You know what they say about trying to catch a falling knife? That's exactly what I envision when I think about picking up shares of a land driller today.
Take a look at Patterson-UTI's
Month |
Rigs Operating |
Monthly Change (%) |
---|---|---|
October 2008 |
283 |
n/a |
November 2008 |
261 |
(7.8) |
December 2008 |
213 |
(18.4) |
January 2009 |
162 |
(23.9) |
Data from company press releases.
Not only are business conditions deteriorating -- the pace of decay is accelerating. For the engineers out there, you have to look out to the second derivative to see any sign for optimism.
On the bright side, this rig laydown luau cannot go on for too much longer. Today's oil and gas prices are at sub-economic levels for the industry as a whole, but there are pockets of resilience out there. Chesapeake Energy
As noted a few weeks back, the U.S. rig count will probably drop somewhere on the order of 1,000 from peak to trough. We're already down to 1,472 from 2,031 -- so we're about halfway there.
If you step in and buy a driller today -- even a quality one like Helmerich & Payne