(By Balachander) RBC Capital Markets downgraded rating on shares of Patterson-UTI Energy Inc. (NASDAQ:PTEN) to "Sector Perform" from "Outperform", citing developing industry headwinds.
"Our field-level channel checks indicate that the rapid decline in NGL and WTI prices has begun to impact the land drilling market, a point emphasized in Monday's reduced guidance from HP and PDC," RBC analyst Kurt Hallead wrote.
In a softening NAM market, Hallead expects reduced demand from E&P companies for rigs, which should pressure both volume and pricing/margins for the NAM land drilling industry.
Hallead, who also lowered price target to $16.00 from $24.00, reduced 2012 EPS estimate for the company to $1.88 from $2.07 and 2013 EPS estimate to $1.27 from $2.14.
The analyst's revised forecast calls for PTEN to maintain its market share within a declining rig count environment.
Given current oil/NGL prices, Hallead sees potential for an increasingly competitive environment among drillers as rigs roll from contract into the spot market.
Houston, Texas-based Patterson-UTI provides domestic land-drilling services to major and independent oil and natural gas companies.
The stock, which has been trading between $12.81 and $34.09 over the past year, rose 0.84 percent to trade at $13.21 on Tuesday.