Shares of Patterson-UTI Energy Inc. (PTEN) hit a 52-week high of $28.47 on Friday, March 25. The onshore contract dealer has seen its share price climb more than 100% since the end of June last year, as investors have been buying stocks of the company for its attractive fundamentals and positive outlook. The turnaround in fuel prices amid recent optimism about economic recovery have added to this bullish sentiment.
Patterson-UTI – the second-largest North American land drilling contractor after Nabors Industries Ltd. (NBR) – has a Zacks #1 Rank (short-term Strong Buy rating) in the short run.
The company, which had a heavy spot market exposure, was hit badly by the financial crisis with operators tending to release land rigs to preserve cash. However, Patterson-UTI Energy has recovered almost all its lost market share, benefiting from its growing premium land rig fleet and the current boom in pressure pumping services (an umbrella term used to describe a number of vital services performed on new and existing wells).
Since the last few quarters, management has indicated that U.S. drilling activity has been picking up, reflected by the sequential improvement in rig count. Patterson-UTI Energy also stated that there is considerable tightness in the market for shale-suitable rigs, and dayrates across the rig fleet have been going up.
Additionally, the company’s stellar financial health (free cash flow positive and a debt-free balance sheet) stands it in good stead. As such, we believe Patterson-UTI Energy is well positioned going forward and view it as an attractive investment.
Houston-based Patterson-UTI is one of the largest onshore contract drillers in the U.S. with approximately 350 land-based rigs operating 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.
NABORS IND (NBR): Free Stock Analysis Report
PATTERSON-UTI (PTEN): Free Stock Analysis Report
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