Shares of Grey Wolf GW are trading 2% lower at $7.43, and we will use the opportunity to add 200 shares to our position, bringing the total number of shares to 600.
Last week, Grey Wolf reported positive quarterly results and stated during its conference call that the strong commodity prices for both oil and natural gas will likely fuel demand for land rigs later in the year. We believe that this demand will eventually push dayrates (the rates a drilling contractor receives per day for a drilling rig) higher and ultimately lead to an increase in the share price.
Based on the favorable drilling environment, shares could hit $9 over the next 12 months. We will look to add further to our position on continued weakness.
Frank Curzio is a research associate at TheStreet.com.
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