We haven't had a look at Patterson-UTI's (NASDAQ:PTEN) operating trends since rig count vertigo showed signs of abating back in early June. This land driller is a fine proxy for its peer group, so such a snapshot is always instructive:


Average Rigs Operating

Change from Previous Month

July 2009



August 2009



September 2009



October 2009



November 2009



December 2009



January 2010



Data from company press releases.

For the fourth quarter, Patterson-UTI's operating rig average jumped 41%, to 103, and the company is now at 145 rigs. The oil patch has clearly gotten busy since last summer, and activity continues to heat up in places like the Eagle Ford shale, where EOG Resources (NYSE:EOG) and Petrohawk Energy (NYSE:HK) are leading the charge, and the Marcellus shale, where Chesapeake Energy (NYSE:CHK) and Range Resources (NYSE:RRC) are rocking and rolling.

Showing how tightly the company's financial results are tied to activity, Patterson-UTI's EBITDA rise by 37% compared with the third quarter. Partly on account of charges taken against a sizeable retirement of rigs, earnings stayed in the red for the quarter.

Additions of new Apex rigs in 2009 -- which are designed for drilling in unconventional resource plays -- nearly offset the 21 rig retirements in the fourth quarter, so Patterson isn't exactly withering away. Nineteen of the 21 retired rigs were located in West Texas, which underlines the plunge in conventional drilling activity in that state.

Looking ahead to 2010, Patterson-UTI sees a rapid expansion in the Marcellus, where the company has 16 rigs operating. The stated plans of companies like Talisman (NYSE:TLM) and Ultra Petroleum (NYSE:UPL) certainly support that outlook. As for the second half of the year, Patterson-UTI management said the phrase "cautious optimism" is the best descriptor. You can't expect much better than that, given the low visibility into both the industrial demand and the uncertain natural gas supply profile.

As far as valuation goes, Patterson-UTI's no longer clearly trading well below replacement cost, as it was at this time last year. Things really change in a heartbeat in this business, so these shares are certainly not suitable for all investors.

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Fool contributor Toby Shute doesn't have a position in any company mentioned. Check out his Motley Fool CAPS profile or follow his articles using Twitter or RSS. The Fool owns shares of Chesapeake Energy. Drill into The Motley Fool's disclosure policy.