Nabors' 3Q2012 EPS Equals $0.42 from Continuing Operations, Excluding a $0.20 per Diluted Share, Non-Cash Ceiling Test
Nabors' 3Q2012 EPS Equals $0.42 from Continuing Operations, Excluding a $0.20 per Diluted Share, Non-Cash Ceiling Test Impairment
HAMILTON, Bermuda, Oct. 23, 2012 /CNW/ - Nabors Industries Ltd. (NYSE: NBR) today announced its results for the third quarter and nine months ended September 30, 2012. Adjusted income derived from operating activities was $225.5 million for the third quarter, compared to $269.3 million in the third quarter of 2011 and $230.4 million in the second quarter of this year. Excluding the Company's portion of its NFR affiliate's third quarter ceiling test impairment, which amounted to a pre-tax charge of approximately $96.3 million, or ($0.20) per diluted share, net income from continuing operations was $123.6 million, or $0.42 per diluted share. This compares to $132.5 million, or $0.45 per diluted share, in the third quarter of 2011 and $109.7 million, or $0.38 per diluted share, in the second quarter of this year when all non-cash charges are excluded. Third quarter GAAP net income from continuing operations was $65.8 million, or $0.22 per diluted share, compared to $87.2 million, or $0.30 per diluted share, in the third quarter of 2011 and a net loss of $98.7 million, or ($0.34) per diluted share, in the second quarter of this year.
Operating revenues totaled $1.77 billion in the current quarter, compared to $1.61 billion in the third quarter of last year and $1.74 billion in the second quarter of this year. For the nine months ended September 30, 2012, adjusted income derived from operating activities was $777.1 million, compared to $654.4 million in 2011. Net income from continuing operations for the first nine months of 2012 was $422.2 million, or $1.45 per diluted share, compared to $297.9 million, or $1.02 per diluted share, in 2011. Year-to-date GAAP net income from continuing operations was $109.8 million, or $0.38 per diluted share, compared to $252.6 million or $0.86 per diluted share in 2011.
The quarter's results reflect the receipt of $25.3 million in contract termination payments in the Company's US Lower 48 and International operations, of which $6.7 million, or $0.02 per diluted share, would have been received in future periods extending as far as December 2013. They also reflect a lower effective tax rate, a portion of which (approximately $5.5 million, or $0.02 per diluted share) was attributable to favorable return-to-provision tax adjustments in multiple jurisdictions.
Tony Petrello, Nabors' Chairman and CEO, commented, "These results reflect improved operational performance in our US land well servicing, International and Canada operations. Unfortunately, a sharper than anticipated drop in US land drilling activity, the seasonal hurricane pause in the Gulf of Mexico, further seasonal slowing in Alaska, and reduced shipments in Canrig essentially offset those improvements. Net income also benefitted from a meaningful reduction in our effective tax rate, which we expect to be ongoing.
"The quarterly exit rates in US land drilling activity, along with the seasonal slowdown in well servicing and pressure pumping utilization, signal a significantly weaker fourth quarter followed by a modest uptick in the first quarter with the seasonal improvement in Alaska and Canada.
"Our initiatives to reduce leverage and improve financial flexibility are beginning to yield meaningful results, with third quarter operating cash flow of $495 million exceeding capital expenditures by approximately $247 million. We also achieved an $80 million reduction in accounts receivable despite a $30 million increase in revenues, primarily attributable to an improvement in DSO (days sales outstanding). This improvement in cash generation contributed to funding the redemption of $275 million in maturing notes, $120 million in semi-annual interest payments and approximately $250 million in capital expenditures, while effecting a $159 million reduction in net debt during the quarter. We will continue to diligently manage capital expenditures and working capital and expect to further reduce net debt. Proceeds from any potential asset sales will accelerate this progress.
"We continue to streamline our business through a conversion from our historical business unit structure into two lines of business, Nabors Completion & Production Services (NCPS) and Nabors Drilling & Rig Services (NDRS). The consolidation of our US well servicing and pressure pumping operations into NCPS is progressing under a matrix organizational structure. The NCPS management team has been established down to the local operations level, while the integration of support functions and facilities is ongoing. The impact of these improvements will become more meaningful over the next few quarters, although it will be obscured by the fourth and first quarter seasonal weakness that characterizes these services, as well as the macro issues discussed below. As a first step in the formation of our NDRS business line, we recently began the consolidation of our US Offshore and Alaska operations into our US Lower 48 business group.
