Oct 29, 2026 earnings call — Activity recovery and premium equipment demand
Patterson-UTI reported total revenue of $1,314,000,000 for Q3 and said activity recovery is strengthening demand for premium rigs and completion technology.
Revenue $1.3B (est $1.3B) · EPS $0.07 (est $0.04)
Key quotes
"The recovery in U.S. onshore activity gained momentum during the third quarter, with activity levels increasing significantly compared to earlier in the year."
"By year-end, nearly 90% of our active horsepower will be powered at least in part by natural gas."
"Our approach to capital allocation is straightforward: invest in opportunities that strengthen long-term free cash flow and create the most value for our shareholders, while maintaining our strong balance sheet."
Analyst Q&A 11
Competition for rigs between US and abroad
Q (Scott Gruber · Citi): Are you seeing less competition on new tenders because rigs are going abroad? Will you gain U.S. land market share in 2027 given international opportunities?
A: Management said opportunities are increasing in both the U.S. and other markets. They will evaluate returns and upgrade rigs so they can work in the U.S. or abroad if economics are right.
"It's really going to boil down to where can we get the best return for the investment that we have to make to activate the rig or even ship the rig." — Andy Hendricks (CEO)
Drilling products growth and Middle East effects
Q (Jim Rollyson · Raymond James): How many rigs might public E&Ps add next year? And how should we think about Drilling Products growth, with and without Middle East normalizing?
A: Management said rig count has risen fast and they expect it to keep moving higher, with some firmed contracts into next year. On Drilling Products, they said manufacturing capacity in the U.S. is being pushed and they may need to expand other locations to meet demand.
"We may have to look at expanding that in some of our other locations, but that's a good problem to have." — Andy Hendricks (CEO)
Reactivating low-cost rigs and completions capacity
Q (Saurabh Pant · BofA): Are the 8-10 low-cost reactivations net new to industry or share gains from upgrades? If rigs add in 2027, where will completions supply come from?
A: Management said some upgrades swap into operating rigs and some are net adds, and they see rig count rising next year. They said completion demand will rise too, but supply availability is unclear and pricing must recover before it makes sense to add capacity.
"With the increasing rig count to the completion story, the completion demand is going to increase, but it's not clear yet where the supply is going to come from." — Andy Hendricks (CEO)
Frac day rates and high-spec rigs
Q (Alexa Bruno · Goldman Sachs): If completions strengthen in 2027, will pricing move much higher before supply responds? What day rates and durations for high-spec rigs?
A: Management said they will not add industry capacity until pricing recovers; they are upgrading fleets and retiring older rigs so capacity stays level. They gave an example: a recently signed three-year contract for a top-spec rig with day rates over $45,000.
"For instance, we've recently signed a three-year contract to deliver one of those rigs next year, with day rates over $45,000 a day." — Andy Hendricks (CEO)
Sand and trucking issues affecting completions
Q (Derek Podhaizer): How many rigs can be added before capital matters, and how confident are you that completions can handle a demand spike given sand and trucking issues?
A: Management reiterated they have about 8-10 rigs that are economical to return given current pricing and that adding more becomes much more expensive. On completions, they said South Texas sand mines struggled to produce at the mine in Q3 but operations look back on track this month and trucking availability in the Permian appears sufficient.
Balance between rigs and frac fleets
Q (Steven Gengaro · Stifel): Are there advantages from competitors diverting capital away from completions? Is the market balanced between rigs and frac fleets?
A: Management said diverted competitor capital is positive for them and makes entry harder for others, and they are open to acquiring product businesses like Ulterra. They also said the market is a bit short on the completion side and tension is growing between supply and E&P demand.
"I'd say we're a little short. We're a little short on the completion side." — Andy Smith (CFO)
Pricing recovery needed to expand completions
Q (Eddie Kim · Barclays): You recovered about one-third of a ~30% pricing decline. How much recovery could we see next year and what level would prompt you to expand completions? Also, any Saudi drilling product opportunities?
A: Management said they could recover all of their pricing in the next year and possibly more, depending on supply-demand. On Saudi drilling, they said they are not commenting on local frac capacity and they do not have excess U.S. capacity to ship overseas.
"I think we have the opportunity to recover all of our pricing in the next year at some point and potentially even more." — Andy Hendricks (CEO)
Contract duration choices
Q (Josh Silverstein · UBS): Given tight markets, are you taking longer-term contracts at lower prices or keeping short-term to chase higher rates? Are smaller private E&Ps willing to lock longer duration?
A: Management said they mix strategies: they will lock longer-term for upgraded assets to de-risk cost, but keep shorter terms on operating rigs if they expect rates to rise. They added smaller private E&Ps they work with often have multi-year programs and can accept longer contracts.
"We weigh all these scenarios the way that you might manage a bond portfolio as well." — Andy Hendricks (CEO)
Opportunities in Middle East for assets and services
Q (Dan Kutz · Morgan Stanley): Any appetite to send drilling or completion assets to the Middle East, and any trends in ancillary completion services like proppant, gas, or power?
A: Management said mature Middle East markets like Saudi, Kuwait, and Oman currently have sufficient drilling capacity and Saudi is slowing rig count, but their Turnwell JV gives them on-the-ground advantage if outside rigs are ever considered. They also said South Texas issues were mine production shortfalls, not logistics, and those mines are back on track.
"I would say that in some of the more mature markets like Kuwait and Saudi Arabia, even Oman, you've got sufficient drilling contract capacity in those countries." — Andy Hendricks (CEO)
Drivers of recent completions pricing gains
Q (Keith Mackey · RBC): How much of pricing increases are like-for-like versus driven by natural gas fuel (Emerald) substitution, and how much gas substitution can you work into pricing?
A: Management said the mid-single-digit price increase in the quarter was mostly like-for-like pricing improvement, and natural gas-burning Emerald pumps also allow higher pricing because customers value the fuel benefit. They noted they have walked away from agreements to pursue higher pricing.
"All that being said, what we said was mid-single-digit price increases in the quarter." — Andy Hendricks (CEO)
Drivers of North America completions outperformance
Q (Arun Jayaram · JP Morgan): Are you seeing industry-wide shift to natural gas-burning fleets and does that support your pricing gains? Why are your North America completions results stronger than peers?
A: Management said natural gas substitution offers large cost savings and Emerald gas systems are sold out, so customers prefer them and the company can charge more. They added their execution, product quality, and digital infrastructure drive outperformance and noted 60%-70% of completion revenue comes from the biggest 15 U.S. E&Ps.
"I would explain it this way and say 60%-70% of our completion revenue comes from the biggest 15 E&Ps in the U.S." — Andy Hendricks (CEO)