Form 8-K NABORS INDUSTRIES LTD For: Aug 04
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) August 4, 2015
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) |
|
(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 August 4, 2015, we issued a press release announcing our results of operations for the three- and six-month period ended June 30, 2015. 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 income (loss) derived from operating activities 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 from the sum of Operating revenues and Earnings (losses) from unconsolidated affiliates. Adjusted income (loss) derived from operating activities is computed similarly, but also subtracts depreciation and amortization expenses from the sum of Operating revenues and Earnings (losses) from unconsolidated affiliates. As part of the press release information, we have provided a reconciliation of adjusted EBITDA and adjusted income (loss) derived from operating activities to income (loss) from continuing operations before income taxes, which is its nearest comparable GAAP financial measure.
We included our adjusted EBITDA and adjusted income (loss) derived from operating activities in the release because management evaluates the performance of our business units and the consolidated company based on several criteria, including these non-GAAP measures, and because we believe these financial measures are an accurate reflection of our ongoing profitability. 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 August 5, 2015, 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. |
|
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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| |
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| |
Date: August 4, 2015 |
By: |
/s/ Mark D. Andrews |
|
|
Mark D. Andrews |
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|
Corporate Secretary |
Exhibit 99.1
NEWS RELEASE |
Nabors Announces Second Quarter Results
Notable items for the quarter:
· EPS from continuing operations of ($0.14), including tax expense of ($0.23)
· Deployed 6 newbuild rigs - two in the U.S., one in Colombia, and three in Saudi Arabia
· Extended and increased the revolving credit facility to 2020 and $2.2 billion
· Saudi Arabia business now wholly owned following the purchase of partner interest
HAMILTON, Bermuda, August 4, 2015 Nabors Industries Ltd. (Nabors) (NYSE: NBR) today reported second-quarter revenue and earnings from unconsolidated affiliates of $862 million, compared to $1.42 billion in the first quarter of 2015, and $1.62 billion in the second quarter of last year. The comparable quarters included $367 million and $535 million respectively, in revenue from Completion and Production Services, a business line that merged with C&J Energy Services on March 24, 2015. Beginning in the second quarter, Nabors results reflect equity-method accounting for this investment on a quarter-lag basis.
Net income from continuing operations reported for the second quarter was a loss of $41.9 million or $0.14 per diluted share, which includes $0.23 of tax expense. This compares to first-quarter net income from continuing operations of $124.4 million or $0.43 per diluted share; or $58.3 million, or $0.20 per share, after excluding $66.1 million attributable to the after-tax net gain from the C&J Energy Services transaction, tax benefits and after-tax severance charges from workforce reductions. The first-quarter comparable results also include income from the Completion and Production Services business.
Anthony Petrello, Nabors Chairman and CEO, commented, Our second-quarter operating results, while down significantly, were better than we had anticipated. This was largely attributable to a resilient international business and stringent cost control throughout the organization. The sequential decrease was driven by: lower drilling activity in the U.S. Lower 48, rate concessions and slightly lower utilization internationally, seasonally lower activity in Canada and Alaska, and a depleting backlog in Canrig, partially offset by the initial contribution from six new rigs deployed during the quarter. We continued to bolster the long-term future of the Company with a more streamlined cost structure and the purchase of our partners interest in our Saudi Arabia entity. Our ability to expand and extend our revolving credit facility in the middle of an industry downturn with a group of 17 global banks, 3 of which are new to the facility, is a testament to our banking groups confidence in our financial strength and future prospects.
Segment Results
Adjusted income derived from operating activities (operating income) in Drilling and Rig Services decreased 48% to $104.9 million from $201.3 million in the first quarter of this year. Adjusted EBITDA in this unit was $323.6 million, primarily attributable to the International segment.
International operating income decreased by 21% sequentially to $83.3 million, reflecting the impact of negotiated rate reductions. Going forward, the Company still foresees the potential for further
declines in its international rig count and average margins as the effects of weak oil prices progressively influence the international market. Despite the softening conditions, full-year results for the International segment are still expected to increase compared to 2014.
In North America, drilling activity within the U.S. Drilling and Canada segments declined significantly throughout the quarter, resulting in decreases in operating income of $45.6 million and $14.6 million, respectively. In the Lower 48, activity declined throughout the quarter with 33 contracted rigs expiring. Although the decline in U.S. activity appears to be bottoming, oil price risk remains and lower income is expected as contracts expire and reprice at lower rates. Results in Canada and Alaska declined seasonally. In the U.S. Gulf of Mexico the Companys new deepwater platform rig received a reduced mobilization dayrate throughout the quarter. However, the commencement of its full operating rate has been delayed for an indefinite period of time due to issues with the installation of the customers platform.
Rig Services, which consists of the Companys manufacturing and directional drilling operations, reported negative operating income of $1.6 million, as the industrys newbuild activity and drilling activity has declined.
