I remain bullish on the drillers

[dan_s]

The North American land drilling cycle appears to be intact despite the plunge in natural gas prices and cuts in dry gas drilling across the exploration and production industry. This conclusion is based on an examination of recent operational data and management commentary during the earnings season.

Read more: http://stocks.investopedia.com/stock-an ... z1lunyqNVJ

Basic Energy Services (NYSE:BAS) is an oil service company that provides well site services to onshore oil and gas wells in the United States. The company just released operating data for January 2012, providing an excellent look at recent activity levels.

The company reported a 76% well servicing rig utilization rate for the month, up from 69% in December 2011. It reported drilling rig day's utilization of 84% in January 2012, down from 89% in December 2011. The company estimates that this decline will be temporary and is looking for 90% utilization over the next few quarters.

It also highlighted the Permian Basin area as having strong demand in January 2012. The company estimates that 70% of its current activity is related to development activity in crude oil and other liquids areas.

Baker Hughes (NYSE:BHI) reported that the land rig count in the U.S. averaged 1,960 in January 2012, about flat with the 1,961 working in December 2011. This still represents strong growth over January 2011, when 1,685 rigs were working.

[bobs]

Dan...With PTEN and HP plus the other land oriented drillers planning on taking delivery of so many addtional rigs could there be a supply imbalance that would hurt pricing and create simply more rigs than needed???

[dan_s]

We are a long way from an oversupply for the high end rigs.

It is very important to note that "all rigs are not create equal". HP and PTEN new builds are all for existing orders.

Yes there are a lot of low HP rigs. More than the market needs today.

[setliff]

"Yes there are a lot of low HP rigs"

i am sure dan means low horse power with this statement if anyone is wondering.

[dan_s]

Yes, I do me low horsepower rigs. HP FlexRigs are in very high demand.

NEW YORK (MarketWatch) -- Goldman Sachs on Monday upgraded shares of Oceaneering International Inc. /quotes/zigman/236914/quotes/nls/oii OII +2.05% to its Americas conviction buy list. Noble Corp. /quotes/zigman/479523/quotes/nls/ne NE -0.05% and Ensco PLC /quotes/zigman/581034/quotes/nls/esv ESV +0.81% were upgraded to the Americas buy list. Analysts also removed Helmerich & Payne /quotes/zigman/229188/quotes/nls/hp HP -0.17% from its Americas conviction buy list and cut Baker Hughes /quotes/zigman/219109/quotes/nls/bhi BHI -0.12% and Patterson-UTI Energy Inc. /quotes/zigman/85795/quotes/nls/pten PTEN -0.61% from their Americas buy list. Analysts said the new ratings for the six stocks mark a "tactical pause on North America land," while adding more offshore to its recommendation mix.

We are working on new "Drillers Watch List" that will cover 7 onshore drillers and 8 offshore drillers. I plan to move HP and PTEN to this Watch List and add more "prime takeover targets" to the Sweet 16. EOG is one of them.