Patterson-UTI Energy, Inc.

What they do

Patterson-UTI operates three segments: drilling services (contract drilling, directional drilling, electrical controls), completion services (hydraulic fracturing, wireline, cementing, power solutions, proppant logistics), and drilling products (drill bits and downhole tools). It operates 148 marketed land rigs, of which 137 are Tier-1 super-spec, and serves basins including the Permian, Appalachia, and Eagle Ford.

Revenue drivers

• Drilling Services — Contract drilling revenue from U.S. and international rigs; second quarter 2026 revenue was $374 million, with adjusted gross profit of $114 million (or $134 million excluding Colombia exit charges).
• Completion Services — Hydraulic fracturing, wireline, cementing, and power solutions; fleet was effectively sold out before industry activity increased, and customer discussions around price increases are constructive.
• Drilling Products — Manufactures and distributes drill bits and downhole tools in over 30 countries; benefits from energy and mining demand.
• U.S. rig activity — Average rigs operating in the U.S. declined from 118 in Q4 2023 to 93 in Q4 2025; recent quarterly revenue rose sequentially from $1.11B in Q1 2026 to $1.22B in Q2 2026.

Recent performance

In Q2 2026, total revenue was $1.22 billion, a 10% sequential increase, with a net loss attributable to common stockholders of $20 million. Adjusted net income was $1 million, excluding a $21 million non-cash charge from exiting Colombia drilling operations and a $5 million write-down of noncontrolling investments. Adjusted EBITDA was $232 million. U.S. contract drilling averaged 92 rigs in the quarter, exiting at 96, and the company declared a quarterly dividend of $0.10 per share.

Strategy

Management is focused on reactivating and upgrading rigs to meet growing demand, with contracts signed for additional rigs. The company is expanding its natural gas-powered completion equipment, including electric, direct drive, and dual fuel pumps, and advancing the Vertex automated completions process on its eos platform. It exited Colombia to streamline international operations and is investing in growth capital to support activity into 2027. Management emphasizes technology leadership and integrated service offerings to drive pricing and returns.

Risks

• Commodity price volatility — Revenue and cash flows depend heavily on oil and gas prices; Q4 2025 average WTI was $59.62 per barrel, down from $70.73 a year earlier.
• Customer consolidation and capex cuts — E&P capital budgets and consolidation can reduce demand for drilling and completion services, impacting utilization and pricing.
• Equipment oversupply and competition — Excess rig and frac capacity in the industry could pressure margins and asset values.
• Geopolitical disruptions — Middle East conflicts and trade policy uncertainty have caused commodity price volatility and could disrupt supply chains or operations.

Outlook

Management expects further growth in drilling and completion activity and pricing in Q3 2026, with momentum continuing from Q2. Higher commodity prices are driving increased U.S. onshore activity, and the company has signed contracts for additional rigs. Full-year 2026 free cash flow is expected to more than cover dividend payments, with improvement expected in 2027 as working capital reverses in the second half.