Another Gain in Patterson Rig Count - Analyst Blog

Onshore contract driller Patterson-UTI Energy Inc. (PTEN) declared its October 2010 drill rig count to average at 192, up from 184 in the previous month. The company operated 180 rigs in the U.S. and 12 in Canada in September, compared with 175 rigs in the U.S. and 9 rigs in Canada during September.

Patterson-UTI's activity levels in the U.S. peaked in early October 2008 with a rig count of 275. Since then, till 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 credit.

However, during the last few quarters, there have been signs that companies were beginning to bring rigs back on line amid signs of economic stabilization that could drive up energy demand. This is reflected in Patterson-UTI's monthly rig count numbers, which recovered from a low of 60 in May 2009 to the current level of 192.

During the third quarter earnings release, management indicated that U.S. drilling activity is picking up as reflected by the sequential improvement in rig count. Patterson-UTI also stated that there is considerable tightness in the market for shale-suitable rigs and dayrates across the rig fleet have been going up.

The company activated 5 new technologically-advanced ‘Apex' rigs during the third quarter of 2010 and expects to activate a total of 21 during the year. Patterson-UTI has entered into long-term contracts for all of these new rigs.

Patterson-UTI is one of the largest onshore contract drillers in the U.S. with approximately 350 land-based rigs that operate primarily in the oil and natural gas producing regions of North America. Additionally, the company is engaged in the exploration and production business and provides pressure pumping services.