Nabors Announces Second-Quarter EPS of $0.21 after net charges of $0.03 per share

HAMILTON, Bermuda, July 22, 2014 /CNW/ -- Nabors Industries Ltd. (NYSE:NBR) today reported its financial results for the second quarter of 2014.  Operating revenues and earnings from unconsolidated affiliates for this quarter totaled $1.62 billion, compared to $1.50 billion in the same quarter of the prior year and $1.59 billion in the first quarter of 2014.  Net income from continuing operations was $65.7 million or $0.21 per diluted share, compared to $28.1 million or $0.08 per diluted share in the second quarter of 2013 and $49.0 million or $0.16 per diluted share in the first quarter of 2014.  The second quarter earnings per share include net charges of $0.03 per share, primarily related to losses on the sale of non-core assets or in unconsolidated businesses in the process of being divested. 

Tony Petrello, Nabors' Chairman, President & CEO, commented, "Operationally, our second quarter represented solid improvement in all of our larger segments, partially offset by the usual seasonal weakness in Canada and Alaska.  Our U.S. land operations led the way with improved pricing and a significant increase in rig activity.  Completion & Production Services recovered sharply with fewer interruptions and improving pricing and utilization.  Our International results also improved as the initial contribution of new rig startups more than compensated for the temporary suspension of several existing rigs. 

"Strategically, we achieved a major objective through the signing of a definitive agreement with C&J Energy Services to combine their operations with our Completion & Production Services segment to form a leading oilfield services provider with increased critical mass, broader geographic presence and strong international potential.  I view this as one of those rare transactions where both companies' shareholders stand to benefit in ways other than just strong accretion potential.  The combination of this segment of our business with a well-respected management team enables us to better concentrate our resources on bolstering our position as a preeminent global drilling company, while retaining the emerging upside of those operations.  Similarly, C&J immediately multiplies the size and breadth of its business, greatly expands its opportunity set, and inherits a highly capable operating team.  We anticipate the closing of the transaction to occur in the fourth quarter. 

"Notably, in the second quarter we received long-term contract awards for an additional eight PACE®-X rigs in the U.S. market.  We continue to see strong demand for new rigs, both domestically and internationally, leading us to significantly increase our new rig production schedule.  We also completed the sale of four of our non-core U.S. Offshore rigs and entered into a definitive agreement to divest our Alaska oil and gas holdings.  In the aggregate these transactions are expected to yield nearly $100 million in cash proceeds."

Operating cash flow (EBITDA) was $416.3 million for the second quarter, compared to $355.8 million in the same quarter last year and $391.2 million in the first quarter of this year.  Adjusted income from operating activities was $133.5 million, compared to $89.6 million in the second quarter of 2013 and $109.0 million in the first quarter of 2014.

Drilling & Rig Services

Operating income in the Drilling & Rig Services business line was down approximately $5.7 million sequentially at $149.8 million.  This unit also saw a similar decrease in operating cash flow, which was $376.8 million.  These represent modest decreases considering the normal seasonal decrease in Canada and Alaska, approximating $40 million in the second quarter.  The quarter's operating income reflects a 50% increase over the same period of last year, illustrating the strength of demand for rigs across virtually all global regions. 

In North America, U.S. Drilling results showed substantial improvement in sequential income at $90.0 million despite seasonally lower results in Alaska.  This improvement was largely attributable to increases in both utilization and pricing in the Lower 48 operation that amounted to 11 rigs and $600 in daily rig margins.  The outlook remains strong with growing pad rig demand, particularly in the Permian and South Texas, as indicated by the award of eight additional PACE®-X rigs.  This brings the total number of PACE®-X rig commitments to 34 and covers all new-builds scheduled to be deployed into early next year.  AC rig utilization remains high at 95% with only one rig on standby revenue versus 11 rigs two quarters ago.  

