SI
SI
discoversearch

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor.  We ask that you disable ad blocking while on Silicon Investor in the best interests of our community.  If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.
Gold/Mining/Energy : Strictly: Drilling and oil-field services
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  
To: pz who wrote (21327)5/4/1998 3:57:00 PM
From: 007  Read Replies (4) of 95453
 
< FWIW...I talked to a drilling contractor in Midland this morning. They have 17 total
rigs, 9 stacked, 8 currently running. Last year they had 11-12 running. Drilling rates
have fallen off 15% since last year and are STILL FALLING. Land drillers are still
risky IMHO.

Paul >

Anybody else feel like I do? (why UTI is my biggest position):

Everything is so awful for land drillers that they must be at the bottom of their cycle, yet UTI still reports 50% earnings growth with 35% of their rigs stacked. With commodity prices most likely beyond their bottom demand should only pick up from here.

I think the best opportunity in the entire sector is buying the land drillers at the bottom of the commodity price cycle. At that point, they have very little downside and the greatest upside. They're undervalued presently and are likely to realize much greater proportional gains from improving commodity prices. Why lock in earnings in the deepwater at a time when crude has very little downside?

If UTI is growing at 50% now, what's its growth rate going to be when the stacked rigs start working again? Look at how UTI's pe expanded to 80 in both '96 and '97; run the numbers cause the potential is huge.

I think Baird is correct in stating that shallower is better if you think oil is headed up. But why not go for the shallowest of them all?
007
Report TOU ViolationShare This Post
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  

HomeMailHotSubjectMarksPeopleMarksKeepersSettings
Terms Of UseContact UsCopyright/IP PolicyPrivacy PolicyAbout UsFAQAdvertise on SI
© 2025 Knight Sac Media.  Data provided by Twelve Data, Alpha Vantage, and CityFALCON News