Drilling & Rig Services
"Sequential operating income for this line of business was essentially flat at $184.6 million, compared to the $186.2 million posted in the second quarter. Improving results in Canada and International essentially offset the adverse effects of declining activity in US Lower 48 land drilling, slower US Offshore activity during hurricane season, seasonally low activity in Alaska, and reduced shipments in Canrig. During the quarter, we averaged 13 fewer rigs working at 364 rig years, with the financial effects being substantially offset by a $657 increase in average margins bringing the third quarter average to $12,351 per rig day. Approximately $200 of this increase was attributable to the portion of the lump sum contract termination payments that represent margins that would have been earned in future periods.
"Operating income in our US Lower 48 operations was $114.9 million, approximately $11.6 million lower than the second quarter, with a lower average rig count of 193.8 rigs, partially offset by an $852 increase in average margins at $12,030 per rig day. This included $40 per rig day in early termination margins that are attributable to future periods. As we anticipated, last quarter our customers reduced second half spending significantly compared to the first half in order to stay within budget in light of reduced cash flows from weaker natural gas and liquids pricing. This reduction led to third quarter activity declines and will further depress fourth quarter results. Our rig count declined by 35 rigs in the quarter, with one-half of those rigs concentrated with four large customers who curtailed their programs as contracts expired. Sixteen of our 35 rigs received early termination payments totaling $16 million in third quarter income, with only $0.7 million of this amount attributable to future periods. These combined effects caused our rig count to decline disproportionately, as compared to the industry, and it currently stands at 175 rigs on revenue.
"We deployed seven new rigs this quarter, all with long-term contract commitments. Additionally, we have secured three incremental long-term contract commitments for our new generation PACE(®)-X rig. This brings to nine the number of PACE(®)-X rigs we have yet to deliver through the first half of 2013, all with long-term contracts. Our new generation PACE(®)-X rigs represent a step change in pad drilling efficiency and mobility. Nabors pioneered pad drilling and has developed the PACE(®)-X rig to more efficiently address the evolving demand for multi-row, multi-well pad configurations. Customer response to the new offering is encouraging and we expect to attract additional contracts. There is a significant increase in demand for rigs with pad drilling capability, particularly in the shale plays. With the delivery of these nine PACE(®)-X rigs our US Lower 48 operations alone will have 93 pad-capable rigs, with our other drilling operations possessing another 79 pad rigs.
"Looking forward, our customers are indicating a resumption of more normal activity as they initiate their 2013 budgets. This should improve utilization relative to current levels and possibly moderate pricing pressure, although a number of new rigs continue to enter the market with lower rates and shorter contract durations.
"Operating income in our International operations was $30.3 million, compared to $16.4 million in the second quarter. This included an early contract termination payment of $8.8 million, of which $6.0 million would have been earned in future periods. Rig activity was 119.2 rigs, two rigs less than the prior quarter, which saw four rigs temporarily idled in Algeria that should return to work around the end of this year. Margins improved by nearly $1,340 to $12,299 per rig day, including $547 representing the future portion of the early termination payments. The absorption of higher labor costs in certain Middle East countries, the temporarily idled Algeria rigs, and the need to perform some deferred contractual rig upgrades will dampen the pace of improvement in this unit for the next several quarters. Longer term, we remain focused on improving results at a modest pace.
"Our drilling operations in Canada experienced a large increase in income as they emerged from the second quarter, despite a wetter-than-usual start to the third quarter. Operating income was $22.9 million, compared to a loss of $3.7 million in the second quarter, and $1.3 was million higher than the same quarter last year. Rig activity increased sequentially by 14 to average 34 rigs operating in the third quarter, while margins improved significantly to average $13,439, an increase of $3,513 per rig day over the second quarter. As is the case in the US Lower 48, customer cash flow constraints are limiting growth in activity. Nonetheless, we anticipate our fourth quarter to show moderate improvement and the first quarter to increase modestly again. We are also deploying a new 1,500 horsepower rig with a pad drilling moving system under a five-year contract for a key customer.
