Onshore Drillers

[dan_s]

With the onshore active rig count continuing to move higher, at a faster pace than most forecasts, I remain bullish on all of the onshore drillers on our Watch List. Patterson-UTI (PTEN) is my top pick because of its aggressive move into the pressure pumping business and the fact that it has the most rigs ready for immediate contracts. My Fair Value estimate for PTEN is $42.00 (compared to First Call's 12-month price target of $41.70) - Dan

Scott Gruber, CFA, Senior Research Analyst for Sanford C. Bernstein & Co., LLC: "I'm still bullish, despite the macro risks. I'm generally a believer that the economic recovery continues, albeit at a moderating pace at least near term. But fundamentally I don't foresee crude prices falling below the marginal cost of supply, which we believe is around $85 to $90 a barrel. And if that is the case, the revenue opportunity for the oil services companies continues to grow, both near term and over the medium term. So I remain bullish, even given what some view as rising macroeconomic risks.

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