This week, Nabors Industries (NBR) joined the list of gas drillers looking for more and more exposure into pressure pumping, also known as hydraulic-fracturing.
The sector has become literally overheated with industry stalwarts convinced of the inevitability of natural gas growth, natural gas prices and shale. We've seen multi-billion-dollar deals from drilling majors Schlumberger (SLB) and Baker Hughes (BHI) last year, followed by similar smaller deals from Patterson-UTI (PTEN)and now Nabors.
I'm a big believer in the inevitability of natural gas from shale, but I make money from finding and betting on stocks, not from pipedreams of our energy future. I see the sector as far too crowded right now, in light of current gas prices and drilling headwinds. There'll be far more opportune prices to find value in shale plays, and this deal convinces me that now is the time to be on the sidelines.
Nabors was a recommendation I made several weeks ago, precisely because of its singular, land-based drilling exposure. I had been leery of involvement in off-shore names, considering the blown well in the Gulf of Mexico and tried to find a driller with concentrated assets in traditional land operations.
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