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We expect onshore oil and gas drilling contractor Patterson-UTI Energy Inc. (PTEN - Analyst Report) to beat expectations when it reports fourth-quarter 2012 results before the opening bell tomorrow, Thursday, Feb 7.

Why a Likely Positive Surprise?

Our proven model shows that Patterson-UTI Energy is likely to beat earnings because it has the right combination of two key ingredients.

Positive Zacks ESP: Expected Surprise Prediction or ESP (Read: Zacks Earnings ESP: A Better Method), which represents the difference between the Most Accurate estimate of 30 cents and the Zacks Consensus Estimate of 29 cents, stands at +3.45%. This is a meaningful and leading indicator of a likely positive earnings surprise.  

Zacks #3 Rank (Hold): The stocks with Zacks Ranks of #1, 2 and 3 have a significantly higher chance of beating the earnings. The sell rated stocks (#4 and 5) should never be considered while going into an earnings announcement.

The combination of Patterson-UTI Energy’s Zacks Rank #3 (Hold) and +3.45% ESP makes us confident of a positive earnings beat on Feb 7, 2013.  

What is Driving the Better Than Expected Earnings?

Patterson-UTI Energy is the second-largest North American land drilling contractor, having a large, high-quality fleet of drilling rigs. The company’s technologically-advanced Apex rigs are the key to its success. Patterson-UTI’s proprietary design makes the rigs move faster than conventional rigs, drill quicker and more efficiently than conventional rigs, and allows a safer operating environment. As such, these rigs are better suited for the new demands of the exploration business and, therefore, commands higher dayrates and utilization than rigs from other land drillers.

The positive trend is seen in the trailing four-quarter average surprise of 5.29%. The company’s third-quarter 2012 surprise was 2.63% owing to high utilization of the company’s Apex rigs.

Other Stocks to Consider

Here are some other firmsyou may want to consider on the basis of our model, which shows that they have the right combination of elements to post an earnings beat this quarter:

Atlas Energy L.P (ATLS - Snapshot Report), earnings ESP of +260.00% and Zacks Rank #1 (Strong Buy).

Northern Tier Energy LP (NTI - Snapshot Report), earnings ESP of +2.94% and Zacks Rank #1 (Strong Buy).

Hercules Offshore Inc. (HERO - Snapshot Report), earnings ESP of +14.29% and Zacks Rank #2 (Buy).

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