HAMILTON, Bermuda, July 21 /PRNewswire-FirstCall/ -- Nabors Industries
Ltd. (NYSE: NBR) today announced its financial results for the second quarter
and first six months of 2009. Excluding previously announced non-cash items,
the Company posted adjusted income derived from operating activities of $143.9
million for the current quarter compared to $265.1 million in the second
quarter of last year and $274.1 million in the first quarter of this year.
Net income excluding the aforementioned non-cash items was $90.9 million
($0.32 per diluted share) for the current quarter compared to $176.4 million
($0.60 per diluted share) in the second quarter of last year and $184.4
million before ceiling test adjustments ($0.65 per diluted share) in the first
quarter of this year. Operating revenues and earnings from unconsolidated
affiliates totaled $868 million in the current quarter compared to $1.28
billion in the second quarter of last year and $1.21 billion in the first
quarter of this year. For the six months ended June 30, 2009, adjusted income
derived from operating activities before the non-cash items was $417.9 million
compared to $551.6 million in the first six months of 2008. Net income
excluding non-cash items for the first six months of 2009 was $275.3 million
($0.97 per diluted share) compared to $388.5 million ($1.34 per diluted share)
in the first six months of 2008. Operating revenues and earnings from
unconsolidated affiliates (before non-cash items) for the first six months of
2009 totaled $2.1 billion compared to $2.6 billion for the first six months of
2008.
Gene Isenberg, Nabors Chairman and CEO, commented, "The quarter's results
reflect the well known declines in activity among our North American
gas-centric businesses since late fourth quarter combined with less robust
international results, particularly in Latin America. Virtually all of our
units experienced both sequential and year-over-year declines in quarterly
operating income, but we believe most have stabilized with the exception of
our US Lower 48 land drilling operations.
"In our US lower 48 land drilling operations we believe the working rig
count has reached stability, although third quarter operating income is
expected to drop by as much as an additional 50 percent. We expect results to
be stable thereafter as the deployment of 16 previously contracted new built
rigs over the next four quarters will largely offset the downward pressure
exerted by rigs rolling over to spot market rates and expiring contracts for
rigs that are generating monthly income but are not working. During the
quarter we averaged 103.4 rigs working and another 39.6 rigs generating income
but not working, including 13.6 lump sum settlements, for a total of 143 rig
years. The average gross margin was $10,250 per day, $1,350 of which was
attributable to the lump sum termination payments during the quarter.
Meanwhile, our PACE rigs established multiple new drilling records during the
quarter in various areas, most notably the Haynesville shale, and regularly
outperformed our customers' planned drilling curves.
"Internationally we experienced a flat sequential quarter as the
contribution from six recent rig startups was more than offset by project
deferrals and suspensions. Additionally, downtime on two jackups and other
miscellaneous cost items dampened the quarter. Average daily rig margins
reached a high of $18,084 per day even though rig years dropped to 104, nearly
20 rigs below the peak in 2008. The strengthened margins resulted from the
premium rates associated with new rig deployments and other contracted rigs,
which now account for 92% of the projected gross margin for the balance of
2009. The lower level of activity in the first half was concentrated in four
countries and has tempered our full-year expectations to a modest
year-over-year increase in income. Over 80% of the shortfall from original
projections is attributable to numerous project cancellations and deferrals in
Mexico, Colombia and Libya, along with multiple, politically induced issues in
Argentina. Some of the suspended activity has recently resumed in Mexico and
Colombia and we are experiencing a healthy increase in bidding activity in
virtually every venue. We fully expect the robust growth that has
characterized this business over the last five years to resume late this year
and accelerate in 2010.
"As expected, our US Well Servicing results declined to $6.2 million which
reflects a significant quarter-to-quarter reduction in hourly rig rates,
principally in West and South Texas, combined with a moderating decline in rig
hours. This unit appears to be stabilizing with improving oil prices. We
expect third and fourth quarter results to be flat, with slightly lower hours
and rates substantially offset by further aggressive cost reductions.
"Results during the seasonally low second quarter in Canada show a smaller
loss than last year at $10 million on significantly less rig activity, a
reflection of significant and ongoing cost reductions. The balance of the
year should show sequential improvement, although full year results are
expected to be less than first quarter results. Our long-term position here
remains promising as the make-up of our fleet is particularly well suited for
the emerging shale plays in northwest British Columbia where Nabors conducted
half of the drilling last winter.
