PTEN will be highlighted in tomorrow's newsletter.
This is in-line with my forecast for 2011:
HOUSTON, March 2, 2011 /PRNewswire/ -- PATTERSON-UTI ENERGY, INC. (Nasdaq:PTEN - News) today reported that for the month of February 2011, the Company had an average of 209 drilling rigs operating, including 192 rigs in the United States and 17 rigs in Canada. For the two months ended February 2011, the Company had an average of 206 drilling rigs operating, including 190 rigs in the United States and 16 rigs in Canada.
PTEN
Re: PTEN
Zacks not as high on the onshore drillers as I am. Actually, I think that gives us more upside during the second half of this year. Here are their comments on NBR, the largest onshore driller. - Dan
We are maintaining a Neutral rating on Nabors Industries (NYSE: NBR - News) considering its strength in the U.S. and Canadian land drilling markets, partially offset by weak natural gas fundamentals.
Nabors possesses a large, high-quality fleet of drilling and workover rigs, making it the leading North American land drilling contractor. Over the years, the company has not only grown through cash flow reinvestments and acquisitions but has also extended its geographic reach and diversified its operating assets beyond land rigs.
With the company’s strong exposure to oil plays owing to its presence in the Bakken, Permian and International plays, we expect Nabors to benefit from higher activity and pricing. The ‘Superior Well’ acquisition will further boost Nabors’ earnings visibility by expanding its pressure pumping capabilities and geographic foothold.
The recently reported fourth quarter and full-year 2010 results testify benefits from the addition of the Superior Well Services and a strong North American market. Earnings per share (excluding special items) came in at 44 cents, surpassing the Zacks Consensus Estimate of 37 cents, while revenues of $1.33 billion surpassed the Zacks Consensus Estimate of $1.26 billion.
However, Nabors has its business spread globally and derives a significant portion of its income from the international markets. These operations are susceptible to various risks such as war, civil disturbances and government actions. Any disturbance in the international markets will likely limit or disrupt the company’s markets, impose restrictions on the movement of funds, currency values and exchange controls.
Moreover, the glut in domestic gas supplies still exists, with storage levels remaining close to their five-year average. This will continue to weigh on natural gas prices in the near-to-medium term. Nabors remains particularly exposed to this situation since its North American business is heavily biased toward gas drilling.
We also remain concerned about Nabors’ relatively weak balance sheet in this severe credit-constrained environment (net debt-to-capitalization ratio of approximately 50.5%). Over the last few years, the company kept adding debt to its balance sheetfor a fleet recapitalization program.
Taking into account the aforesaid factors, we expect the company to perform in line with its peers Patterson-UTI Energy Inc. (NasdaqGS: PTEN - News) and Pride International Inc. (NYSE: PDE - News).
We are maintaining a Neutral rating on Nabors Industries (NYSE: NBR - News) considering its strength in the U.S. and Canadian land drilling markets, partially offset by weak natural gas fundamentals.
Nabors possesses a large, high-quality fleet of drilling and workover rigs, making it the leading North American land drilling contractor. Over the years, the company has not only grown through cash flow reinvestments and acquisitions but has also extended its geographic reach and diversified its operating assets beyond land rigs.
With the company’s strong exposure to oil plays owing to its presence in the Bakken, Permian and International plays, we expect Nabors to benefit from higher activity and pricing. The ‘Superior Well’ acquisition will further boost Nabors’ earnings visibility by expanding its pressure pumping capabilities and geographic foothold.
The recently reported fourth quarter and full-year 2010 results testify benefits from the addition of the Superior Well Services and a strong North American market. Earnings per share (excluding special items) came in at 44 cents, surpassing the Zacks Consensus Estimate of 37 cents, while revenues of $1.33 billion surpassed the Zacks Consensus Estimate of $1.26 billion.
However, Nabors has its business spread globally and derives a significant portion of its income from the international markets. These operations are susceptible to various risks such as war, civil disturbances and government actions. Any disturbance in the international markets will likely limit or disrupt the company’s markets, impose restrictions on the movement of funds, currency values and exchange controls.
Moreover, the glut in domestic gas supplies still exists, with storage levels remaining close to their five-year average. This will continue to weigh on natural gas prices in the near-to-medium term. Nabors remains particularly exposed to this situation since its North American business is heavily biased toward gas drilling.
We also remain concerned about Nabors’ relatively weak balance sheet in this severe credit-constrained environment (net debt-to-capitalization ratio of approximately 50.5%). Over the last few years, the company kept adding debt to its balance sheetfor a fleet recapitalization program.
Taking into account the aforesaid factors, we expect the company to perform in line with its peers Patterson-UTI Energy Inc. (NasdaqGS: PTEN - News) and Pride International Inc. (NYSE: PDE - News).