Activity in Alaska is expected to be less seasonal going forward, with increases in year-round work expected through 2016 and further upside from pending new rig awards.  Near-term Gulf of Mexico offshore activity is expected to be slower with the onset of hurricane season.  However, the intermediate term will benefit from the commencement of a large new deepwater platform drilling rig around the end of this year. 

International operating income of $50.6 million continued to improve sequentially as the initial contribution from several new startups more than compensated for a temporarily lower rig count in a few areas.  Jackup rig 660 returned to work mid-quarter, but its contribution was offset by unanticipated downtime on two other smaller jackups which are expected to return to operations in the near future.  As anticipated, two platform rigs in India and six land rigs in Mexico were down for most of the quarter but have good prospects to return to work.  The Company's bullish outlook for the near and intermediate term remains intact as new rig deployments accelerate and rates increase with contract renewals, further bolstered by the potential for additional new rig awards. 

Rig Services' operating income was $9.1 million, representing a sizable improvement in Canrig and Ryan which was partially offset by a loss in an unconsolidated affiliate.  Canrig's backlog increased to an all-time high, roughly half of which is third-party related.

Completion & Production Services

The Completion & Production Services business line recorded operating income of $29.3 million, with operating cash flow of $85.9 million.  Although the second quarter was still impacted by weather and other utilization interruptions, including sand supply, results rebounded sharply from the weather-induced weakness of the first quarter.  The sequential improvements in operating income amount to $33.1 million in completion operations and $2.7 million in U.S. Production Services despite key customer budget reductions in California.  These improvements were partially offset by a $3.4 million sequential decrease in Canada due to the spring breakup.  The outlook for the completions business has improved markedly in a relatively short time as increases in demand, particularly in West and South Texas, have increased utilization to a high level.  Today this operation's pumping calendar is fully committed into early next year, including a second 45,000 HHP dual-fuel spread which will deploy in early fourth quarter.  Price increases are being implemented in the more active markets with further price increases agreed to take effect shortly in all other regions outside of the northeast.  These increases, along with continuing cost reductions, suggest a significant improvement over the balance of this year and a strong 2015.  The long-term demographics for Production Services continue to indicate a strengthening market despite some near-term pockets of weakness. 

Financial Discussion

Earnings per share for the second quarter included several items that had a net impact of $0.03 cents per diluted share. During the quarter the Company disposed of several non-core assets—barges and other rigs—that generated losses of $0.02 per share. In addition, the development of the C&J transaction led the company to redeem at a loss preferred shares relating to the Superior Well Services acquisition, with an unfavorable impact of $0.01 per share. Finally, the unconsolidated Alaska construction business, which is in the process of being divested, yielded a loss of $0.01 during the quarter. These items were all partially offset by income tax benefits related to the filing of 2013 tax returns in a foreign jurisdiction.

SG&A for the second quarter of $133.6 million was in line with the first quarter with a slight sequential reduction of $0.6 million.  Higher investment income on the sale of certain financial assets was essentially offset by a similar increase in foreign-exchange losses.  The effective tax rate during the quarter was 13.8%, primarily reflecting the above-mentioned benefits.  Capital expenditures of $458 million for the quarter were below forecast and largely associated with the construction of new and upgraded rigs.  Nonetheless, expenditures for the full-year should reach the upper end of prior guidance of $1.8 billion with the additional PACE®-X rigs and the potential for additional international awards yet this year.

William Restrepo, Nabors' Chief Financial Officer added, "We are pleased with the progress made during this quarter and the confirmation of the trends we highlighted during our first quarter conference call. Specifically, the C&J transaction together with the sale of several rigs and E&P assets clearly demonstrate our commitment to focus our resources on those businesses where we are able to generate attractive returns on capital and that are strategically aligned with our areas of strength. Further, the profitability improvement initiatives are well under way. We are starting to see their impact on our financial results and in the cost of building our rigs. And finally, the market has improved as we expected, with higher fracturing service intensity and incremental demand for higher specification drilling assets. During the second half of the year, we expect these favorable trends to contribute to further improvement and to boost the impact of the expected acceleration in international rig deployments."  