"Results in our US Offshore operations declined to $6.7 million in the
second quarter from $16.8 million in the first quarter as all of our
SuperSundowner(TM) platform rigs were released and the utilization of our
barge and workover jackup rigs was down sharply. Customer cash flow
constraints from weak natural gas prices and the onset of hurricane season
collectively led to a sharp curtailment of activity. We expect third quarter
results to be essentially flat as recent cost curtailment efforts take effect,
partially offsetting weak activity and leading to a modest recovery beginning
in the fourth quarter. This expectation is based upon prospective fourth
quarter increases in activity, bolstered by an uptick in oil prices since
virtually all of our work in the Gulf of Mexico has been and continues to be
oil directed. Our deepwater platform rig position continues to be strong with
the deployment of our new MODS(TM) Rig 201 earlier this year and our
involvement in two Front-End Engineering Design (FEED) studies with two major
operators. These 2011 projects anticipate two 4,000 horsepower versions of
our proprietary MODS(TM) technology.
"Alaska results were down to $16.4 million as the first quarter seasonal
peak in activity wound down and two of our long-running rigs were released as
Prudhoe Bay activity scaled back. Third quarter results are expected to
decline by another 50% with three rigs on reduced summer standby rates and
higher expenses attributable to summer maintenance shutdowns on year-round
in-field rigs. Our new AC coiled tubing / stem drilling rig deployed May 1
and is performing exceptionally well with the overall project exceeding the
customer expectations. We continue to develop and expand the capabilities and
applications for this cutting-edge technology.
"Our Other Operating Segments posted $5 million in operating income in the
quarter as a result of a net loss in our Canadian construction and logistics
businesses, a sharp drop off in directional drilling services in Ryan
Technologies, the customary seasonal slowing in our Alaskan joint ventures,
and reduced third party sales in Canrig. Our full year expectations are for
results approximating 50% of those achieved last year. Meanwhile we continue
to see building demand for our proprietary ROCKIT(TM) system, which is in many
cases eliminating the need for rotary steerable motor systems. The system is
most readily implemented on our AC top drives and is also stimulating Canrig's
rental business.
"Our Oil and Gas segment posted a loss (before non-cash items) of $6.9
million in the second quarter as increasing gas production at cash market gas
prices and high seismic expenses offset the income from higher value hedges.
We have curtailed our 2009 drilling plans, but continue to be optimistic about
the longer-term potential given our highly prospective acreage positions in
most of the prominent shale plays.
"Our financial position remains strong and our expectation of 2009 free
cash flow of approximately $300 million remains intact despite the contraction
in our businesses. Reductions in capital, operating and overhead expenditures
along with more modest reductions in net working capital and US tax liability
have all served to offset the lower cash generation from our operations. The
most painful measures have been the overhead reductions we implemented which
consisted of both headcount and compensation rollbacks. Salary adjustments
were implemented on a worldwide basis with the largest proportion absorbed by
our more highly compensated management group and lesser or no reductions for
our lower compensated employees. Further reductions in capital spending and
operating costs will benefit 2010 cash flow and comfortably assure us of more
than adequate liquidity to repay the debt due this year and in May of 2011.
The $1.125 billion debt placement we accomplished in early January allowed us
to maintain a comfortable level of liquidity and gives us additional
flexibility to pursue opportunities that may arise. We have since deployed
the majority of these proceeds to repurchase $945 million in shorter term debt
at discounts aggregating to $120 million of the face value of the debt.
"I believe that the third quarter will likely represent a bottom in all of
our operations, although it remains difficult to predict the timing and pace
of the eventual upturn in natural gas driven activity. Regardless, Nabors
will fare relatively well throughout this cycle given the extent of long-term
contracts in our US Land drilling unit, the ongoing strength of our
international operations and our other more oil dependent businesses. The
important issue is how Nabors is positioned to prosper when North American gas
markets recover. Our market-leading and record-setting performance in the
prominent shale plays in both the US Lower 48 and Canada, along with the
premium nature of our high-specification PACE and SCR rigs and much of our
legacy fleets, position us to do exceptionally well in any recovery.
Similarly, the premium nature and geographic breadth of our International
fleet, as well as the innovative and often proprietary rig designs that make
up our US Offshore and Alaskan fleets, give us market-leading positions and
generate abundant opportunities. Our large acreage positions in some of the
most promising shale plays and new innovative products in our Canrig division
further enhance our opportunity set. The upside represented by the
combination of these elements is unique to Nabors and will increasingly
differentiate us from our peers regardless of how the market evolves."
