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2016-08-03 18:30:00

NABORS NET LOSS $583 MLN

NABORS NET LOSS $583 MLN

Nabors Announces Second Quarter Results

Notable items:

  • Quarterly reported EPS was ($0.65), or ($0.26) after excluding impairments and losses related to divested businesses and assets, primarily C&J Energy Services
  • Reduced debt by $87 million and net debt by $121 million during the quarter
  • Received awards for three Lower 48 newbuilds
  • Started recognizing revenue for MODS 400 GOM platform rig

Nabors Industries Ltd. ("Nabors") (NYSE: NBR) reported second quarter 2016 operating revenues of $571.6 million, compared to operating revenues of $597.6 million in the first quarter. Net income from continuing operations for the quarter was a loss of $186.6 million, or ($0.65) per diluted share, compared to a loss of $396.6 million, or ($1.41) per diluted share, last quarter. Net income from continuing operations for the second quarter includes a loss of $0.39 per share due to impairments and losses related to disposed businesses and assets. The largest component, totaling $0.34 per share, is comprised of an impairment to the carrying value of the Company's investment in C&J Energy Services Ltd. ("C&J") and its proportionate share of C&J losses from the prior quarter. In addition, the second quarter benefitted from the renegotiation of two contracts, as well as early termination revenue that improved reported net income by $24.1 million or $0.09 per share.

Anthony Petrello, Nabors' Chairman, President, and CEO, commented, "Thanks to our global market position, stringent cost management and incremental revenue from two contract renegotiations, we were able to achieve a sequential increase in adjusted EBITDA, despite lower activity and pricing. Additionally, continued focus on capital expenditures and expense control has led to a reduction in net debt of nearly $140 million year-to-date.

"Operating income for the Company remained flat quarter over quarter, largely attributable to favorable results in the Gulf of Mexico and our international business, offset by declines in Rig Services, Alaska and Canada. Our Gulf of Mexico results reflect amended contract terms for the MODS 400 deepwater platform rig, which include partial recovery of standby revenue for past quarters.

"We completed two of our three recently introduced PACE®-M800 AC rigs under construction, with completion of the third expected by the end of September. We have executed a contract for the first rig and are finalizing contracts for the other two. Our pad-optimized PACE®-X rig also continues to set new performance records.

"We remain diligent in managing the current cycle, particularly in light of the recent pullback in oil prices, while maintaining our flexibility to capitalize on opportunities."

Segment Results

Adjusted operating income for the second quarter was a loss of $53.4 million, essentially flat from the first quarter. During the second quarter the Company concluded negotiations on a contract amendment to the MODS 400 platform rig in the Gulf of Mexico and resolved a contract dispute in Angola. In addition, early termination revenue totaled approximately $14.3 million. These items had a combined favorable impact on results of $29.7 million, as compared to $3.6 million for early termination revenue in the first quarter.

Drilling and Rig Services adjusted operating income was a loss of $25.0 million compared to a loss of $18.6 million in the first quarter. Quarterly adjusted EBITDA in these business lines decreased sequentially to $193.4 million, a 3% decline from the previous quarter. For the quarter, the Company averaged 159.1 rigs operating at an average gross margin of $15,850 per rig day, compared to 187.9 rigs at $13,407 per rig day in the first quarter. The Company expects additional declines in near-term volume and pricing, as term contracts expire and adjust to spot market rates in the lower 48, and international markets continue to adjust to commodity prices.

International adjusted operating income increased by 15% sequentially to $53.9 million due to several beneficial revenue items and cost improvements. Quarterly adjusted EBITDA in this segment increased by 2% sequentially to $150.6 million. Compared to the second quarter, the Company expects decreasing quarterly income in the near term, reflecting activity declines and the absence of specific revenue events of the second quarter. Increased bidding activity in the Middle East and planned 2017 budget increases by certain Latin American customers imply an upturn is possible in the first half of next year. In Canada, the usual sequential decrease in results due to the annual second quarter break up was minimized by the historically low first quarter rig counts. Subsequent quarterly results should reflect a modest improvement.

The U.S. Drilling segment posted an adjusted operating loss of $48.3 million for the quarter, reflecting further activity declines and margin erosion offset by the additional standby revenue agreed with our customer for the delayed startup of the MODS 400 platform rig. The Lower 48 operation saw 18% fewer rigs working compared to the first quarter, with an average rig count of 44. A rig count improvement late in the quarter implies a bottoming in activity. Provided oil prices stabilize into the $50 per barrel range, the Company expects the near-term rig count to increase gradually, albeit at lower average margins, as legacy contracts renew at current spot day rates. Subsequent to quarter end, the Company commenced mobilization of its second arctic coiled tubing drilling rig to the North Slope of Alaska with startup anticipated to occur in late third quarter.

Rig Services, which consists of the Company's manufacturing, directional drilling, and complementary services, reported an adjusted operating loss of $19.7 million. While the broader market continues to struggle in these segments, the Company is encouraged by customers' adoption of its technologies and interest in its comprehensive offerings.

