Form 8-K NABORS INDUSTRIES LTD For: Apr 25
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) April 25, 2016
NABORS INDUSTRIES LTD.
(Exact name of registrant as specified in its charter)
Bermuda |
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001-32657 |
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98-0363970 |
(State or Other Jurisdiction of |
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(Commission File Number) |
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(I.R.S. Employer |
Crown House |
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N/A |
(Address of principal executive offices) |
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(Zip Code) |
(441) 292-1510
(Registrants telephone number, including area code)
N/A
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 2.02 Results of Operations and Financial Condition.
On April 25, 2016, we issued a press release announcing our results of operations for the three-month period ended March 31, 2016. A copy of that release is furnished herewith as Exhibit 99.1 and is incorporated herein by reference.
The press release includes forward-looking statements within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934. Such forward-looking statements are subject to risks and uncertainties, as disclosed from time to time in our filings with the Securities and Exchange Commission. As a result of these factors, our actual results may differ materially from those indicated or implied by such forward-looking statements.
We also presented in the press release certain non-GAAP financial measures. We presented our adjusted EBITDA and adjusted operating income (loss) for all periods presented in the release. The components of these non-GAAP measures are computed by using amounts that are determined in accordance with accounting principles generally accepted in the United States of America (GAAP). Adjusted EBITDA is computed by subtracting the sum of direct costs, general and administrative expenses and research and engineering expenses from operating revenues. Adjusted operating income (loss) is computed similarly, but also subtracts depreciation and amortization expenses from operating revenues. As part of the press release information, we have provided a reconciliation of adjusted EBITDA and adjusted operating income (loss) to income (loss) from continuing operations before income taxes, which is its nearest comparable GAAP financial measure.
We included our adjusted EBITDA and adjusted operating income (loss) in the press release because management evaluates the performance of our operating segments and the consolidated company based on several criteria, including these non-GAAP measures, because we believe these financial measures accurately reflect our ongoing profitability and performance. In addition, securities analysts and investors use this measure as one of the metrics on which they analyze our performance. There are, however, certain limitations to these measures and therefore they should be considered in addition to and not as an alternative to our results in accordance with GAAP.
Item 8.01. Other Events.
On April 26, 2016, we will present certain information in connection with our call with shareholders, analysts and others relating to our results of operations discussed above. Attached hereto as Exhibit 99.2 are slides that will be presented at that time.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
Exhibit No. |
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Description |
|
|
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99.1 |
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Press Release |
99.2 |
|
Investor Information |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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NABORS INDUSTRIES LTD. |
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Date: April 25, 2016 |
By: |
/s/ Mark D. Andrews |
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Mark D. Andrews |
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Corporate Secretary |
Exhibit 99.1
NEWS RELEASE |
Nabors Announces First Quarter Results
Notable items:
· First quarter GAAP EPS was ($1.41), which translates to ($0.29) excluding ($1.12) related to our equity investment in C&J Energy Services
· Repurchased approximately $154 million of senior unsecured notes in 1Q 2016
HAMILTON, Bermuda, April 25, 2016 /PRNewswire/ Nabors Industries Ltd. (Nabors) (NYSE: NBR) today reported first quarter 2016 operating revenues of $597.6 million, compared to operating revenues of $738.9 million in the fourth quarter of last year. Net income (loss) from continuing operations for the quarter was a loss of $396.6 million, or ($1.41) per diluted share, compared to a loss of $161.1 million, or ($0.57) per diluted share, last quarter. The net loss from continuing operations for the first quarter included a per share loss of $1.12 per share due to impairments to the carrying value of the Companys investment in C&J Energy Services, Ltd. (C&J) (NYSE: CJES) and from our proportionate share of C&J losses from the prior quarter, as such losses are accounted for on a quarter lag basis.
Anthony Petrello, Nabors Chairman, President, and CEO, commented, Our first quarter results reflect the continued strain from low commodity prices. In particular, the first quarters drop in oil prices below $30 led to sharp reductions in customer spending plans on a worldwide basis and had a corresponding adverse impact on our results. In the U.S., our customers swift reaction to commodity price drops resulted in a roughly equal impact on both rig years and margins. Internationally, a reduction of seven rig years combined with other unfavorable factors resulted in lower operating cash flows for the quarter. Additionally, the Canada markets typical seasonal uptick in the first quarter failed to materialize this year due to market conditions. Despite these reductions in cash flows, we still modestly reduced net debt during the quarter while continuing to fund the innovative technological initiatives that will best position Nabors for the eventual upturn.
