With enterprise value not far north of three times trailing EBITDA, Houston-based Grey Wolf (AMEX:GW) is pretty much priced for impending doom. Well, that doom scenario will just have to be pushed back a bit. After Wednesday's close, the company reported a record quarter, whether one measures by net income, EBITDA, or turnkey segment results.

Why all the pessimism, you ask? For one, natural gas inventories are tracking higher than the five-year average. Producers like Chesapeake Energy (NYSE:CHK) are having tremendous success through the drill bit, which can lead to a potentially more serious near-term glut. Couple that with a big increase in rig count and a softening of dayrates, and you start to see why the market has drillers on a tight leash.

Nevertheless, natural gas prices are trending up in the long term, not down, as Philip Durell reminded us during Stock Madness. This bodes quite well for Grey Wolf, which is not only well-positioned in North America, but increasingly willing to deploy its rigs abroad, as demonstrated by the newly contracted work in Mexico. On the conference call, management commented that they'd be willing to move the whole fleet to Mexico, if that's where the most attractive returns were available. While this isn't necessarily a serious option, I like where management's priorities appear to lie.

I'm coming to accept that it might not be such a bad thing to see investor expectations so low when it comes to a volatile business like land drilling. I'll take that over irrational exuberance any day. It just has to be frustrating to be a shareholder of Grey Wolf or similarly low-priced Patterson-UTI (NASDAQ:PTEN) during these periods of unease.

Now that I mention it, Patterson looks even more attractive, thanks to its better history of free cash flow generation. It's certainly one for you to consider if you're looking to make a contrarian play in this space. Just be sure to familiarize yourself with all the factors weighing on the shares today, because people taking the opposite side of the bet almost certainly have, too.

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Chesapeake Energy is a Motley Fool Inside Value selection. Like to find out what intrinsic value lead analyst Philip Durrell has placed on the shares? Check out a 30-day free trial today.

Fool contributor Toby Shute doesn't own any Duran Duran records, nor shares in any company mentioned. The Motley Fool has a disclosure policy.