PTEN
Patterson-UTI Energy, Inc.
$9.17
Oil & Gas E&P
85%
FCF at Price Deck × Multiple
Mild
·
Conviction
Fair Value
Trading 6.8% below fair value
You pay
$9.17
Bear
$3.73
Fair
$9.84
Bull
$17.99
Bear
$3.73
-59.3%
FCF $261M × 8x
Fair
$9.84
+7.3%
FCF $372M × 11x
Bull
$17.99
+96.2%
FCF $484M × 14x
Key Value Driver
Oil price assumption ($75/bbl base case)
Implied Market Multiple
11.7x
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 $12.29 from 53 analysts, using a 35% weight on analyst consensus. That produces an estimated intrinsic value of $9.84 per share.
Warnings
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.
Wall Street's average price target is $12.29 (from 53 analysts). Our estimate is 31% below the consensus -- consider that gap carefully.
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