Summary and Outlook

Petrello concluded, "It is becoming increasingly apparent that virtually every element of our business is experiencing improving fundamentals manifested through improving utilization and pricing.  Construction of the numerous new rigs we have in progress remains on track and within budget.  The contribution of these deployments combined with a favorable pricing environment across every market and the incremental demand for new rigs globally yield a high degree of growth visibility for the foreseeable future.  We are particularly optimistic about the growth prospects for our venture with C&J in the Completion & Production Services business."   

About Nabors

The Nabors companies own and operate approximately 496 land drilling rigs throughout the world and approximately 544 land workover and well servicing rigs in North America. Nabors' actively marketed offshore fleet consists of 36 platform rigs in the United States and multiple international markets. In addition, Nabors is one of the largest providers of hydraulic fracturing, cementing, nitrogen and acid pressure pumping services with approximately 800,000 hydraulic horsepower currently in service. Nabors also manufactures top drives and drilling instrumentation systems.   Nabors participates in most of the significant oil and gas markets in the world.

The information above includes forward-looking statements within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934. Such forward-looking statements are subject to certain risks and uncertainties, as disclosed by Nabors from time to time in its filings with the Securities and Exchange Commission. As a result of these factors, Nabors' actual results may differ materially from those indicated or implied by such forward-looking statements.  The projections contained in this release reflect management's estimates as of the date of the release.  Nabors does not undertake to update these forward-looking statements.   

MEDIA CONTACT:

Dennis A. Smith, Director of Corporate Development & Investor Relations, +1 281-775-8038. To request investor materials, contact Nabors' corporate headquarters in Hamilton, Bermuda at +441-292-1510 or via e-mail at mark.andrews@nabors.com

NABORS INDUSTRIES LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME (LOSS)

(Unaudited)














Three Months Ended


Six Months Ended



June 30,


March 31,


June 30,












(In thousands, except per share amounts)


2014


2013


2014


2014


2013












Revenues and other income:











   Operating revenues 


$ 1,616,981


$ 1,457,966


$ 1,589,618


$ 3,206,599


$ 2,993,444

   Earnings (losses) from unconsolidated affiliates


(576)


1,360


(2,445)


(3,021)


4,255

   Investment income (loss)


7,066


14,821


980


8,046


94,242

      Total revenues and other income


1,623,471


1,474,147


1,588,153


3,211,624


3,091,941












Costs and other deductions:











   Direct costs 


1,066,495


972,310


1,061,739


2,128,234


1,967,302

   General and administrative expenses


133,630


131,202


134,266


267,896


262,080

   Depreciation and amortization


282,820


266,210


282,127


564,947


535,575

   Interest expense


46,303


60,273


44,810


91,113


120,284

   Losses (gains) on sales and disposals of  long-lived assets and other expense (income), net


16,504


9,242


1,476


17,980


68,979

      Total costs and other deductions


1,545,752


1,439,237


1,524,418


3,070,170


2,954,220












Income (loss) from continuing operations before income taxes


77,719


34,910


63,735


141,454


137,721












Income tax expense (benefit)


10,756


6,032


14,008


24,764


15,886












Subsidiary preferred stock dividend


1,234


750


750


1,984


1,500












Income (loss) from continuing operations, net of tax


65,729


28,128


48,977


114,706


120,335

Income (loss) from discontinued operations, net of tax


(1,032)


(26,873)


1,515


483


(19,862)












Net income (loss)


64,697


1,255


50,492


115,189


100,473

     Less: Net (income) loss attributable to noncontrolling interest


(253)


(5,616)


(573)


(826)


(5,713)

Net income (loss) attributable to Nabors


$      64,444


$       (4,361)


$      49,919


$    114,363


$      94,760












Earnings (losses) per share: (1)











   Basic from continuing operations


$             .21


$             .08


$             .16


$             .37


$             .41

   Basic from discontinued operations


-


(.09)


.01


-


(.09)

