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Strategies & Market Trends : Value Investing

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To: Paul Senior who wrote (24706)	9/14/2006 12:31:49 AM
From: gcrispin	Read Replies (2) of 78744

I bought an initial position in PTEN. I recommend listening to the presentation at the Lehman conference. Just to maintain natural gas supplies requires 27000 drills to be drilled each year. The total US inventory of rigs at the end of 2005 was 1,813. A couple of highlights from the recent quarter: The company earned $171.7 million, or $1 a share, in the quarter, compared with $74 million, or 43 cents a share, a year ago. Second-quarter revenue rose 63.3% from a year ago to $636.8 million. Analysts were looking for earnings of 95 cents and revenues of $607 million. Four hundred thirty-one thousand shares represents each rig, and rigs currently sell for between 10-15 million dollars. (Slide 36 in the presentation.) So you can see that the company is valued at the low end of its rig inventory. The company, which has already completed a $200 million buyback, also said that its board has authorized a share buyback of up to $250 million. Basically the company believes that it's cheaper to buy the stock than to make an acquisition. With no debt and tremendous cash flow, this looked like a good entry point for me.

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