Segment Results
Quarterly adjusted operating income (adjusted income) in Drilling and Rig Services decreased to a loss of $18.6 million from a profit of $29.9 million in the fourth quarter of last year. Quarterly adjusted EBITDA in this business line decreased sequentially to $200.2 million, a 23% decline of which the majority was attributable to the U.S. drilling segment. For the quarter, the Company averaged 187.9 rigs operating at an average gross margin of $13,407 per rig day, compared to 222.9 rigs at $14,229 per rig day in the fourth quarter of last year. The Company expects additional declines in near-term volume and pricing as the weak commodity price environment persists and customer spending continues to adjust to their reduced budget levels.
International adjusted income decreased by 10% sequentially to $46.9 million, primarily due to a reduction of seven rig years, additional pricing concessions, and unfavorable cost impacts and rig moving activity. Quarterly adjusted EBITDA in this segment decreased by 8% sequentially to $148.3 million. Compared to the first quarter, the Company expects moderately decreasing quarterly income in the near term as activity declines. In Canada, where the first quarter is traditionally the strongest, rig years declined 13% from the fourth quarter with future results expected to remain challenged.
The U.S. Drilling segment posted an adjusted operating loss of $47.6 million during the quarter, reflecting further activity declines and margin erosion as term contracts expire. The Lower 48 saw 30% fewer rigs working compared to the fourth quarter of last year, for an average rig count of 54. At current commodity prices, the Company anticipates the rig count to stabilize mid-year but expects further deterioration in average margins in the near-term. Should market fundamentals push oil prices comfortably into the $50s, rig activity could improve.
Rig Services, which consists of the Companys manufacturing, directional drilling, and complementary services, reported an adjusted loss of $10.6 million, a $2.9 million improvement from the fourth quarter due to cost savings. While market fundamentals continue to provide minimal upside for new equipment and services at this time, Nabors remains encouraged about the future potential of this segment with its focus on technology and automation.
William Restrepo, Nabors Chief Financial Officer, stated, We continue to focus on maintaining our liquidity and enhancing operational performance during these challenged times. Though the quarters results declined materially from the previous quarter, we were able to slightly reduce net debt through a combination of continued execution of stringent cost control and disciplined capital spending. During the quarter, we repurchased $154.1 million of Nabors senior unsecured notes at a modest discount for an estimated net annual interest expense savings of $7 million. As a result of the continued deterioration of industry conditions, we made the decision to impair our carrying value in C&J to better reflect the market value of our equity position.
Despite a recent upturn in the price of oil, at its current level, we anticipate further near-term reductions in rig count both internationally and in the U.S. We also expect margins to deteriorate, particularly in the Lower 48 market. Though low oil prices have had increasing spill-over effects on our international business, Nabors remains uniquely well positioned to weather the storm given our ongoing cash flow from international operations and strong liquidity.
Mr. Petrello concluded, We continue to execute on our cost reduction initiatives and to move forward with our vision of the rig serving as the central platform for all drilling services and future innovation. We expect our technological advances to give Nabors a sustainable competitive advantage by drilling wells with greater efficiency, safety, and accuracy in every one of our markets.
About Nabors
Nabors Industries (NYSE: NBR) owns and operates the worlds largest land-based drilling rig fleet and is a leading provider of offshore platform rigs in the United States and multiple international markets. Nabors also provides directional drilling services, performance tools, and innovative technologies throughout the worlds most significant oil and gas markets. Leveraging our advanced drilling automation capabilities, Nabors highly skilled workforce continues to set new standards for operational excellence and transform our industry.
Forward-looking Statements
The information above includes forward-looking statements within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934. Such forward-looking statements are subject to certain risks and uncertainties, as disclosed by Nabors from time to time in its filings with the Securities and Exchange Commission. As a result of these factors, Nabors actual results may differ materially from those indicated or implied by such forward-looking statements. The forward-looking statements contained in this press release reflect managements estimates and beliefs as of the date of this press release. Nabors does not undertake to update these forward-looking statements.
