Oilfield services firm Patterson-UTI Inc. reported a smaller-than-expected loss on Oct. 24, as cost cuts helped it limit the impact of an ongoing decline in North American shale activity.
An investor push towards higher returns instead of growth amid weak oil prices has prompted U.S. shale producers to reduce spending, forcing rig providers to lower costs in the face of weak demand.
The Houston-based company's direct operating costs fell 28.5% in the quarter. It also lowered its full-year capital spending forecast to $350 million from previous projection of $400 million.
Patterson-UTI's move comes after bigger rival Halliburton Co. promised more cost cuts after reporting a bigger-than-expected drop in quarterly revenue earlier this week due to dwindling demand from oil and gas producers.
The shale slowdown across North America more than halved Patterson-UTI's revenues and margins in the pressure pumping business, with the company warning that activity is likely to fall further in the current quarter.
"As pressure pumping activity is expected to fall further in the fourth quarter, we will continue to evaluate the economics of working versus idling spreads on a spread-by-spread basis," CEO Andy Hendricks said.
Reuters had reported in June the company is exploring potential divestment of its pressure pumping business, a deal that could be worth around $1 billion.
Separately, Canadian rival Precision Drilling Corp. reported a narrower quarterly loss, as it reaped the benefits of efforts to cut costs.
Net loss attributable to Patterson-UTI widened to $262 million, or $1.31 per share, in the third quarter ended Sept. 30, from a loss of $75 million, or 34 cents per share, a year earlier.
The company took multiple charges in the quarter, including $173 million for the retirement of 36 rigs and other drilling assets.
Excluding items, loss per share was 27 cents.
Analysts had on average estimated loss of 30 cents per share, according to Refinitiv IBES data.
Revenues fell 31% to $598.5 million.
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