Nabors Industries Reports Earnings Miss

Nabors Industries Ltd. (NBR), the world’s largest land-rig drilling contractor, said second-quarter operating results will miss analysts’ estimates on higher costs. The company also adopted a shareholder rights plan, designed to deter an unsolicited takeover.

Nabors, which provides rigs and well services including hydraulic fracturing to oil and natural-gas producers, expects to earn $220 million to $230 million, excluding some items, the Hamilton, Bermuda-based company said today in a statement. The forecast is at least $15.5 million lower than the average of 11 analysts’ estimates compiled by Bloomberg.

“We had full expectations of a negative quarter,” Brian Uhlmer, an analyst at Global Hunter Securities LLC in Houston, said in a telephone interview. He rates the shares at accumulate, which means investors should buy the stock.

Uhlmer said he was expecting Nabors to report operating income of $235 million in the quarter.

“It’s late startups,” said Uhlmer. “This has been a perennial issue with them.”

The company’s production affiliate had $150 million in reduced value for its reserves. Second quarter operating cash flow was almost $500 million, Nabors said.

Nabors will consolidate its U.S. well-servicing and pressure-pumping businesses into one unit, called Nabors Completion and Production Services. The consolidation and various other costs will lead to a non-cash charge of about $150 million in the second quarter, the company said.

Under the shareholder rights plan, common shareholders will have the right to buy a new series of preferred stock. The plan is designed to deter any person or group from gaining control without paying a premium to all shareholders, according to a separate statement today.

Nabors rose 0.8 percent to $13.30 at 9:43 a.m. in New York.

To contact the reporters on this story: Jim Polson in New York at jpolson@bloomberg.net; David Wethe in Houston at dwethe@bloomberg.net

To contact the editor responsible for this story: Susan Warren at susanwarren@bloomberg.net

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