Financial Discussion
The second quarter included several items that impacted the operational results of the Company. First, the results of the Saudi Arabia joint venture will now be reported on a consolidated basis due to the purchase of the partners interest by Nabors in May 2015. Second, the International segment results were negatively impacted by $5 million related to a customer bankruptcy in Latin America. Finally, the Company is now recording its proportionate share of C&J Energy Services earnings with a one-quarter lag. Accordingly, second-quarter results included a loss of $0.8 million related to the Companys ownership stake in C&J Energy Services during the first quarter of this year, beginning March 24, 2015.
Income tax expense in the second quarter exceeded the Companys income before taxes due to the true-up of the Companys year-to-date tax provision to the full-year expected tax rate. Accordingly, the second quarters tax rate is not representative of the full year anticipated rate and the Company currently expects a tax benefit for the third quarter and full year.
William Restrepo, Nabors Chief Financial Officer, stated, Nabors plans to emerge from the current market in a stronger competitive position and has several initiatives underway to achieve this objective. Our SG&A and purchasing efforts are already yielding significant results. Likewise, we remain focused on cost control and capital expenditure discipline. We are committed to free cash flow generation and intend to exit the downturn with a more modern and capable fleet; a focused, streamlined, more effective organization; and a stronger balance sheet with more financial flexibility.
Summary and Outlook
Petrello concluded, Looking ahead, although we expect the third quarter to reflect another decrease in our results, we also believe it may represent the bottom in most areas outside of the U.S. Lower 48. New rig startups internationally combined with fourth quarter seasonal upticks in Alaska and Canada should serve to mitigate some of the impact of further pricing erosion in the U.S. Lower 48 as contracts continue to roll to lower spot-market pricing. We believe it is likely that current market conditions will prevail for an extended period, particularly in North America. While our international markets will be more resilient, especially in the Middle East and North Africa, we will remain diligent in our
cost-containment efforts. For the full year, we still expect to achieve substantially higher results in our International and Alaska operations compared to 2014.
About Nabors
The Nabors companies own and operate approximately 469 land drilling rigs throughout the world. Nabors actively marketed offshore fleet consists of six jackups and 36 platform rigs in the United States and multiple international markets. Nabors also manufactures top drives and drilling instrumentation systems. Nabors participates in most of the significant oil and gas markets in the world.
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 projections contained in this release reflect managements estimates as of the date of the release. Nabors does not undertake to update these forward-looking statements.
Media Contact:
Dennis A. Smith, Director 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]
Source: Nabors Industries Ltd.
NABORS INDUSTRIES LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (LOSS)
(Unaudited)
|
|
Three Months Ended |
|
Six Months Ended |
| |||||||||||
|
|
June 30, |
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March 31, |
|
June 30, |
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(In thousands, except per share amounts) |
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2015 |
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2014 |
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2015 |
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2015 |
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2014 |
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|
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Revenues and other income: |
|
|
|
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Operating revenues |
|
$ |
863,305 |
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$ |
1,616,981 |
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$ |
1,414,707 |
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$ |
2,278,012 |
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$ |
3,206,599 |
|
Earnings (losses) from unconsolidated affiliates |
|
(1,116 |
) |
(576 |
) |
6,502 |
|
5,386 |
|
(3,021 |
) | |||||
Investment income (loss) |