   Basic


$             .21


$           (.01)


$             .17


$             .37


$             .32












   Diluted from continuing operations


$             .21


$             .08


$             .16


$             .37


$             .41

   Diluted from discontinued operations


-


(.09)


-


-


(.09)

   Diluted


$             .21


$           (.01)


$             .16


$             .37


$             .32























 Weighted-average number of common shares outstanding: (1)











   Basic 


297,984


294,747


296,210


297,097


293,217

   Diluted 


300,981


297,119


299,050


300,016


295,644























Adjusted EBITDA (2)


$    416,280


$    355,814


$    391,168


$    807,448


$    768,317












Adjusted income (loss) derived from operating activities (3)


$    133,460


$      89,604


$    109,041


$    242,501


$    232,742

 

(1)

See "Computation of Earnings (Losses) Per Share" included herein as a separate schedule. 



(2)

Adjusted EBITDA is computed by subtracting the sum of direct costs and general and administrative expenses from the sum of Operating revenues and Earnings (losses) from unconsolidated affiliates. There are limitations inherent in using adjusted EBITDA as a measure of overall profitability because it excludes significant expense items. However, management evaluates the performance of our business units and the consolidated company based on several criteria, including adjusted EBITDA and adjusted income (loss) derived from operating activities, because we believe that these financial measures accurately reflect our ongoing profitability. These amounts should not be used as a substitute for the amounts reported in accordance with GAAP. To compensate for the limitations in utilizing adjusted EBITDA as an operating measure, management also uses GAAP measures of performance, including income from continuing operations and net income, to evaluate performance, but only with respect to the Company as a whole and not on a segment basis.  A reconciliation of this non-GAAP measure to income (loss) from continuing operations before income taxes, which is a GAAP measure, is provided in the table set forth immediately following the heading "Reconciliation of Non-GAAP Financial Measures to Income (loss) from Continuing Operations before Income Taxes".



(3)

Adjusted income (loss) derived from operating activities is computed by subtracting the sum of direct costs, general and administrative expenses and depreciation and amortization from the sum of Operating revenues and Earnings (losses) from unconsolidated affiliates. These amounts should not be used as a substitute for those amounts reported in accordance with GAAP. However, management evaluates the performance of our business units and the consolidated company based on several criteria, including adjusted income (loss) derived from operating activities, because it believes that these financial measures accurately reflect our ongoing profitability.  A reconciliation of this non-GAAP measure to income (loss) from continuing operations before income taxes, which is a GAAP measure, is provided in the table set forth immediately following the heading "Reconciliation of Non-GAAP Financial Measures to Income (loss) from Continuing Operations before Income Taxes".

 

NABORS INDUSTRIES LTD. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS








(Unaudited)












June 30,


March 31,


December 31,

(In thousands, except ratios)


2014


2014


2013








ASSETS







Current assets:







Cash and short-term investments


$      486,344


$      424,767


$       507,133

Accounts receivable, net


1,448,511


1,454,368


1,399,543

Assets held for sale


233,163


231,880


243,264

Other current assets


642,620


580,253


603,890

     Total current assets


2,810,638


2,691,268


2,753,830

Long-term investments and other receivables


2,724


2,915


3,236

Property, plant and equipment, net


8,832,966


8,690,759


8,597,813

Goodwill


512,897


512,391


512,964

Investment in unconsolidated affiliates


60,509


63,069


64,260

Other long-term assets


216,265


226,671


227,708

     Total assets


$ 12,435,999


$ 12,187,073


$  12,159,811








LIABILITIES AND EQUITY







Current liabilities:







Current debt


$              207


$           5,296


$          10,185

Other current liabilities


1,319,379


1,232,846


1,301,239

     Total current liabilities


1,319,586


1,238,142


1,311,424

Long-term debt


3,956,290


3,812,476


3,904,117

Other long-term liabilities


1,078,201


1,095,998


893,905

     Total liabilities


6,354,077


6,146,616


6,109,446








Subsidiary preferred stock (1)


-


69,188


69,188








Equity:







Shareholders' equity


6,071,426


5,960,469


5,969,086

Noncontrolling interest


10,496


10,800


12,091

     Total equity


6,081,922


5,971,269


5,981,177

     Total liabilities and equity


$ 12,435,999


$ 12,187,073


$  12,159,811



(1)

Represents subsidiary preferred stock from acquisition in September 2010.  All 75,000 outstanding shares were redeemed in June 2014.

