We are maintaining our Neutral recommendation on Nabors Industries
following its first quarter earnings results. The onshore contract
driller reported in-line March quarter profits on the back of
impressive international operations along with improved production
services. With leading positions in most natural gas and oil-based
shale plays, Nabors is a big player in the North American land
drilling market. Since last year, the company has also started
paying quarterly dividends, which will create further value for
shareholders. However, we remain concerned about the volatile
natural gas fundamentals, which are likely to limit the company's
ability to generate positive earnings surprises. Nabors' fairly
debt-heavy balance sheet also remains an issue.
Barbados-based Nabors Industries Ltd. (NBR) conducts oil, gas,
and geothermal land drilling operations and is the largest
land-drilling contractor in the world. It is also one of the
largest land well servicing companies and workover contractors in
the U.S. The company offers a number of ancillary wellsite
services, including oilfield management, engineering,
transportation, construction, maintenance, well logging, and other
support services in select domestic and international markets.
Nabors owns about 485 actively-marketed land drilling rigs. In
addition, the company has approximately 549 land workover and well
servicing rigs in North America. Nabors' offshore fleet includes 38
platform rigs, 8 jackups, and 4 barge rigs that are located in the
U.S. and other international markets. Further, Nabors deploys 20
marine transportation and supply vessels and certain related
assets, primarily in the U.S. Gulf of Mexico. In addition to its
activities in North America, Nabors has operations in almost every
major energy-producing regions of the world. The company has a 51%
ownership interest in a joint venture in Saudi Arabia, which
actively markets 5 rigs.
Nabors divides its operations into two principal business
Drilling and Rig Services: This unit includes the operations and
services associated with rigs, accounting for the bulk of Nabors'
operating earnings. Its operations are spread across 4
sub-segments: U.S., Canada, International, and Rig Services.
Completion and Production Services: Nabors' Completion and
Production Services' segment is made up of the company's workover,
well-servicing and coiled tubing operations, together with the
fluids management and pressure pumping activities.
Nabors Industries Ltd. (NBR): Read the Full
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