|
1,181 |
|
7,066 |
|
969 |
|
2,150 |
|
8,046 |
| |||||
Total revenues and other income |
|
863,370 |
|
1,623,471 |
|
1,422,178 |
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2,285,548 |
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3,211,624 |
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|
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|
|
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|
|
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|
|
|
| |||||
Costs and other deductions: |
|
|
|
|
|
|
|
|
|
|
| |||||
Direct costs |
|
488,522 |
|
1,066,495 |
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919,610 |
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1,408,132 |
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2,128,234 |
| |||||
General and administrative expenses |
|
86,290 |
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133,630 |
|
127,133 |
|
213,423 |
|
267,896 |
| |||||
Depreciation and amortization |
|
218,196 |
|
282,820 |
|
281,019 |
|
499,215 |
|
564,947 |
| |||||
Interest expense |
|
44,469 |
|
46,303 |
|
46,601 |
|
91,070 |
|
91,113 |
| |||||
Losses (gains) on sales and disposals of long-lived assets and other expense (income), net |
|
1,338 |
|
16,504 |
|
(55,842 |
) |
(54,504 |
) |
17,980 |
| |||||
Total costs and other deductions |
|
838,815 |
|
1,545,752 |
|
1,318,521 |
|
2,157,336 |
|
3,070,170 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Income (loss) from continuing operations before income taxes |
|
24,555 |
|
77,719 |
|
103,657 |
|
128,212 |
|
141,454 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Income tax expense (benefit) |
|
66,445 |
|
10,756 |
|
(20,705 |
) |
45,740 |
|
24,764 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Subsidiary preferred stock dividend |
|
|
|
1,234 |
|
|
|
|
|
1,984 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Income (loss) from continuing operations, net of tax |
|
(41,890 |
) |
65,729 |
|
124,362 |
|
82,472 |
|
114,706 |
| |||||
Income (loss) from discontinued operations, net of tax |
|
5,025 |
|
(1,032 |
) |
(817 |
) |
4,208 |
|
483 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Net income (loss) |
|
(36,865 |
) |
64,697 |
|
123,545 |
|
86,680 |
|
115,189 |
| |||||
Less: Net (income) loss attributable to noncontrolling interest |
|
44 |
|
(253 |
) |
89 |
|
133 |
|
(826 |
) | |||||
Net income (loss) attributable to Nabors |
|
$ |
(36,821 |
) |
$ |
64,444 |
|
$ |
123,634 |
|
$ |
86,813 |
|
$ |
114,363 |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Earnings (losses) per share: (1) |
|
|
|
|
|
|
|
|
|
|
| |||||
Basic from continuing operations |
|
$ |
(.14 |
) |
$ |
.21 |
|
$ |
.43 |
|
$ |
.28 |
|
$ |
.37 |
|
Basic from discontinued operations |
|
.01 |
|
|
|
|
|
.02 |
|
|
| |||||
Basic |
|
$ |
(.13 |
) |
$ |
.21 |
|
$ |
.43 |
|
$ |
.30 |
|
$ |
.37 |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Diluted from continuing operations |
|
$ |
(.14 |
) |
$ |
.21 |
|
$ |
.43 |
|
$ |
.28 |
|
$ |
.37 |
|
Diluted from discontinued operations |
|
.01 |
|
|
|
(.01 |
) |
.02 |
|
|
| |||||
Diluted |
|
$ |
(.13 |
) |
$ |
.21 |
|
$ |
.42 |
|
$ |
.30 |
|
$ |
.37 |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Weighted-average number of common shares outstanding: (1) |
|
|
|
|
|
|
|
|
|
|
| |||||
Basic |
|
286,085 |
|
297,984 |
|
285,361 |
|
285,723 |
|
297,097 |
| |||||
Diluted |
|
286,085 |
|
300,981 |
|
286,173 |
|
286,701 |
|
300,016 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Adjusted EBITDA (2) |
|
$ |
288,177 |
|
$ |
416,280 |
|
$ |
374,466 |
|
$ |
662,643 |
|
$ |
807,448 |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Adjusted income (loss) derived from operating activities (3) |
|
$ |
69,981 |
|
$ |
133,460 |
|
$ |
93,447 |
|
$ |
163,428 |
|
$ |
242,501 |
|
(1) |
See Computation of Earnings (Losses) Per Share included herein as a separate schedule. |
|
|
(2) |
Adjusted EBITDA is computed by subtracting the sum of direct costs, general and administrative expenses and earnings (losses) from our equity method investment from the sum of Operating revenues and Earnings (losses) from unconsolidated affiliates. These amounts should not be used as a substitute for the amounts reported in accordance with GAAP. However, management evaluates the performance of our business units and the consolidated company based on several criteria, including adjusted EBITDA and adjusted income (loss) derived from operating activities, because we believe that these financial measures accurately reflect our ongoing profitability. There are limitations inherent in using adjusted EBITDA as a measure of overall profitability because it excludes significant expense items. To compensate for the limitations in utilizing adjusted EBITDA as an operating measure, management also uses GAAP measures of performance, including income from continuing operations and net income, to evaluate performance, but only with respect to the Company as a whole and not on a segment basis. 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. |