The Nabors companies own and operate approximately 530 land drilling and
approximately 766 land workover and well-servicing rigs in North America.
Nabors' actively marketed offshore fleet consists of 40 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
forward-looking statements.
The Company will host a conference call tomorrow, July 22, 2009 at 10:00
a.m. Central Time to discuss the results and its outlook in more detail. You
may access a webcast of the call through Nabors' website at www.nabors.com >
Investor Relations > Events Calendar or via www.streetevents.com. The Company
will post a set of slides on its website in advance of the call in order to
provide additional detail on its operations. For further information, please
contact Dennis A. Smith, Director of Corporate Development for 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 mark.andrews@nabors.com.
NABORS INDUSTRIES LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (LOSS)
(Unaudited)
Three Months Ended
--------------------------------
June 30, March 31,
----------------- ----------
(In thousands, except per
share amounts) 2009 2008 2009
----- ---- ----
Revenues and other income:
Operating revenues $ 867,869 $ 1,282,400 $ 1,198,045
Earnings (losses) from
unconsolidated affiliates (1) (8,127) (4,033) (64,427)
Investment income 18,248 25,057 9,141
------ ------ -----
Total revenues and
other income 877,990 1,303,424 1,142,759
------- --------- ---------
Costs and other deductions:
Direct costs 453,922 740,178 665,287
General and administrative
expenses 163,808 116,914 107,343
Depreciation and amortization 165,974 148,813 159,152
Depletion 2,590 7,343 2,753
Interest expense 66,027 49,375 67,078
Losses (gains) on sales and
retirements of long-lived
assets and other expense
(income), net 6,469 3,158 (17,297)
Impairments and other charges (2) 227,083 - -
------- ------- -------
Total costs and other
deductions 1,085,873 1,065,781 984,316
--------- --------- -------
Income (loss) before income taxes (207,883) 237,643 158,443
-------- ------- -------
Income tax expense (benefit):
Current (43,425) 39,759 49,457
Deferred 28,528 21,471 (16,184)
------ ------ -------
Income tax expense (benefit) (14,897) 61,230 33,273
------- ------ ------
--------- -------- --------
Net income (loss) (4) $ (192,986) $ 176,413 $ 125,170
---------- ---------- -----------
Earnings (losses) per share: (3)(4)
Basic $ (.68) $ .63 $ .44
Diluted $ (.68) $ .60 $ .44
Weighted-average number of common
shares outstanding: (3)
Basic 283,154 280,851 283,098
------- ------- -------
Diluted 283,154 294,487 283,119
------- ------- -------
Adjusted income derived from
operating activities (1)(5) $ 73,448 $ 265,119 $ 199,083
========== ========== ===========
Six Months Ended
----------------
June 30,
----------------
(In thousands, except per
share amounts) 2009 2008
---- ----
Revenues and other income:
Operating revenues $ 2,065,914 $ 2,582,258
Earnings (losses) from
unconsolidated affiliates (1) (72,554) (8,484)
Investment income 27,389 51,239
------ ------
Total revenues and other income 2,020,749 2,625,013
--------- ---------
Costs and other deductions:
Direct costs 1,119,209 1,487,948
General and administrative expenses 271,151 228,235
Depreciation and amortization 325,126 285,013
Depletion 5,343 21,028
Interest expense 133,105 96,067
Losses (gains) on sales and retirements
of long-lived assets and other expense
(income), net (10,828) 11,255
Impairments and other charges (2) 227,083 -
------- ---
Total costs and other deductions 2,070,189 2,129,546
--------- ---------
Income (loss) before income taxes (49,440) 495,467
------- -------
Income tax expense (benefit):
Current 6,032 139,052
Deferred 12,344 (32,042)
------ -------
Income tax expense (benefit) 18,376 107,010
------ -------
-------- --------
Net income (loss) (4) $ (67,816) $ 388,457
----------- -----------
Earnings (losses) per share: (3)(4)
Basic $ (.24) $ 1.38
Diluted $ (.24) $ 1.34
Weighted-average number of common
shares outstanding: (3)
Basic 283,126 280,508
------- -------
Diluted 283,126 290,133
------- -------
Adjusted income derived from operating
activities (1)(5) $ 272,531 $ 551,550
=========== ===========
(1) Includes ($75.0) million representing our proportionate share of a
non-cash pre-tax full cost ceiling test writedown from our domestic
oil and gas joint venture recorded during the three months ended
March 31, 2009 and six months ended June 30, 2009.
