Dahlman Rose Comments On Patterson-UTI Following Recent Earnings Release

Dahlman Rose believes that Patterson-UTI's PTEN Q1 EPS report has moderately positive implications for the stock. Patterson-UTI Energy reported $0.46 per share, matching our estimate and exceeding the consensus of $0.43. Contract Drilling revenues of $377.4 million slightly exceeded Dahlman's $375 million forecast but operating income of $158.7 million was below its $163 million estimate. While the increase in rigs working during the quarter was in line with estimates, average day rates surged by $1,150 to $20,240 versus $19,090 in the fourth quarter of 2010. The gain exceeded Dahlman's forecast. However, direct operating costs rose by $730 per day to $11,730. The operating margin was $8,510. Pressure Pumping revenue of $179.7 million was above Dahlman's $173.1 million estimate and operating income of $61.1 million matched our $61.1 million forecast. While the pricing environment is strong, costs are up and the severe winter weather impacted business in both Texas and Appalachia. A lower-than-forecast tax rate contributed $0.01 to the quarter. Dahlman Rose has a $34 PT and Buy rating on PTEN PTEN is trading at $30.90