Non-GAAP Disclaimer
This press release presents certain non-GAAP financial measures. The components of these non-GAAP measures are computed by using amounts that are determined in accordance with accounting principles generally accepted in the United States of America (GAAP). Adjusted EBITDA is computed by subtracting the sum of direct costs, general and administrative expenses and research and engineering expenses from operating revenues. Adjusted operating income (loss) is computed similarly, but also subtracts depreciation and amortization expenses from operating revenues. A reconciliation of adjusted EBITDA and adjusted operating income (loss) to income (loss) from continuing operations before income taxes, which is its nearest comparable GAAP financial measure, are included elsewhere in this press release.
Media Contact:
Dennis A. Smith, Vice President of Corporate Development & Investor Relations, +1 281-775-8038. To request investor materials, contact Nabors corporate headquarters in Hamilton, Bermuda at +441-292-1510 or via e-mail at [email protected]
NABORS INDUSTRIES LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (LOSS)
(Unaudited)
|
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Three Months Ended |
| |||||||
|
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March 31, |
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December 31, |
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(In thousands, except per share amounts) |
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2016 |
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2015 |
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2015 |
| |||
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|
|
|
| |||
Revenues and other income: |
|
|
|
|
|
|
| |||
Operating revenues |
|
$ |
597,571 |
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$ |
1,414,707 |
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$ |
738,872 |
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Earnings (losses) from unconsolidated affiliates |
|
(167,151 |
) |
6,502 |
|
(45,367 |
) | |||
Investment income (loss) |
|
343 |
|
969 |
|
180 |
| |||
Total revenues and other income |
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430,763 |
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1,422,178 |
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693,685 |
| |||
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| |||
Costs and other deductions: |
|
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|
|
|
|
| |||
Direct costs |
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365,023 |
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919,610 |
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445,130 |
| |||
General and administrative expenses |
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62,334 |
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115,430 |
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61,056 |
| |||
Research and engineering |
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8,162 |
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11,703 |
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9,354 |
| |||
Depreciation and amortization |
|
215,818 |
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281,019 |
|
231,137 |
| |||
Interest expense |
|
45,730 |
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46,601 |
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46,410 |
| |||
Other, net |
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182,404 |
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(55,842 |
) |
1,011 |
| |||
Impairments and other charges |
|
|
|
|
|
123,557 |
| |||
Total costs and other deductions |
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879,471 |
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1,318,521 |
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917,655 |
| |||
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|
|
|
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| |||
Income (loss) from continuing operations before income taxes |
|
(448,708 |
) |
103,657 |
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(223,970 |
) | |||
|
|
|
|
|
|
|
| |||
Income tax expense (benefit) |
|
(52,064 |
) |
(20,705 |
) |
(62,880 |
) | |||
|
|
|
|
|
|
|
| |||
Income (loss) from continuing operations, net of tax |
|
(396,644 |
) |
124,362 |
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(161,090 |
) | |||
Income (loss) from discontinued operations, net of tax |
|
(926 |
) |
(817 |
) |
(1,730 |
) | |||
|
|
|
|
|
|
|
| |||
Net income (loss) |
|
(397,570 |
) |
123,545 |
|
(162,820 |
) | |||
Less: Net (income) loss attributable to noncontrolling interest |
|
(724 |
) |
89 |
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(834 |
) | |||
Net income (loss) attributable to Nabors |
|
$ |
(398,294 |
) |
$ |
123,634 |
|
$ |
(163,654 |
) |
|
|
|
|
|
|
|
| |||
Earnings (losses) per share: |
|
|
|
|
|
|
| |||
Basic from continuing operations |
|
$ |
(1.41 |
) |
$ |
.43 |
|
$ |
(.57 |
) |
Basic from discontinued operations |
|
|
|
|
|
(.01 |
) | |||
Basic |
|
$ |
(1.41 |
) |
$ |
.43 |
|
$ |
(.58 |
) |
|
|
|
|
|
|
|
| |||
Diluted from continuing operations |
|
$ |
(1.41 |
) |
$ |
.43 |
|
$ |
(.57 |
) |
Diluted from discontinued operations |
|
|
|
(.01 |
) |
(.01 |
) | |||
Diluted |
|
$ |
(1.41 |
) |
$ |
.42 |
|
$ |
(.58 |
) |
|
|
|
|
|
|
|
| |||
Weighted-average number of common shares outstanding: |
|
|
|
|
|
|
| |||
Basic |
|
275,851 |
|
285,361 |
|
276,371 |
| |||
Diluted |
|
275,851 |
|
286,173 |
|
276,371 |
| |||
|
|
|
|
|
|
|
| |||
Adjusted EBITDA (1) |
|
$ |
162,052 |
|
$ |
367,964 |
|
$ |
223,332 |
|
|
|
|
|
|
|
|
| |||
Adjusted operating income (loss) (2) |
|
$ |
(53,766 |
) |
$ |
86,945 |
|
$ |
(7,805 |
) |
(1) Adjusted EBITDA is computed by subtracting the sum of direct costs, general and administrative expenses and research and engineering expenses from operating revenues. Adjusted EBITDA is a non-GAAP measure and should not be used in isolation or as a substitute for the amounts reported in accordance with GAAP. However, management evaluates the performance of our operating segments and the consolidated company based on several criteria, including adjusted EBITDA and adjusted operating income (loss), because we believe that these financial measures accurately reflect our ongoing profitability and performance. In addition, securities analysts and investors use this measure as one of the metrics on which they analyze our performance. A reconciliation of this non-GAAP measure to income (loss) from continuing operations before income taxes, which is a GAAP measure, is provided in the table set forth immediately following the heading Reconciliation of Non-GAAP Financial Measures to Income (loss) from Continuing Operations before Income Taxes.
