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Onshore contract driller Patterson-UTI Energy Inc. (PTEN - Free Report) declared that its Sep 2013 drill rig count increased by one from the previous month to average out to 191. The company operated 182 rigs in the U.S. and 9 in Canada in Sep.

For the quarter ending Sep 30, the company's rig count averaged 181 in the U.S. and 8 in Canada.

Patterson-UTI’s activity levels in the U.S. peaked in early Oct 2008 with a rig count of 275. From then, through the second quarter of 2009, the company witnessed a steep and rapid decline in rig count on the back of decreased demand, largely caused by lower commodity prices for natural gas.

However, natural gas prices have recovered significantly from their multi-year lows amid signs of economic stabilization. Moreover, as the weather becomes cooler, natural gas demand is expected to increase, which would help set an increasing price trend in the coming quarters.

Houston, Texas-based Patterson-UTI Energy is one of the largest onshore contract drillers in the U.S. with more than 300 land-based rigs that operate primarily in the oil and natural gas producing regions of North America. The company operates primarily in three segments – contract drilling, pressure pumping, and oil and natural gas production and exploration – with contract drilling being the most significant contributor to the operating income.

Though Patterson-UTI reported weak second quarter results, it consistently gave good performances in the quarters before. The company had an average surprise of 11.90% for the last four quarters and we expect long-term earnings growth of 1.90%.

Patterson-UTI currently retains a Zacks Rank #3 (Hold), implying that it is expected to perform in line with the broader U.S. equity market over the next one to three months.

Meanwhile, one can consider other stocks in the energy sector such as Stone Energy Corp. (SGY - Free Report) , Pioneer Energy Services Corp. (PES - Free Report) and Tesco Corporation (TESO - Free Report) as good investment opportunities. All these stocks currently sport a Zacks Rank #1 (Strong Buy).

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