William Restrepo, Nabors' Chief Financial Officer, stated, "Our company's strategy and preparation continue to contain the damage inflicted by the severity and length of the current downturn. Capital allocation over the past five years to international markets with lower cost reservoirs, as well as intense focus on developing advanced drilling technologies, have helped us continue to perform well nearly two years into this downturn. Early actions to control cost and capital expenditures have also contributed to the positive free cash flow that we had anticipated. Finally, the steps taken to strengthen our liquidity position before the start of this downturn have proven extremely valuable and have prevented the need for onerous capital market transactions in a very unfavorable environment. In addition to our current cash balances, our $2.25 billion revolver remains undrawn. And although we see signs of improvement in both international and U.S. markets, we remain committed to maintaining liquidity and financial discipline, while targeting positive free cash flow during the remainder of the year."

Mr. Petrello concluded, "I am pleased with our results this quarter in light of historically low rig counts and the most challenging drilling market in decades. Since this downturn began in 2014, Nabors' unique best-in-class global footprint and technological innovations have allowed us to mitigate the impact of the implosion in North American activity, preserve our sizeable liquidity, and position the Company for further growth."

NABORS INDUSTRIES LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME (LOSS)

(Unaudited)

                     
   

Three Months Ended

 

Six Months Ended

   

June 30,

 

March 31,

 

June 30,

(In thousands, except per share amounts)

 

2016

 

2015

 

2016

 

2016

 

2015

                     

Revenues and other income:

                   

Operating revenues 

 

$  571,591

 

$ 863,305

 

$  597,571

 

$ 1,169,162

 

$ 2,278,012

Earnings (losses) from unconsolidated affiliates

 

(54,769)

 

(1,116)

 

(167,151)

 

(221,920)

 

5,386

Investment income (loss)

 

270

 

1,181

 

343

 

613

 

2,150

      Total revenues and other income

 

517,092

 

863,370

 

430,763

 

947,855

 

2,285,548

                     

Costs and other deductions:

                   

Direct costs

 

341,279

 

488,522

 

365,023

 

706,302

 

1,408,132

General and administrative expenses

 

56,624

 

75,810

 

62,334

 

118,958

 

191,240

Research and engineering

 

8,180

 

10,480

 

8,162

 

16,342

 

22,183

Depreciation and amortization

 

218,913

 

218,196

 

215,818

 

434,731

 

499,215

Interest expense

 

45,237

 

44,469

 

45,730

 

90,967

 

91,070

Other, net

 

74,607

 

1,338

 

182,404

 

257,011

 

(54,504)

      Total costs and other deductions

 

744,840

 

838,815

 

879,471

 

1,624,311

 

2,157,336

                     

Income (loss) from continuing operations before income taxes

 

(227,748)

 

24,555

 

(448,708)

 

(676,456)

 

128,212

                     

Income tax expense (benefit)

 

(41,183)

 

66,445

 

(52,064)

 

(93,247)

 

45,740

                     

Income (loss) from continuing operations, net of tax

 

(186,565)

 

(41,890)

 

(396,644)

 

(583,209)

 

82,472

Income (loss) from discontinued operations, net of tax

 

(984)

 

5,025

 

(926)

 

(1,910)

 

4,208

                     

Net income (loss)

 

(187,549)

 

(36,865)

 

(397,570)

 

(585,119)

 

86,680

     Less: Net (income) loss attributable to noncontrolling interest

 

2,899

 

44

 

(724)

 

2,175

 

133

Net income (loss) attributable to Nabors

 

$(184,650)

 

$ (36,821)

 

$(398,294)

 

$  (582,944)

 

$      86,813

 

 

-----

Earlier: 

NABORS NET LOSS $398.3 MLN 

NABORS NET LOSS $372.7 MLN 

NABORS LOSS $296 MLN 

NABORS LOSS $ 41.9 MLN 

NABORS LOSS $891.1 MLN

 

 



Tags: NABORS, INDUSTRIES, OIL, GAS, DRILLING, CANRIG

Chronicle:

NABORS NET LOSS $583 MLN
November, 20, 09:05:00

INDIA'S GAS WILL UP

REUTERS - India’s natural gas consumption is expected to rise to 70 billion cubic metres (bcm) by 2022 and 100 bcm by 2030, according to a government think tank and the Oxford Institute of Energy Studies, up from 50 bcm now. India burns just 7 percent of what top user the United States consumes in a year with about a quarter of India’s population.

NABORS NET LOSS $583 MLN
November, 20, 09:00:00

NORWAY SELLS OIL & GAS

Norway, which relies on oil and gas for about a fifth of economic output, would be less vulnerable to declining crude prices without its fund investing in the industry, the central bank said Thursday. The divestment would mark the second major step in scrubbing the world’s biggest wealth fund of climate risk, after it sold most of its coal stocks.

NABORS NET LOSS $583 MLN
November, 20, 08:55:00

OIL PRICES UP

WSJ - Light, sweet crude for December delivery rose $1.41, or 2.6%, to $56.55 a barrel on the New York Mercantile Exchange, snapping a three-session losing streak. Brent, the global benchmark, advanced $1.36, or 2.2%, to $62.72 a barrel.

NABORS NET LOSS $583 MLN
November, 20, 08:50:00

U.S. RIGS UP 8 TO 915

U.S. Rig Count is up 327 rigs from last year's count of 588, with oil rigs up 267, gas rigs up 61, and miscellaneous rigs down 1 to 1. Canada Rig Count is up 24 rigs from last year's count of 184, with oil rigs up 9 and gas rigs up 15.

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