Business segments & share of revenue(2007): Contract drilling(83%), Pressure pumping(9%), Drilling and completion fluids(6%), Oil&gas e&p(2%)
Market value: 1.9 billion
Revenue(000's): 2008 YTD: $1,639,369 2007: $2,114,194 2006: $2,546,586 2005: $1,740,455 2004: $1,000,769 2003: $776,170
EBIT(000's): 2008 YTD: $411,575 2007: $670,276 2006: $1,039,164 2005: $581,296 2004: $148,467 2003: $66,282
EPS(diluted) 2008 YTD:$1.72 2007:$2.79 2006:$4.02 2005:$2.15 2004:$0.56 2003:$0.26
P/E: 5.41(ttm), 6.27(five-year average eps)
Yield: 5.20%
Peer valuation: Nabors Industries Ltd. (NBR)P/E 4.85, Precision Drilling Trust (PDS) P/E 4.18, Helmerich & Payne, Inc.(HP) P/E 5.84
Total assets(000's)(30/09/2008): $2,658,549
Total liabilities(000's): $299,373
Quotes from the 2007 Annual Report
"We own and invest in oil and natural gas assets as a working interest owner. Our oil and natural gas interests are located primarily in producing regions of West and
South Texas, Southeastern New Mexico, Utah and Mississippi."
"Most of our drilling contracts are with established customers on a competitive bid or negotiated basis. Typically, the contracts are short-term to drill a single well or a series of wells."
"We provide drilling fluids, completion fluids and related services to oil and natural gas operators offshore in the Gulf of Mexico and on land in Texas, Southeastern New Mexico, Oklahoma and the Gulf Coast region of Louisiana. We serve our offshore customers through six stockpoint facilities located along the Gulf of
Mexico in Texas and Louisiana and our land-based customers through fourteen stockpoint facilities in Texas, Louisiana, Oklahoma and New Mexico."
"The customers of each of our three oil service business segments are oil and natural gas operators. Our customer base includes both major and independent oil and natural gas operators. During 2007, no single customer accounted for 10% or more of our consolidated operating revenues."
Comments: Onshore drilling activity is dropping rapidly in North america and will probably continue to do so for at least a year as the economic activity decreases. PTEN's eps will probably bottom at around 50 cents and I would imagine that the stock price will fall in to the range of five to seven dollars.
However as the "easy" oil and gas are depleted we are left with the expensive and difficult, which requires e.g. deeper wells, greater number of wells and reservoir stimulation. Drillers and well service companies are already benefitting from this trend but in the near future it's effects on drillers revenues will be far greater.
Charts via Union Drilling & Schlumberger
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