Continental Resources, Inc. (CLR), Halliburton Company (HAL), Ultra Petroleum Corp. (UPL): The “New Normal” for the American Oil Industry

What a Fool believes

The implementation of pad drilling will be a welcomed help for investors in the exploration and production space, especially those in the natural gas game. Ultra Petroleum Corp. (NYSE:UPL) suffered mightily in 2012 because of low natural gas prices, but the incorporation of techniques such as pad drilling has enabled the company to get drilling costs down low enough that its natural gas breakeven cost on current wells is $2.88. These kinds of cost efficiencies are necessary, considering the massive capital expenditures these E&P companies are considering over the next several years.

For those in the oil services, this shakeup will more than likely take a year or so for companies to adjust their services to more accurately reflect the needs of the industry in the United States. For the time being, companies such as Halliburton Company (NYSE:HAL) and Nabors will look to move several of its legacy assets to other parts of the globe, where they may be able to milk a few more years out of the equipment. Eventually, though, these international customers’ thirst for pad-capable equipment and services will require a migration of the new technology as well.

The article The “New Normal” for the American Oil Industry originally appeared on Fool.com and is written by Howard Cranford.

Fool contributor Tyler Crowe has no position in any stocks mentioned. You can follow him at Fool.com under the handle TMFDirtyBird, on Google +, or on Twitter: @TylerCroweFool.The Motley Fool recommends Halliburton and Ultra Petroleum, owns shares of Ultra Petroleum, and has options on Ultra Petroleum.

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