Helmerich & Payne, Inc. (HP), Rowan Companies PLC (RDC), Patterson-UTI Energy, Inc. (PTEN): The Best Onshore Driller


Patterson-UTI Energy, Inc. (NASDAQ:PTEN) is the second-largest North American operator of land-based drilling rigs. The company owns 314 land-drilling rigs across the U.S. Patterson’s contract-drilling segment generates around 65% of revenue, while its pressure- pumping services make up the majority of the rest of revenues, at 30%.

Back in 2010, Patterson-UTI Energy, Inc. (NASDAQ:PTEN) snatched up the assets of Key Energy Services, which was an onshore well-service rig provider. This really helped the company expand into the shale-drilling market. One of the benefits for Patterson is that it’s trading out older rigs for new ones.

Patterson-UTI Energy, Inc. (NASDAQ:PTEN) plans to retire some 36 rigs from its fleet. This is a positive for two reasons–one, it should increase the utilization of its fleet, as the low natural-gas prices have lead to market overcapacity. In addition, Patterson’s newer rigs will continue to be well received given their efficiency in drilling the more challenging wells. Thus, these rigs demand higher day-rates.

Bottom line 

As more and more energy companies look to move onshore, Helmerich should be a big benefactor. Many major oil and gas companies have made the move from offshore drilling to take part in the rapid-growth onshore shale plays, such as the Bakken and Eagle Ford. As far as the major onshore drillers go, Helmerich & Payne, Inc. (NYSE:HP) is trading the cheapest:

Carrying over $480 million in cash and just $235 million in debt, Helmerich & Payne, Inc. (NYSE:HP) appears to be a solid investment. I like the company because it’s cash rich, trading at 7.8 times operating cash flow with a return on equity of 17.8%.

Marshall Hargrave has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.

Marshall is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.