(2) Adjusted operating income (loss) is computed by subtracting the sum of direct costs, general and administrative expenses, research and engineering expenses and depreciation and amortization from operating revenues. Adjusted operating income (loss) is a non-GAAP measure and should not be used in isolation or as a substitute for the amounts reported in accordance with GAAP. However, management evaluates the performance of our operating segments and the consolidated company based on several criteria, including adjusted EBITDA and adjusted operating income (loss), because it believes that these financial measures accurately reflect our ongoing profitability and performance. In addition, securities analysts and investors use this measure as one of the metrics on which they analyze our performance. A reconciliation of this non-GAAP measure to income (loss) from continuing operations before income taxes, which is a GAAP measure, is provided in the table set forth immediately following the heading Reconciliation of Non-GAAP Financial Measures to Income (loss) from Continuing Operations before Income Taxes.
NABORS INDUSTRIES LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
|
|
March 31, |
|
December 31, |
| ||
(In thousands) |
|
2016 |
|
2015 |
| ||
|
|
(Unaudited) |
|
|
| ||
ASSETS |
|
|
|
|
| ||
Current assets: |
|
|
|
|
| ||
Cash and short-term investments |
|
$ |
221,501 |
|
$ |
274,589 |
|
Accounts receivable, net |
|
594,506 |
|
784,671 |
| ||
Assets held for sale |
|
80,100 |
|
75,678 |
| ||
Other current assets |
|
363,280 |
|
340,959 |
| ||
Total current assets |
|
1,259,387 |
|
1,475,897 |
| ||
Property, plant and equipment, net |
|
6,942,315 |
|
7,027,802 |
| ||
Goodwill |
|
167,217 |
|
166,659 |
| ||
Investment in unconsolidated affiliates |
|
94,657 |
|
415,177 |
| ||
Other long-term assets |
|
486,755 |
|
452,305 |
| ||
Total assets |
|
$ |
8,950,331 |
|
$ |
9,537,840 |
|
|
|
|
|
|
| ||
LIABILITIES AND EQUITY |
|
|
|
|
| ||
Current liabilities: |
|
|
|
|
| ||
Current debt |
|
$ |
5,880 |
|
$ |
6,508 |
|
Other current liabilities |
|
865,388 |
|
999,991 |
| ||
Total current liabilities |
|
871,268 |
|
1,006,499 |
| ||
Long-term debt |
|
3,584,402 |
|
3,655,200 |
| ||
Other long-term liabilities |
|
578,464 |
|
582,273 |
| ||
Total liabilities |
|
5,034,134 |
|
5,243,972 |
| ||
|
|
|
|
|
| ||
Equity: |
|
|
|
|
| ||
Shareholders equity |
|
3,904,320 |
|
4,282,710 |
| ||
Noncontrolling interest |
|
11,877 |
|
11,158 |
| ||
Total equity |
|
3,916,197 |
|
4,293,868 |
| ||
Total liabilities and equity |
|
$ |
8,950,331 |
|
$ |
9,537,840 |
|
NABORS INDUSTRIES LTD. AND SUBSIDIARIES
SEGMENT REPORTING
(Unaudited)
The following tables set forth certain information with respect to our reportable segments and rig activity:
|
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Three Months Ended |
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|
|
March 31, |
|
December 31, |
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(In thousands, except rig activity) |
|
2016 |
|
2015 |
|
2015 |
| |||
|
|
|
|
|
|
|
| |||
Operating revenues: |
|
|
|
|
|
|
| |||
Drilling & Rig Services: |
|
|
|
|
|
|
