These are certainly trying times for investors in the drilling space. Oil prices have stayed very high, and while natural gas has flitted around a bit, prices there remain at historically attractive levels (if you're a producer/seller, that is). Yet the land drilling space as a whole is considerably lower than where it was in late January. While this might strike owners of Grey Wolf (AMEX:GW) as unfair, I'm not sure an immediate recovery is in the cards.

Of course, Grey Wolf had a solid quarter. Revenue was up 49%, as rig days increased more than 8% and average companywide dayrates rose a further 37% (up more than 7% sequentially). What's more, operating expenses were up only a little more than 6% sequentially, so operating margins continue to expand.

What's interesting about the land-drilling market is that anecdotal evidence seems to be moving the needle a little more than usual. Folks are so worried about the addition of new supply and flattening dayrates that it seems like such information is pounced upon, even if overall supply and pricing aren't changing quite that fast.

It's also true that Grey Wolf has some advantages of its own. Not only does the company have a highly profitable turnkey business, but Grey Wolf possesses a rig fleet that, on average, can drill deeper than its rivals. That typically carries a premium, and Grey Wolf is also in the habit of running under longer-term deals. So with less than half of its fleet under contract for next year, there's the possibility of rolling over deals at higher rates, as well as the risk that rates will start to slack off.

You know what may be really frustrating about Grey Wolf? Company-specific details may just not matter. If you look at a group of land drillers, including Grey Wolf, Nabors (NYSE:NBR), Helmerich&Payne (NYSE:HP), Parker Drilling (NYSE:PKD), Pioneer Drilling (AMEX:PDC), and Patterson-UTI (NASDAQ:PTEN), you see that the stocks trade together in a relatively tight band. So there's at least the threat and possibility that investors will look at Grey Wolf and essentially say, "Gee, that's nice, but we're selling all the drillers anyway."

Drill down into more Foolish thoughts on the land drilling industry:

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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).