Among U.S. land drillers, Crandell has Buy ratings on Helmerich & Payne (HP), Nabors Industries (NBR), Precision Drilling (PDS), and Patterson-UTI Energy (PTEN). Patterson shares were the biggest winner Monday, up 9%.
http://blogs.barrons.com/stockstowatcht ... hoobarrons
Unit Corp. (UNT) did not make this guys radar screen, but it really looks good to me. Unit gets most of its revenues from their E&P division, which will do very well if NG moves over $4/mmbtu.
Our profiles on HP, PTEN, PDS and UNT are being updated right now.
HP and UNT setting up for big year ahead
HP and UNT setting up for big year ahead
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: HP and UNT setting up for big year ahead
Comments from HP's CEO during their last quarterly conference call. This why HP remains my Top Pick among the onshore drillers. [Note that UNT is a "hybrid" driller as more than half of their revenues come from their E&P division.]
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It's hard for us to see natural gas prices increasing enough to add much incremental drilling activity early in 2013. In addition to a cold winter, we'd have to see stubbornly high production levels ease off and actually decline and then gain a better understanding of the true scale that associated gas provides the market. Finally, it's difficult to pinpoint the scope of the well backlog overhang. We expect customers to be patient during the first half of 2013 to allow these issues to play out more fully and to see their impact on natural gas pricing. [If gas prices firm up at over $4/mmbtu, I think we will see more dry gas drilling in 2013. - Dan]
In addition to the energy pricing environment, improved drilling efficiencies are receiving more attention as a growing factor in sorting out the future rig activity levels. Of course, drilling efficiency is a theme we've been focused on for over 10 years, and it comes as no surprise that more and more operators see the potential of executing their drilling programs faster and with fewer rigs. As we expected, the bar is being raised for what constitutes a suitable rig and that squeeze will continue.
We have not only aggressively repositioned our fleet to nearly 100% AC rig offering, but we've also delivered significantly better performance from those rigs. For instance, our footage per day has increased by over 50% from 2007 to 2012, while at the same time average well depth has increased by over 40%. As a result of the enhanced average cost per foot, we continue to drive a compelling value proposition for our customers. And while the rest of the industry has added AC drive rigs to their U.S. land fleets, our top 3 competitors, combined, have officially retired more rigs than they have built since January of 2009.
Another way to look at it is, since the industry's rig count peaked in 2008, our active U.S. land count has increased by 25% ,whereas the same 3 competitors have seen an average reduction of 25%.
Our expectation is that the drilling efficiency continues to be a driver for operators going forward, and that they will continue to provide attractive opportunities to service companies that deliver top performance. For H&P, we would expect the coming year to offer new build opportunities and the prospect to continue to lead the land industry in margins and activity levels.
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It's hard for us to see natural gas prices increasing enough to add much incremental drilling activity early in 2013. In addition to a cold winter, we'd have to see stubbornly high production levels ease off and actually decline and then gain a better understanding of the true scale that associated gas provides the market. Finally, it's difficult to pinpoint the scope of the well backlog overhang. We expect customers to be patient during the first half of 2013 to allow these issues to play out more fully and to see their impact on natural gas pricing. [If gas prices firm up at over $4/mmbtu, I think we will see more dry gas drilling in 2013. - Dan]
In addition to the energy pricing environment, improved drilling efficiencies are receiving more attention as a growing factor in sorting out the future rig activity levels. Of course, drilling efficiency is a theme we've been focused on for over 10 years, and it comes as no surprise that more and more operators see the potential of executing their drilling programs faster and with fewer rigs. As we expected, the bar is being raised for what constitutes a suitable rig and that squeeze will continue.
We have not only aggressively repositioned our fleet to nearly 100% AC rig offering, but we've also delivered significantly better performance from those rigs. For instance, our footage per day has increased by over 50% from 2007 to 2012, while at the same time average well depth has increased by over 40%. As a result of the enhanced average cost per foot, we continue to drive a compelling value proposition for our customers. And while the rest of the industry has added AC drive rigs to their U.S. land fleets, our top 3 competitors, combined, have officially retired more rigs than they have built since January of 2009.
Another way to look at it is, since the industry's rig count peaked in 2008, our active U.S. land count has increased by 25% ,whereas the same 3 competitors have seen an average reduction of 25%.
Our expectation is that the drilling efficiency continues to be a driver for operators going forward, and that they will continue to provide attractive opportunities to service companies that deliver top performance. For H&P, we would expect the coming year to offer new build opportunities and the prospect to continue to lead the land industry in margins and activity levels.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: HP and UNT setting up for big year ahead
Sweet 16: An updated Net Income & Cash Flow Forecast model for Helmerich & Payne (HP) has been posted under the Sweet 16 Tab.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: HP and UNT setting up for big year ahead
Here is a good analysis of HP. It deserves to trade at a much higher multiple than the rest of the pack.
http://beta.fool.com/piyusharora/2012/1 ... lnk0000001
I am putting the final touches on my profile on PDS. It will be up on the website late today. Check under the Watch List Tab. Our profile on PTEN is there now.
Cut from the article above: "The stimulus packages around the globe managed to improve the macroeconomic growth sentiment, which pushed up the crude oil prices. Crude rose nearly 28% since the lows it hit this year, but slid again as the lending to European nations declined. Additionally, the crude stock piles increased faster than the demand, which has put a downward pressure on the commodity. However, it should be noted that the industrial growth of China is expected to grow at a fast pace in the remaining 3 months of 2012.
Also India, which imports nearly 70% of its crude demands, is struggling with poor domestic production levels, forcing the Indian refiners to import even more crude oil. Also, the bottlenecked pipeline systems have led to temporary refinery shut downs in countries like Germany and Czech Republic. Don't forget that natural gas is rebounding, as its posing as a cheap and eco-friendly alternative to coal. Analysts expect a further upside in natural gas with the onset of winter. These reasons altogether offer the upside potential in the crude and natural gas pricing, and here are a few reasons why I’m bullish on Helmerich & Payne (NYSE: HP)."
http://beta.fool.com/piyusharora/2012/1 ... lnk0000001
I am putting the final touches on my profile on PDS. It will be up on the website late today. Check under the Watch List Tab. Our profile on PTEN is there now.
Cut from the article above: "The stimulus packages around the globe managed to improve the macroeconomic growth sentiment, which pushed up the crude oil prices. Crude rose nearly 28% since the lows it hit this year, but slid again as the lending to European nations declined. Additionally, the crude stock piles increased faster than the demand, which has put a downward pressure on the commodity. However, it should be noted that the industrial growth of China is expected to grow at a fast pace in the remaining 3 months of 2012.
Also India, which imports nearly 70% of its crude demands, is struggling with poor domestic production levels, forcing the Indian refiners to import even more crude oil. Also, the bottlenecked pipeline systems have led to temporary refinery shut downs in countries like Germany and Czech Republic. Don't forget that natural gas is rebounding, as its posing as a cheap and eco-friendly alternative to coal. Analysts expect a further upside in natural gas with the onset of winter. These reasons altogether offer the upside potential in the crude and natural gas pricing, and here are a few reasons why I’m bullish on Helmerich & Payne (NYSE: HP)."
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group