Patterson-UTI: 210 Rigs at Work - Analyst Blog


On Jul 3, 2014, onshore contract driller, Patterson-UTI Energy Inc. ( PTEN ) announced that its Jun 2014 drill rig count increased by 8 from May 2014 to reach an average of 210. The company operated 204 rigs in the U.S. and 6 in Canada last month.

Patterson-UTI revealed that for the three months ending Jun 30, the rig count of the company averaged 201 in the U.S. and 3 in Canada.  

Patterson-UTI's activity levels in the U.S. peaked in early Oct 2008, with a rig count of 275. Since then, through the second quarter of 2009, the company witnessed a sharp and rapid decline in rig count owing to decreased demand, largely caused by lower natural gas prices .

However, recently, the statistics have been improving on a rise in rig demand. Furthermore, as several companies are shifting focus on horizontal drilling, Patterson-UTI seems poised to benefit from its portfolio of high-specification rigs and a dominant market position.

Patterson-UTI is a major onshore contract driller in the U.S. with approximately 275 land-based rigs that operate mostly in the oil and natural gas producing regions of North America. The company's technologically advanced 'Apex' rigs are the key to its success. Patterson-UTI's proprietary design makes the rigs move faster than conventional rigs, drill quicker and more efficiently than conventional rigs, and allows a safer operating environment.

On the flip side, Patterson-UTI's operating cost has been increasing significantly over the last three quarters. We are concerned about persistently rising expenses which might hamper the company's future profitability.

As such, Patterson-UTI currently sports a Zacks Rank #3 (Hold), implying that it is expected to perform in line with the broader U.S. equity market over the next one to three months.

Meanwhile, one can look at better-ranked players in the same industry like Helmerich & Payne Inc. ( HP ), Parker Drilling Co. ( PKD ) and Tesco Corporation ( TESO ). All these stocks carry a Zacks Rank #1 (Buy).

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , Business , Stocks

Referenced Stocks: PTEN , HP , TESO , PKD

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