 

NABORS INDUSTRIES LTD. AND SUBSIDIARIES

SEGMENT REPORTING

(Unaudited)












The following tables set forth certain information with respect to our reportable segments and rig activity:

























Three Months Ended


Six Months Ended



June 30,


March 31,


June 30,












(In thousands, except rig activity)


2014


2013


2014


2014


2013












Reportable segments:











Operating revenues and Earnings (losses) from unconsolidated affiliates:











    Drilling and Rig Services: 











      U.S.


$    532,894


$    467,129


$    510,476


$ 1,043,370


$    951,902

      Canada


54,861


64,789


111,621


166,482


191,656

      International


391,251


351,421


375,069


766,320


672,937

      Rig Services (1)


161,740


118,120


143,726


305,466


252,351

       Subtotal Drilling and Rig Services (2)


1,140,746


1,001,459


1,140,892


2,281,638


2,068,846












    Completion and Production Services:











      Completion Services


276,639


254,016


227,899


504,538


516,154

      Production Services


258,378


244,602


275,400


533,778


496,173

       Subtotal Completion and Production Services (3)


535,017


498,618


503,299


1,038,316


1,012,327












    Other reconciling items (4)


(59,358)


(40,751)


(57,018)


(116,376)


(83,474)

      Total operating revenues and earnings (losses) from unconsolidated affiliates

$ 1,616,405


$ 1,459,326


$ 1,587,173


$ 3,203,578


$ 2,997,699












Adjusted EBITDA: (5)











    Drilling and Rig Services: 











      U.S.


$    206,061


$    178,799


$    187,637


$    393,698


$    363,658

      Canada


14,216


18,067


40,119


54,335


63,598

      International


139,336


117,491


137,991


277,327


224,005

      Rig Services (1)


17,176


2,273


16,491


33,667


11,607

       Subtotal Drilling and Rig Services (2)


376,789


316,630


382,238


759,027


662,868












    Completion and Production Services:











      Completion Services


27,614


33,479


(6,654)


20,960


80,203

      Production Services


58,267


48,036


60,056


118,323


99,154

       Subtotal Completion and Production Services (3)


85,881


81,515


53,402


139,283


179,357












    Other reconciling items (6)


(46,390)


(42,331)


(44,472)


(90,862)


(73,908)

      Total adjusted EBITDA


$    416,280


$    355,814


$    391,168


$    807,448


$    768,317












Adjusted income (loss) derived from operating activities:  (7)











    Drilling and Rig Services: 











      U.S.


$      89,977


$      69,813


$      72,494


$    162,471


$    147,408

      Canada


225


3,895


26,160


26,385


34,413

      International


50,583


32,481


48,119


98,702


53,950

      Rig Services (1)


9,059


(5,383)


8,728


17,787


(4,096)

       Subtotal Drilling and Rig Services (2)


149,844


100,806


155,501


305,345


231,675












    Completion and Production Services:











      Completion Services


(581)


6,870


(33,635)


(34,216)


24,626

      Production Services


29,889


23,471


30,591


60,480


49,485

       Subtotal Completion and Production Services (3)


29,308


30,341


(3,044)


26,264


74,111












    Other reconciling items (6)


(45,692)


(41,543)


(43,416)


(89,108)


(73,044)

   Total adjusted income (loss) derived from operating activities


$    133,460


$      89,604


$    109,041


$    242,501


$    232,742












Rig activity:











Rig years: (8)











   U.S.


