Actionable news
0
All posts from Actionable news
Actionable news in NBR: NABORS INDUSTRIES Ltd.,

Nabors Industries: Nabors Announces First Quarter Results

The following excerpt is from the company's SEC filing.

Notable items:

First quarter GAAP EPS was ($1.41), which translates to ($0.29) excluding ($1.12) related to our equity investment in C&J Energy Services

Repurchased approximately $154 million of senior unsecured notes in 1Q 2016

HAMILTON, Bermuda, April 25, 2016 /PRNewswire/ Nabors Industries Ltd. (Nabors) (NYSE: NBR) today reported first quarter 2016 operating revenues of $597.6 million, compared to operating revenues of $738.9 million in the fourth quarter of last year. Net income (loss) from continuing operations for the quarter was a loss of $396.6 million, or ($1.41) per diluted shar e, compared to a loss of $161.1 million, or ($0.57) per diluted share, last quarter. The net loss from continuing operations for the first quarter included a per share loss of $1.12 per share due to impairments to the carrying value of the Companys investment in C&J Energy Services, Ltd. (C&J) (NYSE: CJES) and from our proportionate share of C&J losses from the prior quarter, as such losses are accounted for on a quarter lag basis.

Anthony Petrello, Nabors Chairman, President, and CEO, commented, Our first quarter results reflect the continued strain from low commodity prices. In particular, the first quarters drop in oil prices below $30 led to sharp reductions in customer spending plans on a worldwide basis and had a corresponding adverse impact on our results. In the U.S., our customers swift reaction to commodity price drops resulted in a roughly equal impact on both rig years and margins. Internationally, a reduction of seven rig years combined with other unfavorable factors resulted in lower operating cash flows for the quarter. Additionally, the Canada markets typical seasonal uptick in the first quarter failed to materialize this year due to market conditions. Despite these reductions in cash flows, we still modestly reduced net debt during the quarter while continuing to fund the innovative technological initiatives that will best position Nabors for the eventual upturn.

Segment Results

Quarterly adjusted operating income (adjusted income) in Drilling and Rig Services decreased to a loss of $18.6 million from a profit of $29.9 million in the fourth quarter of last year. Quarterly adjusted EBITDA in this business line decreased sequentially to $200.2 million, a 23% decline of which the majority was attributable to the U.S. drilling segment. For the quarter, the Company averaged 187.9 rigs operating at an average gross margin of $13,407 per rig day, compared to 222.9 rigs at $14,229 per rig day in the fourth quarter of last year. The Company expects additional declines in near-term volume and pricing as the weak commodity price environment persists and customer spending continues to adjust to their reduced budget levels.

International adjusted income decreased by 10% sequentially to $46.9 million, primarily due to a reduction of seven rig years, additional pricing concessions, and unfavorable cost impacts and rig moving activity. Quarterly adjusted EBITDA in this segment decreased by 8% sequentially to $148.3 million. Compared to the first quarter, the Company expects moderately decreasing quarterly income in the near term as activity declines. In Canada, where the first quarter is traditionally the strongest, rig years declined 13% from the fourth quarter with future results expected to remain challenged.

The U.S. Drilling segment posted an adjusted operating loss of $47.6 million during the quarter, reflecting further activity declines and margin erosion as term contracts expire. The Lower 48 saw 30% fewer rigs working compared to the fourth quarter of last year, for an average rig count of 54. At current commodity prices, the Company anticipates the rig count to stabilize mid-year but expects further deterioration in average margins in the near-term. Should market fundamentals push oil prices comfortably into the $50s, rig activity could improve.

Rig Services, which consists of the Companys manufacturing, directional drilling, and complementary services, reported an adjusted loss of $10.6 million, a $2.9 million improvement from the fourth quarter due to cost savings. While market fundamentals continue to provide minimal upside for new equipment and services at this time, Nabors remains encouraged about the future potential of this segment with its focus on technology and automation.

William Restrepo, Nabors Chief Financial Officer, stated, We continue to focus on maintaining our liquidity and enhancing operational performance during these challenged times. Though the quarters results declined materially from the previous quarter, we were able to slightly reduce net debt through a combination of continued execution of stringent cost control and disciplined capital spending. During the quarter, we repurchased $154.1 million of Nabors senior unsecured notes at a modest discount for an estimated net annual interest expense savings of $7 million. As a result of the continued deterioration of industry conditions, we made the decision to impair our carrying value in C&J to better reflect the market value of our equity position.

Despite a recent upturn in the price of oil, at its current level, we anticipate further near-term reductions in rig count both internationally and in the U.S. We also expect margins to deteriorate, particularly in the Lower 48 market. Though low oil prices have had increasing spill-over effects on our international business, Nabors remains uniquely well positioned to weather the storm given our ongoing cash flow from international operations and strong liquidity.