| |||
U.S. |
|
$ |
148,676 |
|
$ |
453,821 |
|
$ |
222,060 |
|
Canada |
|
17,494 |
|
57,840 |
|
28,312 |
| |||
International |
|
401,055 |
|
439,161 |
|
448,507 |
| |||
Rig Services (1) |
|
53,853 |
|
144,084 |
|
72,862 |
| |||
Subtotal Drilling & Rig Services |
|
621,078 |
|
1,094,906 |
|
771,741 |
| |||
|
|
|
|
|
|
|
| |||
Completion & Production Services: |
|
|
|
|
|
|
| |||
Completion Services |
|
|
|
207,860 |
|
|
| |||
Production Services |
|
|
|
158,512 |
|
|
| |||
Subtotal Completion & Production Services |
|
|
|
366,372 |
|
|
| |||
|
|
|
|
|
|
|
| |||
Other reconciling items (2) |
|
(23,507 |
) |
(46,571 |
) |
(32,869 |
) | |||
Total operating revenues |
|
$ |
597,571 |
|
$ |
1,414,707 |
|
$ |
738,872 |
|
|
|
|
|
|
|
|
| |||
Adjusted EBITDA: (3) |
|
|
|
|
|
|
| |||
Drilling & Rig Services: |
|
|
|
|
|
|
| |||
U.S. |
|
$ |
51,235 |
|
$ |
187,745 |
|
$ |
94,254 |
|
Canada |
|
2,122 |
|
18,468 |
|
10,041 |
| |||
International |
|
148,309 |
|
194,789 |
|
160,716 |
| |||
Rig Services (1) |
|
(1,481 |
) |
21,583 |
|
(4,491 |
) | |||
Subtotal Drilling & Rig Services |
|
200,185 |
|
422,585 |
|
260,520 |
| |||
|
|
|
|
|
|
|
| |||
Completion & Production Services: |
|
|
|
|
|
|
| |||
Completion Services |
|
|
|
(28,110 |
) |
|
| |||
Production Services |
|
|
|
23,043 |
|
|
| |||
Subtotal Completion & Production Services |
|
|
|
(5,067 |
) |
|
| |||
|
|
|
|
|
|
|
| |||
Other reconciling items (4) |
|
(38,133 |
) |
(49,554 |
) |
(37,188 |
) | |||
Total adjusted EBITDA |
|
$ |
162,052 |
|
$ |
367,964 |
|
$ |
223,332 |
|
|
|
|
|
|
|
|
| |||
Adjusted operating income (loss): (5) |
|
|
|
|
|
|
| |||
Drilling & Rig Services: |
|
|
|
|
|
|
| |||
U.S. |
|
$ |
(47,559 |
) |
$ |
77,038 |
|
$ |
(7,398 |
) |
Canada |
|
(7,278 |
) |
6,358 |
|
(1,034 |
) | |||
International |
|
46,872 |
|
98,802 |
|
51,850 |
| |||
Rig Services (1) |
|
(10,644 |
) |
12,873 |
|
(13,505 |
) | |||
Subtotal Drilling & Rig Services |
|
(18,609 |
) |
195,071 |
|
29,913 |
| |||
|
|
|
|
|
|
|
| |||
Completion & Production Services: |
|
|
|
|
|
|
| |||
Completion Services |
|
|
|
(55,243 |
) |
|
| |||
Production Services |
|
|
|
(3,559 |
) |
|
| |||
Subtotal Completion & Production Services |
|
|
|
(58,802 |
) |
|
| |||
|
|
|
|
|
|
|
| |||
Other reconciling items (4) |
|
(35,157 |
) |
(49,324 |
) |
(37,718 |
) | |||
Total adjusted operating income (loss) |
|
$ |
(53,766 |
) |
$ |
86,945 |
|
$ |
(7,805 |
) |
|
|
|
|
|
|
|
| |||
Earnings (losses) from unconsolidated affiliates (6) |
|
$ |
(167,151 |
) |
$ |
6,502 |
|
$ |
(45,367 |
) |
|
|
|
|
|
|
|
| |||
Rig activity: |
|
|
|
|
|
|
| |||
Rig years: (7) |
|
|
|
|
|
|
| |||
U.S. |
|
64.9 |
|
167.6 |
|
91.0 |
| |||
Canada |
|
12.5 |
|
25.6 |
|
14.4 |
| |||
International (8) |
|
110.5 |
|
130.1 |
|
117.5 |
| |||
Total rig years |
|
187.9 |
|
323.3 |
|
222.9 |
| |||
Rig hours: (9) |
|
|
|
|
|
|
| |||
U.S. Production Services |
|
|
|
129,652 |
|
|
| |||
Canada Production Services |
|
|
|
23,947 |
|
|
| |||
Total rig hours |
|
|
|
153,599 |
|
|
|
(1) Includes our other services comprised of our drilling technology and top drive manufacturing, directional drilling, rig instrumentation and software services.