215.3


195.8


206.6


211.0


192.8

   Canada


21.6


17.4


43.8


32.6


28.6

   International (9)


127.3


125.2


129.8


128.6


124.0

      Total rig years 


364.2


338.4


380.2


372.2


345.4

Rig hours: (10)











   U.S. Production Services


210,750


224,681


209,982


420,732


436,979

   Canada Production Services


28,671


28,802


41,540


70,211


76,829

      Total rig hours


239,421


253,483


251,522


490,943


513,808



(1)

Includes our drilling technology and top drive manufacturing, directional drilling, rig instrumentation and software services. These services represent our other companies that are not aggregated into a reportable operating segment.



(2)

Includes earnings (losses), net from unconsolidated affiliates, accounted for using the equity method, of ($.8) million, $1.2 million and ($2.5) million for the three months ended June 30, 2014 and 2013 and March 31, 2014, respectively and ($3.3) million and $4.0 million for the six months ended June 30, 2014 and 2013, respectively.



(3)

Includes earnings (losses), net from unconsolidated affiliates, accounted for using the equity method, of $.2 million, $.2 million and $.1 million for the three months ended June 30, 2014 and 2013 and March 31, 2014, respectively and $.3 million for each of the six months ended June 30, 2014 and 2013.



(4)

Represents the elimination of inter-segment transactions.



(5)

Adjusted EBITDA is computed by subtracting the sum of direct costs and general and administrative expenses from the sum of Operating revenues and Earnings (losses) from unconsolidated affiliates. There are limitations inherent in using adjusted EBITDA as a measure of overall profitability because it excludes significant expense items. However, management evaluates the performance of our business units and the consolidated company based on several criteria, including adjusted EBITDA and adjusted income (loss) derived from operating activities, because we believe that these financial measures accurately reflect our ongoing profitability. These amounts should not be used as a substitute for the amounts reported in accordance with GAAP. To compensate for the limitations in utilizing adjusted EBITDA as an operating measure, management also uses GAAP measures of performance, including income from continuing operations and net income, to evaluate performance, but only with respect to the Company as a whole and not on a segment basis.  A reconciliation of this non-GAAP measure to income (loss) from continuing operations before income taxes, which is a GAAP measure, is provided in the table set forth immediately following the heading "Reconciliation of Non-GAAP Financial Measures to Income (loss) from Continuing Operations before Income Taxes". 



(6)

Represents the elimination of inter-segment transactions and unallocated corporate expenses.



(7)

Adjusted income (loss) derived from operating activities is computed by subtracting the sum of direct costs, general and administrative expenses and depreciation and amortization from the sum of Operating revenues and Earnings (losses) from unconsolidated affiliates. These amounts should not be used as a substitute for the amounts reported in accordance with GAAP. However, management evaluates the performance of our business units and the consolidated company based on several criteria, including adjusted income (loss) derived from operating activities, because it believes that these financial measures accurately reflect our ongoing profitability. A reconciliation of this non-GAAP measure to income (loss) from continuing operations before income taxes, which is a GAAP measure, is provided in the table set forth immediately following the heading "Reconciliation of Non-GAAP Financial Measures to Income (loss) from Continuing Operations before Income Taxes".



(8)

Excludes well-servicing rigs, which are measured in rig hours.  Includes our equivalent percentage ownership of rigs owned by unconsolidated affiliates.  Rig years represent a measure of the number of equivalent rigs operating during a given period.  For example, one rig operating 182.5 days during a 365-day period represents 0.5 rig years.



(9)

International rig years includes our equivalent percentage ownership of rigs owned by unconsolidated affiliates, which totaled 2.5 years during each of the three months ended June 30, 2014 and 2013 and March 31, 2014 and 2.5 years for each of the six months ended June 30, 2014 and 2013.



(10)

Rig hours represents the number of hours that our well-servicing rig fleet operated during the period.

