HAMILTON, Bermuda, Oct. 5 /CNW/ -- Nabors Industries Ltd. (NYSE: NBR),
today announced that it expects its results for the third quarter of 2007 to
be lower than current analysts' consensus estimates as a result of both
operational and other factors. The company currently estimates third quarter
earnings to be in the range of $0.73 to $0.76 per diluted share, inclusive of
gains identified in its second quarter earnings release, arising from the sale
of certain oil and gas properties and its Sea Mar entity.
Gene Isenberg, Nabors' Chairman and CEO commented, "The operational
component of our reduced third quarter outlook primarily is attributable to
lower than expected rig activity across most of our North American rig
operations and various factors in our international business unit. We also
expect a net negative impact from several cash and non-cash items in our other
income and investment income categories.
We anticipate the largest variances in operating results to be in our
U.S. Offshore, U.S. Well Servicing, and International units followed by our
U.S. Lower 48 Land Drilling entity. In the U.S. Offshore segment, operating
days for both our workover jackups and smaller Sundowner(R) workover platform
rigs was less than 50% of the level experienced in the first two quarters of
2007, as several customers suspended plans given weaker natural gas prices and
the prospects for significant hurricane interruptions during the quarter. We
also experienced significant damage to one of our new barge rigs as a result
of an engine room fire in July. We anticipate the rig to be back in service
by the start of the first quarter of 2008. In our U.S. Land Well Servicing
operations, quarterly hours are expected to be lower than the second quarter
by roughly 12,000 hours leading to a disproportionate decrease in operating
income, as costs are not readily scaleable to volume in this operation.
While our International operations should post a sequential increase we
don't expect it to be as significant as anticipated with excessive downtime on
several rigs and earlier than expected cessation of two rigs, which are
expected to return to work during the fourth quarter. Our U.S. Land Drilling
unit is running slightly below expectations with a further increase in idle
rigs to 84 at the end of the quarter and a larger than indicated reduction in
average rates. Results in our Oil and Gas segment will be sequentially higher
with operating income benefiting from the sale of the properties mentioned in
our second quarter release. In Canada we anticipate results to be up
significantly compared to the second quarter but inhibited by fewer rigs
working due to persistent market weakness and wetter than normal weather
during the quarter.
Other income/expense and investment income, net of a significantly lower
effective tax rate, constitutes the balance of the expected shortfall. Other
income/expense is anticipated to be a net loss of approximately $30 million,
substantially attributable to non-cash fixed asset write-offs, the bulk of
which relates to rig components in our U.S. Land Drilling unit. Investment
income also will be significantly lower than anticipated as third quarter
results reflect another net loss on the order of $30 million, as the
mark-to-market valuations of certain funds, which are being redeemed, was much
worse during July and August than we had anticipated. We believe the losses
on the investment funds are largely behind us since by the end of September we
had already redeemed many of the funds and results appear to be improving.
These items are substantially offset by lower taxes due to the quarter's lower
income and a non-cash reversal of certain tax reserves, and approximately $22
million of after tax income from discontinued operations arising from the sale
of our Sea Mar entity which was completed on August 8, 2007. This income
includes a partial quarter's operating results and the net gain on the sale of
Our outlook for the near term has been dampened by the increased
potential for persistent weak market conditions throughout 2008 in our North
American natural gas directed and U.S. Land Well Servicing businesses. We do
anticipate that the fourth quarter's results will be in line with consensus
estimates, as our Oil and Gas segment will post significantly higher operating
income, on the order of $75-$80 million, including the income associated with
the closing of the sale of a portion of our Oil and Gas holdings earlier this
week. While next year's outlook for our International and Alaskan operations
continues to increase compared to earlier expectations, we are reducing our
consolidated 2008 expectations to a level that will be essentially flat or
slightly lower than 2007 in light of the factors mentioned above."
The Nabors companies own and operate approximately 650 land drilling and
approximately 805 land workover and well-servicing rigs in North America.
Nabors' actively marketed offshore fleet consists of: 41 platform rigs, 14
jack-up units and 4 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