H&P - AC rigs are in high demand

[mingya]

The Q4 call is quite upbeat and worth a listen. Not only are the getting more new build orders, but the utilization of AC rigs and new customers (in Permian) is what stands out. It is one of the many keeper stocks that Dan has introduced - great consistent execution.

Q I was struck by your commentary about your down -- being down to 15 idle AC rigs, just given that it seems as though most of this calendar year you've been kind of bouncing around between 18 and 20 idle AC rigs. And so I guess the comment I was struck by was when you had mentioned 9 of those 15 idle AC rigs are already committed for work.

A There's a churn that's going on. And I think on the last call, we had commented that it appeared that there were less rigs. And maybe it wasn't on the last call, maybe it was in some of our conferences in September and October. But there's just less customers giving rigs back to us. We're still putting rigs to work, but there's less rigs that are getting released. And so I think that's what we're seeing and so clearly, the demand has improved. We're seeing fewer customers releasing rigs, they're hanging onto their high-performing AC rigs. And we're in a position where we just have a handful of AC rigs that are available as existing rigs in our spot market. So we see that as a positive, and again, I think it could speak to a little bit more pricing power for us -- for us and others in the industry.

The other point was the Permian Basin is ripe for AC rigs and also the number of new customers for H&P

Q Just out of curiosity, how many customers are you working for now in the U.S. versus, say, 6 months ago or 12 months ago?

A our total customer count is right at 50. I think that's right in the U.S. And that's probably up 10 customers over the last year. We've added quite a few new customers. We've had quite a few new customers in the Permian and the Eagle Ford. And several of those are smaller customers, smaller E&Ps. So that's been encouraging. As you know, most of our customers, a large percentage of our customers are majors and large independents. So it's been nice to do more work for some of the smaller independents.

[dan_s]

HP is definitely a "keeper". They have the highest quality onshore rig fleet in the world. Their rigs are always in high demand and perfect for the big shale horizontal wells. As the industry moves to development drilling from pads, HP rigs will go on very long contracts, so visibility of earnings is much higher and HP deserves to trade at a high multiple.

HP is a "Core Holding" quality stock.

Read our profiles for PDS and PTEN. I think both have 20% to 30% upside over the next six months.

I follow a lot of E&P companies and most of them are saying they will add rigs next year.