I see Dabum has found an article on one of my favorites.
What to own in 2004
by: dabum_jv2 12/23/03 06:59 pm
Msg: 43899 of 43901
According to Money Magazine, PTEN is one of the 5 stocks they say one should own in 2004. I believe it is supposed to be held for the entire year.
Patterson-UTI Energy
Our excitement over Patterson-UTI Energy (PTEN: Research, Estimates) stems from one simple fact: Demand for clean-burning natural gas is rising, yet existing wells aren't productive enough to meet that demand. The rising prices that result from that supply-demand imbalance will spur production and the search for new wells. That in turn means more business for firms like Patterson-UTI, which owns 343 drilling rigs in North America.
Patterson-UTI's roots dig deep into the heart of energy country -- its headquarters are in Snyder, Tex. (pop. 10,783), not far from where CEO Cloyce Talbott grew up. At 67, Talbott has been in the gas business for more than 45 years and can rattle off reams of data on natural gas pricing and production. Chairman Mark Siegel is the city boy who has brought financial discipline.
That combination has paid off in improved efficiency and earnings growth. Patterson-UTI's top rigs drill more, better and faster than any others in the country. That's partly because the company has its own fleet of trucks that can move rigs quickly to wherever they're needed most and get them working -- and earning day rates -- faster.
How quickly? They can get a rig capable of drilling10,000 feet moved and ready to go in under seven hours, compared with two days for competitors. This efficiency means that when demand for natural gas drilling rises, profit margins shoot up.
Just look at the first nine months of 2003, which saw production turn up as the economy strengthened: Patterson-UTI achieved a 10 percent operating margin on $568 million in revenue compared with a measly 1.3 percent on $387 million in revenue in the first three quarters of 2002. "Small, incremental changes in demand really drive results," says Steve Romick, who has been buying Patterson-UTI shares for his FPA Crescent fund.
Romick believes that this trend will continue as the economy recuperates and gas consumption expands. Because of its strong balance sheet, Patterson-UTI can still buy rigs to ensure that it meets increased market demand as that happens. Romick reckons that the company's shares are worth $50 based on the value of its rigs alone, or 67 percent more than the stock's recent price of $29.33.
premium.money.cnn.com
Just passing along FWIW.
dabum
messages.yahoo.com |
