Patterson-UTI Energy Inc. (PTEN) saw its shares climb 3.1% to $12.39 in Thursday's trading session, outperforming both its oilfield services peers and the broader market. The gain came even as crude oil prices slipped, highlighting a shift in investor focus from near-term commodity price movements to the company's robust operational outlook.
Market Context and Peer Performance
The broader market edged higher, with the SPDR S&P 500 ETF adding 0.4%, while the United States Oil Fund, which tracks crude futures, fell 2.9%. Patterson-UTI's advance outpaced Halliburton, which rose 0.6%, and brought it near Baker Hughes, up 2.9%. SLB also gained 2.0%. The VanEck Oil Services ETF climbed 1.9%, and the SPDR S&P Oil & Gas Equipment & Services ETF was up 2.2%.
Divergence from Oil Prices
The move underscores that oilfield services stocks are not always directly tied to crude prices. Brent and U.S. crude settled about 3% lower Thursday as traders weighed the potential for an Iran deal linked to an Israel-Lebanon ceasefire. However, U.S. crude stockpiles dropped by 8 million barrels last week on strong exports and refinery runs, according to Reuters, providing some support.
Drilling Activity and DUC Wells
Shale drillers face a shrinking backlog of drilled-but-uncompleted wells (DUCs), which fell to the lowest level since at least 2013, Reuters reported last week. Matthew Bernstein at Rystad Energy noted that the low DUC count makes finishing new wells quickly “largely unfeasible.” Brandon Myers of Novi Labs described DUCs as a “shock absorber,” underscoring the need for fresh drilling activity.
Patterson-UTI's May investor deck outlined plans to end the second quarter with 95 active U.S. rigs and target more than 100 by year-end. The company is in discussions with both public and private customers to add rigs in the second half. Leading-edge dayrates—the daily rig prices—are up by a mid-single-digit percentage since early 2026, signaling stronger pricing power.
Financial Guidance
Patterson-UTI is guiding for second-quarter adjusted EBITDA of around $220 million. Adjusted EBITDA is earnings before interest, taxes, depreciation, and amortization, with further adjustments for items management says are not part of the core business. The company set 2026 net capital spending at about $600 million, factoring in asset sales, with growth capex expected to benefit the business mainly from 2027 onward.
In the first quarter, Patterson-UTI posted revenue of $1.1 billion, a net loss to common stockholders of $25 million, and adjusted EBITDA of $205 million. CEO Andy Hendricks called the second quarter a “market inflection,” while CFO Andy Smith pointed to “strong free cash flow potential” for the year.
Rig Count and Debt Management
Baker Hughes reported the U.S. rig count at 562 as of May 29, up four for the week but still one rig fewer than the same week last year. The slow climb reflects cautious industry sentiment despite improving demand signals.
Patterson-UTI is proactively managing its debt. In a May SEC filing, the company agreed to sell $500 million of 6.050% senior notes due 2036. Proceeds will be used to redeem about $482.5 million of 3.95% senior notes due 2028, plus cash and possible borrowings under its revolving credit line. The move results in more expensive debt but extends maturities, providing financial flexibility.
Risks and Outlook
The rally could face headwinds. Potential risks include a further drop in oil prices, slower customer approvals, or difficulty passing higher costs along, all of which could chill rig reactivations. Patterson-UTI has said second-quarter reactivation and mobilization costs are running $5 million to $10 million. For now, the market is trading the stock as if customers want activity, not just higher crude prices.