(2) Represents the elimination of inter-segment transactions.
(3) Adjusted EBITDA is computed by subtracting the sum of direct costs, general and administrative expenses and research and engineering expenses from operating revenues. Adjusted EBITDA is a non-GAAP measure and should not be used in isolation or as a substitute for the amounts reported in accordance with GAAP. However, management evaluates the performance of our operating segments and the consolidated company based on several criteria, including adjusted EBITDA and adjusted operating income (loss), because we believe that these financial measures accurately reflect our ongoing profitability and performance. In addition, securities analysts and investors use this measure as one of the metrics on which they analyze our performance. A reconciliation of this non-GAAP measure to income (loss) from continuing operations before income taxes, which is a GAAP measure, is provided in the table set forth immediately following the heading Reconciliation of Non-GAAP Financial Measures to Income (loss) from Continuing Operations before Income Taxes.
(4) Represents the elimination of inter-segment transactions and unallocated corporate expenses.
(5) Adjusted operating income (loss) is computed by subtracting the sum of direct costs, general and administrative expenses, research and engineering expenses and depreciation and amortization from operating revenues. Adjusted operating income (loss) is a non-GAAP measure and should not be used in isolation or as a substitute for the amounts reported in accordance with GAAP. However, management evaluates the performance of our operating segments and the consolidated company based on several criteria, including adjusted EBITDA and adjusted operating income (loss), because it believes that these financial measures accurately reflect our ongoing profitability and performance. In addition, securities analysts and investors use this measure as one of the metrics on which they analyze our performance. A reconciliation of this non-GAAP measure to income (loss) from continuing operations before income taxes, which is a GAAP measure, is provided in the table set forth immediately following the heading Reconciliation of Non-GAAP Financial Measures to Income (loss) from Continuing Operations before Income Taxes.
(6) Represents our share of the net income (loss), as adjusted for our basis difference, of our unconsolidated affiliates accounted for by the equity method, inclusive of $(167.1) million and $(81.3) million for the three months ended March 31, 2016 and December 31, 2015, respectively, related to our share of the net loss of C&J, which we report on a quarter lag.
(7) Excludes well-servicing rigs, which are measured in rig hours. Includes our equivalent percentage ownership of rigs owned by unconsolidated affiliates. Rig years represent a measure of the number of equivalent rigs operating during a given period. For example, one rig operating 182.5 days during a 365-day period represents 0.5 rig years.
(8) International rig years includes our equivalent percentage ownership of rigs owned by unconsolidated affiliates, which totaled 2.5 years during the three months ended March 31, 2015. As of May 24, 2015, this was no longer an unconsolidated affiliate.
(9) Rig hours represents the number of hours that our well-servicing rig fleet operated during the period. This fleet was included in the Completion & Production Services business that was merged with C&J Energy Services, Inc. in March 2015 and we will therefore no longer report this performance metric.
