UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) October 27, 2015
NABORS INDUSTRIES LTD.
(Exact name of registrant as specified in its charter)
Bermuda |
|
001-32657 |
|
98-0363970 |
(State or Other Jurisdiction of Incorporation or Organization) |
|
(Commission File Number) |
|
(I.R.S. Employer Identification No.) |
Crown House 4 Par-la-Ville Road Second Floor Hamilton, HM08 Bermuda |
|
N/A |
(Address of principal executive offices) |
|
(Zip Code) |
(441) 292-1510
(Registrants telephone number, including area code)
N/A
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 2.02 Results of Operations and Financial Condition.
On October 27, 2015, we issued a press release announcing our results of operations for the three- and nine-month period ended September 30, 2015. A copy of that release is furnished herewith as Exhibit 99.1 and is incorporated herein by reference.
The press release 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 risks and uncertainties, as disclosed from time to time in our filings with the Securities and Exchange Commission. As a result of these factors, our actual results may differ materially from those indicated or implied by such forward-looking statements.
We also presented in the press release certain non-GAAP financial measures. We presented our adjusted EBITDA and adjusted income (loss) derived from operating activities for all periods presented in the release. The components of these non-GAAP measures are computed by using amounts that are determined in accordance with accounting principles generally accepted in the United States of America (GAAP). Adjusted EBITDA is computed by subtracting the sum of direct costs, general and administrative expenses and earnings (losses) from our equity method investment from the sum of Operating revenues and Earnings (losses) from unconsolidated affiliates. Adjusted income (loss) derived from operating activities is computed similarly, but also subtracts depreciation and amortization expenses from the sum of Operating revenues and Earnings (losses) from unconsolidated affiliates. As part of the press release information, we have provided a reconciliation of adjusted EBITDA and adjusted income (loss) derived from operating activities to income (loss) from continuing operations before income taxes, which is its nearest comparable GAAP financial measure.
We included our adjusted EBITDA and adjusted income (loss) derived from operating activities in the release because management evaluates the performance of our business units and the consolidated company based on several criteria, including these non-GAAP measures, and because we believe these financial measures are an accurate reflection of our ongoing profitability. There are, however, certain limitations to these measures and therefore they should be considered in addition to and not as an alternative to our results in accordance with GAAP.
Item 8.01. Other Events.
On October 28, 2015, we will present certain information in connection with our call with shareholders, analysts and others relating to our results of operations discussed above. Attached hereto as Exhibit 99.2 are slides that will be presented at that time.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
Exhibit No. |
|
Description |
|
|
|
99.1 |
|
Press Release |
99.2 |
|
Investor Information |
2
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
|
NABORS INDUSTRIES LTD. |
|
|
|
|
Date: October 27, 2015 |
By: |
/s/ Mark D. Andrews |
|
Mark D. Andrews |
|
Corporate Secretary |
3
EXHIBIT INDEX
Exhibit No. |
|
Description |
|
|
|
99.1 |
|
Press Release |
99.2 |
|
Investor Information |
4
Exhibit 99.1
|
NEWS RELEASE |
Nabors Announces Third Quarter Results
Notable items for the quarter:
· EPS of ($0.86), including $0.72 in items, impairments and other charges related to the downturn, and $0.12 loss from unconsolidated affiliates
· Deployed 5 remaining PACE®-X rigs to Colombia
· Repurchased 8.3 million shares at a cost of $78.4 million
HAMILTON, Bermuda, October 27, 2015 Nabors Industries Ltd. (Nabors) (NYSE:NBR) today reported third-quarter operating revenues of $848 million, compared to $863 million in the second quarter of 2015, and $1.81 billion in the third quarter of last year. The comparable third quarter of last year included $612 million in revenue from Completion and Production Services, a business line that merged with C&J Energy Services on March 24, 2015. The Completion and Production Services business is no longer consolidated with Nabors, and Nabors results reflect equity-method accounting for this investment on a quarter-lag basis.
