational execution and cost controls. Analysts estimate next year's revenue growth at 4.0%, indicating a positive outlook for the company.

Publication Date: Feb -16

📋 Highlights
  • Adjusted Free Cash Flow Surge:: Patterson-UTI generated $416M in 2025 adjusted free cash flow, with Q4 being the highest since 2023 transformation.
  • Dividend Hike & Shareholder Returns:: Quarterly dividend raised 25% to $0.10/share, targeting at least 50% free cash flow returns to shareholders.
  • Completion Services Growth:: Segment EBITDA doubled in 2025 H2, driven by the eos Digital Platform and performance-based contracts.
  • CapEx Efficiency:: 2026 gross CapEx cut 15% to $500M, with $65M allocated to Emerald high-tech equipment.
  • International Expansion:: Argentina and Saudi Arabia initiatives, including drill-bit manufacturing, to leverage $60/barrel commodity prices.

Segment Performance

The U.S. Contract Drilling Business showed steady activity and pricing, with a focus on investing in assets and technologies that enhance operational efficiency. The Completion Services segment delivered strong results, with segment adjusted EBITDA for the second half of the year higher than the first half. The Drilling Products segment also performed well, with revenue per industry rig close to company record levels in North America.

Cash Flow and Dividend

Patterson-UTI generated significant free cash flow, returning $119 million to shareholders through dividends and share repurchases in 2025. The company increased its quarterly dividend by 25% to $0.10 per share and expects to exceed dividend commitments, allowing for additional share repurchases or investments. The company's cash position was $421 million, with no debt drawn on its $500 million revolving credit facility.

Valuation and Outlook

Given the company's current valuation metrics, including a P/S Ratio of 0.64 and EV/EBITDA of 4.27, the market appears to be pricing in a relatively stable outlook for Patterson-UTI. The company's focus on generating strong free cash flow and returning at least 50% to shareholders is expected to continue. With a dividend yield of 3.95% and a free cash flow yield of 12.11%, the stock presents an attractive opportunity for income investors.

Operational Highlights

The company is seeing growing acceptance of performance-based commercial agreements and strong results from drilling automation packages. The launch of its proprietary eos Completions Digital Platform is expected to drive further growth. In Argentina, Patterson-UTI is partnering with a local supplier to provide drilling rigs, which is expected to lead to reduced US rig supply over time.

Cost Structure and Capital Allocation

Patterson-UTI has made efforts to reduce OpEx and CapEx through maintenance efficiency and supplier negotiations. The company's capital allocation philosophy remains focused on maximizing free cash flow per share. The 2026 gross CapEx budget is approximately $500 million, with a net CapEx below $500 million after asset sales.

3. NewsRoom

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Compared to Estimates, Patterson-UTI (PTEN) Q4 Earnings: A Look at Key Metrics

Feb -11

Source: zacks.com

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Patterson-UTI: Choosing Cash Flow Over Expansion Into Data Centers

Feb -09

Source: seekingalpha.com

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Patterson-UTI Energy, Inc. $PTEN Shares Sold by Principal Financial Group Inc.

Feb -08

Source: defenseworld.net

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Patterson-UTI Reports Drilling Activity for January 2026

Feb -06

Source: accessnewswire.com

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Patterson-UTI Energy, Inc. (PTEN) Q4 2025 Earnings Call Transcript

Feb -05

Source: seekingalpha.com

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Patterson-UTI Energy Q4 Loss Narrower Than Expected, Revenues Beat

Feb -05

Source: zacks.com

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Patterson-UTI Energy, Inc. (NASDAQ:PTEN) Short Interest Update

Feb -05

Source: defenseworld.net

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Patterson-UTI (PTEN) Reports Q4 Loss, Beats Revenue Estimates

Feb -04

Source: zacks.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (9.95%)

6. Segments

Completion Services

Expected Growth: 9%

Patterson-UTI Energy's Completion Services segment growth is driven by increasing demand for hydraulic fracturing and pressure pumping services, supported by rising oil prices, growing shale production, and improving operational efficiency. Additionally, the company's strategic acquisitions and investments in technology, such as its proprietary FLEX25 frac pump, have enhanced its service offerings and competitiveness.

Drilling Services

Expected Growth: 11%

Patterson-UTI Energy's 11% growth in Drilling Services is driven by increasing demand for oil and gas, improved operational efficiency, and strategic investments in premium drilling technologies. Additionally, the company's expanded fleet of high-spec rigs and growing presence in key basins such as the Permian and Eagle Ford contribute to its growth momentum.

Drilling Products

Expected Growth: 8%

Patterson-UTI Energy's Drilling Products segment growth is driven by increasing demand for oil and gas, rising drilling activity, and growing adoption of advanced drilling technologies. Additionally, the company's strategic acquisitions, expanded product offerings, and strong relationships with major oil and gas operators contribute to its 8% growth.

Other

Expected Growth: 12%

Patterson-UTI Energy's 12% growth is driven by increasing demand for oilfield services, expansion into new markets, and strategic acquisitions. The company's diversified portfolio of services, including drilling, pressure pumping, and directional drilling, positions it for growth in a recovering oil and gas market. Additionally, its focus on technology and operational efficiency enables it to capitalize on rising drilling activity and increasing well complexity.

7. Detailed Products

Contract Drilling

Patterson-UTI Energy, Inc. provides contract drilling services to oil and natural gas operators, offering a fleet of drilling rigs and experienced personnel to support drilling operations.

Pressure Pumping

The company offers pressure pumping services, including hydraulic fracturing and cementing, to enhance oil and gas production.

Directional Drilling

Patterson-UTI provides directional drilling services, enabling operators to access hard-to-reach reservoirs and improve drilling efficiency.

Well Servicing

The company offers well servicing, including maintenance, repair, and workover services, to keep wells operating efficiently.

Equipment Manufacturing

Patterson-UTI designs and manufactures drilling and completion equipment, including rigs, pumps, and other specialized equipment.

8. Patterson-UTI Energy, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes for Patterson-UTI Energy, Inc. is medium due to the availability of alternative energy sources such as solar and wind power. However, the high cost of switching to these alternatives and the lack of infrastructure to support widespread adoption mitigate this threat.

Bargaining Power Of Customers

The bargaining power of customers for Patterson-UTI Energy, Inc. is low due to the company's diversified customer base and the lack of concentration in the industry.

Bargaining Power Of Suppliers

The bargaining power of suppliers for Patterson-UTI Energy, Inc. is medium due to the company's dependence on a few key suppliers for drilling equipment and services. However, the company's large scale of operations and diversified supply chain mitigate this threat.

Threat Of New Entrants

The threat of new entrants for Patterson-UTI Energy, Inc. is low due to the high barriers to entry in the oil and gas industry, including the need for significant capital investment and regulatory approvals.

Intensity Of Rivalry

The intensity of rivalry for Patterson-UTI Energy, Inc. is high due to the competitive nature of the oil and gas industry, with many established players competing for market share.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 21.20%
Debt Cost 4.91%
Equity Weight 78.80%
Equity Cost 15.12%
WACC 12.95%
Leverage 26.90%

11. Quality Control: Patterson-UTI Energy, Inc. passed 2 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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A-Score: 4.8/10

Value: 9.0

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Quality: 3.6

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

8.41$

Current Price

8.41$

Potential

-0.00%

Expected Cash-Flows