PTEN · Patterson-UTI Energy
Conviction · Low · more likely to lag the S&P 500 over the next three months
Wrong if: a daily close above $13.32
Note written ·
Price against the kill line
17.6% clear of its kill line on the 13 November 2026 close.
How to read this
This note expects the shares to lag the market, so its kill line sits above the price: a close above the red mark would prove the view wrong. Prices run from low on the left to high on the right. The dot is where the stock closed on 13 November 2026, left of the mark while it is below the line; a dot right of the mark has closed through it.
The scale is stretched near the line, so close calls are easy to see. More than 8% from the line, the stock reads well clear, with a hollow dot to show the figure is off the drawn scale.
The kill line is the research note's own test. The portfolio sells on business facts, not on a price. How the portfolio decides
Three months against the kill line
Daily closes, to . Red: the kill line, a daily close above $13.32, on record since 11 November 2026. The shares are down 9.5% since the close; the S&P 500 is down 2.1% over the same sessions. Figures in the note can cover a different window.
Kill line
A daily close above $13.32, just under the 52-week intraday high of $13.39 set on 10 September 2026, which would show the shares leading again. A fourth-quarter Drilling Services adjusted gross profit above the roughly $150 million guide would also point to leadership.
Research onlyNot in the portfolio.
Last catalyst
Key figures from the filings · Energy
Quarter to 30 September 2026, filed 2 November 2026; valuation at the 13 November 2026 close
- Revenue, latest quarter ($M)
- 1,342
- Revenue, change on a year (%)
- +14.1
- Operating margin (%)
- 4.7
- Free cash flow, four quarters ($M)
- 266
- Net cash, cash less debt ($M)
- −897
- Enterprise value to sales (×)
- 1.0
- Enterprise value to operating income (×)
- 121.2
- Free-cash-flow yield (%)
- 6.4
All filed numbers
What Patterson-UTI Energy reports to the SEC in its quarterly and annual filings. Each group states its period and filing date once; a figure dated otherwise says so. Built from the filings known on .
| Quarter to | Revenue ($M) | On a year (%) | Operating margin (%) |
|---|---|---|---|
| first filed | 1,342 | +14.1 | 4.7 |
| first filed | 1,228 | +0.7 | −0.6 |
| first filed | 1,117 | −12.7 | −1.3 |
| first filed | 1,151 | −1.0 | 0.0 |
| first filed | 1,176 | −13.4 | −2.4 |
| first filed | 1,219 | −9.6 | −2.4 |
| Pre-tax income ($M) | 47.1 |
| Net income ($M) four quarters: −25.0 | 28.4 |
| Diluted shares, change on a year (%) against the quarter to 30 September 2025 | +0.4 |
| Operating cash flow ($M) | 818 |
| Capital spending ($M) | 552 |
| Free cash flow ($M) | 266 |
| Cash and short-term investments ($M) | 337 |
| Debt ($M) non-current long-term debt | 1,235 |
| Net cash, cash less debt ($M) | −897 |
| Deferred revenue ($M) −11.9% on a year | 3.4 |
| Backlog, orders not yet delivered ($M) +65.6% on a year | 424 |
| Receivables ($M) | 946 |
| Inventory ($M) | 144 |
| Shareholders' equity ($M) | 3,071 |
| Market value ($M) | 4,162 |
| Enterprise value, market value plus net debt ($M) | 5,060 |
| Enterprise value to sales (×) | 1.0 |
| Enterprise value to operating income (×) | 121.2 |
| Price to earnings (×) | Not meaningful |
| Price to book value (×) | 1.4 |
| Free-cash-flow yield (%) | 6.4 |
Short interest (FINRA, settled 15 October 2026, published 26 October 2026): 7.1% of shares outstanding sold short, 4.4 days of average trading to cover, −11.9% since the previous report.
| Window | Bought | Sold |
|---|---|---|
| 90 daysfrom | $0 | $12.7M |
| 12 monthsfrom | $0 | $33.9M |
The thesis
Patterson-UTI Energy's business is recovering, yet its shares are more likely to lag the S&P 500 than lead it over the next three months. The shares closed at $10.67 on 12 November 2026, 20.3% below the 52-week intraday high of $13.39 set on 10 September 2026, and Citigroup lowered its target to $11 on 10 November 2026. The company's November drilling-activity release, expected around 8 December 2026, shows whether the U.S. rig average holds near the fourth-quarter guide of about 104.
The 29 October 2026 third-quarter release reported revenue of $1.34 billion, adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) of $264 million, and net income attributable to common stockholders of $28.4 million, or $0.07 per diluted share. Drilling Services adjusted gross profit was $149 million against a guide of about $145 million. Benzinga reported that consensus expected $0.03 per share and $1.307 billion of revenue.
The shares have recovered from a close of $9.86 on 9 November 2026 and gained in each of the next three sessions. They remain below the 50-day average, and the largest cluster of insider sales in the Form 4 filings came at prices above today's close.
Bullish and bearish views on Patterson-UTI Energy, Inc.
The bull case on Patterson-UTI Energy, Inc. (PTEN), in brief: Drilling profit beat the guide. The bear case: Citigroup moved its target down.
Bull case
- Drilling profit beat the guide. Drilling Services adjusted gross profit was $149 million on $417 million of revenue in the third quarter, per the 29 October 2026 release. The company averaged 101 U.S. rigs and exited the quarter at 104.
- The fourth-quarter guide is higher. Management guided Drilling Services adjusted gross profit to about $150 million on about 104 average rigs, with more reactivations expected in the first quarter of 2027. It said the commodity price environment "continues to support higher customer budgets."
