HOUSTON - Patterson-UTI (NASDAQ:PTEN) Energy, Inc. (NASDAQ:PTEN) announced today that its subsidiary has completed a joint venture agreement with a subsidiary of ADNOC Drilling. The deal gives Patterson-UTI a 15% stake in Turnwell Industries LLC OPC, a new entity formed by ADNOC Drilling to drill and complete 144 unconventional wells for Abu Dhabi National Oil Company.
Turnwell, which is majority-owned by ADNOC Drilling with a 55% stake and with SLB holding a 30% interest, aims to leverage Patterson-UTI's expertise in unconventional drilling and completion as part of this collaboration. Patterson-UTI's involvement includes a limited cash contribution for working capital purposes.
Andy Hendricks, CEO of Patterson-UTI, expressed enthusiasm about the venture, stating that the company looks forward to applying its established processes and experience to the project. He also highlighted the opportunity for Patterson-UTI to extend its market presence in a capital-efficient way.
Patterson-UTI, known for providing drilling and completion services in the United States and other select countries, sees this joint venture as a strategic move to create long-term value for its customer, partners, and shareholders.
The statement from Patterson-UTI also contained forward-looking sentiments regarding the potential of the joint venture to lead to industry-leading efficiencies in unconventional oil and gas well delivery in the Middle East. However, the company also noted the risks inherent in such forward-looking statements, including market volatility and other operational risks.
This move marks Patterson-UTI's entry into the Middle Eastern market, expanding its global footprint. The joint venture aligns with ADNOC's strategy of increasing its unconventional oil and gas output, with Turnwell Industries positioned to support this growth.
The information for this article is based on a press release statement from Patterson-UTI Energy, Inc.
In other recent news, Patterson-UTI Energy has been experiencing notable developments. JPMorgan and ATB Capital Markets have revised their price targets for the company, lowering them to $12.00 and $11.00 respectively, while maintaining neutral and outperform ratings. This decision follows Patterson-UTI Energy's encounter with unbooked time in its hydraulic fracturing calendar, anticipated to continue for the remainder of the year. The company expects a slight decline in third-quarter gross profit for Completion Services, contrary to previous guidance projecting improvement.
Patterson-UTI Energy has reported stable drilling rig counts for August 2024, maintaining an average of 107 operating rigs in the United States. The company also disclosed an agreement to retain James M. Holcomb, the Executive Vice President and Chief Business Officer, through 2026, with a transition to an advisory role planned until 2030. Furthermore, the company has indicated a reduction in capital expenditures for 2024, projecting to spend $700 million, below the previous forecast of less than $740 million.
In financial highlights, Patterson-UTI Energy's Q2 2024 earnings report revealed a total revenue of $1.348 billion, a net income of $11 million, and an adjusted EBITDA of $324 million. However, ATB Capital Markets has revised its EBITDA forecasts for the company, decreasing them by 3% for 2024 and 8% for 2025. Despite these adjustments, Patterson-UTI Energy continues to anticipate increased activity in gas-related drilling in 2025. These are the recent developments for Patterson-UTI Energy.
InvestingPro Insights
As Patterson-UTI Energy (NASDAQ:PTEN) ventures into the Middle Eastern market through its new joint venture, InvestingPro data provides additional context to the company's financial position and market performance.
Despite the strategic expansion, Patterson-UTI's stock has faced challenges recently. InvestingPro data shows that the company's stock has taken a significant hit over the last week, with a 1-week price total return of -10.67%. This short-term decline is part of a broader trend, as the stock has experienced a -43.28% price total return over the past year.
However, it's worth noting that Patterson-UTI maintains a strong dividend track record. An InvestingPro Tip highlights that the company has maintained dividend payments for 21 consecutive years, demonstrating a commitment to shareholder returns. Currently, the stock offers a dividend yield of 4.2%, which may be attractive to income-focused investors.
From a valuation perspective, Patterson-UTI's Price to Book ratio stands at 0.65, suggesting the stock might be undervalued relative to its book value. This could be of interest to value investors, especially considering the company's recent strategic moves.
For those considering a deeper dive into Patterson-UTI's prospects, InvestingPro offers 11 additional tips that could provide valuable insights for investment decision-making.
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