Patterson-UTI Energy revenue rises 10% to $1.23B as drilling activity strengthens

Patterson-UTI Energy reported Q2 revenue of $1.228 billion, up 10% from the first quarter, driven by stronger drilling activity and higher pricing.

"Activity and pricing improved faster than we anticipated during the quarter," Chief Executive Officer Andy Hendricks said, adding that momentum continued into the third quarter.

The company posted a net loss of $20 million, or $0.05 per share, including $21 million in non-cash charges tied to its exit from Contract Drilling operations in Colombia and $5 million in write-downs of minority interests. Adjusted EBITDA reached $232 million. Drilling Services generated $374 million in revenue and $114 million in adjusted gross profit, while Completion Services reported $754 million in revenue and $123 million in adjusted gross profit. Drilling Products recorded $91 million in revenue, its highest since the Ulterra acquisition in 2023.

Management expects third-quarter Drilling Services adjusted gross profit of about $145 million and Completion Services adjusted gross profit of roughly $140 million, supported by near-full utilization and additional price increases. The company is investing about $600 million in 2026 capital expenditures, funding rig upgrades and additional natural-gas-powered Emerald frac fleets.

Hendricks said pricing on new drilling contracts rose about 10% to 15% from first-quarter levels, with upgraded rigs deploying at day rates several thousand dollars above standard super-spec rigs. Outside the Permian Basin, high-quality rigs are effectively sold out, he said, while increasing Permian demand has also supported pricing.

The company is upgrading 10 to 15 rigs through early next year, with many upgrades costing in the low-single-digit millions and achieving payback within a year under term contracts. Roughly half of recent wells drilled had laterals exceeding two miles, compared with about one-third a year earlier, while wells with laterals beyond four miles accounted for more than 10% of recent activity.

In Completion Services, natural-gas-powered equipment is nearly fully utilized, and the company expects about 90% of active horsepower to be powered substantially by natural gas by year-end. Hendricks estimated average completion pricing had fallen about 30% over the prior three years, creating an opportunity for substantial recovery as drilling demand increases.

The company ended the quarter with $203 million in cash and no borrowings under its $500 million revolving credit facility. It refinanced its 2028 senior unsecured notes, extending the maturity to 2036, and now has no senior-note maturities until 2029. The board approved a quarterly dividend of $0.10 per share, payable Sept. 15.

The guidance raise indicates management expects demand for higher-specification rigs and gas-powered frac equipment to continue strengthening. Investors will watch the Q3 earnings call for further updates on pricing recovery and free cash flow generation, which management expects to improve meaningfully in 2027.

This article is for informational purposes only and does not constitute investment advice.