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Helmerich & Payne

Helmerich & Payne (NYSE:HP)Trailing P/E: 10.3
2013 P/E: 11.2

The contract drilling business accounts for almost all of Helmerich & Payne’s (NYSE:HP) operating revenues. But of course, lower rig counts also have hurt this firm. However, like C&J, the longer-term is rosy for HP.

Its cost advantage in building new rigs will allow it to increase market share in the coming years. Analysts expect 2013 E&P capital spending budgets will be up about 10% to 20% year-over-year and will focus more on U.S. and Canadian mixed shale fields.

At the same time, the recent strength in natural gas and shale oil pricing should boost E&P firm cash flows and provide strong incentives for increased drilling in the new year. Roughly 80% of HP’s customer base comprises major oil companies and large-cap independent E&Ps.

Shares of Helmerich & Payne currently trade at a better valuation than several competitors, including Union Drilling (NASDAQ:UDRL) and Pioneer Energy Services (NYSE:PES).

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