PTEN
Patterson-UTI Energy, Inc.
$12.31
Oil & Gas E&P
85%
FCF at Price Deck × Multiple
Moderate
·
Conviction
Overvalued
Trading 31.1% above fair value
You pay
$12.31
Bear
$3.56
Fair
$9.39
Bull
$17.17
Bear
$3.56
-71.1%
FCF $261M × 8x
Fair
$9.39
-23.7%
FCF $372M × 11x
Bull
$17.17
+39.5%
FCF $484M × 14x
Key Value Driver
Oil price assumption ($75/bbl base case)
Implied Market Multiple
14.9x
Summary
Our base-case estimate uses a valuation based on free cash flow under different commodity price assumptions and a valuation multiple. We then blend that result with the average analyst price target of $11.00 from 53 analysts, using a 35% weight on analyst consensus. That produces an estimated intrinsic value of $9.39 per share.
Warnings
If oil drops to $60/barrel, the stock could fall -74%. Check whether the company can survive at low prices and still pay its dividend.
Where you think oil prices will settle long-term drives over 80% of this valuation. The biggest risk isn't the company itself — it's getting the commodity price wrong.
Key Risks
- Growth DCF inappropriate — commodity volumes do not compound
- Geopolitical premiums are real but historically temporary
- Reserve replacement ratio below 100% for 3 years is existential