For all of you folks invested in energy services or natural gas companies, especially the U.S. land drillers, I feel your pain. Trading since the end of January has been brutal, as worries about high natural gas inventories have just wrecked these stocks. Among the wreckage is Grey Wolf (AMEX:GW) -- hardly a household name, but one of the United States' largest rig operators.

Like most drillers, Grey Wolf had a good fourth quarter. Revenues were up 58%, net income more than tripled, and cash continued to roll into the business. While this company doesn't provide dayrate information like other firms such as Nabors (NYSE:NBR) or Pioneer Drilling (AMEX:PDC), I think you can gain a rough approximation by dividing the contract drilling revenue by the number of rig days worked. Do so for both periods, and you'll see a better-than-40% jump from last year's fourth quarter. Couple that with a 12.5% increase in rig days worked to get a rough estimate of revenue growth.

While the drillers often trade as a bloc, Grey Wolf does things a little differently. It has focused on building a fleet of premium assets, and I believe it has the best drilling depth capabilities among the larger operators. (More depth generally means higher rates.) What's more, the company's willingness to sign long-term deals tends to moderate its cyclical exposure. Grey Wolf won't make as much when dayrates spike, but it'll make more when dayrates plummet.

Even though the market has just been killing these U.S. land drillers, management still seems optimistic. While acknowledging that there is a natural gas price point at which drilling activity would start to slow, management has pegged that level around $6/mmbtu. Though we're closer to that price than I'd like, it still doesn't appear that drilling activity and dayrate increases will stop dead in their tracks.

Whether or not you find Grey Wolf right for you, allow me to make a broader point about energy investing. I own three energy stocks right now (a land-based driller, an undersea construction company, and a large integrated energy company), and they constitute about 15% of my portfolio. Two are up about 69% and 93% respectively, near 52-week highs, while the other, the land-based driller, is barely up much at all. That's the value of diversification, and I strongly suggest that anyone looking to play the energy space be very careful about putting all of their eggs in any one basket -- particularly one as volatile as the drilling sector.

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Fool contributor Stephen Simpson has no financial interest in any stocks mentioned (that means he's neither long nor short the shares).