NEAA Blog
Posted: Thu Oct 20, 2011 1:17 pm
This will be posted on my NEAA Blog this afternoon. All EPG members are Red Level members in NEAA so you have access to the stuff on their website. You should check it out. Clay MaHaffey heads up their research team and he has made some incredible picks this year.
Keep an Eye on Patterson-UTI (NYSE: PTEN)
Patterson-UTI Energy, Inc. is one of my Top Picks for NEAA members. I believe the Market still does not grasp the important of the company’s rapidly growing pressure pumping business. Pressure pumping services, used to fracture stimulate many of the wells drilled in the world today, are in high demand in all of the red hot shale plays and PTEN is getting a lot of that work. They are one of the major oilfield service firms in the Permian Basin in West Texas.
The Market is also anticipating a drop in the onshore rig count. I sure don’t see that happening.
As long as crude oil stays over $70/bbl the demand for onshore drilling rigs and pressure pumping services will be strong. If natural gas prices move over $4.00/mmbtu this winter, the demand will be even stronger.
Patterson, like all of the onshore drillers, has sold off to ridiculous levels. It has a strong balance sheet and it is sure to report solid 3rd and 4th quarter results.
Bret Jenson over at Seeking Alpha posted a nice article about the company today. Here are his 8 reasons PTEN is a good value at $18 a share.
1. PTEN is selling in the bottom half of its five-year valuation range based on P/E, P/B and P/CF.
2. The company has beaten earnings estimates each of the last six quarters. The average beat over consensus over the previous four quarters has been 10%
3. It has the largest fleet is the fast growing Permian Basin.
4. PTEN has rapidly increasing earnings. It earned 72 cents in 2010, is expected to earn $2.23 a share in 2011 and $2.86 in 2012. (Per my forecast model, PTEN will earn $3.08 per share in 2012.)
5. Revenue is expected to increase 75% in 2011 and 25% in 2012.
6. Earnings estimates for 2011 and 2012 have increased over the past three months
7. Its forward PE is 6.4, which is a 70% discount to its five-year average.
8. The stock price is way under analysts’ price targets. S&P has a $30 price target on PTEN, Credit Suisse is at $42 and the median analysts’ target is $34. (My “Fair Value” estimate for the company is $41.42/share.)
We have six onshore drillers on the Energy Prospectus Group (www.energyprospectus.com) Watch List. They all appear to be oversold at this time. In addition to PTEN, I like Helmerich & Payne (NYSE: HP) and Unit Corp. (NYSE: UNT).
Keep an Eye on Patterson-UTI (NYSE: PTEN)
Patterson-UTI Energy, Inc. is one of my Top Picks for NEAA members. I believe the Market still does not grasp the important of the company’s rapidly growing pressure pumping business. Pressure pumping services, used to fracture stimulate many of the wells drilled in the world today, are in high demand in all of the red hot shale plays and PTEN is getting a lot of that work. They are one of the major oilfield service firms in the Permian Basin in West Texas.
The Market is also anticipating a drop in the onshore rig count. I sure don’t see that happening.
As long as crude oil stays over $70/bbl the demand for onshore drilling rigs and pressure pumping services will be strong. If natural gas prices move over $4.00/mmbtu this winter, the demand will be even stronger.
Patterson, like all of the onshore drillers, has sold off to ridiculous levels. It has a strong balance sheet and it is sure to report solid 3rd and 4th quarter results.
Bret Jenson over at Seeking Alpha posted a nice article about the company today. Here are his 8 reasons PTEN is a good value at $18 a share.
1. PTEN is selling in the bottom half of its five-year valuation range based on P/E, P/B and P/CF.
2. The company has beaten earnings estimates each of the last six quarters. The average beat over consensus over the previous four quarters has been 10%
3. It has the largest fleet is the fast growing Permian Basin.
4. PTEN has rapidly increasing earnings. It earned 72 cents in 2010, is expected to earn $2.23 a share in 2011 and $2.86 in 2012. (Per my forecast model, PTEN will earn $3.08 per share in 2012.)
5. Revenue is expected to increase 75% in 2011 and 25% in 2012.
6. Earnings estimates for 2011 and 2012 have increased over the past three months
7. Its forward PE is 6.4, which is a 70% discount to its five-year average.
8. The stock price is way under analysts’ price targets. S&P has a $30 price target on PTEN, Credit Suisse is at $42 and the median analysts’ target is $34. (My “Fair Value” estimate for the company is $41.42/share.)
We have six onshore drillers on the Energy Prospectus Group (www.energyprospectus.com) Watch List. They all appear to be oversold at this time. In addition to PTEN, I like Helmerich & Payne (NYSE: HP) and Unit Corp. (NYSE: UNT).