(2) Represents non-cash pre-tax impairments and other charges recorded
during the three months ended June 30,2009.
(3) See "Computation of Earnings (Losses) Per Share" included herein as
a separate schedule.
(4) Net income (loss) and earnings (losses) per share include ($283.9)
million (($1.00) per diluted share) related to non-cash impairments
and other charges recorded in our Contract Drilling, Oil and Gas and
Other Operating Segments during the three months ended June 30, 2009;
($59.3) million (($.21) per diluted share) related to non-cash
impairments of oil and gas properties recorded during the three
months ended March 31, 2009 and (343.1) million (($1.21) per diluted
share) related to non-cash impairments and other charges recorded in
our Contract-Drilling, Oil and Gas and Other Operating Segments
during the six months ended June 30, 2009.
(5) Adjusted income derived from operating activities is computed by:
subtracting direct costs, general and administrative expenses,
depreciation and amortization, and depletion expense from Operating
revenues and then adding Earnings from unconsolidated affiliates.
Such amounts should not be used as a substitute to those amounts
reported under accounting principles generally accepted in the
United States of America (GAAP). However, management evaluates
the performance of our business units and the consolidated company
based on several criteria, including adjusted income derived from
operating activities, because it believes that this financial
measure is an accurate reflection of the ongoing profitability of
our Company. A reconciliation of this non-GAAP measure to income
before income taxes, which is a GAAP measure, is provided within
the table set forth immediately following the heading "Segment
Reporting".
NABORS INDUSTRIES LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
June 30, March 31, December 31,
(In thousands, except ratios) 2009 2009 2008
---- ---- ----
ASSETS
Current assets:
Cash and short-term
investments $ 1,196,440 $ 1,108,588 $ 584,245
Accounts receivable, net 787,653 975,797 1,160,768
Other current assets 318,068 395,462 421,580
------- ------- -------
Total current assets 2,302,161 2,479,847 2,166,593
Long-term investments and
other receivables 140,101 254,714 239,952
Property, plant and
equipment, net 7,621,186 7,488,679 7,331,959
Goodwill 162,812 174,806 175,749
Investment in unconsolidated
affiliates 433,955 405,393 411,727
Other long-term assets 209,147 191,052 191,919
------- ------- -------
Total assets $10,869,362 $10,994,491 $10,517,899
=========== =========== ===========
LIABILITIES AND SHAREHOLDERS'
EQUITY
Current liabilities:
Current portion of long-term
debt $ 168,699 $ 168,682 $ 225,030
Other current liabilities 675,800 816,311 903,829
------- ------- -------
Total current liabilities 844,499 984,993 1,128,859
Long-term debt 4,063,288 4,158,331 3,600,533
Other long-term liabilities 913,751 837,971 884,401
------- ------- -------
Total liabilities 5,821,538 5,981,295 5,613,793
Shareholders' equity 5,047,824 5,013,196 4,904,106
--------- --------- ---------
Total liabilities and
shareholders' equity $10,869,362 $10,994,491 $10,517,899
=========== =========== ===========
Cash, short-term and long-term
investments (1) $ 1,336,541 $ 1,363,302 $ 826,063
Funded debt to
capital ratio: (2)
- Gross 0.43 : 1 0.44 : 1 0.41 : 1
- Net of cash and
investments 0.34 : 1 0.35 : 1 0.35 : 1
Interest coverage ratio: (3) 11.4 : 1 15.7 : 1 20.7 : 1
(1) The June 30, 2009, March 31, 2009 and December 31, 2008 amounts
include $128.1 million, $240.3 million and $224.2 million,
respectively, in oil and gas financing receivables that are
included in long-term investments and other receivables.
(2) The gross funded debt to capital ratio is calculated by dividing
funded debt by funded debt plus deferred tax liabilities net of
deferred tax assets plus capital. Funded debt is defined as the sum
of (1) short-term borrowings, (2) current portion of long-term debt
and (3) long-term debt. Capital is defined as shareholders' equity.
The net funded debt to capital ratio is calculated by dividing net
funded debt by net funded debt plus deferred tax liabilities net of
deferred tax assets plus capital. Net funded debt is defined as the
sum of (1) short-term borrowings, (2) current portion of long-term
debt and (3) long-term debt reduced by the sum of cash and cash
equivalents and short-term and long-term investments and other
receivables. Capital is defined as shareholders' equity. Both of
these ratios are a method for calculating the amount of leverage a
company has in relation to its capital. The gross funded debt and
net funded debt to capital ratios are not measures of operating
performance or liquidity defined by accounting principles generally
accepted in the United States of America and may not be comparable to
similarly titled measures presented by other companies.
