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Nabors Industries' (NBR) CEO Anthony Petrello on Q1 2016 Results - Earnings Call Transcript

Q1 2016 Earnings Conference Call

April 26, 2016 11:00 AM ET

Executives

Denny Smith - Vice President, Corporate Development and Investor Relations

Anthony Petrello - Chairman, President and Chief Executive Officer

William Restrepo - Chief Financial Officer

Siggi Meissner - President, Global Drilling Operations and Engineering

Analysts

Marshall Adkins - Raymond James

Ole Slorer - Morgan Stanley

Jacob Lundberg - Credit Suisse

Robin Shoemaker - KeyBanc Capital Markets

Byron Pope - Tudor Pickering Holt

Sean Meakim - JPMorgan

Dan Boyd - BMO Capital Markets

Michael Lamotte - Guggenheim

Angie Sedita - UBS

Jud Bailey - Wells Fargo

Operator

Good day and welcome to the Nabors First Quarter 2016 Earnings Conference Call and Webcast. All participants will be in listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded.

I would now like to turn the conference call over to Dennis A. Smith, Vice President, Corporate Development and Investor Relations. Mr. Smith, the floor is yours sir.

Denny Smith

Good morning, everyone and thank you for joining Nabor’s earnings teleconference to review our first quarter results. Today, we will follow our customary format with Tony Petrello, our Chairman, President and Chief Executive Officer; and William Restrepo, our Chief Financial Officer, providing perspectives on the results along with insights into our markets and how we expect Nabors to perform in these markets.

In support of these remarks, we have posted some slides to our website which you can access to follow along with the presentation if you desire. They are accessible in two ways. One, if you're participating by webcast, they are available as a download within the webcast. Alternatively, you can download the slides from the Investor Relations section of nabors.com under Events Calendar submenu, where you will find them listed in Supporting Materials under the conference call listing. Instructions for the replay are posted on the website as well.

With us today, in addition to Tony, William and myself are Siggi Meissner, our President of Global Drilling and Engineering; Chris Papouras, our President of Nabors Drilling Solutions; John Sanchez who recently joined us as Head of our Canrig Operations; and Laura Doerre, our General Counsel.

Since much of the commentary today will concern our expectations of the future, they may constitute forward-looking statements within the meaning of the Securities Exchange Act of 1933 and the Securities Exchange Act of 1934. Such forward-looking statements are subject to certain risk 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, our actual results may differ materially from those indicated or implied by such forward-looking statements.

Also, during the call, we may discuss certain non-GAAP financial measures such as adjusted operating income, EBITDA, adjusted EBITDA, operating income and free cash flow. We have posted to the Investor Relations section of our website at www.nabors.com a reconciliation of these non-GAAP financial measures to the most recently comparable GAAP measures.

Now, I’ll turn the call over to Tony.

Anthony Petrello

Good morning, everyone. Welcome to the call. We appreciate your participation as we review our results for the first quarter of 2016. I will begin with a brief summary and then comment on our performance. William will follow with a review of the quarter's financials. I will then wrap up to take some questions.

A chart of WTI in the first quarter shows a distinctive V Shape pattern. Prices declined steadily from the upper 30s at the beginning of the quarter to the upper 20s by mid February. From that point, oil prices rebounded and even broke through the $40 level by the end of March. The steep drop in prices in the first part of the quarter precipitated a forceful reduction in our customers spending plans. That impact was unmistakeable in our Lower 48 activity. The decline of big activity outside of North America and especially in the Middle East was less pronounced in the U.S.