Nabors Industries Ltd. (NBR): New Analyst Report from Zacks Equity Research - Zacks Equity Research Report

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Summary:
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.

Overview:

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 lines:

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.


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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



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