(3) The interest coverage ratio is a trailing twelve-month computation
of the sum of income (loss) before income taxes, interest expense,
depreciation and amortization, depletion expense, impairments, and
our proportionate share of non-cash pre-tax writedowns from our oil
and gas joint ventures less investment income and then dividing by
cash interest expense. This ratio is a method for calculating the
amount of operating cash flows available to cover cash interest
expense. The interest coverage ratio is not a measure of operating
performance or liquidity defined by accounting principles generally
accepted in the United States of America and may not be comparable
to similarly titled measures presented by other companies.
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
------------------------------
June 30, March 31,
--------------- ----------
(In thousands, except
rig activity) 2009 2008 2009
---- ---- ----
Reportable segments:
Operating revenues and
Earnings (losses) from
unconsolidated affiliates:
Contract Drilling: (1)
U.S. Lower 48 Land Drilling $ 249,859 $ 438,848 $ 389,879
U.S. Land Well-servicing 100,080 182,222 134,362
U.S. Offshore 41,947 65,723 60,392
Alaska 53,207 45,114 62,782
Canada 45,035 67,782 112,145
International 327,551 342,892 342,656
------- ------- -------
Subtotal Contract
Drilling (2) 817,679 1,142,581 1,102,216
Oil and Gas (3)(4) (6,001) 11,352 (60,044)
Other Operating Segments (5)(6) 105,547 172,865 156,917
Other reconciling items (7) (57,483) (48,431) (65,471)
------- ------- -------
Total $ 859,742 $1,278,367 $1,133,618
======== ========== ==========
Adjusted income derived from
operating activities:
Contract Drilling: (1)
U.S. Lower 48 Land Drilling $ 70,075 $ 134,322 $ 129,242
U.S. Land Well-servicing 6,192 31,468 13,658
U.S. Offshore 6,724 17,983 16,830
Alaska 16,374 13,466 20,825
Canada (10,151) (14,326) 13,175
International 101,303 101,752 102,975
------- ------- -------
Subtotal Contract
Drilling (2) 190,517 284,665 296,705
Oil and Gas (3)(4) (15,228) (1,645) (71,334)
Other Operating Segments (5)(6) 4,925 19,006 19,104
Other reconciling items (8) (106,766) (36,907) (45,392)
-------- ------- -------
Total 73,448 265,119 199,083
Interest expense (66,027) (49,375) (67,078)
Investment income 18,248 25,057 9,141
(Losses) gains on sales and
retirements of long-lived
assets and other (expense)
income, net (6,469) (3,158) 17,297
Impairments and other charges (9) (227,083) - -
-------- -------- --------
Income (loss) before income taxes $ (207,883) $ 237,643 $ 158,443
========== ========== =========
Rig activity:
Rig years: (10)
U.S. Lower 48 Land Drilling 142.9 242.3 192.8
U.S. Offshore 12.2 17.1 15.3
Alaska 11.3 10.4 11.9
Canada 11.1 16.9 34.4
International (11) 104.1 121.5 114.0
----- ----- -----
Total rig years 281.6 408.2 368.4
===== ===== =====
Rig hours: (12)
U.S. Land Well-servicing 142,797 272,101 179,567
Canada Well-servicing 23,896 40,257 50,224
------ ------ ------
Total rig hours 166,693 312,358 229,791
======= ======= =======
Six Months Ended
----------------
June 30,
----------------
(In thousands, except rig activity) 2009 2008
---- ----
Reportable segments:
Operating revenues and Earnings (losses)
from unconsolidated affiliates:
Contract Drilling: (1)
U.S. Lower 48 Land Drilling $ 639,738 $ 845,909
U.S. Land Well-servicing 234,442 353,363
U.S. Offshore 102,339 117,178
Alaska 115,989 99,483
Canada 157,180 246,634
International 670,207 646,464
------- -------
Subtotal Contract Drilling (2) 1,919,895 2,309,031
Oil and Gas (3)(4) (66,045) 25,392
Other Operating Segments (5)(6) 262,464 338,647
Other reconciling items (7) (122,954) (99,296)
-------- -------
Total $ 1,993,360 $ 2,573,774
=========== ===========
Adjusted income derived from
operating activities:
Contract Drilling: (1)
U.S. Lower 48 Land Drilling $ 199,317 $ 261,193
U.S. Land Well-servicing 19,850 61,854
U.S. Offshore 23,554 24,441
Alaska 37,199 31,249
Canada 3,024 27,647
International 204,278 192,402
------- -------
Subtotal Contract Drilling (2) 487,222 598,786
Oil and Gas (3)(4) (86,562) (6,497)
Other Operating Segments (5)(6) 24,029 31,440
Other reconciling items (8) (152,158) (72,179)
-------- -------
Total 272,531 551,550
Interest expense (133,105) (96,067)
Investment income 27,389 51,239
(Losses) gains on sales and retirements of
long-lived assets and other (expense)
income, net 10,828 (11,255)
Impairments and other charges (9) (227,083) -
-------- --------
Income (loss) before income taxes $ (49,440) $ 495,467
=========== ===========
Rig activity:
Rig years: (10)
U.S. Lower 48 Land Drilling 167.7 234.0
U.S. Offshore 13.7 16.6
Alaska 11.6 10.5
Canada 22.7 33.1
International (11) 109.0 119.6
----- -----
Total rig years 324.7 413.8
===== =====
Rig hours: (12)
U.S. Land Well-servicing 322,364 531,578
Canada Well-servicing 74,120 119,394
------ -------
Total rig hours 396,484 650,972
======= =======
(1) These segments include our drilling, workover and well-servicing
operations, on land and offshore.
