Patterson-UTI (PTEN) Rig Count Continues to Increase - Analyst Blog

Onshore contract driller, Patterson-UTI Energy Inc. (PTEN) declared that its Sep 2014 drill rig count has increased by 3 from Aug 2014 to reach an average of 221. The company operated 211 rigs in the U.S. and 10 in Canada last month.

Patterson-UTI revealed that for the three months ending Sep 30, its rig count averaged 209 in the U.S. and 10 in Canada.

Patterson-UTI is a major onshore contract driller in the U.S. with over 275 land-based rigs that operate primarily in the oil and natural gas producing regions of North America. The company's increasing premium land rig fleet and the expected rise in demand for such services should lead to further growth in the near term.

Moreover, owing to the emergence of major shale plays that are yielding impressive results over the last few years, there has been an overwhelming requirement of increasingly complex drilling. With its technologically advanced ‘Apex' rigs – that command higher dayrates and utilization – constituting around 65% of its total fleet, Patterson-UTI is well poised to expand further in the shale-drilling market.   

Additionally, onshore drillers like Patterson-UTI are set to benefit from growth in oil-focused horizontal drilling. The technique, which considerably improves well productivity, requires new and complex technology that enables drillers to charge higher rates. As land drilling activity continues to thrive, the booming rig demand will improve pricing across the fleet.

Patterson-UTI looks good on the earnings front as well. The company has delivered positive earnings surprises in three of the four trailing quarters with an average surprise of 25.86%. Moreover, upward revisions indicate the company's bright prospects.

Currently, Patterson-UTI has a Zacks Rank #2 (Buy). One could also consider other oil and gas drilling stocks like Ocean Rig UDW Inc. (ORIG), Pioneer Energy Services Corp. (PES) and Helmerich & Payne, Inc. (HP). While Ocean Rig and Pioneer Energy sport a Zacks Rank #1 (Strong Buy), Helmerich & Payne holds a Zacks Rank #2.