Nabors Industries Inc. (NII), a fully owned affiliate of land
Nabors Industries Ltd.
), declared the pricing of senior unsecured notes of $700
million. The notes will be offered to selected institutional
NABORS IND (NBR): Free Stock Analysis Report
PACIFIC DRILLNG (PACD): Free Stock Analysis
PARKER DRILLING (PKD): Free Stock Analysis
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Out of $700 million worth of notes, $350 million senior notes,
scheduled to mature in 2016, will carry an interest rate of 2.35%
and will likely be priced at 99.942% of their face value. The
remaining $350 million notes, supposed to mature in 2013, are
projected to carry an interest rate of 5.10% and are estimated to
be priced at 99.635% of their face value.
NII intends to utilize the proceeds from the notes offering,
along with cash in hand and borrowings from its revolving credit
facility, to acquire part or all of $1.125 billion outstanding
senior notes that are expected to mature by 2019, with an
interest rate of 9.25%.
Barbados-based Nabors conducts oil, gas, and geothermal land
drilling operations and is the largest land drilling contractor
in the world. Moreover, the company is well positioned with a
sound mix of high performance rigs and new rigs in the key shale
plays. Nabors also enjoys good exposure to oil plays with
presence in the Bakken, Permian and International plays.
However, we are concerned about the weakness in Nabors' pressure
pumping business. Deterioration in pricing and utilization,
coupled with the spike in costs, is likely to adversely impact
the company's second half results.
Nabors currently carries a Zacks Rank #3 (Hold), implying that it
is expected to perform in line with the broader U.S. equity
market over the next 1 to 3 months.
Meanwhile, one can look at oil and gas drilling firms like
Pacific Drilling SA
Parker Drilling Co.
) that offer value. All the stocks sport a Zacks Rank #2