(2) Includes earnings (losses), net, from unconsolidated affiliates,
accounted for by the equity method, of $.6 million, $2.8 million,
and $1.3 million for the three months ended June 30, 2009 and 2008
and March 31, 2009, respectively, and $1.9 million and $9.6 million
for the six months ended June 30, 2009 and 2008, respectively.
(3) Includes our proportionate share of non-cash pre-tax writedowns
recorded by our domestic oil and gas joint venture of ($8.3) million
and ($75.0) million for the three months ended June 30, 2009 and
March 31, 2009, respectively, and ($83.3) million for the six months
ended June 30, 2009.
(4) Includes earnings (losses), net, from unconsolidated affiliates,
accounted for by the equity method, of ($11.0) million,
($6.7) million and ($72.2) million for the three months ended
June 30, 2009 and 2008 and March 31, 2009, respectively, and
($83.3) million and ($24.6) million for the six months ended
June 30, 2009 and 2008, respectively.
(5) Includes our drilling technology and top drive manufacturing,
directional drilling, rig instrumentation and software, and
construction and logistics operations.
(6) Includes earnings (losses), net, from unconsolidated affiliates,
accounted for by the equity method, of $2.3 million, ($.1) million
and $6.5 million, for the three months ended June 30, 2009 and 2008
and March 31, 2009, respectively, and $8.8 million and $6.6 million
for the six months ended June 30, 2009 and 2008, respectively.
(7) Represents the elimination of inter-segment transactions.
(8) Represents the elimination of inter-segment transactions and
unallocated corporate expenses.
(9) Represents non-cash pre-tax impairments and other charges recorded
during the three months ended June 30, 2009.
(10) 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.
(11) International rig years include our equivalent percentage
ownership of rigs owned by unconsolidated affiliates which totaled
2.3 years, 4.0 years and 2.8 years, during the three months ended
June 30, 2009 and 2008 and March 31, 2009, respectively, and
2.6 years and 4.0 years during the six months ended June 30, 2009
and 2008, respectively.
(12) Rig hours represents the number of hours that our well-servicing
rig fleet operated during the period.
