Much higher North American results more than offset by non-operating items
HAMILTON, Bermuda, Oct. 1 /CNW/ -- Nabors Industries Ltd. (NYSE: NBR)
today announced that, notwithstanding higher than expected Adjusted Income
Derived from Operating Activities (operating income) for the third quarter of
2008, it will incur significant charges in its Investment Income and Other
Expense items as well as a tax rate adjustment for an expected higher
full-year effective tax rate, all of which will adversely impact Net Income
and Earnings Per Share. The aggregate impact is expected to approximate $0.18
per diluted share which will be slightly offset by a $0.01 per diluted share
gain resulting from a lower share count. This should result in reported
quarterly earnings of between $0.65 and $0.68 per diluted share.
The most significant component is a non-cash charge to investment income
of approximately $22 million pre-tax ($0.07 per diluted share), inclusive of a
$6 million cash dividend received on the same investment. The charge
represents the decline in the market price, since the end of the second
quarter, in the "Trading" portion of the Company's total holdings of 450
million shares in Honghua Group Ltd. (HH), which must be marked-to-market
through the income statement at the quarter-ended share price of 1.48 HKD
($0.19 USD). The current valuation still represents a cumulative gain of
approximately $17 million on the trading securities and $65 million on our
total holdings. HH became a publicly traded stock on the Hong Kong Exchange
in March of 2008 at an initial price of 3.83 HKD (USD $0.49). Upon receipt of
the public shares Nabors designated 26.7% of its shares as "Trading" so that
it could readily sell these shares upon expiration of the lock up period. The
designation of a portion of our holdings as trading securities anticipated the
eventual reduction of Nabors' ownership in HH to less than 10% at or above
which the Hong Kong Exchange rules would deem Nabors an affiliated party.
These shares were originally obtained through the settlement of a litigation
matter relating to certain warranty and other claims that Nabors asserted
against HH in 2007. All of the warranty issues have since been fully
rectified and the rigs are now performing exceptionally well, setting numerous
performance records in multiple regions worldwide, particularly the high
profile North American shale development projects.
Additionally, the third quarter's Other Expense line will reflect
approximately $13 million pre-tax ($0.05 per share) in estimated property
losses during the quarter, consisting of $11 million for Barge Rig 100 which
was partially submerged during Hurricane Gustav and $2 million for minor
damage to several rigs during Hurricane Ike.
The Company will also record a tax adjustment in the third quarter of
nearly $0.06 per diluted share as North American income continues to exceed
our earlier forecast and International income is almost flat sequentially,
resulting in an estimated higher effective tax rate for the full year. The
current quarter tax adjustment includes the tax impact of all of the above
items. The lower International results during this quarter stem primarily
from excessive downtime in Mexico and Saudi Arabia combined with the delayed
start-up of jack-up 657 early in the quarter and other less significant delays
in Russia, Angola and Oman.
The Nabors companies own and operate approximately 548 land drilling and
approximately 749 land workover and well-servicing rigs in North America.
Nabors' actively marketed offshore fleet consists of; 36 platform rigs, 13
jackup units and 3 barge rigs in the United States and multiple international
markets. In addition, Nabors manufactures top drives and drilling
instrumentation systems and provides comprehensive oilfield hauling,
engineering, civil construction, logistics and facilities maintenance, and
project management services. Nabors participates in most of the significant
oil, gas and geothermal 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
For further information, please contact Dennis A. Smith, Director of
Corporate Development of Nabors Corporate Services, Inc. at 281-775-8038. To
request Investor Materials, call our corporate headquarters in Hamilton,
Bermuda at 441-292-1510 or via email at firstname.lastname@example.org.
For further information:
For further information: Dennis A. Smith, Director of Corporate
Development of Nabors Corporate Services, Inc., +1-281-775-8038, or Investors,