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Main Press Release Nabors Announces Second-Quarter EPS of $0.21 after net charges of $0.03 per share - Press Release - Digital Journal

Nabors Announces Second-Quarter EPS of $0.21 after net charges of $0.03 per share - Press Release - Digital Journal


HAMILTON, Bermuda, July 22, 2014--(CNW)--
Nabors Announces Second-Quarter EPS of $0.21 after net charges of $0.03 per share

Second-Quarter Highlights Include:

- Signed definitive agreement to combine Completion &- Production Services operations with C&-J Energy Services

- Eight new term contract awards for PACE®--X rigs bringing total to 34 rigs

- Secured non-core asset divestitures set to yield nearly $100 million in cash proceeds

Canada NewsWire

HAMILTON, Bermuda, July 22, 2014

HAMILTON, Bermuda, July 22, 2014 /CNW/ -- -Nabors Industries Ltd. (NYSE:NBR) today reported its financial results for the second quarter of 2014. - Operating revenues and earnings from unconsolidated affiliates for this quarter totaled $1.62 billion, compared to $1.50 billion in the same quarter of the prior year and $1.59 billion in the first quarter of 2014. - Net income from continuing operations was $65.7 million or $0.21 per diluted share, compared to $28.1 million or $0.08 per diluted share in the second quarter of 2013 and $49.0 million or $0.16 per diluted share in the first quarter of 2014. - The second quarter earnings per share include net charges of $0.03 per share, primarily related to losses on the sale of non-core assets or in unconsolidated businesses in the process of being divested. -

Tony Petrello, Nabors' Chairman, President &- CEO, commented, "Operationally, our second quarter represented solid improvement in all of our larger segments, partially offset by the usual seasonal weakness in Canada and Alaska. - Our U.S. land operations led the way with improved pricing and a significant increase in rig activity. - Completion &- Production Services recovered sharply with fewer interruptions and improving pricing and utilization. - Our International results also improved as the initial contribution of new rig startups more than compensated for the temporary suspension of several existing rigs. -

"Strategically, we achieved a major objective through the signing of a definitive agreement with C&-J Energy Services to combine their operations with our Completion &- Production Services segment to form a leading oilfield services provider with increased critical mass, broader geographic presence and strong international potential. - I view this as one of those rare transactions where both companies' shareholders stand to benefit in ways other than just strong accretion potential. - The combination of this segment of our business with a well-respected management team enables us to better concentrate our resources on bolstering our position as a preeminent global drilling company, while retaining the emerging upside of those operations. - Similarly, C&-J immediately multiplies the size and breadth of its business, greatly expands its opportunity set, and inherits a highly capable operating team. - We anticipate the closing of the transaction to occur in the fourth quarter. -

"Notably, in the second quarter we received long-term contract awards for an additional eight PACE®--X rigs in the U.S. market. - We continue to see strong demand for new rigs, both domestically and internationally, leading us to significantly increase our new rig production schedule. - We also completed the sale of four of our non-core U.S. Offshore rigs and entered into a definitive agreement to divest our Alaska oil and gas holdings. - In the aggregate these transactions are expected to yield nearly $100 million in cash proceeds."

Operating cash flow (EBITDA) was $416.3 million for the second quarter, compared to $355.8 million in the same quarter last year and $391.2 million in the first quarter of this year. - Adjusted income from operating activities was $133.5 million, compared to $89.6 million in the second quarter of 2013 and $109.0 million in the first quarter of 2014.

Drilling &- Rig Services

Operating income in the Drilling &- Rig Services business line was down approximately $5.7 million sequentially at $149.8 million. - This unit also saw a similar decrease in operating cash flow, which was $376.8 million. - These represent modest decreases considering the normal seasonal decrease in Canada and Alaska, approximating $40 million in the second quarter. - The quarter's operating income reflects a 50% increase over the same period of last year, illustrating the strength of demand for rigs across virtually all global regions. -

In North America, U.S. Drilling results showed substantial improvement in sequential income at $90.0 million despite seasonally lower results in Alaska. - This improvement was largely attributable to increases in both utilization and pricing in the Lower 48 operation that amounted to 11 rigs and $600 in daily rig margins. - The outlook remains strong with growing pad rig demand, particularly in the Permian and South Texas, as indicated by the award of eight additional PACE®--X rigs. - This brings the total number of PACE®--X rig commitments to 34 and covers all new-builds scheduled to be deployed into early next year. - AC rig utilization remains high at 95% with only one rig on standby revenue versus 11 rigs two quarters ago. - -

Activity in Alaska is expected to be less seasonal going forward, with increases in year-round work expected through 2016 and further upside from pending new rig awards. - Near-term Gulf of Mexico offshore activity is expected to be slower with the onset of hurricane season. - However, the intermediate term will benefit from the commencement of a large new deepwater platform drilling rig around the end of this year. -

