Onshore contract driller
Nabors Industries Ltd.
) has announced it will start paying out a portion of its
earnings in the form of shareholder dividends. The Barbados-based
company initiated its quarterly dividend at the rate of 4 cents
per share, making the annualized dividend payout 16 cents per
share. The first installment is payable on Mar 28, to
shareholders of record as of Mar 11, 2013.
Nabors, which reported better-than-expected fourth quarter
earnings on Feb 19, has bolstered its long-term earnings and cash
flow visibility on the back of the company's strong operational
execution as well successful implementation of certain strategic
We believe that the dividend start-up not only highlights Nabors'
commitment to create value for shareholders but also underlines
the energy equipment supplier's healthy financial condition and
confidence in its business going forward.
Nabors, which ranks ahead of
Patterson-UTI Energy Inc.
) as the largest North American land drilling contractor,
currently retains a Zacks Rank #3 (Hold), implying that it is
expected to perform in line with the broader U.S. equity market
over the next one to three months.
With leading positions in most natural gas and oil-based shale
plays, we expect the company to benefit from higher activity and
pricing. The 'Superior Well' acquisition has further enhanced
Nabors' earnings visibility by expanding its pressure pumping
capabilities and geographic foothold.
However, we remain concerned about weak natural gas
fundamentals, which are likely to limit the company's ability to
generate positive earnings surprises. The recent weakness in the
North American onshore rig count has also remains an issue.
NABORS IND (NBR): Free Stock Analysis Report
NGL ENERGY PART (NGL): Free Stock Analysis
PATTERSON-UTI (PTEN): Free Stock Analysis
RANGE RESOURCES (RRC): Free Stock Analysis
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In the meantime, one can look at downstream operator
NGL Energy Partners L.P.
)) and energy explorer
Range Resources Corp.
) as attractive investments. Both these firms - sporting a Zacks
Rank #1 (Strong Buy) - offer value and are worth accumulating at