|
|
(3) |
Adjusted income (loss) derived from operating activities is computed by subtracting the sum of direct costs, general and administrative expenses, depreciation and amortization and earnings (losses) from our equity method investment from the sum of Operating revenues and Earnings (losses) from unconsolidated affiliates. These amounts should not be used as a substitute for those amounts reported in accordance with GAAP. However, management evaluates the performance of our business units and the consolidated company based on several criteria, including adjusted income (loss) derived from operating activities, because it believes that these financial measures accurately reflect our ongoing profitability. 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
|
|
(Unaudited) |
|
|
| |||||
|
|
June 30, |
|
March 31, |
|
December 31, |
| |||
(In thousands) |
|
2015 |
|
2015 |
|
2014 |
| |||
|
|
|
|
|
|
|
| |||
ASSETS |
|
|
|
|
|
|
| |||
Current assets: |
|
|
|
|
|
|
| |||
Cash and short-term investments |
|
$ |
469,897 |
|
$ |
621,171 |
|
$ |
536,169 |
|
Accounts receivable, net |
|
908,563 |
|
971,601 |
|
1,517,503 |
| |||
Assets held for sale |
|
136,677 |
|
134,709 |
|
146,467 |
| |||
Other current assets |
|
454,018 |
|
442,851 |
|
541,735 |
| |||
Total current assets |
|
1,969,155 |
|
2,170,332 |
|
2,741,874 |
| |||
Long-term investments and other receivables |
|
2,617 |
|
2,627 |
|
2,806 |
| |||
Property, plant and equipment, net |
|
7,405,441 |
|
7,333,808 |
|
8,599,125 |
| |||
Goodwill |
|
139,756 |
|
80,947 |
|
173,928 |
| |||
Investment in unconsolidated affiliates |
|
676,234 |
|
730,487 |
|
58,251 |
| |||
Other long-term assets |
|
324,080 |
|
286,397 |
|
303,958 |
| |||
Total assets |
|
$ |
10,517,283 |
|
$ |
10,604,598 |
|
$ |
11,879,942 |
|
|
|
|
|
|
|
|
| |||
LIABILITIES AND EQUITY |
|
|
|
|
|
|
| |||
Current liabilities: |
|
|
|
|
|
|
| |||
Current debt |
|
$ |
66,359 |
|
$ |
8,739 |
|
$ |
6,190 |
|
Other current liabilities |
|
1,156,394 |
|
1,147,857 |
|
1,561,285 |
| |||
Total current liabilities |
|
1,222,753 |
|
1,156,596 |
|
1,567,475 |
| |||
Long-term debt |
|
3,691,357 |
|
3,816,717 |
|
4,348,859 |
| |||
Other long-term liabilities |
|
663,798 |
|
663,523 |
|
1,044,819 |
| |||
Total liabilities |
|
5,577,908 |
|
5,636,836 |
|
6,961,153 |
| |||
|
|
|
|
|
|
|
| |||
Equity: |
|
|
|
|
|
|
| |||
Shareholders equity |
|
4,931,960 |
|
4,958,813 |
|
4,908,619 |
| |||
Noncontrolling interest |
|
7,415 |
|
8,949 |
|
10,170 |
| |||
Total equity |
|
4,939,375 |
|
4,967,762 |
|
4,918,789 |
| |||
Total liabilities and equity |
|
$ |
10,517,283 |
|
$ |
10,604,598 |
|
$ |
11,879,942 |
|
NABORS INDUSTRIES LTD. AND SUBSIDIARIES
SEGMENT REPORTING
(Unaudited)
The following tables set forth certain information with respect to our reportable segments and rig activity:
|
|
Three Months Ended |
|
Six Months Ended |
| |||||||||||
|
|
June 30, |
|
March 31, |
|
June 30, |
| |||||||||
(In thousands, except rig activity) |
|
2015 |
|
2014 |
|
2015 |
|
2015 |
|
2014 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Reportable segments: |
|
|
|
|
|
|
|
|
|
|
| |||||
Operating revenues and Earnings (losses) from unconsolidated affiliates: |
|
|
|
|
|
|
|
|
|
|
| |||||
Drilling and Rig Services: |
|
|
|
|
|
|
|
|
|
|
| |||||
U.S. |
|
$ |
321,169 |
|
$ |
532,894 |
|
$ |
453,821 |
|
$ |
774,990 |
|
$ |
1,043,370 |
|
Canada |
|
21,413 |
|
54,861 |
|
57,840 |
|
79,253 |
|
166,482 |
| |||||
International |
|
458,229 |
|
391,251 |
|
445,400 |
|
903,629 |
|
766,320 |
| |||||
Rig Services (1) |
|
100,599 |
|
161,740 |
|
144,084 |
|
244,683 |
|
305,466 |
| |||||
Subtotal Drilling and Rig Services (2) |
|
901,410 |
|
1,140,746 |
|
1,101,145 |
|
2,002,555 |
|
2,281,638 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Completion and Production Services: |
|
|
|
|
|
|
|
|
|
|
| |||||
Completion Services |
|
|
|
276,639 |
|
208,123 |
|
208,123 |
|
504,538 |
| |||||
Production Services |
|
|
|
258,378 |
|
158,512 |
|
158,512 |
|
533,778 |
| |||||
Subtotal Completion and Production Services (3) |
|
|
|
535,017 |
|
366,635 |
|
366,635 |
|
1,038,316 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
All Other (4) |
|
