NEW YORK (TheStreet) -- If there is one company that stands to benefit from the increasing oil and gas drilling activity in North America and Canada's LNG export prospects, then that is Precision Drilling (PDS), Canada's largest oil and gas drilling contractor.
Precision Drilling gets more than 80% of its revenue by providing contract drilling services and less than 20% by providing completion and production services.
Precision Drilling gets 50% of its revenue from Canada and more than 40% from the U.S. With operations in nearly all major North American oil and gas plays, the company will profit from the increasing activity from this region.
Moreover, analysts have said that Precision Drilling could double the size of its Canadian business in the coming years from the expected growth in liquefied natural gas, or LNG, output. Canada has been developing several LNG export facilities to meet the increasing demand coming from Asia.
Precision Drilling's shares are up more than 40% this year, currently hovering around $13.28, yet they are priced just 2 times the company's trailing sales, considerably lower than the industry's average of 44 times, as per Thomson Reuters.
According to data provided by Baker Hughes, as of May 30, the rig count in the U.S. and Canada was up 5.4% and 37% respectively from the same period last year. This uptake in activity, supported by the year-over-year increase in energy prices, has been driven by increasing production from shale basins. This spurred demand for rigs, mainly the higher-quality, Tier-1 rigs.