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
--------------------------
June 30, March 31,
---------------- --------
(In thousands, except per share amounts) 2009 2008 2009
---- ---- ----
Net income (loss) (numerator):
Net income (loss) - basic $ (192,986) $ 176,413 $ 125,170
Add interest expense on assumed
conversion of our
zero coupon convertible/
exchangeable senior
debentures/notes, net of tax:
$2.75 billion due 2011 (1) - - -
$82.8 million due 2021 (2) - - -
$700 million due 2023 (3) - - -
--- --- ---
Adjusted net income (loss) - diluted $ (192,986) $ 176,413 $ 125,170
---------- ---------- ----------
Earnings (losses) per share:
Basic $ (.68) $ .63 $ .44
---------- ---------- ----------
Diluted $ (.68) $ .60 $ .44
---------- ---------- ----------
Shares (denominator):
Weighted-average number of shares
outstanding-basic (4) 283,154 280,851 283,098
Net effect of dilutive stock options,
warrants and restricted
stock awards based on the if
converted method - 8,507 21
Assumed conversion of our zero coupon
convertible/exchangeable senior
debentures/notes:
$2.75 billion due 2011 (1) - - -
$82.8 million due 2021 (2) - - -
$700 million due 2023 (3) - 5,129 -
--- ----- ---
Weighted-average number of shares
outstanding - diluted 283,154 294,487 283,119
------- ------- -------
Six Months Ended
----------------
June 30,
----------------
(In thousands, except per share amounts) 2009 2008
----- -----
Net income (loss) (numerator):
Net income (loss) - basic $ (67,816) $ 388,457
Add interest expense on assumed
conversion of our
zero coupon convertible/
exchangeable senior
debentures/notes, net of tax:
$2.75 billion due 2011 (1) - -
$82.8 million due 2021 (2) - -
$700 million due 2023 (3) - -
--- ---
Adjusted net income (loss) - diluted $ (67,816) $ 388,457
-------- ----------
Earnings (losses) per share:
Basic $ (.24) $ 1.38
----- -----
Diluted $ (.24) $ 1.34
--------- ----------
Shares (denominator):
Weighted-average number of shares
outstanding-basic (4) 283,126 280,508
Net effect of dilutive stock options,
warrants and restricted stock awards
based on the if converted method - 7,060
Assumed conversion of our zero coupon
convertible/exchangeable senior
debentures/notes:
$2.75 billion due 2011 (1) - -
$82.8 million due 2021 (2) - -
$700 million due 2023 (3) - 2,565
--- -----
Weighted-average number of shares
outstanding - diluted 283,126 290,133
------- -------
(1) Diluted earnings (losses) per share for the three and six months
ended June 30, 2009 and 2008 and the three months ended
March 31, 2009 do not include any incremental shares issuable upon
exchange of the $2.75 billion 0.94% senior exchangeable notes due
2011. During 2008 and the six months ended June 30, 2009, we
purchased $888.5 million par value of these notes in the open market,
leaving $1.9 billion par value outstanding. The number of shares
that we would be required to issue upon exchange consists of only
the incremental shares that would be issued above the principal
amount of the notes, as we are required to pay cash up to the
principal amount of the notes exchanged. We would only issue an
incremental number of shares upon exchange of these notes. Such
shares are only included in the calculation of the weighted-average
number of shares outstanding in our diluted earnings per share
calculation, when our stock price exceeds $45.83 as of the last
trading day of the quarter and the average price of our shares for
the ten consecutive trading days beginning on the third business day
after the last trading day of the quarter exceeds $45.83, which did
not occur during any period for the three and six months ended
June 30, 2009 and 2008 and the three months ended March 31, 2009.
(2) In June 2008 Nabors Delaware called for redemption of the full
$82.8 million aggregate principal amount at maturity of its zero
coupon senior convertible debentures due 2021 and in July 2008, paid
cash of $60.6 million; an amount equal to the issue price of
$50.4 million plus accrued original issue discount of $10.2 million.
No common shares were issued as part of the redemption of the
$82.8 million zero coupon convertible senior debentures.
(3) In May 2008 Nabors Delaware called for redemption all of its
$700 million zero coupon senior exchangeable notes due 2023 and in
June and July 2008 issued an aggregate 5.25 million common shares
which equated to the excess of the exchange value of the notes over
their principal amount, as cash was required up to the principal
amount of the notes exchanged. Diluted earnings per share for the
three and six months ended June 30, 2008 reflect the conversion of
the $700 million zero coupon senior exchangeable notes due 2023
resulting in the inclusion of the incremental number of shares that
were required to be issued upon the exchange of these notes. The
number of shares issued upon exchange equated to the excess of the
exchange value of the notes over their principal amount, as Nabors
Delaware was required to pay cash up to the principal amount of the
notes exchanged. Because the conversion was partially completed in
June 2008, only the .5 million of our treasury shares that were
actually issued in June 2008 were included in the calculation of the
weighted-average number of basic shares outstanding for the three
and six months ended June 30, 2008, resulting in an incremental
increase of .121 million weighted-average number of basic shares
outstanding. Since the remaining balance of the shares was issued
in July 2008 the entire dilutive effect of the 5.25 million shares
issued in relation to the conversion of the $700 million zero coupon
senior exchangeable notes due 2023 was not recognized until the
three months ended September 30, 2008.