(800 |
) |
|
|
|
|
(800 |
) |
|
| |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Other reconciling items (5) |
|
(38,421 |
) |
(59,358 |
) |
(46,571 |
) |
(84,992 |
) |
(116,376 |
) | |||||
Total operating revenues and earnings (losses) from unconsolidated affiliates |
|
$ |
862,189 |
|
$ |
1,616,405 |
|
$ |
1,421,209 |
|
$ |
2,283,398 |
|
$ |
3,203,578 |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Adjusted EBITDA: (6) |
|
|
|
|
|
|
|
|
|
|
| |||||
Drilling and Rig Services: |
|
|
|
|
|
|
|
|
|
|
| |||||
U.S. |
|
$ |
136,499 |
|
$ |
206,061 |
|
$ |
187,745 |
|
$ |
324,244 |
|
$ |
393,698 |
|
Canada |
|
3,732 |
|
14,216 |
|
18,468 |
|
22,200 |
|
54,335 |
| |||||
International |
|
176,994 |
|
139,336 |
|
201,028 |
|
378,022 |
|
277,327 |
| |||||
Rig Services (1) |
|
6,341 |
|
17,176 |
|
21,583 |
|
27,924 |
|
33,667 |
| |||||
Subtotal Drilling and Rig Services (2) |
|
323,566 |
|
376,789 |
|
428,824 |
|
752,390 |
|
759,027 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Completion and Production Services: |
|
|
|
|
|
|
|
|
|
|
| |||||
Completion Services |
|
|
|
27,614 |
|
(27,847 |
) |
(27,847 |
) |
20,960 |
| |||||
Production Services |
|
|
|
58,267 |
|
23,043 |
|
23,043 |
|
118,323 |
| |||||
Subtotal Completion and Production Services (3) |
|
|
|
85,881 |
|
(4,804 |
) |
(4,804 |
) |
139,283 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Other reconciling items (7) |
|
(35,389 |
) |
(46,390 |
) |
(49,554 |
) |
(84,943 |
) |
(90,862 |
) | |||||
Total adjusted EBITDA |
|
$ |
288,177 |
|
$ |
416,280 |
|
$ |
374,466 |
|
$ |
662,643 |
|
$ |
807,448 |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Adjusted income (loss) derived from operating activities: (8) |
|
|
|
|
|
|
|
|
|
|
| |||||
Drilling and Rig Services: |
|
|
|
|
|
|
|
|
|
|
| |||||
U.S. |
|
$ |
31,445 |
|
$ |
89,977 |
|
$ |
77,038 |
|
$ |
108,483 |
|
$ |
162,471 |
|
Canada |
|
(8,268 |
) |
225 |
|
6,358 |
|
(1,910 |
) |
26,385 |
| |||||
International |
|
83,255 |
|
50,583 |
|
105,041 |
|
188,296 |
|
98,702 |
| |||||
Rig Services (1) |
|
(1,575 |
) |
9,059 |
|
12,873 |
|
11,298 |
|
17,787 |
| |||||
Subtotal Drilling and Rig Services (2) |
|
104,857 |
|
149,844 |
|
201,310 |
|
306,167 |
|
305,345 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Completion and Production Services: |
|
|
|
|
|
|
|
|
|
|
| |||||
Completion Services |
|
|
|
(581 |
) |
(55,243 |
) |
(55,243 |
) |
(34,216 |
) | |||||
Production Services |
|
|
|
29,889 |
|
(3,296 |
) |
(3,296 |
) |
60,480 |
| |||||
Subtotal Completion and Production Services (3) |
|
|
|
29,308 |
|
(58,539 |
) |
(58,539 |
) |
26,264 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Other reconciling items (7) |
|
(34,876 |
) |
(45,692 |
) |
(49,324 |
) |
(84,200 |
) |
(89,108 |
) | |||||
Total adjusted income (loss) derived from operating activities |
|
$ |
69,981 |
|
$ |
133,460 |
|
$ |
93,447 |
|
$ |
163,428 |
|
$ |
242,501 |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Rig activity: |
|
|
|
|
|
|
|
|
|
|
| |||||
Rig years: (9) |
|
|
|
|
|
|
|
|
|
|
| |||||
U.S. |
|
119.5 |
|
215.3 |
|
167.6 |
|
143.4 |
|
211.0 |
| |||||
Canada |
|
9.7 |
|
21.6 |
|
25.6 |
|
17.6 |
|
32.6 |
| |||||
International (10) |
|
127.1 |
|
127.3 |
|
130.1 |
|
128.6 |
|
128.6 |
| |||||
Total rig years |
|
256.3 |
|
364.2 |
|
323.3 |
|
289.6 |
|
372.2 |
| |||||
Rig hours: (11) |
|
|
|
|
|
|
|
|
|
|
| |||||
U.S. Production Services |
|
|
|
210,750 |
|
129,652 |
|
129,652 |
|
420,732 |
| |||||
Canada Production Services |
|
|
|
28,671 |
|
23,947 |
|
23,947 |
|
70,211 |
| |||||
Total rig hours |
|
|
|
239,421 |
|
153,599 |
|
153,599 |
|
490,943 |
|
(1) Includes our other services comprised of our drilling technology and top drive manufacturing, directional drilling, rig instrumentation and software services.
(2) Includes earnings (losses), net from unconsolidated affiliates, accounted for using the equity method, of $(.3) million, $(.8) million and $6.2 million for the three months ended June 30, 2015 and 2014 and March 31, 2015, respectively and $5.9 million and $(3.3) million for the six months ended June 30, 2015 and 2014, respectively.
(3) Includes earnings (losses), net from unconsolidated affiliates, accounted for using the equity method, of $.2 million and $.3 million for the three months ended June 30, 2014 and March 31, 2015, respectively and $.3 million for the six months ended June 30, 2015 and 2014.
(4) Represents our share of the net income (loss) of C&J Energy Services Ltd. for the eight-day period from the closing of the merger until March 31, 2015.
(5) Represents the elimination of inter-segment transactions.
