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UPDATE 2-Patterson-UTI says it expects 2015 to be "challenging"
February 5, 2015 / 1:02 PM / 3 years ago

UPDATE 2-Patterson-UTI says it expects 2015 to be "challenging"

* Halves 2015 new rig construction program

* Q4 earnings $0.39/shr vs $0.11/shr last year

* Q4 rev $901.2 mln vs $658.8 mln last year

* Shares rise as much as 6 pct (Adds details from conference call, background, updates shares)

By Darshana Sankararaman and Anet Josline Pinto

Feb 5 (Reuters) - Land rig provider Patterson-UTI Energy Inc warned that 2015 would be “challenging,” having received indications that customers could terminate a number of longer-term contracts early.

The company expects 20 rigs to be affected and to receive early termination payments of about $40 million in the first half of the year, it said on a post-earnings conference call.

Patterson has halved its rig construction program for the year to 16 new high-tech Apex rigs, mirroring a 50 percent slump in crude oil prices since June, which has led to oil producers slashing drilling budgets.

The company, which had earlier planned to build eight new APEX rigs each quarter, said it would cut its capital budget by 29 percent to about $750 million for the year.

Patterson’s decision follows rival Helmerich & Payne Inc’s announcement last week that it would halve its FlexRig construction program, cut 2,000 jobs and reduce spending by 16 percent.

Patterson had an average of 210 rigs drilling in the United States in the fourth quarter and said its U.S. rig count had dropped 17 percent since peaking in October. It said it expects this number to fall by a fifth in the current quarter.

The company’s shares, however, rose as much as 6 percent to $17.96 on the Nasdaq, boosted by a rally in global crude prices on Thursday.

Patterson said it expected revenue from its pressure-pumping business to fall by a fourth on a sequential basis, hurt mainly by weak prices and lower utilization of its rigs.

Revenue from the business rose 70 percent to $397.7 million in the fourth quarter from a year earlier.

The company also said headcount had “decreased at a slightly higher rate,” without giving more details.

Patterson’s net income more than tripled to $57.6 million, or 39 cents per share, in the quarter ended Dec. 31. Revenue rose nearly 37 percent to $901.2 million. (Editing by Simon Jennings and Sayantani Ghosh)

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