Net income from continuing operations reported for the third quarter was a loss of $250.9 million or $0.86 per diluted share. This compares to a second-quarter net income loss from continuing operations of $41.9 million or $0.14 per diluted share. The current results include $250.9 million in pre-tax charges or $0.79 per diluted share. The largest portion of the charges consisted of the impairment of Nabors holdings in C&J Energy Services in the amount of $180.6 million. The balance consisted of numerous small asset impairments and severance costs. These impairments were partially offset by favorable tax adjustments of $19.1 million ($0.07 per diluted share). The quarter also includes a net loss of $35.1 million or $0.12 per diluted share attributable to Nabors equity share of C&J Energy Services second quarter results.
Anthony Petrello, Nabors Chairman and CEO, commented, Our third-quarter results were essentially in line, as increased revenue and cash flow internationally were offset by lower results in North America due to lower activity and increased exposure to spot market pricing. We expect more moderate sequential decreases through the seasonally weak second quarter of next year with gradual declines in rig activity and more rigs converting to spot pricing both in North America and internationally. The recent new rig deployments internationally have been on time and within budget, mitigating the impact of the idling of other high contribution rigs that would likely have been renewed had it not been for the weakening environment. Our PACE®-X rigs continue to experience over 90% utilization and are increasingly viewed as best-in-class for pad drilling.
Our view of the timing and shape of the recovery remains unchanged with an expectation of a protracted trough followed by a more gradual recovery than recent cycles. Accordingly, we continue to exercise stringent control over our operating, support and capital spending in order to meet our minimum goal of breakeven free cash flow. Our solid financial position and sizable liquidity allow us to remain opportunistic should attractive long-term strategic opportunities arise.
Segment Results
Adjusted income derived from operating activities (adjusted income) in Drilling and Rig Services decreased 57% to $45.5 million from $104.9 million in the second quarter of this year. Adjusted EBITDA in this business line was $286.0 million, primarily attributable to the International segment. For the quarter the Company averaged 242 rigs operating at an average gross margin of $14,657 per rig day. Future quarters are expected to show more moderate income declines as the weak commodity price environment persists and customer spending continues to slow.
International adjusted income decreased by 11% sequentially to $74.0 million, reflecting the impact of lower utilization. Going forward, the Company continues to foresee the potential for further declines in its International results as several impactful drilling programs continue to wind down. Despite the softening conditions, full-year results for the International segment are still expected to increase compared to 2014.
In North America, our U.S. Drilling segment experienced further decline during the quarter, resulting in a decrease in adjusted income of $45.5 million from the prior quarter. In the Lower 48, activity declined throughout the quarter with 14% fewer rigs working. Canada marginally improved during the third quarter after its seasonal break up, while utilization in Alaska declined seasonally by nearly 13%. In the U.S. Gulf of Mexico, commencement of the full operating dayrate for our newest platform rig continues to be delayed for an indefinite period of time due to issues with the installation of the customers platform.
Rig Services, which consists of the Companys manufacturing and directional drilling operations, reported negative adjusted income of $10.4 million, as the industrys newbuild activity and drilling activity has declined.
Financial Discussion
William Restrepo, Nabors Chief Financial Officer, stated, Nabors is taking measures to maintain our financial flexibility and commitment to free cash flow throughout this downcycle. We are targeting annualized G&A reductions of at least $110 million on a comparable basis, and continue to reduce direct rig operating and field support costs in line with our expectations of near-term drilling activity. Third quarter capital expenditures were $166 million, and we are on pace to spend approximately $900 million for the year, well below anticipated adjusted EBITDA.
During the quarter we established a $325 million five-year term loan on attractive terms with three large global banks. This represented an opportunity to lock in an attractive LIBOR spread of 117.5 basis points and in anticipation of the maturity of our $350 million senior unsecured notes due September next year. We also took advantage of equity market volatility during the quarter by repurchasing 8.3 million shares of our common stock at an average cost of $9.47 per share. We remain committed to emerge from this cycle a stronger and even more financially sound drilling company.
About Nabors
The Nabors companies own and operate approximately 476 land drilling rigs throughout the world. Nabors actively marketed offshore fleet consists of six jackups and 36 platform rigs in the United States and multiple international markets. Nabors also manufactures top drives, other rig components and drilling instrumentation systems. Nabors participates in most of the significant oil and gas markets in the world.