- Rig activity held in October. Patterson-UTI reported an October U.S. average of 104 rigs on 6 November 2026. Baker Hughes counted 604 U.S. rigs for the week ended 6 November 2026, up 56 from a year earlier, per SteelOrbis.
- Brokers raised targets after the report. RBC raised its target to $17 (Outperform), Piper Sandler to $15 (Overweight), Susquehanna to $15, UBS to $13.50 and Morgan Stanley (Equal-Weight) to $13, per Benzinga reports dated 3 November 2026.
- Cash returns continue. The company repurchased $24 million of stock in the third quarter and declared a $0.10 per share dividend payable 15 December 2026 to holders of record on 1 December 2026.
Bear case
- Citigroup moved its target down. Citigroup kept a Neutral rating and lowered its target to $11 on 10 November 2026, the lowest of the post-report targets listed here, and 3.1% above the $10.67 close of 12 November 2026.
- Completion Services missed its guide. Adjusted gross profit was $133 million against a guide of about $140 million, which the company blamed on South Texas sand shortages and Permian trucking delays, per the 29 October 2026 release.
- Drilling Products turns down. Management expects fourth-quarter adjusted gross profit to fall 5–10% from the record $51 million of the third quarter, on lower drilling activity in Saudi Arabia amid regional unrest.
- Insiders sold at higher prices. Chief Executive William Hendricks sold 250,000 shares at $11.91 on 18 September 2026 under a Rule 10b5-1 plan (a pre-arranged selling schedule), and 250,000 at $12.93 on 2 September 2026. Directors and an executive sold between $11.54 and $12.85 from 25 August to 2 September 2026, per SEC Form 4 filings.
- Dilution capacity exists. The automatic shelf registration (Form S-3ASR) filed 26 August 2026 permits future securities offerings. It reports no issuance.
Price setup
The shares closed at $10.67 on 12 November 2026. That is above the 200-day average of $10.61 and below the 50-day average of $11.58, both as of that close. The 3-month change is −5.4%.
The closes of the last six sessions ran from $9.95 on 5 November 2026 and $9.92 on 6 November 2026 to a low of $9.86 on 9 November 2026, then $10.05, $10.42 and $10.67. The 52-week closing low was $5.41 on 20 November 2025.
At $10.67 the shares trade below every post-report target listed above, with Citigroup's $11 the lowest. The market is paying less than any covering broker's view of the drilling recovery.
The case turns on two price conditions. A close back above the 50-day average would show the post-report decline reversing. A close below the 200-day average would show the November rebound failing.
Catalysts ahead
- 1 December 2026: Record date for the $0.10 per share dividend (payable 15 December 2026). Confirms the cash return announced with third-quarter results.
- ~8 December 2026 (est.): Patterson-UTI November drilling-activity release. Shows whether the fourth-quarter average of about 104 U.S. rigs is on track after October's 104.
- ~3 February 2027 (est.): Fourth-quarter 2026 results, estimated from the 4 February 2026 date of the prior year's fourth-quarter report. Shows whether Drilling Services reached about $150 million and Completion Services recovered to about $140 million of adjusted gross profit.
Elapsed catalysts
- 13 November 2026: Baker Hughes weekly U.S. rig count (and each following Friday). Tests whether industry activity supports the company's rig-reactivation path after the 604 total for the week ended 6 November 2026. (passed)
What would change the view
A daily close above $13.32, just under the 52-week intraday high of $13.39 set on 10 September 2026, which would show the shares leading again. A fourth-quarter Drilling Services adjusted gross profit above the roughly $150 million guide would also point to leadership.
What it trades with
Patterson-UTI's shares trade with crude oil and with oil-service peers. Barchart's move write-ups pair the shares with Helmerich & Payne, Nabors Industries, Halliburton and ProPetro, and tie earlier sharp declines to falling crude as Middle East tensions eased. Natural-gas conditions affect the gas-directed part of customer budgets, and Baker Hughes counted 131 gas rigs in the week ended 6 November 2026. Offshore-rig headlines are not a direct read on the company's land drilling, completion and drilling-products business.
The evidence, claim by claim (8)
- Third-quarter 2026 revenue was $1.34 billion, adjusted EBITDA $264 million, and net income attributable to common stockholders $28.4 million ($0.07 per diluted share). Patterson-UTI third-quarter 2026 earnings release (8-K Exhibit 99.1) · as of
- Drilling Services adjusted gross profit was $149 million on $417 million of revenue; the company averaged 101 U.S. rigs and exited the quarter at 104. Patterson-UTI third-quarter 2026 earnings release (8-K Exhibit 99.1) · as of
- Management guided fourth-quarter Drilling Services adjusted gross profit to about $150 million on about 104 average U.S. rigs, and Completion Services to about $140 million. Patterson-UTI third-quarter 2026 earnings release (8-K Exhibit 99.1) · as of
- Completion Services adjusted gross profit was $133 million against a guide of about $140 million, due to South Texas sand shortages and Permian trucking delays. Patterson-UTI third-quarter 2026 earnings release (8-K Exhibit 99.1) · as of
- Patterson-UTI reported an October U.S. rig average of 104. Patterson-UTI October 2026 drilling-activity release · as of
- Baker Hughes counted 604 U.S. rigs (463 oil, 131 gas) for the week ended 6 November 2026, up 56 from a year earlier. SteelOrbis, US rig count week 45, 2026 · as of
- Citigroup maintained a Neutral rating on Patterson-UTI and lowered its price target to $11. Citigroup rating report, 10 November 2026 · as of
- CEO William Hendricks sold 250,000 shares at $11.91 on 18 September 2026 under a Rule 10b5-1 plan. SEC Form 4 filed 21 September 2026 · as of
Sources
- SEC EDGAR
- US rig count increases, Canada decreases · steelorbis.com ·
- Barchart
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