(6) Adjusted EBITDA is computed by subtracting the sum of direct costs, general and administrative expenses and earnings (losses) from our equity method investment from the sum of Operating revenues and Earnings (losses) from unconsolidated affiliates. There are limitations inherent in using adjusted EBITDA as a measure of overall profitability because it excludes significant expense items. However, management evaluates the performance of our business units and the consolidated company based on several criteria, including adjusted EBITDA and adjusted income (loss) derived from operating activities, because we believe that these financial measures accurately reflect our ongoing profitability. These amounts should not be used as a substitute for the amounts reported in accordance with GAAP. To compensate for the limitations in utilizing adjusted EBITDA as an operating measure, management also uses GAAP measures of performance, including income from continuing operations and net income, to evaluate performance, but only with respect to the Company as a whole and not on a segment basis. 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.
(7) Represents the elimination of inter-segment transactions and unallocated corporate expenses.
(8) Adjusted income (loss) derived from operating activities is computed by subtracting the sum of direct costs, general and administrative expenses, depreciation and amortization and earnings (losses) from our equity method investment from the sum of Operating revenues and Earnings (losses) from unconsolidated affiliates. These amounts should not be used as a substitute for the amounts reported in accordance with GAAP. However, management evaluates the performance of our business units and the consolidated company based on several criteria, including adjusted income (loss) derived from operating activities, because it believes that these financial measures accurately reflect our ongoing profitability. 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.
(9) 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.
(10) International rig years includes our equivalent percentage ownership of rigs owned by unconsolidated affiliates, which totaled 2.5 years during the three months ended June 30, 2014 and March 31, 2015 and 2.5 years for the six months ended June 30, 2014. As of May 24, 2015, this was no longer an unconsolidated affiliate.
(11) Rig hours represents the number of hours that our well-servicing rig fleet operated during the period. This fleet was included in the Completion and Production Services business line that was merged with C&J Energy Services, Inc. in March 2015, therefore we will 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 |
|
Six Months Ended |
| |||||||||||
|
|
June 30, |
|
March 31, |
|
June 30, |
| |||||||||
(In thousands) |
|
2015 |
|
2014 |
|
2015 |
|
2015 |
|
2014 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Adjusted EBITDA |
|
$ |
288,177 |
|
$ |
416,280 |
|
$ |
374,466 |
|
$ |
662,643 |
|
$ |
807,448 |
|
Less: Depreciation and amortization |
|
218,196 |
|
282,820 |
|
281,019 |
|
499,215 |
|
564,947 |
| |||||
Adjusted income (loss) derived from operating activities |
|
69,981 |
|
133,460 |
|
93,447 |
|
163,428 |
|
242,501 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Earnings (losses) from equity method investment |
|
(800 |
) |
|
|
|
|
(800 |
) |
|
| |||||
Interest expense |
|
(44,469 |
) |
(46,303 |
) |
(46,601 |
) |
(91,070 |
) |
(91,113 |
) | |||||
Investment income (loss) |
|
1,181 |
|
7,066 |
|
969 |
|
2,150 |
|
8,046 |
| |||||
Gains (losses) on sales and disposals of long-lived assets and other income (expense), net |
|
(1,338 |
) |
(16,504 |
) |
55,842 |
|
54,504 |
|
(17,980 |
) | |||||
Income (loss) from continuing operations before income taxes |
|
$ |
24,555 |
|
$ |
77,719 |
|
$ |
103,657 |
|
$ |
128,212 |
|
$ |
141,454 |
|
NABORS INDUSTRIES LTD. AND SUBSIDIARIES
COMPUTATION OF EARNINGS (LOSSES) PER SHARE
(Unaudited)
A reconciliation of the numerators and denominators of the basic and diluted earnings (losses) per share computations is as follows:
|
|
Three Months Ended |
|
Six Months Ended |
| |||||||||||
|
|
June 30, |
|
March 31, |
|
June 30, |
| |||||||||
(In thousands, except per share amounts) |
|
2015 |
|
2014 |
|
2015 |
|
2015 |
|
2014 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
BASIC EPS: |
|
|
|
|
|
|
|
|
|
|
| |||||
Income (loss) from continuing operations, net of tax |
|
$ |
(41,890 |
) |
$ |
65,729 |
|
$ |
124,362 |
|
$ |
82,472 |
|
$ |
114,706 |
|
Less: Net (income) loss attributable to noncontrolling interest |
|
44 |
|
(253 |
) |
89 |
|
133 |
|
(826 |
) | |||||
