NEW YORK (TheStreet) -- Shares of Patterson-UTI Energy (PTEN) were falling, sharply lower by 6.03% to $20.11 in midday trading Tuesday amid worries that U.S. shale oil producers could increase drilling activity, weighing down oil prices, according to Reuters.
Last Friday, data released by Baker Hughes (BHI) showed that U.S. drillers reduced the number of rigs by just one. Analysts as Goldman Sachs said oil prices were at a level that would spur activity, Reuters reports.
Plus, analysts at Morgan Stanley said the dollar may strengthen further, which would drive oil prices down.
The strength in the dollar affects commodities like oil, that are priced in dollars by making them more expensive for holders of other currencies, Reuters noted.
WTI crude for July delivery was trading down 2.7% to $58.11 as of 12:37 p.m. ET today, while Brent crude for July delivery was also down 2.9% to $63.62 a barrel.
Snyder, Texas-based Patterson-UTI owns and operates fleets of land-based drilling rigs in the U.S.
The company provides pressure pumping services to oil and natural gas operators primarily in Texas and the Appalachian Basin.
Separately, TheStreet Ratings team rates PATTERSON-UTI ENERGY INC as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:
"We rate PATTERSON-UTI ENERGY INC (PTEN) a HOLD. The primary factors that have impacted our rating are mixed, some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including feeble growth in the company's earnings per share, deteriorating net income and disappointing return on equity."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The current debt-to-equity ratio, 0.30, is low and is below the industry average, implying that there has been successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.02, which illustrates the ability to avoid short-term cash problems.
- Net operating cash flow has significantly increased by 125.62% to $404.99 million when compared to the same quarter last year. In addition, PATTERSON-UTI ENERGY INC has also vastly surpassed the industry average cash flow growth rate of 12.48%.
- PTEN, with its decline in revenue, slightly underperformed the industry average of 1.6%. Since the same quarter one year prior, revenues slightly dropped by 3.0%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Energy Equipment & Services industry. The net income has significantly decreased by 73.8% when compared to the same quarter one year ago, falling from $34.82 million to $9.13 million.
- The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. In comparison to the other companies in the Energy Equipment & Services industry and the overall market, PATTERSON-UTI ENERGY INC's return on equity is significantly below that of the industry average and is below that of the S&P 500.
- You can view the full analysis from the report here: PTEN Ratings Report