Forward-looking Statements
The information above includes forward-looking statements within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934. Such forward-looking statements are subject to certain risks and uncertainties, as disclosed by Nabors from time to time in its filings with the Securities and Exchange Commission. As a result of these factors, Nabors actual results may differ materially from those indicated or implied by such forward-looking statements. The forward-looking statements contained in this release reflect managements estimates as of the date of the release. Nabors does not undertake to update these forward-looking statements.
Media Contact:
Dennis A. Smith, Director of Corporate Development & Investor Relations, +1 281-775-8038. To request investor materials, contact Nabors corporate headquarters in Hamilton, Bermuda at +441-292-1510 or via e-mail at mark.andrews@nabors.com
Source: Nabors Industries Ltd.
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 amounts) |
|
2015 |
|
2014 |
|
2015 |
|
2015 |
|
2014 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues and other income: |
|
|
|
|
|
|
|
|
|
|
|
Operating revenues |
|
$ |
847,553 |
|
$ |
1,813,762 |
|
$ |
863,305 |
|
$ |
3,125,565 |
|
$ |
5,020,361 |
|
Earnings (losses) from unconsolidated affiliates |
|
(35,100 |
) |
(2,851 |
) |
(1,116 |
) |
(29,714 |
) |
(5,872 |
) |
Investment income (loss) |
|
(22 |
) |
2,189 |
|
1,181 |
|
2,128 |
|
10,235 |
|
Total revenues and other income |
|
812,431 |
|
1,813,100 |
|
863,370 |
|
3,097,979 |
|
5,024,724 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs and other deductions: |
|
|
|
|
|
|
|
|
|
|
|
Direct costs |
|
518,174 |
|
1,181,986 |
|
488,522 |
|
1,926,306 |
|
3,310,220 |
|
General and administrative expenses |
|
81,748 |
|
138,967 |
|
86,290 |
|
295,171 |
|
406,863 |
|
Depreciation and amortization |
|
240,107 |
|
286,581 |
|
218,196 |
|
739,322 |
|
851,528 |
|
Interest expense |
|
44,448 |
|
43,138 |
|
44,469 |
|
135,518 |
|
134,251 |
|
Losses (gains) on sales and disposals of long-lived assets and other expense (income), net |
|
259,731 |
|
(1,513 |
) |
1,338 |
|
205,227 |
|
16,467 |
|
Total costs and other deductions |
|
1,144,208 |
|
1,649,159 |
|
838,815 |
|
3,301,544 |
|
4,719,329 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations before income taxes |
|
(331,777 |
) |
163,941 |
|
24,555 |
|
(203,565 |
) |
305,395 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense (benefit) |
|
(80,898 |
) |
61,511 |
|
66,445 |
|
(35,158 |
) |
86,275 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Subsidiary preferred stock dividend |
|
|
|
|
|
|
|
|
|
1,984 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations, net of tax |
|
(250,879 |
) |
102,430 |
|
(41,890 |
) |
(168,407 |
) |
217,136 |
|
Income (loss) from discontinued operations, net of tax |
|
(45,275 |
) |
4,005 |
|
5,025 |
|
(41,067 |
) |
4,488 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) |
|
(296,154 |
) |
106,435 |
|
(36,865 |
) |
(209,474 |
) |
221,624 |
|
Less: Net (income) loss attributable to noncontrolling interest |
|
320 |
|
(387 |
) |
44 |
|
453 |
|
(1,213 |
) |
Net income (loss) attributable to Nabors |
|
$ |
(295,834 |
) |
$ |
106,048 |
|
$ |
(36,821 |
) |
$ |
(209,021 |
) |
$ |
220,411 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (losses) per share: (1) |
|
|
|
|
|
|
|
|
|
|
|
Basic from continuing operations |
|
$ |
(.86 |
) |
$ |
.34 |
|
$ |
(.14 |
) |
$ |
(.57 |
) |
$ |
.72 |
|
Basic from discontinued operations |
|
(.16 |
) |
.02 |
|
.01 |
|
(.15 |
) |
.02 |
|
Basic |
|
$ |
(1.02 |
) |
$ |
.36 |
|
$ |
(.13 |
) |
$ |
(.72 |
) |
$ |
.74 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted from continuing operations |
|
$ |
(.86 |
) |
$ |
.34 |
|
$ |
(.14 |
) |
$ |
(.57 |
) |
$ |
.71 |
|
Diluted from discontinued operations |
|
(.16 |
) |
.01 |
|
.01 |
|
(.15 |
) |
.02 |
|
Diluted |
|
$ |
(1.02 |
) |
$ |
.35 |
|
$ |
(.13 |
) |
$ |
(.72 |
) |
$ |
.73 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average number of common shares outstanding: (1) |
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
284,112 |
|
292,621 |
|
286,085 |
|
285,186 |
|
292,613 |
|
Diluted |
|
284,112 |
|
295,005 |
|
286,085 |
|
285,186 |
|
295,353 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA (2) |
|
$ |
247,631 |
|
$ |
489,958 |
|
$ |
288,177 |
|
$ |
910,274 |
|
$ |
1,297,406 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted income (loss) derived from operating activities (3) |
|
$ |
7,524 |
|
$ |
203,377 |
|
$ |
69,981 |
|
$ |
170,952 |
|
$ |
445,878 |
|
(1) See Computation of Earnings (Losses) Per Share included herein as a separate schedule.