(4) Includes the following weighted-average number of common shares and
restricted stock of Nabors and weighted-average number of
exchangeable shares of Nabors (Canada) Exchangeco Inc., respectively:
283.1 million and .1 million shares for the three months ended
June 30, 2009; 280.8 million and .1 million shares for the three
months ended June 30, 2008; 283.0 million and .1 million shares for
the three months ended March 31, 2009; 283.0 million and .1 million
shares for the six months ended June 30, 2009; and 280.4 million and
.1 million for the six months ended June 30, 2008. The exchangeable
shares of Nabors Exchangeco are exchangeable for Nabors' common
shares on a one-for-one basis, and have essentially identical rights
as Nabors Industries Ltd. common shares, including but not limited to,
voting rights and the right to receive dividends, if any.
For all periods presented, the computation of diluted earnings (losses)
per share excludes outstanding stock options and warrants with exercise
prices greater than the average market price of Nabors' common shares,
because the inclusion of such options and warrants would be anti-dilutive
and such options and warrants are not considered participating securities.
The average number of options and warrants that were excluded from diluted
earnings (losses) per share that would potentially dilute earnings
(losses) per share in the future were 35,783,476 shares during the three
months ended June 30, 2009; and 31,023,161 shares during the three months
ended March 31, 2009; and 33,403,319 and 2,716,877 shares during the six
months ended June 30, 2009 and 2008, respectively. No options and
warrants were excluded from diluted earnings per share for the three
months ended June 30, 2008. 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 will be
included in our diluted earnings (losses) per share computation using the
if converted method of accounting. Restricted stock will be 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 participating securities.
NABORS INDUSTRIES LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME ITEMS EXCLUDING
CERTAIN NON-CASH CHARGES (NON-GAAP)
(Unaudited)
As adjusted to
(In thousands, except Actuals Exclude Charges
per share amounts) (GAAP) Charges (Non-GAAP)
-------- --------- ---------------
Three Months Ended June 30, 2009
---------------------------------------
Operating revenues and
Earnings from
unconsolidated affiliates $ 859,742 $ (8,295) $ 868,037
Adjusted income derived
from operating activities 73,448 (70,409) 143,857
Income before income taxes (207,883) (297,492) 89,609
Net income (192,986) (283,894) 90,908
Diluted earnings per share $ (0.68) $ (1.00) $ 0.32
Three Months Ended March 31, 2009
----------------------------------------
Operating revenues and
Earnings from
unconsolidated affiliates $1,133,618 $ (75,000) $1,208,618
Adjusted income derived
from operating activities 199,083 (75,000) 274,083
Income before income taxes 158,443 (75,000) 233,443
Net income 125,170 (59,250) 184,420
Diluted earnings per share $ 0.44 $ (0.21) $ 0.65
Six Months Ended June 30, 2009
---------------------------------------
Operating revenues and
Earnings from
unconsolidated affiliates $1,993,360 $ (83,295) $2,076,655
Adjusted income derived
from operating activities 272,531 (145,409) 417,940
Income before income taxes (49,440) (372,492) 323,052
Net income (67,816) (343,144) 275,328
Diluted earnings per share $ (0.24) $ (1.21) $ 0.97
NABORS INDUSTRIES LTD. AND SUBSIDIARIES
SUMMARY OF NON-CASH CHARGES (NON-GAAP)
(Unaudited)
Three months ended Six months ended
------------------------------- -----------------
(In thousands) June 30, 2009 March 31, 2009 June 30, 2009
-------------- ---------------- -----------------
Impairment to oil
and gas financing
receivable $ (112,516) $ - $ (112,516)
Rig asset
retirements and
impairments (64,229) - (64,229)
Other-than-temporary
impairment - debt
security (35,649) - (35,649)
Goodwill impairment (14,689) - (14,689)
Stock compensation
charges (62,114) - (62,114)
Equity method oil
and gas venture
impairments (8,295) (75,000) (83,295)
------ ------- -------
Total charges before
income taxes (297,492) (75,000) (372,492)
Tax benefit (1) 13,598 15,750 29,348
------ ------ ------
Total charges after
taxes $ (283,894) $ (59,250) $ (343,144)
========== ========= ==========
(1) This represents the portion of the benefit that can be recognized in
the current quarter in accordance with the interim period tax
allocation rules. The remaining tax effect of these items will be
recognized during the third and fourth quarters of 2009.
SOURCE Nabors Industries Ltd.
CONTACT: Dennis A. Smith, Director of Corporate Development for Nabors
Corporate Services, Inc., +1-281-775-8038, or corporate headquarters,
+1-
441-292-1510, mark.andrews@nabors.com
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