 












NABORS INDUSTRIES LTD. AND SUBSIDIARIES

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO 

INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES

(Unaudited)















































Three Months Ended


Six Months Ended



June 30,


March 31,


June 30,












(In thousands)


2014


2013


2014


2014


2013












Adjusted EBITDA


$ 416,280


$ 355,814


$ 391,168


$ 807,448


$ 768,317

Less: Depreciation and amortization 


282,820


266,210


282,127


564,947


535,575

Adjusted income (loss) derived from operating activities


133,460


89,604


109,041


242,501


232,742












Interest expense


(46,303)


(60,273)


(44,810)


(91,113)


(120,284)

Investment income (loss)


7,066


14,821


980


8,046


94,242

Gains (losses) on sales and disposals of long-lived assets and other income (expense), net


(16,504)


(9,242)


(1,476)


(17,980)


(68,979)

Income (loss) from continuing operations before income taxes


$   77,719


$   34,910


$   63,735


$ 141,454


$ 137,721

 












NABORS INDUSTRIES LTD. AND SUBSIDIARIES

COMPUTATION OF EARNINGS (LOSSES) PER SHARE

(Unaudited)























A reconciliation of the numerators and denominators of the basic and diluted earnings (losses) per share computations is as follows:

























Three Months Ended


Six Months Ended



June 30,


March 31,


June 30,












(In thousands, except per share amounts)


2014


2013


2014


2014


2013












Net income (loss) attributable to Nabors (numerator):











Income (loss) from continuing operations, net of tax


$65,729


$28,128


$  48,977


$ 114,706


$ 120,335

   Less: Net (income) loss attributable to noncontrolling interest


(253)


(5,616)


(573)


(826)


(5,713)

   Less: Earnings allocated to unvested shareholders


(974)


(814)


(733)


(1,707)


-

   Less: Redemption of preferred shares


(1,688)


-


-


(1,688)


-

Adjusted income (loss) from continuing operations - basic and diluted


$62,814


$21,698


$  47,671


$ 110,485


$ 114,622

Income (loss) from discontinued operations, net of tax


(1,032)


(26,873)


1,515


483


(19,862)



$61,782


$ (5,175)


$  49,186


$ 110,968


$   94,760












   Earnings (losses) per share:











     Basic from continuing operations


$       .21


$       .08


$         .16


$         .37


$         .41

     Basic from discontinued operations


-


(.09)


.01


-


(.09)

Total Basic


$       .21


$      (.01)


$         .17


$         .37


$         .32












     Diluted from continuing operations


$       .21


$       .08


$         .16


$         .37


$         .41

     Diluted from discontinued operations


-


(.09)


-


-


(.09)

Total Diluted


$       .21


$      (.01)


$         .16


$         .37


$         .32












Shares (denominator): 











   Weighted-average number of shares outstanding-basic


297,984


294,747


296,210


297,097


293,217

     Net effect of dilutive stock options, warrants and restricted stock awards based on the if-converted method


2,997


2,372


2,840


2,919


2,427

   Weighted-average number of shares outstanding - diluted


300,981


297,119


299,050


300,016


295,644



For all periods presented, the computation of diluted earnings (losses) per share excluded outstanding stock options and warrants with exercise prices greater than the average market price of Nabors' common shares because their inclusion would have been anti-dilutive and because they were not considered participating securities. The average number of options and warrants that were excluded from diluted earnings (losses) per share that would have potentially diluted earnings (losses) per share were 5,782,273 and 11,578,175 shares during the three months ended June 30, 2014 and 2013, respectively; 7,853,509 shares during the three months ended March 31, 2014; and 6,817,891 and 12,015,219 shares during the six months ended June 30, 2014 and 2013, respectively. In any period during which the average market price of Nabors' common shares exceeds the exercise prices of these stock options and warrants, such stock options and warrants are included in our diluted earnings (losses) per share computation using the if-converted method of accounting.  Restricted stock is included in our basic and diluted earnings (losses) per share computation using the two-class method of accounting in all periods because such stock is considered a participating security.

SOURCE Nabors Industries Ltd.