The U.S. onshore oil and natural gas drilling industry is hot today. And if you're looking to play the rebounding outlook for the domestic oil business, then you should be looking at Noble Energy, Inc. (NYSE:NBL), a producer, and Helmerich & Payne, Inc. (NYSE:HP), an oil-services company. Helmerich & Payne, however, looks like the better option to me.

Oil in demand

There are two interesting trends in the oil industry today. The first is persistently low oil prices. In mid-2014, oil was trading hands at more than $100 a barrel before falling to as low $30 a barrel at the depths of the downturn. Since that point, energy prices have moved up and down but have yet to hold above $50 a barrel for any length of time. That's kept the pressure on oil companies' top and bottom lines.

A man writing in a notebook standing in front of an oil well.

Image source: Getty Images

A key part of the pricing equation is that U.S. onshore oil drilling is taking off again. Companies working the space have figured out how to get production prices down so they can eke out a profit (or at least lose less money) when energy prices are depressed. That's allowed drillers to ramp up production despite persistently low oil prices. These two trends, which are tightly intertwined, have helped to keep oil prices range-bound.

There's no sign that things are going to change anytime soon.

Not very helpful

There are several ways to get exposure to the U.S. onshore business. For example, you could buy Noble Energy. Roughly 75% of the company's capital spending in the first quarter went into its U.S. onshore business. That's right on target with the company's full-year goal. So, clearly, it has big plans for its U.S. onshore business.    

And it's putting up solid operational results. For example, it's achieving above industry average production results in all three of the U.S. regions in which it operates. Perhaps more encouraging is that Noble believes roughly 70% of its production can break even at $40 a barrel of oil, or lower.    

A graphic showing that Noble Energy has three primary regions and is expanding production.

Noble has achieved good results, but that's part of the problem for oil prices. Image source: Noble Energy, Inc.

These facts, however, are part of the issue that's keeping oil prices depressed. Sure, drillers like Noble are starting to figure out how to lower costs in the U.S. onshore space, but that's led to more oil in an already saturated global oil market. When oil prices break out of the low range they're in today, Noble will benefit in a big way. But it still posted an adjusted loss of $0.05 a share in the first quarter. And its own production success is a part of the headwind it's facing.    

Demand, not oil prices

Then you have Helmerich & Payne, which is an oil services company. U.S. onshore represents around 90% of the company's rig count. At the end of September, the company's utilization in this segment of its business was just 25%. At the end of December it had increased to 31%. And by the end of March it was up to 42%.  

Clearly, it's seeing increased demand for its services in the U.S. onshore space. And it's benefiting in a big way. The first is simply the number of rigs it's putting back to work. But it also increased its U.S. market share from 17% to 19% between its fiscal first and second quarters. And the spot price for rigs is moving higher, rising 9% between late January and late April. Helmerich & Payne expects the good news to keep coming, too.  

A chart showing that demand for Helmerich and Payne's rigs is starting to move higher again.

Demand for Helmerich's rigs is coming back. Image source: Helmerich & Payne, Inc.

To be fair, costs are running high right now as Helmerich puts idled rigs back to work. And it's been decommissioning older, less desirable rigs as well. That helps explain the fiscal second-quarter loss of $0.45 a share. Analysts expect it to lose money for the full fiscal year, which ends in September.  

But as demand for its rigs moves higher and it gets them back to work, profits should start to show up on the bottom line. Analysts are predicting a return to the black in the company's next fiscal year. The big difference here is that the price of oil will be less important than the demand for Helmerich's rigs -- which is expected to keep growing at this point.

Picks and shovels

If you look just at earnings, Helmerich & Payne doesn't appear to be a very good investment today. But when you look a little deeper, you see its business is improving in important ways. Once the cost of getting rigs back up and running starts to fade, Helmerich should move solidly into the black as the company benefits from the resurgence of the U.S. onshore space. It won't matter if oil prices continue to hover at a low level, so long as the price is high enough to keep oil companies like Noble drilling.

Noble, however, actually needs higher oil prices if it wants to benefit from the drilling it's doing. Only the increased drilling activity in the U.S. onshore space, which Noble is a part of, is putting a lid on oil prices. There are clear positives in the company's production results, but there's no reason to expect oil prices to snap out of their recent range.

In this case, I prefer Helmerich & Payne's model of supplying the oil companies with their picks and shovels. And to add a little more excitement, you can collect Helmerich's fat 5.3% yield, backed by 44 years of annual dividend increases, while you wait for it to get past the start-up costs that are holding results down today.  

Reuben Brewer has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.