Mr. Petrello concluded, We continue to execute on our cost reduction initiatives and to move forward with our vision of the rig serving as the central platform for all drilling services and future innovation. We expect our technological advances to give Nabors a sustainable competitive advantage by drilling wells with greater efficiency, safety, and accuracy in every one of our markets.

About Nabors

Nabors Industries (NYSE: NBR) owns and operates the worlds largest land-based drilling rig fleet and is a leading provider of offshore platform rigs in the United States and multiple international markets. Nabors also provides directional drilling services, performance tools, and innovative technologies throughout the worlds most significant oil and gas markets. Leveraging our advanced drilling automation capabilities, Nabors highly skilled workforce continues to set new standards for operational excellence and transform our industry.

Forward-looking Statements

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 forward-looking statements contained in this press release reflect managements estimates and beliefs as of the date of this press release. Nabors does not undertake to update these forward-looking statements.

Non-GAAP Disclaimer

This press release presents certain non-GAAP financial measures. The components of these non-GAAP measures are computed by using amounts that are determined in accordance with accounting principles generally accepted in the United States of America (GAAP). Adjusted EBITDA is computed by subtracting the sum of direct costs, general and administrative expenses and research and engineering expenses from operating revenues. Adjusted operating income (loss) is computed similarly, but also subtracts depreciation and amortization expenses from operating revenues. A reconciliation of adjusted EBITDA and adjusted operating income (loss) to income (loss) from continuing operations before income taxes, which is its nearest comparable GAAP financial measure, are included elsewhere in this press release.

Media Contact

Dennis A. Smith, Vice President 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

March 31,

December 31,

(In thousands, except per share amounts)

Revenues and other income:

Operating revenues

597,571

1,414,707

738,872

Earnings (losses) from unconsolidated affiliates

(167,151

(45,367

Investment income (loss)

Total revenues and other income

430,763

1,422,178

693,685

Costs and other deductions:

Direct costs

365,023

919,610

445,130

General and administrative expenses

62,334

115,430

61,056

Research and engineering

11,703

Depreciation and amortization

215,818

281,019

231,137

Interest expense

45,730

46,601

46,410

Other, net

182,404

(55,842

Impairments and other charges

123,557

Total costs and other deductions

879,471

1,318,521

917,655

Income (loss) from continuing operations before income taxes

(448,708

103,657

(223,970

Income tax expense (benefit)

(52,064

(20,705

(62,880

Income (loss) from continuing operations, net of tax

(396,644

124,362

(161,090

Income (loss) from discontinued operations, net of tax

(1,730

(397,570

123,545

(162,820

Less: Net (income) loss attributable to noncontrolling interest

Net income (loss) attributable to Nabors

(398,294

123,634

(163,654

Earnings (losses) per share:

Basic from continuing operations

Basic from discontinued operations

Diluted from continuing operations

Diluted from discontinued operations

Weighted-average number of common shares outstanding:

275,851

285,361

276,371

286,173

Adjusted EBITDA (1)

162,052

367,964

223,332

Adjusted operating income (loss) (2)

(53,766

86,945

(7,805

Adjusted EBITDA is computed by subtracting the sum of direct costs, general and administrative expenses and research and engineering expenses from operating revenues. Adjusted EBITDA is a non-GAAP measure and should not be used in isolation or as a substitute for the amounts reported in accordance with GAAP. However, management evaluates the performance of our operating segments and the consolidated company based on several criteria, including adjusted EBITDA and adjusted operating income (loss), because we believe that these financial measures accurately reflect our ongoing profitability and performance. In addition, securities analysts and investors use this measure as one of the metrics on which they analyze our performance. 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.

Adjusted operating income (loss) is computed by subtracting the sum of direct costs, general and administrative expenses, research and engineering expenses and depreciation and amortization from operating revenues. Adjusted operating income (loss) is a non-GAAP measure and should not be used in isolation or as a substitute for the amounts reported in accordance with GAAP. However, management evaluates the performance of our operating segments and the consolidated company based on several criteria, including adjusted EBITDA and adjusted operating income (loss), because it believes that these financial measures accurately reflect our ongoing profitability and performance. In addition, securities analysts and investors use this measure as one of the metrics on which they analyze our performance. 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.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

ASSETS

Current assets:

Cash and short-term investments

221,501

274,589

Accounts receivable, net

594,506

784,671

Assets held for sale

80,100

75,678

Other current assets

363,280

340,959

Total current assets

1,259,387

1,475,897

Property, plant and equipment, net

6,942,315

7,027,802

Goodwill

167,217

166,659

Investment in unconsolidated affiliates

94,657

415,177

Other long-term assets

486,755

452,305

Total assets

8,950,331

9,537,840

LIABILITIES AND EQUITY

Current liabilities:

