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PTEN's U.S. Land-Based Rig Count Declines 7% in September from August

Houston-based Patterson-UTI Energy Inc., whose subsidiaries provide onshore contract drilling and pressure pumping services to producers in North America, saw its U.S. rig count fall month/month in September by 7%.

The contractor said its U.S. rig count fell to 99 from 106 in August. Four rigs were running in Canada during September and in August. Patterson-UTI's (PTEN) September rig count averaged 103 in North America, down from 110 in August.

Between July and September, the operator's average rig count in the United States was 105 rigs, versus previous company guidance of 107. During the second quarter, PTEN's average rig count was 122 U.S. rigs and two Canadian rigs.

PTEN's average rig count represents the number of the company's drilling rigs that were operating on average under contract. The company's most sought-after rig line is its Apex system, which includes fit-for-purpose and walking rigs. It also maintains an inventory of conventional rigs.

The land rig count during 3Q2015 was slightly under guidance as the "reality" of sub-$50/bbl West Texas Intermediate prices "continues to manifest itself," said Tudor, Pickering, Holt & Co. (TPH). Outperformance during the first half of this year is "now catching up" as the 3Q2015 U.S. rig count is down 14% from 2Q2015, "well below overall domestic rig count declines" of 5% quarter/quarter.

Exploration and production companies are dropping rigs "irrespective of quality," with "top-tier" 1,500 hp walking rigs with alternating current at risk. That in turn has pushed dayrates for the top-tier rigs to the mid-teens from the high-teens, said analysts. The domestic land rig count as of last Friday has fallen 10% over the past six weeks, TPH noted.

Using RigData information, the analyst noted U.S. horizontal rig reductions drove the most recent decline and accounted for 71 of the rigs dropped since Aug. 21. 

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