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Patterson-UTI Energy, Inc. (PTEN) is one of the largest onshore contract drillers in the U.S. with approximately 350 land-based rigs that operate primarily in the oil and natural gas producing regions of North America.
The pullback in natural gas prices from their late-summer highs and the credit turmoil have helped erase the gains made by Patterson-UTI shares in the first half of the year and then some. But these negatives are already price in, leaving little downside risk from current levels, in our view.
On the positive side, the company's premium newbuild fleet and stellar financial health (free cash flow positive and a debt-free balance sheet) should help it weather the downturn better than most of its peers. Also, Patterson-UTI pays a growing (and safe, in our view) dividend that currently yields an attractive 7.3%.
Our Buy recommendation remains unchanged, though we have lowered our estimates and price objective.
Read the full analyst report on PTEN
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