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: PTEN
here it is---------------
most of their drilling is onshore.
Saudi Arabia prepares massive oil rig boost
By Joshua Schneyer, Reuters March 28, 2011 5:28 PM NEW YORK (Reuters) - Saudi Arabia, the world’s top oil exporter, has unexpectedly called on top oilfield service companies to help quickly boost the country’s oil rig count by 30 percent to expand production capacity, Simmons & Co analyst Bill Herbert said Monday.
Saudi state-run oil giant Aramco met with leading oil service companies, including Halliburton, over the weekend to announce ambitious plans to increase its rig count, Herbert wrote in a research note.
It was not immediately clear whether Saudi Arabia was seeking more rigs to increase its idle spare production capacity beyond an estimated 3 million barrels per day currently, or simply ensure it can maintain the extra pumping power to meet any disruptions in international oil markets.
“Saudi Arabia has been expected to tread water on its production capacity, so this is unexpected,” Herbert said from Houston in a phone interview with Reuters.
“The risk premium in the Middle East has risen. Also, with Libyan production falling, Saudi Arabia may feel it has to be ready for higher production capacity.”
Aramco has stepped up production over the last several weeks to make up for a loss in Libyan output, but the Kingdom hasn’t released any plans to expand its overall capacity since completing a $100 billion plan to increase capacity by 3 million bpd to a “sustainable” 12 million bpd last year.
Herbert said Aramco wants to see the Saudi oil rig count soar to 118 from a current level around 92, while it’s “dusting off” a slow-going, $16 billion, 900,000-bpd oil project known as Manifa.
The rig count increase is imminent, and expected to “accelerate” in the second half of 2011 and into 2012, Herbert wrote.
Later, Halliburton said in a press release that it plans to accelerate activity at Manifa, a project to tap massive offshore heavy crude reserves, following discussions with Saudi Arabia. In 2008, Halliburton was awarded a major contract to provide drilling and associated work at 93 Manifa wells off northeast Saudi Arabia.
Herbert called the Saudi plans “manifestly positive” for oil service companies. Halliburton shares soared 4 percent to $47.90 on the New York Stock Exchange, after touching a 52-week high. Shares in Schlumberger also rose more than 4 percent, while Baker Hughes rose 3.8 percent.
The country, OPEC’s top producer, controls more than a fifth of world oil reserves.
Saudi Arabia is currently believed to be pumping more than 9 million bpd of crude after lifting output amid a slowdown in Libya’s oil exports which have been crimped by a bloody conflict between rebels and the regime of Muammar Gaddafi.
Herbert said Saudi Arabia may be moving to boost spare capacity as it comes closer to reaching its operational capacity, or as it girds against the risk of further political unrest across the Middle East that could curtail production elsewhere.
© Copyright (c) The Calgary Herald
Read more: http://www.calgaryherald.com/business/S ... z1HwVlbT2Y
most of their drilling is onshore.
Saudi Arabia prepares massive oil rig boost
By Joshua Schneyer, Reuters March 28, 2011 5:28 PM NEW YORK (Reuters) - Saudi Arabia, the world’s top oil exporter, has unexpectedly called on top oilfield service companies to help quickly boost the country’s oil rig count by 30 percent to expand production capacity, Simmons & Co analyst Bill Herbert said Monday.
Saudi state-run oil giant Aramco met with leading oil service companies, including Halliburton, over the weekend to announce ambitious plans to increase its rig count, Herbert wrote in a research note.
It was not immediately clear whether Saudi Arabia was seeking more rigs to increase its idle spare production capacity beyond an estimated 3 million barrels per day currently, or simply ensure it can maintain the extra pumping power to meet any disruptions in international oil markets.
“Saudi Arabia has been expected to tread water on its production capacity, so this is unexpected,” Herbert said from Houston in a phone interview with Reuters.
“The risk premium in the Middle East has risen. Also, with Libyan production falling, Saudi Arabia may feel it has to be ready for higher production capacity.”
Aramco has stepped up production over the last several weeks to make up for a loss in Libyan output, but the Kingdom hasn’t released any plans to expand its overall capacity since completing a $100 billion plan to increase capacity by 3 million bpd to a “sustainable” 12 million bpd last year.
Herbert said Aramco wants to see the Saudi oil rig count soar to 118 from a current level around 92, while it’s “dusting off” a slow-going, $16 billion, 900,000-bpd oil project known as Manifa.
The rig count increase is imminent, and expected to “accelerate” in the second half of 2011 and into 2012, Herbert wrote.
Later, Halliburton said in a press release that it plans to accelerate activity at Manifa, a project to tap massive offshore heavy crude reserves, following discussions with Saudi Arabia. In 2008, Halliburton was awarded a major contract to provide drilling and associated work at 93 Manifa wells off northeast Saudi Arabia.