"As anticipated, our US Offshore operations experienced a modest loss in the third quarter as many of our shallow-water customers suspended their work programs for hurricane season. We anticipate some recovery in the fourth and first quarters, but the shallow-water platform market is still plagued by increased regulatory requirements that are limiting activity.
"In Alaska, results were down seasonally as expected at $4.0 million, compared to second quarter results of $8.9 million and first quarter results of $27.4 million. This market has become highly seasonal due to the reduced level of year-round drilling work being conducted in the legacy North Slope fields where steeply progressive tax rates limit reinvestment. We expect the fourth quarter to decline further, but anticipate a sharp rebound in the first quarter with what promises to be another active exploratory drilling season. There continues to be a high level of optimism that the Alaska legislature will modify the tax structure for operators, which would spur a significant increase in activity over time. Longer term, a number of strategic projects are planned in new areas where tax incentives are already in place, but these are characterized by long lead times and would likely not commence for another two to three years.
"Our Other Rig Services entities saw lower results as our Alaska trucking and construction businesses slowed seasonally and Canrig experienced a moderate slowdown in rentals and domestic shipments, mirroring other land rig equipment manufacturers. Although Canrig's capital equipment backlog has decreased recently, in line with slower North American rig construction, recent international orders are partially offsetting the decrease.
Completion & Production Services
"During the quarter, operating income in our Completion & Production Services business line was $80.0 million, up from the $74.7 million realized in the second quarter. The majority of this increase came from higher average rates in well servicing, augmented by a small improvement in pressure pumping margins to 13.1 percent, compared to 12.3 percent in second quarter. We anticipate the usual seasonally lower results in the fourth and first quarters.
"Operating income attributable to the US well servicing and fluids management operations was $32.8 million for the quarter, up $4.2 million compared to the second quarter. While rig and truck hours were essentially flat to down slightly, higher average rates for both generated most of the increase. Rates and utilization have flattened and certain markets are becoming increasingly competitive, especially in the fluids management portion of this business. We expect seasonally lower activity through late first quarter, followed by a resumption of activity as our customers indicate higher spending levels and the population of maintenance-intensive oil wells continues to increase at a robust pace.
"In our Pressure Pumping operations, operating income increased modestly to $47.2 million compared to $46.1 million in the second quarter. The outlook remains challenging across all regional markets as most of our long-term contract crews are now working at minimum activity levels and spot-market rates remain under pressure. Some competitors are bidding work at what appears to be near breakeven cash flow levels. Given the status of the spot market, we recently idled another crew in the Permian basin bringing our number of stacked frac spreads to six.
"Although we may see a small increase in industry utilization in the new year, the amount of excess capacity will likely limit any upside potential for the foreseeable future. Meanwhile, we continue to focus on cost and efficiency, particularly relating to logistics and storage functions which have been centralized into our corporate procurement and logistics group. Inventory turns have increased significantly and material costs are improving.
"In summary, the near-term market for most of our services is challenging. Macro worries are still prevalent, and the lower levels of customer spending and seasonal constraints in North America are adversely affecting all areas of our operations. While we anticipate some increase in customer spending levels at the beginning of the new year, which will improve utilization moderately, it is not likely to absorb sufficient capacity to restore pricing momentum. That will come with a more meaningful increase in demand for rigs and other services, which can occur for a number of reasons, with improving gas prices having the greatest impact.
"Nonetheless, we believe our quality asset base, diverse product lines and geography, global infra-structure and talented employee base uniquely position us as opportunities arise, particularly in the expansion of unconventional resource development. Meanwhile, we will diligently continue to improve our balance sheet quality, streamline our business and achieve higher levels of operational excellence."
