Oil and gas driller
Nabors Industries Ltd.
) expects its second quarter results to fall short of the market
projections, bruised by the poor performing Pressure Pumping
segment and low contributions from the International markets.
Impressive activities at the U.S. Land Operations are expected to
partially negate these effects.
Nabors - which will release its second quarter results on July 24,
after the close of trading - expects to generate operating income
of $220 million to $230 million for the June quarter, impacted by
As a part of the restructuring strategy, Nabors had earlier
announced plans to merge its U.S. well-servicing and
pressure-pumping businesses into one unit, naming it - Nabors
Completion and Production Services. This amalgamation coupled with
the withdrawal of inoperable Canadian drilling rigs likely show a
non-cash charge of about $150 million in the second quarter.
Additionally, the company will also record a ceiling test charge of
$150 million for the drop in the valuation for a part of its
natural gas reserves controlled by the NFR Energy affiliate.
Combining these two factors, Nabors' quarterly earnings will also
be influenced by one-time charges totaling almost $300 million.
The Zacks Consensus earnings estimate for the second quarter is
42 cents, on revenue of $1,741 million.
In a separate announcement, Barbados-based Nabors stated that
its board of directors has approved of a shareholder rights plan or
poison pill, which will provide shareholders the right to buy new
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Nabors, which competes with peers such as
), currently retains a Zacks #3 Rank, which translates into a
short-term Hold rating. We are also maintaining our long-term
Neutral recommendation on the stock.
Nabors remains well positioned with a sound mix of high performance
rigs and new rigs working in the key shale plays. The company also
enjoys good exposure to oil plays with its presence in the Bakken,
Permian and International plays.
However, with natural gas fundamentals remaining weak, we do not
see any significant price upside for the Nabors stock during the
next few quarters.