Herbert called the Saudi plans “manifestly positive” for oil service companies. Halliburton shares soared 4 percent to $47.90 on the New York Stock Exchange, after touching a 52-week high. Shares in Schlumberger also rose more than 4 percent, while Baker Hughes rose 3.8 percent.
The country, OPEC’s top producer, controls more than a fifth of world oil reserves.
Saudi Arabia is currently believed to be pumping more than 9 million bpd of crude after lifting output amid a slowdown in Libya’s oil exports which have been crimped by a bloody conflict between rebels and the regime of Muammar Gaddafi.
Herbert said Saudi Arabia may be moving to boost spare capacity as it comes closer to reaching its operational capacity, or as it girds against the risk of further political unrest across the Middle East that could curtail production elsewhere.
© Copyright (c) The Calgary Herald
Read more: http://www.calgaryherald.com/business/S ... z1HwVlbT2Y
Re: PTEN
Keep up the good work. You guys are adding a lot of value for EPG members that check this Forum.
We have two great speakers for this Thursday's luncheon. If you do not live in the Houston area you can sign up for the webcast.
We have two great speakers for this Thursday's luncheon. If you do not live in the Houston area you can sign up for the webcast.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: PTEN
"Land rig conference bullish on all fronts. We hosted four small cap land drillers in the midwest last week. Commentary was very bullish and
the companies in attendance echoed our view that the US land rig count should continue its increase in 2011 and 2012. The most interesting part
of the discussion was on the mid-horsepower mechanical rigs and the potential that exists for them in the US. Two of the drillers believed this
segment showed the most promise for both utilization and dayrate improvement and that while some of those rigs are being used as substitutes
by E&P companies prior to delivery of newbuild rigs, most are more than pleased with the results and the trade-off in efficiency is worth the
lower dayrate. This could lead to substantial earnings power for PDC, UDRL and Patterson (PTEN). Secondly, the companies all seemed to
express an interest in doing some form of spec-building, but primarily just via ordering long-lead items and not full rigs. Our favorite quote from
an operator is "when you have Limburger cheese on your mustache, the whole world stinks," meaning that most drillers have just recovered
from the massive downturn and spent the past two years fighting off creditors and are just coming around to the idea of adding leverage or specbuilds.
We feel like the tide is turning and we will see announcements for new rigs from at least two of the four companies in attendance in the
near future. Lastly, we were overwhelmed by the acceptance of our thesis, especially since our bullish initiation on the group a mere four months
ago. It appears that investors are taking the long-term view of the space and believe that US land drilling, especially in oil plays, is here to stay
and that the land drillers are becoming a secular play vs. a cyclical play." (from Global Hunter today)
the companies in attendance echoed our view that the US land rig count should continue its increase in 2011 and 2012. The most interesting part
of the discussion was on the mid-horsepower mechanical rigs and the potential that exists for them in the US. Two of the drillers believed this
segment showed the most promise for both utilization and dayrate improvement and that while some of those rigs are being used as substitutes
by E&P companies prior to delivery of newbuild rigs, most are more than pleased with the results and the trade-off in efficiency is worth the
lower dayrate. This could lead to substantial earnings power for PDC, UDRL and Patterson (PTEN). Secondly, the companies all seemed to
express an interest in doing some form of spec-building, but primarily just via ordering long-lead items and not full rigs. Our favorite quote from
an operator is "when you have Limburger cheese on your mustache, the whole world stinks," meaning that most drillers have just recovered
from the massive downturn and spent the past two years fighting off creditors and are just coming around to the idea of adding leverage or specbuilds.
We feel like the tide is turning and we will see announcements for new rigs from at least two of the four companies in attendance in the
near future. Lastly, we were overwhelmed by the acceptance of our thesis, especially since our bullish initiation on the group a mere four months
ago. It appears that investors are taking the long-term view of the space and believe that US land drilling, especially in oil plays, is here to stay
and that the land drillers are becoming a secular play vs. a cyclical play." (from Global Hunter today)
Re: PTEN
Global Hunter has raised PTEN to Buy from Accumulate with a price target of $45 (6X 2012 EBITDA), up from $30. Their new 2011 EPS estimate is $2.19 (consensus is $1.85) and for 2012 their EPS estimate is $2.85 (consensus is $2.05). PTEN has the highest percentage upside to their target with PDC second and UDRL third. The target for PDC is $22 (5.5X 2012 EBITDA) and for UDRL, $16.50 (4.5X 2012 EBITDA).
Dan's work was early and his BUY call has been corroborated by a shop that is good on the services and drillers IMO. Wasn't Dan's call made when the stock was in the low $20s? Sweet!
Dan's work was early and his BUY call has been corroborated by a shop that is good on the services and drillers IMO. Wasn't Dan's call made when the stock was in the low $20s? Sweet!