Onshore contract driller
Patterson-UTI Energy Inc.
) declared that its May 2013 drill rig count averaged 185, down
from 189 in the previous month. The company operated 184 rigs in
the U.S. and 1 in Canada in May, compared with 186 rigs in the
U.S. and 3 in Canada during Apr this year.
Patterson-UTI's activity levels in the U.S. peaked in early Oct
2008 with a rig count of 275. From then through the second
quarter of 2009, the company witnessed a steep and rapid decline
in rig count on the back of decreased demand, largely caused by
lower commodity prices for natural gas and tighter access to
However, with natural gas prices looking up amid signs of
economic stabilization, Patterson-UTI's monthly rig count numbers
have recovered sharply. In fact, its current rig count is up more
than 3 times from a low of 60 in May 2009.
Houston, Texas-based Patterson-UTI Energy is one of the largest
onshore contract drillers in the U.S. with more than 300
land-based rigs that operate primarily in the oil and natural gas
producing regions of North America.
Buoyed by Patterson-UTI's growing premium land rig fleet and the
expected demand uptick for such services; we are confident about
the company's near to medium term outlook. However, we remain
wary of increased labor costs for contract drilling that may lead
to slower margin growth going forward.
This accounts for Patterson-UTI's current 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
Newpark Resources Inc.
Exterran Partners L.P.
Dawson Geophysical Co.
) as good buying opportunities. These energy equipment service
providers - sporting a Zacks Rank #1 (Strong Buy) - have solid
secular growth stories with potential to rise significantly from
DAWSON GEOPHYS (DWSN): Free Stock Analysis
EXTERRAN PTNRS (EXLP): Free Stock Analysis
NEWPARK RESOUR (NR): Free Stock Analysis
PATTERSON-UTI (PTEN): Free Stock Analysis
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