The Nabors companies own and operate approximately 521 land drilling rigs throughout the world and approximately 607 land workover and well servicing rigs in North America. Nabors' actively marketed offshore fleet consists of 40 platform rigs, 12 jackup units and 4 barge rigs in the United States and multiple international markets. In addition, Nabors is one of the largest providers of hydraulic fracturing, cementing, nitrogen and acid pressure pumping services with approximately 805,000 hydraulic horsepower currently in service. Nabors also 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 and gas 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 projections contained in this release reflect management's estimates as of the date of the release. Nabors does not undertake to update these forward-looking statements.
For further information, please contact Dennis A. Smith, Director of Corporate Development & Investor Relations, at 281-775-8038. To request investor materials, contact Nabors' 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 Nine Months Ended
September 30, June 30, September 30,
(In thousands, except per share 2012 2011 2012 2012 2011 amounts)
Revenues and other income:
Operating $ $ $ $ $ revenues 1,766,419 1,608,504 1,737,114 5,393,959 4,325,714
Earnings (losses) from (99,527) 33,723 (134,317) (302,513) 59,305 unconsolidated affiliates
Investment 7,224 727 5,368 32,844 12,032 income (loss)
Total revenues 1,674,116 1,642,954 1,608,165 5,124,290 4,397,051 and other income
Costs and other deductions:
Direct costs 1,136,198 1,019,412 1,123,256 3,444,270 2,687,970
General and administrative 131,887 119,431 133,612 401,845 358,352 expenses
Depreciation and 269,597 234,085 261,016 778,234 684,337 amortization
Interest expense 63,604 58,060 63,459 189,717 195,781
Losses (gains) on sales and retirements of
long-lived assets and other 10,263 (11,607) 13,414 21,837 (1,100) expense (income), net
Impairments and - 98,072 147,503 147,503 98,072 other charges
Total costs and 1,611,549 1,517,453 1,742,260 4,983,406 4,023,412 other deductions
Income (loss) from continuing operations 62,567 125,501 (134,095) 140,884 373,639 before income taxes
Income tax expense (4,001) 37,561 (36,192) 28,851 118,760 (benefit)
Subsidiary preferred stock 750 750 750 2,250 2,250 dividend
Income (loss) from continuing 65,818 87,190 (98,653) 109,783 252,629 operations, net of tax
Income (loss) from discontinued 10,826 (12,226) 24,690 26,721 96,545 operations, net of tax
Net income 76,644 74,964 (73,963) 136,504 349,174 (loss)
Less: Net (income) loss attributable to (988) (708) 1,174 453 355 noncontrolling interest
Net income (loss) $ 75,656 $ 74,256 $ $ 136,957 $ 349,529 attributable to (72,789) Nabors
Earnings (losses) per share: (1)
Basic from continuing $ .22 $ .30 $ (.34) $ .38 $ .88 operations
Basic from discontinued .04 (.04) .09 .09 .34 operations
Basic $ .26 $ .26 $ (.25) $ .47 $ 1.22
Diluted from continuing $ .22 $ .30 $ (.34) $ .38 $ .86 operations
Diluted from discontinued .04 (.05) .09 .09 .33 operations
Diluted $ .26 $ .25 $ (.25) $ .47 $ 1.19
Weighted-average number
of common shares outstanding: (1)
Basic 290,367 287,487 290,311 289,822 286,971
Diluted 292,501 291,986 290,311 292,290 292,991
Adjusted income (loss) derived from operating activities from $ 225,529 $ 269,299 $ 230,413 $ 777,128 $ 654,360
continuing operations (2)
(1) See "Computation of Earnings (Losses) Per Share" included
herein as a separate schedule.
Adjusted income (loss) derived from operating activities is
computed by: subtracting direct costs, general and
administrative expenses and depreciation and amortization
from Operating revenues and then adding Earnings (losses)
from unconsolidated affiliates (excluding our proportionate
share of full-cost ceiling test writedowns recorded by our
oil and gas joint venture). These amounts should not be used
as a substitute for those amounts reported in accordance with (2) 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
(loss) derived from operating activities, because it believes
that these financial measures accurately reflect our ongoing
profitability. 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 "Segment Reporting".