Current debt

Other current liabilities

865,388

999,991

Total current liabilities

871,268

1,006,499

Long-term debt

3,584,402

3,655,200

Other long-term liabilities

578,464

582,273

Total liabilities

5,034,134

5,243,972

Equity:

Shareholders equity

3,904,320

4,282,710

Noncontrolling interest

11,877

11,158

Total equity

3,916,197

4,293,868

Total liabilities and equity

SEGMENT REPORTING

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

(In thousands, except rig activity)

Operating revenues:

Drilling & Rig Services:

148,676

453,821

222,060

17,494

57,840

28,312

401,055

439,161

448,507

Rig Services (1)

53,853

144,084

72,862

Subtotal Drilling & Rig Services

621,078

1,094,906

771,741

Completion & Production Services:

Completion Services

207,860

Production Services

158,512

Subtotal Completion & Production Services

366,372

Other reconciling items (2)

(23,507

(46,571

(32,869

Total operating revenues

Adjusted EBITDA: (3)

51,235

187,745

94,254

18,468

10,041

148,309

194,789

160,716

(1,481

21,583

(4,491

200,185

422,585

260,520

(28,110

23,043

(5,067

Other reconciling items (4)

(38,133

(49,554

(37,188

Total adjusted EBITDA

Adjusted operating income (loss): (5)

(47,559

77,038

(7,398

(7,278

(1,034

46,872

98,802

51,850

(10,644

12,873

(13,505

(18,609

195,071

29,913

(55,243

(3,559

(58,802

(35,157

(49,324

(37,718

Total adjusted operating income (loss)

Earnings (losses) from unconsolidated affiliates (6)

Rig activity:

Rig years: (7)

International (8)

Total rig years

Rig hours: (9)

U.S. Production Services

129,652

Canada Production Services

23,947

Total rig hours

153,599

Includes our other services comprised of our drilling technology and top drive manufacturing, directional drilling, rig instrumentation and software services.

Represents the elimination of inter-segment transactions.

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

Adjusted operating income (loss) is computed by subtracting the sum of direct costs, general and administrative expenses, research and engineering expenses and depreciation and amortization from operating revenues. Adjusted operating income (loss) is a non-GAAP measure and should not be used in isolation or as a substitute for the amounts reported in accordance with GAAP. However, management evaluates the performance of our operating segments and the consolidated company based on several criteria, including adjusted EBITDA and adjusted operating income (loss), because it believes that these financial measures accurately reflect our ongoing profitability and performance. In addition, securities analysts and investors use this measure as one of the metrics on which they analyze our performance. 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.

Represents our share of the net income (loss), as adjusted for our basis difference, of our unconsolidated affiliates accounted for by the equity method, inclusive of $(167.1) million and $(81.3) million for the three months ended March 31, 2016 and December 31, 2015, respectively, related to our share of the net loss of C&J, which we report on a quarter lag.

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.

International rig years includes our equivalent percentage ownership of rigs owned by unconsolidated affiliates, which totaled 2.5 years during the three months ended March 31, 2015. As of May 24, 2015, this was no longer an unconsolidated affiliate.

Rig hours represents the number of hours that our well-servicing rig fleet operated during the period. This fleet was included in the Completion & Production Services business that was merged with C&J Energy Services, Inc. in March 2015 and we will therefore no longer report this performance metric.

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO

INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES

(215,818

(281,019

(231,137

(45,730

(46,601

(46,410

(182,404

(1,011

(123,557

CONSOLIDATED STATEMENTS OF INCOME (LOSS) ITEMS EXCLUDING CERTAIN NON-CASH CHARGES

AND OTHER NON-OPERATIONAL ITEMS (NON-GAAP)

Charges and

Non-Operational

As adjusted

Actuals

(Non-GAAP)

Three Months Ended March 31, 2016

(316,552

(80,092

Diluted earnings (losses) per share from continuing operations

SCHEDULE OF NON-CASH CHARGES AND OTHER NON-OPERATIONAL ITEMS (NON-GAAP)

Per Diluted

Impairments and equity losses (1)

Total Adjustments, net of tax

(1) Represents impairments to the carrying value of our C&J holdings and earnings (losses) from unconsolidated affiliates, which represents our proportionate share of C&Js losses from the prior quarter, net of tax of $27.8 million.

The above information was disclosed in a filing to the SEC. To see the filing, click here.

To receive a free e-mail notification whenever Nabors Industries Ltd. makes a similar move, sign up!

Other recent filings from the company include the following:

Nabors Industries Ltd. director was just granted 13,897 options - April 4, 2016