(2) Adjusted EBITDA is computed by subtracting the sum of direct costs and general and administrative expenses and earnings (losses) from our equity method investment from the sum of Operating revenues and Earnings (losses) from unconsolidated affiliates. Adjusted EBITDA is a non-GAAP measure and should not be used in isolation as a substitute for the 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 EBITDA and adjusted income (loss) derived from operating activities, because we believe 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 Reconciliation of Non-GAAP Financial Measures to Income (loss) from Continuing Operations before Income Taxes.
(3) 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 our equity method investment 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 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 Reconciliation of Non-GAAP Financial Measures to Income (loss) from Continuing Operations before Income Taxes.
1-1
NABORS INDUSTRIES LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
|
|
(Unaudited) |
|
|
|
|
|
September 30, |
|
June 30, |
|
December 31, |
|
(In thousands) |
|
2015 |
|
2015 |
|
2014 |
|
|
|
|
|
|
|
|
|
ASSETS |
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
Cash and short-term investments |
|
$ |
276,562 |
|
$ |
469,897 |
|
$ |
536,169 |
|
Accounts receivable, net |
|
871,385 |
|
908,563 |
|
1,517,503 |
|
Assets held for sale |
|
78,400 |
|
136,677 |
|
146,467 |
|
Other current assets |
|
492,728 |
|
454,018 |
|
541,735 |
|
Total current assets |
|
1,719,075 |
|
1,969,155 |
|
2,741,874 |
|
Long-term investments and other receivables |
|
2,455 |
|
2,617 |
|
2,806 |
|
Property, plant and equipment, net |
|
7,287,531 |
|
7,405,441 |
|
8,599,125 |
|
Goodwill |
|
150,032 |
|
139,756 |
|
173,928 |
|
Investment in unconsolidated affiliates |
|
460,543 |
|
676,234 |
|
58,251 |
|
Other long-term assets |
|
309,545 |
|
324,080 |
|
303,958 |
|
Total assets |
|
$ |
9,929,181 |
|
$ |
10,517,283 |
|
$ |
11,879,942 |
|
|
|
|
|
|
|
|
|
LIABILITIES AND EQUITY |
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
Current debt |
|
$ |
8,982 |
|
$ |
66,359 |
|
$ |
6,190 |
|
Other current liabilities |
|
1,040,569 |
|
1,156,394 |
|
1,561,285 |
|
Total current liabilities |
|
1,049,551 |
|
1,222,753 |
|
1,567,475 |
|
Long-term debt |
|
3,737,773 |
|
3,691,357 |
|
4,348,859 |
|
Other long-term liabilities |
|
630,458 |
|
663,798 |
|
1,044,819 |
|
Total liabilities |
|
5,417,782 |
|
5,577,908 |
|
6,961,153 |
|
|
|
|
|
|
|
|
|
Equity: |
|
|
|
|
|
|
|
Shareholders equity |
|
4,502,313 |
|
4,931,960 |
|
4,908,619 |
|
Noncontrolling interest |
|
9,086 |
|
7,415 |
|
10,170 |
|
Total equity |
|
4,511,399 |
|
4,939,375 |
|
4,918,789 |
|
Total liabilities and equity |
|
$ |
9,929,181 |
|
$ |
10,517,283 |
|
$ |
11,879,942 |
|
1-2
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 activity) |
|
2015 |
|
2014 |
|
2015 |
|
2015 |
|
2014 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Reportable segments: |
|
|
|
|
|
|
|
|
|
|
|