Less: Redemption of preferred shares |
|
|
|
(1,688 |
) |
|
|
|
|
(1,688 |
) | |||||
Less: Earnings allocated to unvested shareholders |
|
720 |
|
(974 |
) |
(2,031 |
) |
(1,311 |
) |
(1,707 |
) | |||||
Adjusted income (loss) from continuing operations - basic and diluted |
|
$ |
(41,126 |
) |
$ |
62,814 |
|
$ |
122,420 |
|
$ |
81,294 |
|
$ |
110,485 |
|
Income (loss) from discontinued operations, net of tax |
|
$ |
5,025 |
|
$ |
(1,032 |
) |
$ |
(817 |
) |
$ |
4,208 |
|
$ |
483 |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Weighted-average number of shares outstanding-basic |
|
286,085 |
|
297,984 |
|
285,361 |
|
285,723 |
|
297,097 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Earnings (losses) per share: |
|
|
|
|
|
|
|
|
|
|
| |||||
Basic from continuing operations |
|
$ |
(.14 |
) |
$ |
.21 |
|
$ |
.43 |
|
$ |
.28 |
|
$ |
.37 |
|
Basic from discontinued operations |
|
.01 |
|
|
|
|
|
.02 |
|
|
| |||||
Total Basic |
|
$ |
(.13 |
) |
$ |
.21 |
|
$ |
.43 |
|
$ |
.30 |
|
$ |
.37 |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
DILUTED EPS: |
|
|
|
|
|
|
|
|
|
|
| |||||
Income (loss) from continuing operations attributed to common shareholders |
|
$ |
(41,126 |
) |
$ |
62,814 |
|
$ |
122,420 |
|
$ |
81,294 |
|
$ |
110,485 |
|
Add: Effect of reallocating undistributed earnings of unvested shareholders |
|
|
|
|
|
5 |
|
5 |
|
|
| |||||
Adjusted income (loss) from continuing operations attributed to common shareholders |
|
$ |
(41,126 |
) |
$ |
62,814 |
|
$ |
122,425 |
|
$ |
81,299 |
|
$ |
110,485 |
|
Income (loss) from discontinued operations |
|
$ |
5,025 |
|
$ |
(1,032 |
) |
$ |
(817 |
) |
$ |
4,208 |
|
$ |
483 |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Weighted-average number of shares outstanding-basic |
|
286,085 |
|
297,984 |
|
285,361 |
|
285,723 |
|
297,097 |
| |||||
Add: dilutive effect of potential common shares |
|
|
|
2,997 |
|
812 |
|
978 |
|
2,919 |
| |||||
Weighted-average number of diluted shares outstanding |
|
286,085 |
|
300,981 |
|
286,173 |
|
286,701 |
|
300,016 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Diluted from continuing operations |
|
$ |
(.14 |
) |
$ |
.21 |
|
$ |
.43 |
|
$ |
.28 |
|
$ |
.37 |
|
Diluted from discontinued operations |
|
.01 |
|
|
|
(.01 |
) |
.02 |
|
|
| |||||
Total Diluted |
|
$ |
(.13 |
) |
$ |
.21 |
|
$ |
.42 |
|
$ |
.30 |
|
$ |
.37 |
|
Restricted stock grants that contain non-forfeitable rights to dividends are considered participating securities. As such, these grants are included in our basic and diluted earnings (losses) per share computation using the two-class method of accounting. For all periods presented, the computation of diluted earnings (losses) per share excluded outstanding stock options with exercise prices greater than the average market price of Nabors common shares because their inclusion would have been anti-dilutive and because they were not considered participating securities. The average number of options that were excluded from diluted earnings (losses) per share that would have potentially diluted earnings (losses) per share were 9,860,422, 5,782,273 and 6,621,688 shares during the three months ended June 30, 2015 and 2014 and March 31, 2015, respectively and 6,325,598 and 6,817,891 shares during the six months ended June 30, 2015 and 2014, respectively. In any period during which the average market price of Nabors common shares exceeds the exercise prices of these stock options, such stock options are included in our diluted earnings (losses) per share computation using the if-converted method of accounting.
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 |
| |||
(In thousands, except per share amounts) |
|
Actuals |
|
Items |
|
(Non-GAAP) |
| |||
|
|
Three Months Ended March 31, 2015 |
| |||||||
|
|
|
|
|
|
|
| |||
Income (loss) from continuing operations, net of tax |
|
$ |
124,362 |
|
$ |
66,115 |
|
$ |
58,247 |
|
Diluted earnings (losses) per share from continuing operations |
|
$ |
0.43 |
|
$ |
0.23 |
|
$ |
0.20 |
|
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) |
|
2015 |
|
Share |
| ||
|
|
|
|
|
| ||
Net gain from the C&J Energy Services transaction (1) |
|
$ |
(61,885 |
) |
$ |
(.22 |
) |
Prior year tax benefits (2) |
|
(10,499 |
) |
(.03 |
) | ||
Severance charges (3) |
|
6,269 |
|
.02 |
| ||
|
|
|
|
|
| ||
Total Adjustments, net of tax |
|
$ |
(66,115 |
) |
(.23 |
) | |
(1) Represents the net gain from the C&J Energy Services transaction, net of tax of ($9.3) million.
(2) Represents tax benefits related to releases of tax provisions and reserves in various jurisdictions.
(3) Represents severance charges from workforce reductions, net of tax of $1.6 million.