NABORS INDUSTRIES LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
September 30, June 30, December 31,
(In thousands, except 2012 2012 2011
ratios)
ASSETS
Current assets:
Cash and short-term $ 619,563 $ 455,182 $ 539,489
investments
Accounts receivable, net 1,529,232 1,607,422 1,576,555
Assets held for sale 404,234 396,413 401,500
Other current assets 580,620 516,153 570,770
Total current assets 3,133,649 2,975,170 3,088,314
Long-term investments and 5,301 5,452 11,124
other receivables
Property, plant and 8,894,084 8,904,324 8,629,946
equipment, net
Goodwill 472,462 471,913 501,258
Investment in unconsolidated 70,172 165,003 371,021
affiliates
Other long-term assets 348,893 321,610 310,477
Total assets $ 12,924,561 $ 12,843,472 $ 12,912,140
LIABILITIES AND EQUITY
Current liabilities:
Current portion of long-term $ 389 $ 275,323 $ 275,326
debt
Other current liabilities 1,134,277 1,211,198 1,527,236
Total current liabilities 1,134,666 1,486,521 1,802,562
Long-term debt 4,678,896 4,398,452 4,348,490
Other long-term liabilities 1,185,687 1,160,409 1,090,683
Total liabilities 6,999,249 7,045,382 7,241,735
Subsidiary preferred stock 69,188 69,188 69,188
(1)
Equity:
Shareholders' equity 5,843,880 5,718,035 5,587,815
Noncontrolling interest 12,244 10,867 13,402
Total equity 5,856,124 5,728,902 5,601,217
Total liabilities and equity $ 12,924,561 $ 12,843,472 $ 12,912,140
Represents subsidiary preferred stock from acquisition in (1) September 2010. 75,000 shares of such stock are outstanding and
pay quarterly dividends at an annual rate of 4%.
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 Nine Months Ended
September 30, June 30, September 30,
(In thousands,
except rig 2012 2011 2012 2012 2011
activity)
Reportable
segments:
Operating
revenues and
Earnings
(losses) from
unconsolidated
affiliates
from
continuing
operations:
(1)
Drilling and
Rig Services:
U.S. Lower 48 $ 461,860 $ 430,895 $ 494,371 $ $ 1,214,447
Land Drilling 1,451,928
U.S. Offshore 66,675 46,069 71,978 207,768 116,807
Alaska 27,249 27,027 32,416 121,958 100,678
Canada 135,786 145,587 92,390 420,469 406,004
International 329,245 281,686 304,622 940,332 809,394
Other Rig 188,694 190,744 228,614 659,066 462,779
Services (2)
Subtotal
Drilling and 1,209,509 1,122,008 1,224,391 3,801,521 3,110,109
Rig Services
(3)
Completion and
Production
Services:
U.S. Land 222,034 189,356 214,005 645,740 503,752
Well-servicing
Pressure 381,241 343,723 387,663 1,166,940 867,512
Pumping
Subtotal
Completion and 603,275 533,079 601,668 1,812,680 1,371,264
Production
Services
Oil and Gas (98,805) 34,909 (140,434) (301,801) 56,285
(4)
Other
reconciling (47,087) (47,769) (82,828) (220,954) (152,639)
items (5)
Total $ $ $ $ $ 4,385,019
1,666,892 1,642,227 1,602,797 5,091,446
Adjusted
income (loss)
derived from
operating
activities
from
continuing
operations:
(1) (6)
Drilling and
Rig Services:
U.S. Lower 48 $ 114,884 $ 104,877 $ 126,532 $ 372,997 $ 284,203
Land Drilling
U.S. Offshore (3,650) 2,457 9,924 14,006 (2,579)
Alaska 3,973 3,021 8,895 40,288 22,328
Canada 22,889 21,604 (3,718) 68,458 58,084
International 30,299 29,015 16,401 67,838 100,363
Other Rig 16,207 20,175 28,179 74,232 42,465
Services (2)
Subtotal
Drilling and 184,602 181,149 186,213 637,819 504,864
Rig Services
(3)
Completion and
Production
Services:
U.S. Land 32,766 22,839 28,599 83,253 50,488
Well-servicing
Pressure 47,218 65,052 46,144 158,222 152,655
Pumping
Subtotal
Completion and 79,984 87,891 74,743 241,475 203,143
Production
Services
Oil and Gas (2,486) 34,909 5,066 8,230 56,285
(7)
Other
reconciling (36,571) (34,650) (35,609) (110,396) (109,932)
items (8)
Total adjusted
income (loss)
derived from $ 225,529 $ 269,299 $ 230,413 $ 777,128 $ 654,360
operating
activities
Full-cost
ceiling test (96,319) - (145,500) (310,031) -
writedowns
Interest (63,604) (58,060) (63,459) (189,717) (195,781)
expense
Investment 7,224 727 5,368 32,844 12,032
income (loss)
Gains (losses)
on sales and
retirements of
long-lived
assets and (10,263) 11,607 (13,414) (21,837) 1,100
other income
(expense), net
Impairments
and other - (98,072) (147,503) (147,503) (98,072)
charges
Income (loss)
from
continuing $ 62,567 $ 125,501 $ $ 140,884 $ 373,639
operations (134,095)
before income
taxes
Rig activity:
Rig years: (9)
U.S. Lower 48 193.8 201.8 217.9 210.2 194.7
Land Drilling
U.S. Offshore 12.8 10.8 14.0 12.9 9.4
Alaska 4.6 4.7 4.4 5.7 4.8
Canada 34.0 41.8 20.3 34.3 38.0
International 119.2 105.3 120.9 119.3 102.6
(10)
Total rig 364.4 364.4 377.5 382.4 349.5
years
Rig hours:
(11)
U.S. Land 217,675 205,610 220,304 651,005 589,140
Well-servicing
Canada 43,849 49,788 35,710 136,603 132,196
Well-servicing
Total rig 261,524 255,398 256,014 787,608 721,336
hours
All periods present the operating activities of our wholly owned
oil and gas business in the United States, Canada and Colombia, (1) including equity interests in Canada and Colombia, as well as our
aircraft logistics operations in Canada as discontinued
operations.
Includes our drilling technology and top drive manufacturing,
directional drilling, rig instrumentation and software, and (2) construction services. These services represent our other
companies that are not aggregated into a reportable operating
segment.
Includes earnings (losses), net from unconsolidated affiliates,
accounted for using the equity method, of $(.7) million, $(1.2) (3) million and $6.1 million for the three months ended September 30,
2012 and 2011 and June 30, 2012, respectively, and $(.7) million
and $3.0 million for the nine months ended September 30, 2012 and
2011, respectively.
Includes earnings (losses), net from unconsolidated affiliates,
accounted for using the equity method, of $(98.8) million, $34.9 (4) million and $(140.4) million for the three months ended September
30, 2012 and 2011 and June 30, 2012, respectively, and $(301.8)
million and $56.3 million for the nine months ended September 30,
2012 and 2011, respectively.
(5) Represents the elimination of inter-segment transactions.
Adjusted income (loss) derived from operating activities is
computed by subtracting direct costs, general and administrative
expenses, and depreciation and amortization from Operating
revenues and then adding Earnings (losses) from unconsolidated
affiliates (excluding our proportionate share of full-cost
ceiling test writedowns recorded by our oil and gas joint
venture). These amounts should not be used as a substitute for (6) those amounts reported in accordance with GAAP. However,
management evaluates the performance of our business units and
the consolidated company based on several criteria, including
adjusted income (loss) derived from operating activities, because
it believes that these financial measures accurately reflect our
ongoing profitability. 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 above table.
Includes earnings (losses), net from unconsolidated affiliates,
accounted for using the equity method, of $(2.5) million
(excluding $96.3 million, which represents our proportionate
share of full-cost ceiling test writedowns recorded by our oil
and gas joint venture), $34.9 million and $5.1 million (excluding
$145.5 million, which represents our proportionate share of (7) full-cost ceiling test writedowns recorded by our oil and gas
joint venture) for the three months ended September 30, 2012 and
2011 and June 30, 2012, respectively, and $8.2 million (excluding
$310.0 million, which represents our proportionate share of
full-cost ceiling test writedowns recorded by our oil and gas
joint venture) and $56.3 million for the nine months ended
September 30, 2012 and 2011, respectively.
(8) Represents the elimination of inter-segment transactions and
unallocated corporate expenses.
Excludes well-servicing rigs, which are measured in rig hours.
Includes our equivalent percentage ownership of rigs owned by (9) 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 include our equivalent percentage
ownership of rigs owned by unconsolidated affiliates, which (10) totaled 2.5 years, 2.0 years, and 2.5 years during each of the
three months ended September 30, 2012 and 2011 and June 30, 2012,
respectively, and 2.5 years and 2.0 years during the nine months
ended September 30, 2012 and 2011, respectively.
(11) 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 Nine Months Ended
September 30, June 30, September 30,
(In thousands,
except per share 2012 2011 2012 2012 2011
amounts)
Net income (loss)
attributable to
Nabors
(numerator):
Income (loss) from
continuing $65,818 $87,190 $ (98,653) $ 109,783 $ 252,629
operations, net of
tax
Less: net (income)
loss attributable (988) (708) 1,174 453 355
to noncontrolling
interest
Adjusted income
(loss) from
continuing $64,830 $86,482 $ (97,479) $ 110,236 $ 252,984
operations, net of
tax - basic
Add interest
expense on assumed
conversion of our
0.94% senior
exchangeable notes
due 2011, net of - - - - -
tax (1)
Adjusted income
(loss) from
continuing $64,830 $86,482 $ (97,479) $ 110,236 $ 252,984
operations, net of
tax - diluted
Income (loss) from
discontinued 10,826 (12,226) 24,690 26,721 96,545
operations, net of
tax
Adjusted net
income (loss) $75,656 $74,256 $ (72,789) $ 136,957 $ 349,529
attributable to
Nabors
Earnings (losses)
per share:
Basic from
continuing $ .22 $ .30 $ (.34) $ .38 $ .88
operations
Basic from
discontinued .04 (.04) .09 .09 .34
operations
Total Basic $ .26 $ .26 $ (.25) $ .47 $ 1.22
Diluted from
continuing $ .22 $ .30 $ (.34) $ .38 $ .86
operations
Diluted from
discontinued .04 (.05) .09 .09 .33
operations
Total Diluted $ .26 $ .25 $ (.25) $ .47 $ 1.19
Shares
(denominator):
Weighted-average
number of shares 290,367 287,487 290,311 289,822 286,971
outstanding-basic
Net effect of
dilutive stock
options, warrants
and restricted
stock awards based
on the 2,134 4,499 - 2,468 6,020
if-converted
method
Assumed conversion
of our 0.94% senior - - - - -
exchangeable notes
due 2011 (1)
Weighted-average
number of shares 292,501 291,986 290,311 292,290 292,991
outstanding -
diluted
(1) At maturity in May 2011, we redeemed the remaining
aggregate principal amount of $1.4 billion of our 0.94%
senior exchangeable notes. Prior to maturity, we had
purchased $1.4 billion par value of these notes in the open
market for cash of $1.2 billion.
For all periods presented, the computation of diluted
earnings (losses) per share excluded outstanding stock
options and warrants with exercise prices greater than the
average market price of Nabors' common shares because their
inclusion would have been anti-dilutive and because they were
not considered participating securities. The average number
of options and warrants that were excluded from diluted
earnings (losses) per share that would have potentially
diluted earnings (losses) per share in the future were
15,010,906 and 10,271,673 shares during the three months
ended September 30, 2012 and 2011, respectively; and
17,635,173 shares during the three months ended June 30,
2012; and 13,934,259 and 7,678,536 shares during the nine
months ended September 30, 2012 and 2011, respectively. 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 are
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 a participating security.
NABORS INDUSTRIES LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (LOSS) ITEMS EXCLUDING CERTAIN
NON-CASH CHARGES
AND OTHER NON-OPERATIONAL ITEMS (NON-GAAP)
(Unaudited)
Charges and As adjusted
Non-Operational
(In thousands, except Actuals Items (Non-GAAP)
per share amounts)
2012: Three Months Ended September 30, 2012
Income (loss) from
continuing operations, $ 65,818 $ (57,791) $ 123,609
net of tax
Diluted earnings
(losses) per share from $ 0.22 $ (0.20) $ 0.42
continuing operations
Nine Months Ended September 30, 2012
Income (loss) from
continuing operations, $ 109,783 $ (312,445) $ 422,228
net of tax
Diluted earnings
(losses) per share from $ 0.38 $ (1.07) $ 1.45
continuing operations
Three Months Ended June 30, 2012
Income (loss) from
continuing operations, $ (98,653) $ (208,359) $ 109,706
net of tax
Diluted earnings
(losses) per share from $ (0.34) $ (0.72) $ 0.38
continuing operations
2011: Three Months Ended September 30, 2011
Income (loss) from
continuing operations, $ 87,190 $ (45,266) $ 132,456
net of tax
Diluted earnings
(losses) per share from $ 0.30 $ (0.15) $ 0.45
continuing operations
Nine Months Ended September 30, 2011
Income (loss) from
continuing operations, $ 252,629 $ (45,266) $ 297,895
net of tax
Diluted earnings
(losses) per share from $ 0.86 $ (0.16) $ 1.02
continuing operations
NABORS INDUSTRIES LTD. AND SUBSIDIARIES
SCHEDULE OF NON-CASH CHARGES AND OTHER NON-OPERATIONAL ITEMS (NON-GAAP)
(Unaudited)
Three Months Ended Nine Months Ended
September 30, June 30 September 30,
Per Per Per Per Per
Diluted Diluted Diluted Diluted Diluted
(In thousands,
except per share 2012 Share 2011 Share 2012 Share 2012 Share 2011 Share
amounts)
Full-cost $
ceiling test $96,319 $ .20 $ - $ - 145,500 $ .35 $ 310,031 $ .70 $ - $ -
writedowns (1)
Bargain purchase
gain by oil and - - (27,229) (.06) - - - - (27,229) (.05)
gas joint
venture (2)
Asset - - 98,072 .23 46,264 .10 46,264 .10 98,072 .23
retirements (3)
Goodwill - - - - 26,279 .09 26,279 .09 - -
impairment (4)
Intangible asset - - - - 74,960 .18 74,960 .18 - -
impairment (5)
Gain on
acquisition of - - (12,178) (.02) - - - - (12,178) (.02)
equity method
investment (6)
Total
Adjustments 96,319 58,665 293,003 457,534 58,665
before tax
Income Tax
Effect of (38,528) (13,399) (84,644) (145,089) (13,399)
Adjustments
Total $
Adjustments, net $57,791 $ .20 $45,266 $ .15 208,359 $ .72 $ 312,445 $ 1.07 $45,266 $ .16
of tax
Weighted-average
number of shares 292,501 291,986 292,411 292,290 292,991
outstanding -
diluted
Represents the impact of our proportionate share
of our oil and gas joint venture's full-cost (1) ceiling test writedowns for the three and nine
months ended September 30, 2012 and the three
months ended June 30, 2012, respectively.
Represents our proportionate share of a bargain
purchase gain recorded by our oil and gas joint
venture during the third quarter of 2011 related (2) to the closing of an acquisition. This gain was
deemed necessary because the estimated fair value
of the assets acquired exceeded the purchase
price.
Represents the impact of the decommissioning and
retirement of various rigs, trucks and other (3) assets across our business segments. These assets
have been deemed to be functionally or
economically non-competitive for today's market
and are being dismantled for parts and scrap.
(4) Represents goodwill impairment in our
International and U.S. Offshore business segments.
Represents the write-off of the intangible asset (5) associated with the Superior Well Services, Inc.
trade name.
We acquired the remaining 50% equity interest in
Peak Oilfield Services (Peak), which we had
previously accounted for under the equity method
of accounting. We consolidated the assets and (6) liabilities of Peak during the third quarter of
2011 and recorded a gain, which reflects the
excess of the estimated fair value of the assets
and liabilities over the net carrying value of our
equity investment.
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SOURCE: Nabors Industries Ltd.
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CO: Nabors Industries Ltd.
NI: OIL UTI ERN
-0- Oct/23/2012 20:17 GMT
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