Operating revenues and Earnings (losses) from unconsolidated affiliates: |
|
|
|
|
|
|
|
|
|
|
|
Drilling and Rig Services: |
|
|
|
|
|
|
|
|
|
|
|
U.S. |
|
$ |
259,939 |
|
$ |
571,736 |
|
$ |
321,169 |
|
$ |
1,034,929 |
|
$ |
1,615,106 |
|
Canada |
|
29,929 |
|
80,491 |
|
21,413 |
|
109,182 |
|
246,973 |
|
International |
|
516,180 |
|
427,558 |
|
458,545 |
|
1,413,886 |
|
1,191,520 |
|
Rig Services (1) |
|
73,521 |
|
191,437 |
|
100,599 |
|
318,204 |
|
502,509 |
|
Subtotal Drilling and Rig Services |
|
879,569 |
|
1,271,222 |
|
901,726 |
|
2,876,201 |
|
3,556,108 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Completion and Production Services: |
|
|
|
|
|
|
|
|
|
|
|
Completion Services |
|
|
|
352,018 |
|
|
|
207,860 |
|
856,329 |
|
Production Services |
|
|
|
259,863 |
|
|
|
158,512 |
|
793,641 |
|
Subtotal Completion and Production Services |
|
|
|
611,881 |
|
|
|
366,372 |
|
1,649,970 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Other reconciling items (2) |
|
(32,016 |
) |
(69,341 |
) |
(38,421 |
) |
(117,008 |
) |
(185,717 |
) |
Total operating revenues |
|
$ |
847,553 |
|
$ |
1,813,762 |
|
$ |
863,305 |
|
$ |
3,125,565 |
|
$ |
5,020,361 |
|
Earnings (losses) from unconsolidated affiliates (3) |
|
(35,100 |
) |
(2,851 |
) |
(1,116 |
) |
(29,714 |
) |
(5,872 |
) |
Total operating revenues and earnings (losses) from unconsolidated affiliates |
|
$ |
812,453 |
|
$ |
1,810,911 |
|
$ |
862,189 |
|
$ |
3,095,851 |
|
$ |
5,014,489 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA: (4) |
|
|
|
|
|
|
|
|
|
|
|
Drilling and Rig Services: |
|
|
|
|
|
|
|
|
|
|
|
U.S. |
|
$ |
94,505 |
|
$ |
234,980 |
|
$ |
136,499 |
|
$ |
418,749 |
|
$ |
628,678 |
|
Canada |
|
7,516 |
|
25,804 |
|
3,732 |
|
29,716 |
|
80,139 |
|
International |
|
186,451 |
|
159,588 |
|
176,994 |
|
564,473 |
|
436,915 |
|
Rig Services (1) |
|
(2,455 |
) |
30,153 |
|
6,341 |
|
25,469 |
|
63,820 |
|
Subtotal Drilling and Rig Services (5) |
|
286,017 |
|
450,525 |
|
323,566 |
|
1,038,407 |
|
1,209,552 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Completion and Production Services: |
|
|
|
|
|
|
|
|
|
|
|
Completion Services |
|
|
|
40,507 |
|
|
|
(27,847 |
) |
61,467 |
|
Production Services |
|
|
|
49,312 |
|
|
|
23,043 |
|
167,635 |
|
Subtotal Completion and Production Services (6) |
|
|
|
89,819 |
|
|
|
(4,804 |
) |
229,102 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Other reconciling items (7) |
|
(38,386 |
) |
(50,386 |
) |
(35,389 |
) |
(123,329 |
) |
(141,248 |
) |
Total adjusted EBITDA |
|
$ |
247,631 |
|
$ |
489,958 |
|
$ |
288,177 |
|
$ |
910,274 |
|
$ |
1,297,406 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted income (loss) derived from operating activities: (8) |
|
|
|
|
|
|
|
|
|
|
|
Drilling and Rig Services: |
|
|
|
|
|
|
|
|
|
|
|
U.S. |
|
$ |
(14,034 |
) |
$ |
117,212 |
|
$ |
31,445 |
|
$ |
94,449 |
|
$ |
279,683 |
|
Canada |
|
(4,085 |
) |
11,517 |
|
(8,268 |
) |
(5,995 |
) |
37,902 |
|
International |
|
74,039 |
|
68,452 |
|
83,255 |
|
262,335 |
|
167,154 |
|
Rig Services (1) |
|
(10,434 |