NABORS INDUSTRIES LTD. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO
INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES
(Unaudited)
|
|
Three Months Ended |
| |||||||
|
|
March 31, |
|
December 31, |
| |||||
(In thousands) |
|
2016 |
|
2015 |
|
2015 |
| |||
|
|
|
|
|
|
|
| |||
Adjusted EBITDA |
|
$ |
162,052 |
|
$ |
367,964 |
|
$ |
223,332 |
|
Depreciation and amortization |
|
(215,818 |
) |
(281,019 |
) |
(231,137 |
) | |||
Adjusted operating income (loss) |
|
(53,766 |
) |
86,945 |
|
(7,805 |
) | |||
|
|
|
|
|
|
|
| |||
Earnings (losses) from unconsolidated affiliates |
|
(167,151 |
) |
6,502 |
|
(45,367 |
) | |||
Investment income (loss) |
|
343 |
|
969 |
|
180 |
| |||
Interest expense |
|
(45,730 |
) |
(46,601 |
) |
(46,410 |
) | |||
Other, net |
|
(182,404 |
) |
55,842 |
|
(1,011 |
) | |||
Impairments and other charges |
|
|
|
|
|
(123,557 |
) | |||
Income (loss) from continuing operations before income taxes |
|
$ |
(448,708 |
) |
$ |
103,657 |
|
$ |
(223,970 |
) |
NABORS INDUSTRIES LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (LOSS) ITEMS EXCLUDING CERTAIN NON-CASH CHARGES
AND OTHER NON-OPERATIONAL ITEMS (NON-GAAP)
(Unaudited)
|
|
|
|
Charges and |
|
As adjusted |
| |||
|
|
Actuals |
|
Items |
|
(Non-GAAP) |
| |||
(In thousands, except per share amounts) |
|
Three Months Ended March 31, 2016 |
| |||||||
|
|
|
|
|
|
|
| |||
Income (loss) from continuing operations, net of tax |
|
$ |
(396,644 |
) |
$ |
(316,552 |
) |
$ |
(80,092 |
) |
Diluted earnings (losses) per share from continuing operations |
|
$ |
(1.41 |
) |
$ |
(1.12 |
) |
$ |
(0.29 |
) |
NABORS INDUSTRIES LTD. AND SUBSIDIARIES
SCHEDULE OF NON-CASH CHARGES AND OTHER NON-OPERATIONAL ITEMS (NON-GAAP)
(Unaudited)
|
|
Three Months Ended |
| ||||
|
|
March 31, |
| ||||
|
|
|
|
Per Diluted |
| ||
(In thousands, except per share amounts) |
|
2016 |
|
Share |
| ||
|
|
|
|
|
| ||
Impairments and equity losses (1) |
|
$ |
316,552 |
|
$ |
1.12 |
|
|
|
|
|
|
| ||
Total Adjustments, net of tax |
|
$ |
316,552 |
|
$ |
1.12 |
|
(1) Represents impairments to the carrying value of our C&J holdings and earnings (losses) from unconsolidated affiliates, which represents our proportionate share of C&Js losses from the prior quarter, net of tax of $27.8 million.
Exhibit 99.2
1Q16 Earnings Presentation April 26, 2016 Presented by: Anthony G. Petrello Chairman, President, & Chief Executive Officer William J. Restrepo Chief Financial Officer
2 We often discuss expectations regarding our markets, demand for our products and services, and our future performance in our annual and quarterly reports, press releases, and other written and oral statements. Such statements, including statements in this document incorporated by reference that relate to matters that are not historical facts are forward-looking statements within the meaning of the safe harbor provisions of Section 27A of the U.S. Securities Act of 1933, as amended (the Securities Act) and Section 21E of the U.S. Securities Exchange Act of 1934. These forward-looking statements are based on our analysis of currently available competitive, financial and economic data and our operating plans. They are inherently uncertain, and investors must recognize that events and actual results could turn out to be significantly different from our expectations. Factors to consider when evaluating these forward-looking statements include, but are not limited to: fluctuations and volatility in worldwide prices of and demand for natural gas and oil; fluctuations in levels of natural gas and oil exploration and development activities; fluctuations in the demand for our services; competitive and technological changes and other developments in the oil and gas and oilfield services industries; changes in the market value of investments accounted for using the equity method of accounting; our ability to complete, and realize the expected benefits of strategic transactions; the existence of operating risks inherent in the oil and gas and oilfield services industries; the possibility of changes in tax and other laws and regulations; the possibility of political or economic instability, civil disturbance, war or acts of terrorism in any of the countries in which we do business; and general economic