International operating income of $50.6 million continued to improve sequentially as the initial contribution from several new startups more than compensated for a temporarily lower rig count in a few areas. - Jackup rig 660 returned to work mid-quarter, but its contribution was offset by unanticipated downtime on two other smaller jackups which are expected to return to operations in the near future. - As anticipated, two platform rigs in India and six land rigs in Mexico were down for most of the quarter but have good prospects to return to work. - The Company's bullish outlook for the near and intermediate term remains intact as new rig deployments accelerate and rates increase with contract renewals, further bolstered by the potential for additional new rig awards. -

Rig Services' operating income was $9.1 million, representing a sizable improvement in Canrig and Ryan which was partially offset by a loss in an unconsolidated affiliate. - Canrig's backlog increased to an all-time high, roughly half of which is third-party related.

Completion &- Production Services

The Completion &- Production Services business line recorded operating income of $29.3 million, with operating cash flow of $85.9 million. - Although the second quarter was still impacted by weather and other utilization interruptions, including sand supply, results rebounded sharply from the weather-induced weakness of the first quarter. - The sequential improvements in operating income amount to $33.1 million in completion operations and $2.7 million in U.S. Production Services despite key customer budget reductions in California. - These improvements were partially offset by a $3.4 million sequential decrease in Canada due to the spring breakup. - The outlook for the completions business has improved markedly in a relatively short time as increases in demand, particularly in West and South Texas, have increased utilization to a high level. - Today this operation's pumping calendar is fully committed into early next year, including a second 45,000 HHP dual-fuel spread which will deploy in early fourth quarter. - Price increases are being implemented in the more active markets with further price increases agreed to take effect shortly in all other regions outside of the northeast.  -These increases, along with continuing cost reductions, suggest a significant improvement over the balance of this year and a strong 2015. - The long-term demographics for Production Services continue to indicate a strengthening market despite some near-term pockets of weakness. -

Financial Discussion

Earnings per share for the second quarter included several items that had a net impact of $0.03 cents per diluted share. During the quarter the Company disposed of several non-core assets—-barges and other rigs—-that generated losses of $0.02 per share. In addition, the development of the C&-J transaction led the company to redeem at a loss preferred shares relating to the Superior Well Services acquisition, with an unfavorable impact of $0.01 per share. Finally, the unconsolidated Alaska construction business, which is in the process of being divested, yielded a loss of $0.01 during the quarter. These items were all partially offset by income tax benefits related to the filing of 2013 tax returns in a foreign jurisdiction.

SG&-A for the second quarter of $133.6 million was in line with the first quarter with a slight sequential reduction of $0.6 million. - Higher investment income on the sale of certain financial assets was essentially offset by a similar increase in foreign-exchange losses. - The effective tax rate during the quarter was 13.8%, primarily reflecting the above-mentioned benefits. - Capital expenditures of $458 million for the quarter were below forecast and largely associated with the construction of new and upgraded rigs. - Nonetheless, expenditures for the full-year should reach the upper end of prior guidance of $1.8 billion with the additional PACE®--X rigs and the potential for additional international awards yet this year.

William Restrepo, Nabors' Chief Financial Officer added, "We are pleased with the progress made during this quarter and the confirmation of the trends we highlighted during our first quarter conference call. Specifically, the C&-J transaction together with the sale of several rigs and E&-P assets clearly demonstrate our commitment to focus our resources on those businesses where we are able to generate attractive returns on capital and that are strategically aligned with our areas of strength. Further, the profitability improvement initiatives are well under way. We are starting to see their impact on our financial results and in the cost of building our rigs. And finally, the market has improved as we expected, with higher fracturing service intensity and incremental demand for higher specification drilling assets. During the second half of the year, we expect these favorable trends to contribute to further improvement and to boost the impact of the expected acceleration in international rig deployments." - -

Summary and Outlook

Petrello concluded, "It is becoming increasingly apparent that virtually every element of our business is experiencing improving fundamentals manifested through improving utilization and pricing. - Construction of the numerous new rigs we have in progress remains on track and within budget. - The contribution of these deployments combined with a favorable pricing environment across every market and the incremental demand for new rigs globally yield a high degree of growth visibility for the foreseeable future. - We are particularly optimistic about the growth prospects for our venture with C&-J in the Completion &- Production Services business." - - -

About Nabors

The Nabors companies own and operate approximately 496 land drilling rigs throughout the world and approximately 544 land workover and well servicing rigs in North America. Nabors' actively marketed offshore fleet consists of 36 platform rigs in the United States and multiple international markets. In addition, Nabors is one of the largest providers of hydraulic fracturing, cementing, nitrogen and acid pressure pumping services with approximately 800,000 hydraulic horsepower currently in service. 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 management's 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 mark.andrews@nabors.com

