At this point it’s no secret that North America is undergoing a huge energy resurgence. As various energy companies have plowed head first into the continent’s hottest shale regions, they’ve managed to pull out an abundance of oil and natural gas. That continued rising production has put North America on the path to energy independence.

However, it seems that all of the glory has been placed onto E&P firms like Cimarex Energy (NYSE:XEC).

Yet, there is a whole ecosystem of firms making the boom a reality. For investors, the unloved operators of land drilling rigs could be one of the most important pieces in the energy puzzle, as well as one of the biggest values.

Rising Rig Counts & Day Rates

As natural gas and oil production continues to increase across North America, the land drillers will ultimately be charged with extracting that energy from the ground. This is the group that does the "heavy lifting," and physically removes the hydrocarbons from the earth. And as of late, the oil services subsector has be doing more of it.

Overall, rig counts continue to rise.

According to data provided by Houston, TX-based oil service giant Baker Hughes (NYSE:BHI), 2014 has already seen a nice bump upwards in terms of the number of rigs in operation. As various E&P firms have begun to execute new CAPEX spending plans, U.S. land rig counts have increased by 41- about 2%- since the beginning of 2014. Currently, there are 1803 drilling rigs tapping our oil and natural gas in the United States. That’s up from just 488 recorded back in 1999.

What’s more is the number of rigs drilling for oil has surged to decade highs. Total U.S. oil production has recently hit a whopping 8.22 million barrels per day, which is the most since May of 1988. Likewise, BHI’s data shows the number of oil rigs in operation rose to 1,473- the highest level since 1987.

Coupled with generalized rising rig demand, day rates for advanced drilling equipment continue to rise as well. Innovative technologies- like horizontal drilling and multi-stage fracturing- have allowed the land drillers with modern fleets to charge higher rental rates for their offerings. According to the agency Fitch Ratings, advanced firms like Helmerich & Payne (NYSE:HP) have been able to charge more than rivals thanks to their increased efficiency.

Drilling Down

Given the overall bullish production profile for North America’s shale, investors may want to consider a position in the land drillers for their portfolios. The broad based and equal-weighted SPDR S&P Oil & Gas Equipment & Services (NYSE:XES) has about 28% of its holdings in drilling firms, and could be used as proxy for the entire oil services sector. However, for those who want to target their exposure to drilling growth, individual stocks are the way to go. Here are a few picks.

While not 100% a land-focused driller, Bermuda-based Nabors Industries (NYSE:NBR) does feature the largest land drilling rig fleet in the country- at 445 rigs. Perhaps more important, NBR has been switching out its older land rig fleet into a highly-specialized one. Its new “walking rigs”- which allow firms to drill multiple wells from one well pad- have been booked for rent even before they’ve finished being built. That’s helped NBR’s bottom line and the ability to begin paying a dividend. Likewise, slightly smaller rival Patterson-UTI Energy (Nasdaq:PTEN) has expanded its advanced rig offerings. Both firms offer a great play on rising day rates for rigs.

For investors looking for a potential value buy, Precision Drilling (NYSE:PDS) could be it. After a series of high-profile acquisitions, PDS was forced to reduce its dividend in order to lessen its debt load. Now the firm seems to be back on track and recently upped its CAPEX spending on new advanced rigs. That includes building 12 new walking rigs as well as upgrading 15 others. Likewise, smaller land driller Parker Drilling (NYSE:PKD) could be a value as it is small enough to be bought outright from a larger competitor.

The Bottom Line

As both natural gas and oil drilling activity continues to increase onshore, the land drillers will benefit. For investors, the firms doing the heavy lifting continue to see rising rig counts as well as day rates. The previous picks- along with Unit Corp. (NYSE:UNT) –make ideal selections to play the drillers rising profits.

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