Patterson-UTI (PE1) AI Stock Analysis

Company Guidance

For the fourth quarter, Patterson-UTI expects drilling services rig count to average approximately 104 rigs and exit the quarter above that level, with segment Adjusted gross profit of approximately $150 million; completion services adjusted gross profit of approximately $140 million, higher pricing compared to the third quarter, and normal seasonal factors expected to be more modest this year, as well as the potential for weather-related delays typical of the fourth quarter; drilling products adjusted gross profit to decline 5%-10% compared to the third quarter; other adjusted gross profit to be steady compared to the third quarter; G&A expenses to be approximately $70 million; and depreciation, depletion, amortization, and impairment expense to be approximately $220 million. The company expects 2026 capital expenditures net of proceeds from asset sales to be less than $600 million, another quarter of strong free cash flow in the fourth quarter, and free cash flow to improve meaningfully in 2027, with meaningful improvement in 2027 and beyond. Management expects industry activity to remain relatively steady in the fourth quarter, another step up in demand as customers’ budgets reset into 2027, oil-directed activity to strengthen further into 2027, approximately 8-10 rigs that are economic to put back out, completion capacity to remain relatively steady for the next projected several quarters, and revenue from downhole tools to roughly double in 2026 compared with 2025.