Patterson-UTI Energy, Inc. (PTEN): A Bull Case Theory

We came across a bullish thesis on Patterson-UTI Energy, Inc. (PTEN) on Nugget Capital Partner’s Substack. In this article, we will summarize the bulls’ thesis on PTEN. Patterson-UTI Energy, Inc. (PTEN)'s share was trading at $5.51 as of 2^nd June. PTEN’s trailing and forward P/E were 56.73 and 8.38 respectively according to Yahoo Finance.

Patterson-UTI, following its 2023 acquisition of Nextier, has emerged as a dominant player in U.S. drilling and completions, boasting the country’s largest pressure pumping fleet. This vertical integration enables exploration and production (E&P) companies to rely on a single provider for both drilling and completion services, offering a competitive advantage as the market tightens and access to labor and equipment remains constrained.

NCP anticipates a tightening U.S. oilfield services market in the coming upcycle, driven by recent industry consolidations and ongoing attrition of aging equipment, which has diminished the capacity of service fleets. A key dynamic reshaping the sector is the transition toward next-generation equipment, bifurcating the market into high-spec fleets that command premium pricing and strong margins, versus obsolete fleets relegated to lower rates or idled altogether due to uneconomical operations.

Patterson-UTI’s recent earnings call reinforced this bifurcation, with the company maintaining solid margins despite declining activity levels, underscoring robust demand for high-spec rigs and fleets. This signals that the high-end segment of the oilfield services market is already tight and possibly at a cyclical bottom. NCP believes this creates a powerful setup for outperformance as demand accelerates, particularly in response to the U.S. LNG buildout and record oil and gas production growth, which will require a robust service response just to sustain output. With few investors currently bullish on the sector despite looming demand, NCP sees substantial upside potential. The sector appears poised for significant pricing power and margin expansion over the next 12–18 months, especially for providers like Patterson-UTI.

For a comprehensive analysis of another standout stock covered by the same author, we recommend reading our summary of their bullish thesis on Precision Drilling Corporation (PDS).

Patterson-UTI Energy, Inc. (PTEN) is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 45 hedge fund portfolios held PTEN at the end of the first quarter which was 47 in the previous quarter. While we acknowledge the potential of LYFT as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an extremely cheap AI stock that is also a major beneficiary of Trump tariffs and onshoring, see our free report on the best short-term AI stock.

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Disclosure: None. This article was originally published at Insider Monkey.