Energy Business

4 Oilfield Services Stocks to Buy as Oil Price Skyrockets

Patterson-UTI Energy

This remains a top oil services pick across Wall Street. Patterson-UTI Energy Inc. (NASDAQ: PTEN) is the second-largest land driller in North America and a large pressure pumping provider. Its operations are particularly focused in the Marcellus and in Texas.

Patterson-UTI and its subsidiaries operate land-based drilling rigs in oil and natural gas producing regions of the continental United States and western Canada. Universal Pressure Pumping and Universal Well Services provide pressure pumping services primarily in Texas and the Appalachian region. For the three months ended September 30, 2017, the company had an average of 161 drilling rigs operating.

The company remains the fifth largest Pressure Pumper with a 1.5 million HHP frac fleet (currently 83% utilized) with exposure to ancillary rental equipment business through Great Plains Oilfield Rental. The recent acquisition of MS Energy (directional drilling) complements its contract drilling business and provides attractive growth opportunities for investors.

Investors in Patterson-UTI are paid a small 0.4% dividend. The $27 Merrill Lynch price target compares with a consensus price objective last seen at $24.85. The shares closed at $20.30 on Thursday.

Nabors Industries

This company provides drilling and rig services, and some feel it could be a takeover target. Nabors Industries Ltd (NYSE: NBR) owns and operates the largest land-based drilling rig fleet in the world, and it is a leading provider of offshore platform workover and drilling rigs in the United States and select international markets. Revenues in 2016 were $2.23 billion.

Nabors markets approximately 400 rigs for land-based drilling operations in the United States, Canada and approximately 20 other countries worldwide, and 41 rigs for offshore drilling operations in the United States and internationally.

While the stock has rallied off the lows, Nabors is still down over 50% from highest levels posted a year ago. This concern has been exacerbated recently by a softer-than-expected third-quarter earnings report and focus on 2018 non–cash deferred revenues. While most don’t see a quick fix for the company, the worst surely looks to be over.

Nabors investors receive a 3.07% dividend, though that may be lowered going forward. Merrill Lynch has set its price target at $10. The posted consensus price objective is $9.19, and the shares closed well below those levels most recently at $7.82 apiece.

These are four stocks to buy for big potential gains the rest of 2018. They run the risk gamut, so investors need to gauge their capital investment to their risk tolerance. One thing is for sure, the sector offers far more value than many others and makes sense to buy now as oil heads towards the $70 level.