Earlier this year, I told you not to pity Patterson-UTI (NASDAQ:PTEN). Now that the share price has been savaged -- almost as severely as that of Nabors Industries (NYSE:NBR) -- I am feeling rather bad for the blokes.

Then again, under-priced shares are really not such a bad thing when you've got the cash to hoover them up from skittish sellers. Patterson is perfectly well positioned to pick up shares at a real fire sale price. (Look, Ma -- no debt!) In the most recent quarter, the company bought back around $50 million worth at nearly double today's prices. Fortunately, that's just a fraction of the total repurchase authorization.

The company's earnings report doesn't give us too much of an idea of what to expect going forward. For example, I wouldn't expect to see earnings stay above $100 million in future quarters. However, on the conference call, management pointed out that natural gas prices aren't much different than they were a year ago. So, last year's results may actually be more informative as we look forward.

By now we know that most exploration and production companies, from Newfield Exploration (NYSE:NFX) to SandRidge Energy (NYSE:SD), are paring back their drilling plans. As a consequence, drillers like Patterson, Grey Wolf (AMEX:GW), and Helmerich & Payne (NYSE:HP) will all be idling some rigs.

Goldman Sachs (NYSE:GS) estimates that we'll see the rig count fall by about 350, and I have no reason to argue with that number. Patterson sees its count falling by about 10 rigs in the fourth quarter, and continued weakness into 2009 could take a few dozen more rigs off the market. That would take us back to last year's levels. The company didn't break the bank back then, and it won't this time around either.

Remember this much, Fools: Declining rates are your best friend. Once rigs get laid down, production is going to drop, fast -- perhaps faster than in any previous downturn. That's the self-correcting mechanism that, along with a clean balance sheet, keeps Patterson-UTI out of the poorhouse.

Patterson's rated a promising four stars by Motley Fool CAPS players. Grace the community with your own presence by pontificating on the stock right here.

Fool contributor Toby Shute doesn't have a position in any company mentioned. The Motley Fool has a disclosure policy.