Onshore contract driller
Patterson-UTI Energy Inc.
) declared that its Sep 2013 drill rig count increased by one
from the previous month to average out to 191. The company
operated 182 rigs in the U.S. and 9 in Canada in Sep.
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For the quarter ending Sep 30, the company's rig count averaged
181 in the U.S. and 8 in Canada.
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.
However, natural gas prices have recovered significantly from
their multi-year lows amid signs of economic stabilization.
Moreover, as the weather becomes cooler, natural gas demand is
expected to increase, which would help set an increasing price
trend in the coming quarters.
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. The company operates
primarily in three segments - contract drilling, pressure
pumping, and oil and natural gas production and exploration -
with contract drilling being the most significant contributor to
the operating income.
Though Patterson-UTI reported weak second quarter results, it
consistently gave good performances in the quarters before. The
company had an average surprise of 11.90% for the last four
quarters and we expect long-term earnings growth of 1.90%.
Patterson-UTI currently retains 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 consider other stocks in the energy sector
Stone Energy Corp.
Pioneer Energy Services Corp.
) as good investment opportunities. All these stocks currently
sport a Zacks Rank #1 (Strong Buy).