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)


2014


2013


2014


2014


2013












Revenues and other income:











 - - Operating revenues -


$ 1,616,981


$ 1,457,966


$ 1,589,618


$ 3,206,599


$ 2,993,444

 - - Earnings (losses) from unconsolidated affiliates


(576)


1,360


(2,445)


(3,021)


4,255

 - - Investment income (loss)


7,066


14,821


980


8,046


94,242

 - - - - - Total revenues and other income


1,623,471


1,474,147


1,588,153


3,211,624


3,091,941












Costs and other deductions:











 - - Direct costs -


1,066,495


972,310


1,061,739


2,128,234


1,967,302

 - - General and administrative expenses


133,630


131,202


134,266


267,896


262,080

 - - Depreciation and amortization


282,820


266,210


282,127


564,947


535,575

 - - Interest expense


46,303


60,273


44,810


91,113


120,284

 - - -Losses (gains) on sales and disposals of - -long-lived assets and other expense (income), net


16,504


9,242


1,476


17,980


68,979

 - - - - - Total costs and other deductions


1,545,752


1,439,237


1,524,418


3,070,170


2,954,220












Income (loss) from continuing operations before income taxes


77,719


34,910


63,735


141,454


137,721












Income tax expense (benefit)


10,756


6,032


14,008


24,764


15,886












Subsidiary preferred stock dividend


1,234


750


750


1,984


1,500












Income (loss) from continuing operations, net of tax


65,729


28,128


48,977


114,706


120,335

Income (loss) from discontinued operations, net of tax


(1,032)


(26,873)


1,515


483


(19,862)












Net income (loss)


64,697


1,255


50,492


115,189


100,473

 - - - - Less: Net (income) loss attributable to noncontrolling interest


(253)


(5,616)


(573)


(826)


(5,713)

Net income (loss) attributable to Nabors


$  -  -  -64,444


$  -  -  - (4,361)


$  -  -  -49,919


$  -  -114,363


$  -  -  -94,760












Earnings (losses) per share: (1)











 - - Basic from continuing operations


$  -  -  -  -  -  - .21


$  -  -  -  -  -  - .08


$  -  -  -  -  -  - .16


$  -  -  -  -  -  - .37


$  -  -  -  -  -  - .41

 - - Basic from discontinued operations


-


(.09)


.01


-


(.09)

 - - Basic


$  -  -  -  -  -  - .21


$  -  -  -  -  - (.01)


$  -  -  -  -  -  - .17


$  -  -  -  -  -  - .37


$  -  -  -  -  -  - .32












 - - Diluted from continuing operations


$  -  -  -  -  -  - .21


$  -  -  -  -  -  - .08


$  -  -  -  -  -  - .16


$  -  -  -  -  -  - .37


$  -  -  -  -  -  - .41

 - - Diluted from discontinued operations


-


(.09)


-


-


(.09)

 - - Diluted


$  -  -  -  -  -  - .21


$  -  -  -  -  - (.01)


$  -  -  -  -  -  - .16


$  -  -  -  -  -  - .37


$  -  -  -  -  -  - .32























 -Weighted-average number -of common shares outstanding: (1)











 - - Basic -


297,984


294,747


296,210


297,097


293,217

 - - Diluted -


300,981


297,119


299,050


300,016


295,644























Adjusted EBITDA (2)


$  -  -416,280


$  -  -355,814


$  -  -391,168


$  -  -807,448


$  -  -768,317












Adjusted income (loss) derived from operating activities (3)


$  -  -133,460


$  -  -  -89,604


$  -  -109,041


$  -  -242,501


$  -  -232,742

 -

(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 and general and administrative expenses 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".



(3)

Adjusted income (loss) derived from operating activities is computed by subtracting the sum of direct costs, general and administrative expenses and depreciation and amortization 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, except ratios)


2014


2014


2013








ASSETS







Current assets:







Cash and short-term investments


$  -  -  -486,344


$  -  -  -424,767


$  -  -  - 507,133

Accounts receivable, net


1,448,511


1,454,368


1,399,543

Assets held for sale


233,163


231,880


243,264

Other current assets


642,620


580,253


603,890

 - - - - Total current assets


2,810,638


2,691,268


2,753,830

Long-term investments and other receivables


2,724


2,915


3,236

Property, plant and equipment, net


8,832,966


8,690,759


8,597,813

Goodwill


512,897


512,391


512,964

Investment in unconsolidated affiliates


60,509


63,069


64,260

Other long-term assets


216,265


226,671


227,708

 - - - - Total assets


$ 12,435,999


$ 12,187,073


$  -12,159,811








LIABILITIES AND EQUITY







Current liabilities: