Nabors Posts 4Q2012 EPS Of $0.44 Per Diluted Share From Continuing Operations, Including Net Gains From Asset Dispositions,
Nabors Posts 4Q2012 EPS Of $0.44 Per Diluted Share From Continuing Operations, Including Net Gains From Asset Dispositions, Higher Investment Income & Favorable Tax Rate
- Company Makes Significant Progress Against Strategic Initiatives in 2012
- Strong Fourth Quarter Cash Flow Yields $458 Million Additional Net Debt Reduction for Total Net Debt Reduction of $678 Million Over Last Three Quarters
- Nine New Multi-Year Contracts Signed for Innovative PACE®-X Rigs
HAMILTON, Bermuda, Feb. 19, 2013 /CNW/ - Nabors Industries Ltd. (NYSE:NBR) today announced its results for the fourth quarter and full year 2012. The Company's net income from continuing operations was $129.3 million ($0.44 per diluted share) in the fourth quarter and $239.1 million ($0.82 per diluted share) for the full year. For the comparable periods of the prior year, the Company reported net income from continuing operations of $89.5 million ($0.30 per diluted share) for the fourth quarter and $342.2 million ($1.17 per diluted share) for the full year. The current quarter's adjusted income derived from operating activities was $149.8 million, bringing the total for 2012 to $918.6 million. This compares to $269.3 million for the corresponding quarter of 2011 and $867.4 million for all of 2011. Revenues for 2012 were $1.6 billion for the quarter and $7.0 billion for the full year. Income from discontinued operations for the fourth quarter was a net loss of $101.1 million ($0.35 per diluted share), reflecting further impairments and reserves with respect to the Company's oil and gas operations in British Columbia.
Tony Petrello, Nabors' Chairman and CEO, commented, "As we anticipated, the fourth quarter reflected weaker market conditions, including a near suspension of pressure pumping work in late December that continued into early January. Nonetheless, we made significant progress toward our strategic objectives, namely streamlining our business, achieving a higher level of operational excellence and enhancing the flexibility of our financial position. Although it contained formidable challenges, 2012 represented the highest levels of revenue, gross margin and EBITDA in the Company's history, while more judicious capital deployment yielded strong free cash flow.
"The consolidation of our U.S. Well Servicing and Pressure Pumping operations continues and is beginning to show meaningful cost and performance improvements, although obscured by the weaker market environment. A combination of strong operating cash flow, lower capital expenditures, additional asset sales and improvements in working capital management enabled a $458 million reduction in net debt in the fourth quarter, adding to the $160 million reduction we achieved in the third quarter. This enhanced financial flexibility facilitates our ability to make capital investments in new rigs and technologies and pursue other strategic opportunities. For example, the innovative features of our new PACE(®)–X rig continue to gain market traction, as evidenced by the nine additional long-term contracts we secured in the quarter with an average duration of 2.7 years and average revenues in excess of $29,000 per day. We now have 21 long-term contract awards in the last four quarters in our U.S. land operations alone, 17 of which are for our new generation PACE(®)-X rigs. We are pleased with the customer reaction to the innovative features of this new rig design and are engaged in discussions regarding more awards."
Fourth quarter income per share of $0.44 benefited from net gains on asset dispositions, higher investment income and a favorable tax rate. Results also included an operating income charge of $17.7 million due to the establishment of reserves with respect to a customer bankruptcy and lower expected margins on a construction project in our U.S. Offshore operations. Those charges were essentially offset by $16.3 million in early contract termination payments during the quarter that are attributable to future periods. Net gains on asset dispositions were $17.2 million (or $0.04 per share) and resulted from $160 million in gains on asset sales and $143 million in asset retirements and impairments. The higher than usual investment income reflected non-cash mark-to-market increases in certain securities, principally a portion of the Company's interest in Honghua Group, a Chinese rig manufacturer. The quarter's results also reflect a tax adjustment to bring the full year normalized tax rate to 25%, resulting in a fourth quarter effective tax rate of 3%, for an EPS impact of approximately $0.10 per diluted share in the quarter.
Drilling & Rig Services
Sequential operating income for the Drilling & Rig Services business was $138.9 million, compared to $184.6 million posted in the third quarter. Operationally, results were lower in US Lower 48 land drilling and Other Rig Services, driven by a lower U.S. land rig count and seasonal bottoms in the Alaska construction and logistics businesses. This was partially offset by increases in Canada, International and Offshore - adjusting for International's third quarter early contract termination payments and the fourth quarter U.S. Offshore charges. The Company averaged 18.5 fewer rigs working during the quarter at average margins of $12,140 per rig day, which is $211 lower than the third quarter.
In the Company's U.S. Lower 48 operations, operating income was $94.7 million, approximately $20.2 million lower than the third quarter with 21 fewer rigs working, the impact of which was partially offset by a $333 increase in average margins totaling $12,363 per rig day. These numbers include $1,028 per rig day in early termination payments attributable to other periods. For the full year, this unit recorded $467.7 million in operating income, compared to $414.3 million for 2011.
Mr. Petrello continued, "As we have previously discussed, our rig count has declined more sharply than the industry for reasons we believe are circumstantial and not structural. Coincident with weakening commodity prices and operators' increasing reluctance to renew contracts at durations longer than six months, we became increasingly vulnerable as 118 of our long-term contracts matured in 2012. In particular, several major customers with whom we enjoyed an outsized market share, sharply curtailed spending, four of which accounted for 41 of our 68 rig decrease. Twelve of these rigs received early termination compensation, with the balance released as long-term contracts matured. Among these four customers, the one that released the most rigs is also the largest subscriber to our new PACE(®)-X rig contracts, affirming their satisfaction with our performance. Further, industry rig counts do not reflect the $75 million in lump sum termination and standby payments, representing the economic equivalent of 25 working rigs, that we received in the last three quarters of 2012. Our rig count recently bottomed and has begun to increase, which we expect to continue over the rest of this quarter, although we remain cautious in predicting the timing and magnitude of activity improvement. The performance of our fleet continues to receive recognition from our customer base as we recently earned rig of the year honors for a large Bakken operator and have recently set records in two Texas fields.
"Our optimism for the longer-term future is bolstered by this performance, coupled with strong and growing customer acceptance of our innovative PACE(®)-X rig. We anticipate more X rig awards in the near term. We are also the leader in the rapidly emerging market for pad-capable rigs, particularly walking rigs, which overcome the inherent limitations of skid rigs. Including walking systems currently on order, our U.S. Lower 48 fleet comprises 45% of the industry's pad-capable rigs and 50% of the walking rigs.
"Nonetheless, we expect the first quarter to show a marked decline in income given the current low rig count and depressed spot market rates, largely as a consequence of numerous speculative rigs entering the market at spot rates with minimal durations. Our availability of highly capable rigs and the short-term bias of recent contract renewals give us good leverage in the eventual upturn.
"We consolidated our U.S. Offshore and Alaska drilling operations into U.S. Land drilling at the beginning of the fourth quarter, allowing us to consolidate overhead, capitalize on the engineering excellence of all three organizations and improve labor utilization and efficiency.
"Our U.S. Offshore operations recorded a loss of $14.3 million, which included the aforementioned $17.7 million reversal of previously accrued income in light of a customer bankruptcy and lower expected margins on a platform construction project. Absent these charges, operational rig activity increased modestly and average margins improved by $6,500 per rig day to $15,115 as hurricane season wound down and consolidation savings began to be realized. We expect activity and margins to continue to improve over the next two quarters with an improving market and lower costs.
"Operating income in Alaska reached its seasonal low at $2.2 million, down from $4.0 million in the third quarter. For the full year, operating income was $42.5 million, which compared favorably to the $27.7 million achieved by this unit in 2011. Alaska has become increasingly seasonal with the progressive tax structure inhibiting year-round activity in the large legacy fields. The fourth quarter is now the seasonal low point, as it lies between the end of the summer drilling season and the first quarter commencement of the winter exploratory season. We expect to have a strong first quarter, although lower than last year as permitting obstacles have postponed at least one significant project into next year.
"Operating income in our international operations was essentially flat at $23 million, after normalizing results for the portion of a third quarter termination payment attributable to future periods. For the full year, income of $91.2 million was down compared to $123.8 million for 2011. However, it is noteworthy to point out that cash from operations in this unit increased while capital expenditures declined significantly, resulting in an overall improvement in year over year cash generation of more than $400 million, exemplifying our more stringent capital allocation criteria.
"The near-term outlook remains challenging, but we expect to see improving results beginning in the second half of the year, and the longer-term future looks increasingly bright. Higher costs in certain countries are beginning to abate as contracts renew at increased rates with high quality rigs in increasingly tighter supply. We have six rigs in Saudi that will undergo deferred modifications in the first two quarters, and Yemen and Iraq continue to drag our results. We also have a large project winding down in Latin America where we expect to incur some down time before new contracts commence. On the positive side, we recently restarted a jackup in the UAE and renewed another at an increased rate in Saudi Arabia for an additional three years. These developments, the completion of negotiations on other projects, and the gradual improvement in the aforementioned cost issues, support our expectation of a second half improvement.
"In Canada we saw a $5.2 million sequential increase in operating income at $28.1 million. For the full year, this unit achieved a slight improvement in income of $96.5 million, compared to $94.6 million in 2011. While it appears the first quarter will represent a significant increase over the fourth quarter, we expect it to be significantly below the first quarter of 2012, indicative of the customer spending constraints that characterize this market. Nonetheless, the nature of the remaining market favors our fleet mix and is supported by the quality of both our drilling and workover operations. We deployed a new slant workover rig to the oilsands and expect soon to deploy a new 1,500 horsepower walking rig, both on term contracts for key customers.
"Our other rig services were down sequentially at $4.8 million with weaker results in three of the four units that comprise this segment. Canrig was moderately down, with reduced service and rental income as a result of the anemic rig count and fewer capital equipment shipments due to slower new rig construction. Ryan posted a small improvement, while our Alaska construction and logistics operations both posted net losses; these accounted for nearly 80% of this segment's sequential decrease with their activity at seasonal troughs. These operations should rebound sharply in the first quarter as they move into their seasonally high quarters.
Completion & Production Services
"During the quarter, operating income in our Completion & Production Services business line was $50.7 million, down sharply from the $80.0 million achieved in the third quarter. The majority of this decrease came from lower stage counts in pressure pumping as our term contract customers compressed activity to contractually required minimums combined with a larger than usual drop off during the holidays. Commencing with the U.S. Thanksgiving holiday, depleting budgets led to a more severe seasonal contraction than past years, which became even worse near the end of the year. Activity in well servicing and fluids services also dropped sharply commencing in mid-November, exacerbated by some customer-specific work suspensions in December. Similarly in pressure pumping, we operated only one of our 16 active stimulation spreads during the last two weeks of December, as contractual minimums had been met and spot market, customers suspended operations for the holidays. Despite the weakening market, full year operating income was $292.2 million compared to $303.9 million in 2011, with increases in Production Services more than offset by declines in Completion Services.
"Operating income attributable to the Production Services group was $20.4 million, down from the $32.8 million realized in the third quarter. This was a product of activity curtailments experienced in the last six weeks of the quarter, amplified by the limited ability to reduce costs in such short-term situations. Truck hours were up seven percent, while rig hours dropped by the same percentage. Average hourly rig rates improved modestly as truck rates moved slightly lower, both most likely attributable to regional mix. For the full year, operating income was up significantly at $103.7 million, compared to $74.7 million for the prior year, indicative of the longer-term trends in this business. We anticipate further improvement in 2013 fueled by the continuing growth in the population of maintenance-intensive oil wells and increasing demand for fluid services. Activity recovered significantly in mid-January, but we still expect first quarter improvement to be limited by the usual seasonal constraints, especially with our growing northern presence.
"In Completion Services, operating income declined to $30.3 million compared to the $47.2 million this unit achieved in the third quarter. This was primarily due to reduced volume and exacerbated by the same limited ability to curtail costs during short-term interruptions that we occasionally experience in Production Services. For the full year, operating income was $188.5 million compared to $229.1 million in 2011. This business continues to be weighed down by an overhang of capacity that is keeping rates and utilization suppressed. Nonetheless, we continue to focus on improving operational and logistical efficiency, reducing operating costs, and lowering SG&A through improved systems and consolidation, although the financial impact is obscured by the challenging market. Our operational performance is at a good level and improving as evidenced by our success in rolling over maturing contracts and bundling other related services with numerous operators. We anticipate a further decrease in first quarter income with seasonal weakness amplified by our concentration in the most susceptible areas. The balance of 2013 is difficult to forecast for this segment, but we will continue to pursue efficiency gains. Although many of our long-term contracts are expiring, our success to date in extending these into exclusive or minimum volume term agreements leads us to believe we can maintain a sufficient level of utilization.
"Our financial position remains strong and has continued to improve as we remain focused on generating free cash flow through a combination of strong operational execution, working capital management, judicious capital allocation and asset sales where prudent. At the same time, we will continue to invest in our core markets to obtain, regain or maintain leading positions in market share and technical innovation and pursue strategic opportunities within our core operations where the risk / reward balance warrants.
"Despite the near-term challenges that several of our markets present, we are increasingly optimistic concerning the intermediate and longer-term future of all of our operations. Our previously announced strategic plan of enhancing balance sheet flexibility, achieving a higher standard of operational excellence, accelerating technology innovation and adoption, and streamlining our business is beginning to yield results. Our progress has been inhibited by the obstacles of the weak market conditions we face in many of our businesses and compressed financial market multiples; conversely, the diminishing drag of previous commitments is beginning to facilitate progress. This is evident in the achievements of the last two quarters. Our success with the PACE(®)-X rig reflects our efforts to make Nabors the global provider of choice in reducing well costs, especially in shale provinces."
The Nabors companies actively market approximately 474 land drilling rigs throughout the world and approximately 548 land workover and well servicing rigs in North America. Nabors' actively marketed offshore fleet consists of 36 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 firstname.lastname@example.org.
NABORS INDUSTRIES LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (LOSS)
Three Months Ended Year Ended December 31, September December 31, 30, (In thousands, except per share 2012 2011 2012 2012 2011 amounts) Revenues and other income: Operating $ $ $ $ $ revenues 1,595,614 1,734,637 1,766,419 6,989,573 6,060,351 Earnings (losses) from 1,193 (2,658) (99,527) (301,320) 56,647 unconsolidated affiliates Investment 30,293 7,908 7,224 63,137 19,940 income (loss) Total revenues 1,627,100 1,739,887 1,674,116 6,751,390 6,136,938 and other income Costs and other deductions: Direct costs 1,039,050 1,087,994 1,136,198 4,483,320 3,775,964 General and administrative 130,723 131,540 131,887 532,568 489,892 expenses Depreciation and 277,283 239,757 269,597 1,055,517 924,094 amortization Interest expense 61,835 60,852 63,604 251,552 256,633 Losses (gains) on sales and disposals of long-lived (158,347) 5,614 10,263 (136,510) 4,514 assets and other expense (income), net Impairments and 142,757 100,000 - 290,260 198,072 other charges Total costs and 1,493,301 1,625,757 1,611,549 6,476,707 5,649,169 other deductions Income (loss) from continuing operations 133,799 114,130 62,567 274,683 487,769 before income taxes Income tax expense 3,777 23,845 (4,001) 32,628 142,605 (benefit) Subsidiary preferred stock 750 750 750 3,000 3,000 dividend Income (loss) from continuing 129,272 89,535 65,818 239,055 342,164 operations, net of tax Income (loss) from discontinued (101,121) (193,985) 10,826 (74,400) (97,440) operations, net of tax Net income 28,151 (104,450) 76,644 164,655 244,724 (loss) Less: Net (income) loss attributable to (1,074) (1,400) (988) (621) (1,045) noncontrolling interest Net income (loss) $ 27,077 $ $ 75,656 $ 164,034 $ 243,679 attributable to (105,850) Nabors Earnings (losses) per share: (1) Basic from continuing $ .44 $ .31 $ .22 $ .82 $ 1.19 operations Basic from discontinued (.35) (.68) .04 (.25) (.34) operations Basic $ .09 $ (.37) $ .26 $ .57 $ .85 Diluted from continuing $ .44 $ .30 $ .22 $ .82 $ 1.17 operations Diluted from discontinued (.35) (.66) .04 (.26) (.34) operations Diluted $ .09 $ (.36) $ .26 $ .56 $ .83
Weighted-average number of common shares outstanding: (1)
Basic 290,394 287,561 290,367 289,965 287,118
Diluted 292,421 290,964 292,501 292,323 292,484
Adjusted income (loss) derived from operating $ 149,751 $ 269,288 $ 228,015 $ 918,649 $ 867,363 activities from 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 the sum of direct costs, general and administrative expenses, depreciation and amortization and earnings (losses) from the U.S. oil and gas joint venture from the sum of Operating revenues and Earnings (losses) from unconsolidated affiliates. These amounts should not be used as a substitute for
those amounts reported in accordance with GAAP. However, management (2) 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) December 31, September 30, December 31, (In thousands, except 2012 2012 2011 ratios) ASSETS Current assets: Cash and short-term $ 778,204 $ 619,563 $ 539,489 investments Accounts receivable, net 1,382,623 1,529,232 1,576,555 Assets held for sale 383,857 404,234 401,500 Other current assets 588,173 580,620 570,770 Total current assets 3,132,857 3,133,649 3,088,314 Long-term investments and 4,269 5,301 11,124 other receivables Property, plant and 8,712,088 8,894,084 8,629,946 equipment, net Goodwill 472,326 472,462 501,258 Investment in unconsolidated 61,690 70,172 371,021 affiliates Other long-term assets 272,792 348,893 310,477 Total assets $ 12,656,022 $ 12,924,561 $ 12,912,140 LIABILITIES AND EQUITY Current liabilities: Current portion of long-term $ 364 $ 389 $ 275,326 debt Other current liabilities 1,132,018 1,134,277 1,527,236 Total current liabilities 1,132,382 1,134,666 1,802,562 Long-term debt 4,379,336 4,678,896 4,348,490 Other long-term liabilities 1,117,999 1,185,687 1,090,683 Total liabilities 6,629,717 6,999,249 7,241,735 Subsidiary preferred stock 69,188 69,188 69,188 (1) Equity: Shareholders' equity 5,944,929 5,843,880 5,587,815 Noncontrolling interest 12,188 12,244 13,402 Total equity 5,957,117 5,856,124 5,601,217 Total liabilities and equity $ 12,656,022 $ 12,924,561 $ 12,912,140
Represents subsidiary preferred stock from acquisition in September (1) 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 Year Ended December 31, September December 31, 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 $ 408,429 $ 484,173 $ 461,860 $ $ 1,698,620 Land Drilling 1,860,357 U.S. Offshore 61,218 53,920 66,675 268,986 170,727 Alaska 25,507 29,216 27,249 147,465 129,894 Canada 152,147 168,750 135,786 572,616 574,754 International 324,728 295,067 329,245 1,265,060 1,104,461 Other Rig 180,467 211,427 188,694 839,533 674,206 Services (2) Subtotal Drilling and 1,152,496 1,242,553 1,209,509 4,954,017 4,352,662 Rig Services (3) Completion and Production Services: U.S. Production 211,928 197,471 222,034 857,668 701,223 Services Completion 295,827 369,794 381,241 1,462,767 1,237,306 Services Subtotal Completion and 507,755 567,265 603,275 2,320,435 1,938,529 Production Services (4) Other reconciling (63,444) (77,839) (145,892) (586,199) (174,193) items (5) Total $ $ $ $ $ 6,116,998 1,596,807 1,731,979 1,666,892 6,688,253 Adjusted income (loss) derived from operating activities from continuing operations: (1) (6) Drilling and Rig Services: U.S. Lower 48 $ 94,719 $ 130,114 $ 114,884 $ 467,716 $ 414,317 Land Drilling U.S. Offshore (14,311) 3,422 (3,650) (305) 843 Alaska 2,195 5,343 3,973 42,483 27,671 Canada 28,078 36,553 22,889 96,536 94,637 International 23,388 23,450 30,299 91,226 123,813 Other Rig 4,829 13,152 16,207 79,061 55,617 Services (2) Subtotal Drilling and 138,898 212,034 184,602 776,717 716,898 Rig Services (3) Completion and Production Services: U.S. Production 20,360 24,237 32,825 103,659 74,725 Services Completion 30,296 76,470 47,218 188,518 229,125 Services Subtotal Completion and 50,656 100,707 80,043 292,177 303,850 Production Services (4) Other reconciling (39,803) (43,453) (36,630) (150,245) (153,385) items (7) Total adjusted income (loss) derived from $ 149,751 $ 269,288 $ 228,015 $ 918,649 $ 867,363 operating activities U.S. oil and gas joint venture - 3,400 (98,805) (301,801) 59,685 earnings (losses) Interest (61,835) (60,852) (63,604) (251,552) (256,633) expense Investment 30,293 7,908 7,224 63,137 19,940 income (loss) Gains (losses) on sales and disposals of long-lived 158,347 (5,614) (10,263) 136,510 (4,514) assets and other income (expense), net Impairments and other (142,757) (100,000) - (290,260) (198,072) charges Income (loss) from continuing $ 133,799 $ 114,130 $ 62,567 $ 274,683 $ 487,769 operations before income taxes Rig activity: Rig years: (8) U.S. Lower 48 172.7 216.7 193.8 200.7 200.2 Land Drilling U.S. Offshore 12.4 10.0 12.8 12.8 9.6 Alaska 5.2 5.0 4.6 5.6 4.9 Canada 36.3 45.2 34.0 34.8 39.8 International 119.3 113.2 119.2 119.3 105.3 (9) Total rig 345.9 390.1 364.4 373.2 359.8 years Rig hours: (10) U.S. Production 202,368 202,816 217,675 853,373 791,956 Services Canada Production 44,582 52,712 43,849 181,185 184,908 Services Total rig 246,950 255,528 261,524 1,034,558 976,864 hours All periods present the operating activities of our wholly owned
oil and gas businesses in the United States, Canada and Colombia, (1) our equity interests in joint ventures in Canada and Colombia, and
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, $(6.1) (3) million and $(.7) million for the three months ended December 31,
2012 and 2011 and September 30, 2012, respectively, and $(3.1) million for the year ended December 31, 2011.
Includes earnings (losses), net from unconsolidated affiliates, (4) accounted for using the equity method, of $.5 million for the
three months and year ended December 31, 2012. Represents the elimination of inter-segment transactions and earnings (losses), net from the U.S. unconsolidated oil and gas
joint venture, accounted for using the equity method until sold in (5) December 2012, of $3.4 million and $(98.8) million during the
three months ended December 31, 2011 and September 30, 2012, respectively, and $(301.8) million and $59.7 million for the years ended December 31, 2012 and 2011, respectively. Adjusted income (loss) derived from operating activities is computed by subtracting the sum of direct costs, general and administrative expenses, depreciation and amortization and earnings (losses) from the U.S. oil and gas joint venture from the sum of Operating revenues and Earnings (losses) from unconsolidated affiliates. These amounts should not be used as a
substitute for the amounts reported in accordance with GAAP. (6) 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. (7) 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 (8) 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 (9) totaled 2.5 years, 2.3 years, and 2.5 years during each of the
three months ended December 31, 2012 and 2011 and September 30, 2012, respectively, and 2.5 years and 2.1 years during the years ended December 31, 2012 and 2011, respectively. (10) 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 Year Ended December 31, September December 31, 30, (In thousands, except per share 2012 2011 2012 2012 2011 amounts) Net income (loss) attributable to Nabors (numerator): Income (loss) from continuing $ 129,272 $ 89,535 $ 65,818 $ 239,055 $ 342,164 operations, net of tax Less: net (income) loss attributable to (1,074) (1,400) (988) (621) (1,045) noncontrolling interest Adjusted income (loss) from continuing $ 128,198 $ 88,135 $ 64,830 $ 238,434 $ 341,119 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 $ 128,198 $ 88,135 $ 64,830 $ 238,434 $ 341,119 operations, net of tax - diluted Income (loss) from discontinued (101,121) (193,985) 10,826 (74,400) (97,440) operations, net of tax Adjusted net income (loss) $ 27,077 $ $ 75,656 $ 164,034 $ 243,679 attributable to (105,850) Nabors Earnings (losses) per share: Basic from continuing $ .44 $ .31 $ .22 $ .82 $ 1.19 operations Basic from discontinued (.35) (.68) .04 (.25) (.34) operations Total Basic $ .09 $ (.37) $ .26 $ .57 $ .85 Diluted from continuing $ .44 $ .30 $ .22 $ .82 $ 1.17 operations Diluted from discontinued (.35) (.66) .04 (.26) (.34) operations Total Diluted $ .09 $ (.36) $ .26 $ .56 $ .83 Shares (denominator): Weighted-average number of shares 290,394 287,561 290,367 289,965 287,118 outstanding - basic Net effect of dilutive stock options, warrants and 2,027 3,403 2,134 2,358 5,366 restricted stock awards based on the if-converted method Assumed conversion of our 0.94% senior - - - - - exchangeable notes due 2011 (1) Weighted-average number of shares 292,421 290,964 292,501 292,323 292,484 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 15,000,882 and 13,930,575 shares during the three months ended December 31, 2012 and 2011, respectively; and 15,010,906 shares during the three months ended September 30, 2012; and 14,200,915 and 9,241,543 shares during the years ended December 31, 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 is 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. http://photos.prnewswire.com/prnh/20070205/NABORSLOGO PRN Photo Desk, email@example.com SOURCE: Nabors Industries Ltd. To view this news release in HTML formatting, please use the following URL: http://www.newswire.ca/en/releases/archive/February2013/19/c6759.html CO: Nabors Industries Ltd. NI: ERN EST ERN -0- Feb/19/2013 21:09 GMT