Exhibit 99.2
2Q15 Earnings Presentation August 5, 2015 Presenters: Anthony G. Petrello Chairman, President & Chief Executive Officer William J. Restrepo Chief Financial Officer |
Forward-Looking Statements 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 in worldwide prices 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; the existence of competitors, technological changes and developments in the oilfield services industry; our ability to complete, and realize the expected benefits of, any strategic transactions; the existence of operating risks inherent in the oilfield services industry; the possibility of changes in tax laws 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 continued 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 included in the investor relations section of our website. 2 |
Recent Highlights 1111, NABORS 3 |
Financial Summary ($000 except EPS) 2Q14 3Q14 4Q14 1Q15 2Q15 Revenue $1,616,405 $1,810,911 $1,783,407 $1,421,209 $862,189 Adjusted EBITDA 416,280 489,958 445,692 374,466 288,177 Operating Income 133,460 203,377 152,120 93,447 69,981 GAAP Diluted EPS(1) 0.21(2) 0.34(3) (3.06)(4) 0.43(5) (0.14)(6) (1) (2) Diluted EPS from continuing operations Includes several charges related to businesses in the process of being disposed and the redemption of SWSI preferred stock, which net to a loss of approximately 3¢ per share Includes charges of 5¢ per share for income tax and merger-related fees, net of early termination payment, gain on sale of Alaska E&P and other items Includes charges and impairments of $3.39 per share related to asset impairments and transaction costs 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 (3) (4) (5) (6) 4 |
Current Debt and Liquidity Liquidity(4) (at June 30, 2015) Cash & Available Capacity: $2,345 Investment in Affiliate (at June 30, 2015) C&J stock(5): $ 825 (1) (2) (3) (4) (5) Capitalization defined as Net Debt plus Shareholders Equity Coverage defined as TTM Adjusted EBITDA / TTM Interest Expense Leverage defined as Total Debt / TTM Adjusted EBITDA Reflects the expansion of the revolving credit facility during July 2015 Based on C&J stock price as of 6/30/15; subject to lockup through 9/22/15 5 Note: Subtotals may not foot due to rounding High1Q152Q15ChangeChange ($MM's)3/31/123/31/156/30/151Q15 to 2Q15 2Q15 from High Total Debt Cash and ST Investments Net Debt Shareholders Equity Net Debt to Capitalization(1) Coverage(2) Leverage(3) $4,773$3,825$3,758($67)($1,015) 494621470151(24) $4,279$3,204$3,28884($991) 5,8114,9594,932(27)(879) 42.4%39.3%40.0%0.7%(2.4%) 7.8x9.6x9.0x(0.6x)1.2x 2.5x2.2x2.4x0.2x(0.1x) |
Drilling & Rig Services 1111, NABORS 6 |
2Q15 Rig Utilization & Availability 2Q15 Rig Average Rig Fleet(1) Years Utilization U.S. Lower 48 AC Legacy U.S. Lower 48 Total U.S. Offshore Alaska 172 85 257 17 19 92 12 104 8 8 53% 14% 40% 47% 42% 57 10 17% Canada International 175 127 73% Subtotal PACE®-X Construction(2) Intl. Newbuilds & Upgrades(2) U.S. & Intl. Offshore Newbuilds(2) 525 9 5 3 256 49% Total Fleet 542 (1) As of 6/30/15 (2) Includes announced newbuild commitments and rigs to be completed in 2015 Numbers may not calculate due to rounding 7 |
2Q15 U.S. Rig Utilization Power Type and Pad Capability % As of 6/30/15 8 Walking Skidding Pad Capable Not Pad Capable Total Rigs Total AC Legacy Grand Total WorkingTotal 69120 17 Util. 58% 14% WorkingTotal 1018 313 Util. 56% 23% Total 57% 20% WorkingTotal 834 665 Util. 24% 9% 172 85 Util. 51% 12% 70127 55% 1331 42% 53% 1499 14% 257 38% |
PACE®-X Rig Deployments & Rig Years 45 40 35 30 25 20 15 10 5 0 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 Deployments Cumulative Deployments Cumulative Rig Years 37 PACE®-X Rig Years through 2Q15 > As of 6/30/15 9 |
2Q15 International Working Rigs As of 6/30/15 10 Total 124 Russia 4 Saudi 41 Venezuela 5 Kuwait 2 Malaysia 1 Mexico 7 Oman 4 PNG 1 Romania 1 Ecuador 5 India 4 Iraq 1 Italy 1 Kazakhstan 2 Kurdistan 2 Algeria 10 Angola 1 Australia 1 Argentina 23 Colombia 7 Congo 1 |
Outlook and Summary 1111, NABORS 11 |
Strategic Focus Capitalize on the existing asset base > Differentiate the rig and service offerings > Improve financial flexibility > Enhance operational excellence > 12 |
Appendix 1111, NABORS 13 |
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. (2) Includes early termination payment of $30 million 14 Drilling 3Q14 4Q14 1Q15 2Q15 Margin (1)Rig Yrs Margin (1)Rig Yrs Margin (1)Rig Yrs Margin (1)Rig Yrs U.S. Drilling$12,756(2)216.0 Canada9,66334.3 International15,490130.1 $11,525212.2 9,88936.9 17,803121.2 $13,487167.6 9,92725.6 18,865130.1 $13,739119.5 7,7719.7 17,263127.1 |
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