conditions, including the capital and credit markets. Our businesses depend, to a large degree, on the level of spending by oil and gas companies for exploration, development and production activities. Therefore, a sustained decrease in the price of natural gas or oil, which could have a material impact on exploration and production activities, could also materially affect our financial position, results of operations and cash flows. The above description of risks and uncertainties is by no means all-inclusive, but is designed to highlight what we believe are important factors to consider. Statements made in this presentation include non-GAAP financial measures. The required reconciliation to the nearest comparable GAAP financial measures is included in the Investor Relations section of our website at http://www.nabors.com. Forward-Looking Statements
3 Financial Overview
4 Financial Summary Diluted Earnings (Losses) Per Share from continuing operations Includes net benefit of 23¢ per share for net gain from the C&J Energy Services transaction, tax benefits from various international jurisdictions, and severance charges from workforce reductions Includes 23¢ per share of tax expense Includes 7¢ per share in favorable tax adjustments as well as charges and impairments of 79¢ per share related to our equity investment in C&J Energy Services, Ltd., other small asset impairments, and severance costs Includes net after-tax charges of 35¢ per share related to the impairment of certain assets Includes impairments of $1.12 per share related to our holdings in C&J Energy Services, Ltd. ($000 except EPS) 1Q15 2Q15 3Q15 4Q15 1Q16 Operating Revenues $1,414,707 $863,305 $847,553 $738,872 $597,571 Adjusted EBITDA 367,964 288,493 247,631 223,332 162,052 Adjusted Income 86,945 70,297 7,524 (7,805) (53,766) GAAP Diluted EPS(1) 0.43(2) (0.14)(3) (0.86)(4) (0.57)(5) (1.41)(6)
5 Current Debt and Liquidity 1. Capitalization defined as Net Debt plus Shareholders Equity 2. Coverage defined as TTM Adjusted EBITDA / TTM Interest Expense 3. Leverage defined as Total Debt / TTM Adjusted EBITDA Note: Subtotals may not foot due to rounding * Based on 3/31/16 CJES share price Liquidity (at March 31, 2016) Cash & Available Capacity: $2,382 Investment in Affiliate (at March 31, 2016)* C&J Energy Services shares: $88 High 4Q15 1Q16 Change Change ($MM's) 3/31/2012 12/31/2015 3/31/2016 1Q16 to 4Q15 1Q16 from High Total Debt $4,750 $3,662 $3,590 ($72) ($1,160) Cash and ST Investments 494 275 222 (53) (272) Net Debt $4,256 $3,387 $3,369 ($18) ($887) Shareholders Equity 5,811 4,283 3,904 (379) (1,907) Net Debt to Capitalization(1) 42% 44% 46% 2% 4% Coverage(2) 7.8x 6.2x 5.1x (1.1x) (2.7x) Leverage(3) 2.5x 3.2x 3.9x 0.7x 1.4x
6 Drilling and Rig Services
7 1Q16 Rig Utilization & Availability (1) As of 3/31/16 Rig Fleet(1) 1Q16 Rig Years Average Utilization U.S. Lower 48 AC 175 51 29% Legacy 47 3 6% U.S. Lower 48 Total 222 54 24% U.S. Offshore 17 6 35% Alaska 16 5 30% Canada 54 13 23% International 136 111 81% Subtotal 445 188 42% Lower 48 Construction 4 Total Fleet 449
8 3/31/16 U.S. Rig Utilization Power Type and Capacity Walking Skidding Pad Not Pad Total Total Capable Capable Rigs % Working Total Util. Working Total Util. Total Working Total Util. Util. AC 38* 124 31% 3** 18 17% 29% 2 33 6% 175 25% Legacy 0 7 0% 0 7 0% 0% 1 33 3% 47 2% Grand Total 38* 131 29% 3** 25 12% 26% 3 66 5% 222 20% * Including seven (7) rigs stacked on rate; ** Including one (1) rig stacked on rate;
9 3/31/16 International Working Rigs Algeria 10 Congo 0 Kazakhstan 2 Oman 5 Angola 1 Ecuador 1 Kurdistan 0 PNG 1 Argentina 20 India 2 Kuwait 2 Russia 4 Bahrain 1 Iraq 0 Malaysia 1 Saudi 42 Colombia 8 Italy 1 Mexico 3 Venezuela 5 Total 109
10 Appendix
11 Rig Margins & Activity (1) Margin = gross margin per rig per day for the period. Gross margin is computed by subtracting direct costs from operating revenues for the period. 2Q15 3Q15 4Q15 1Q16 Drilling Margin (1) Rig Yrs Margin (1) Rig Yrs Margin (1) Rig Yrs Margin (1) Rig Yrs U.S. Drilling $13,739 119.5 $11,177 103.0 $12,274 91.0 $10,043 64.9 Canada 7,771 9.7 6,349 17.2 9,473 14.4 3,585 12.5 International 17,263 127.1 18,613 121.3 16,321 117.5 16,489 110.5
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