Patterson-UTI Rig Count Inches Up - Analyst Blog

Onshore contract driller Patterson-UTI Energy Inc. (PTEN) declared its November 2010 drill rig count to average at 193, up slightly from 192 in the previous month. The company operated 182 rigs in the U.S. and 11 in Canada in November, compared with 180 rigs in the U.S. and 12 rigs in Canada during October.

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 push up  the 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 193.

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

The number of rigs operating during the quarter averaged 178 (170 rigs located in the U.S. and 8 in Canada), compared with 73 average rigs operating in the third quarter of 2009. The count was also up from 156 rigs in operation in the June quarter.

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.

Patterson-UTI, which competes with other U.S. onshore drilling companies, including Nabors Industries Ltd (NBR), currently has a Zacks #3 Rank (short-term 'Hold' rating).

 
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