Pritchard Says Go Long the Land Drillers

Pritchard Capital is out with its oil services industry update, and says to go long the land drillers, including Patterson-UTI Energy, Inc. PTEN and Pioneer Drilling Co. PDC. In the research note, Pritchard writes, "Channel checks with the land drillers under our coverage indicate demand is holding firm, particularly in the oily and liquids plays, pricing is improving across all rig classes, and cost inflation, specifically for crews, is unlikely to have a material adverse impact on results this quarter. Additionally, start-up costs will be below prior quarters and fewer mobes from basin-to-basin will likely help several of the smaller drillers report impressive sequential bottom-line improvement. While we expect fewer newbuild announcements this quarter than we did in Q2 2010, with just the big four announcing plans for 32 incremental rigs, we believe several opportunities are in the hopper and that from Q4 2010 thru 1H 2011 several of the smaller drillers come to market for new equipment."