) |
21,136 |
|
(1,575 |
) |
864 |
|
38,923 |
|
Subtotal Drilling and Rig Services (5) |
|
45,486 |
|
218,317 |
|
104,857 |
|
351,653 |
|
523,662 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Completion and Production Services: |
|
|
|
|
|
|
|
|
|
|
|
Completion Services |
|
|
|
14,211 |
|
|
|
(55,243 |
) |
(20,005 |
) |
Production Services |
|
|
|
21,182 |
|
|
|
(3,296 |
) |
81,662 |
|
Subtotal Completion and Production Services (6) |
|
|
|
35,393 |
|
|
|
(58,539 |
) |
61,657 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Other reconciling items (7) |
|
(37,962 |
) |
(50,333 |
) |
(34,876 |
) |
(122,162 |
) |
(139,441 |
) |
Total adjusted income (loss) derived from operating activities |
|
$ |
7,524 |
|
$ |
203,377 |
|
$ |
69,981 |
|
$ |
170,952 |
|
$ |
445,878 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Rig activity: |
|
|
|
|
|
|
|
|
|
|
|
Rig years: (9) |
|
|
|
|
|
|
|
|
|
|
|
U.S. |
|
103.0 |
|
216.0 |
|
119.5 |
|
129.8 |
|
212.7 |
|
Canada |
|
17.2 |
|
34.3 |
|
9.7 |
|
17.5 |
|
33.2 |
|
International (10) |
|
121.3 |
|
130.1 |
|
127.1 |
|
126.1 |
|
129.1 |
|
Total rig years |
|
241.5 |
|
380.4 |
|
256.3 |
|
273.4 |
|
375.0 |
|
Rig hours: (11) |
|
|
|
|
|
|
|
|
|
|
|
U.S. Production Services |
|
|
|
205,604 |
|
|
|
129,652 |
|
626,336 |
|
Canada Production Services |
|
|
|
36,509 |
|
|
|
23,947 |
|
106,720 |
|
Total rig hours |
|
|
|
242,113 |
|
|
|
153,599 |
|
733,056 |
|
1-3
(1) Includes our other services comprised of our drilling technology and top drive manufacturing, directional drilling, rig instrumentation and software services.
(2) Represents the elimination of inter-segment transactions.
(3) Represents our share of the net income (loss) of our unconsolidated affiliates accounted for by the equity method inclusive of $(31.5) million, $(0.8) million and $(35.9) million for the three months ended September 30, 2015 and June 30, 2015 and the nine months ended September 30, 2015, respectively, representing our share of the net loss of C&J Energy Services, Ltd., reported on a one-quarter lag.
(4) Adjusted EBITDA is computed by subtracting the sum of direct costs and general and administrative expenses and earnings (losses) from our equity method investment from the sum of Operating revenues and Earnings (losses) from unconsolidated affiliates. Adjusted EBITDA is a non-GAAP measure and should not be used in isolation as a substitute for the 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 EBITDA and adjusted income (loss) derived from operating activities, because we believe 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 Reconciliation of Non-GAAP Financial Measures to Income (loss) from Continuing Operations before Income Taxes.
(5) Includes earnings (losses), net from unconsolidated affiliates, accounted for using the equity method, of $(2.9) million and $(0.3) million for the three months ended September 30, 2014 and June 30, 2015, respectively and $5.9 million and $(6.1) million for the nine months ended September 30, 2015 and 2014, respectively.
(6) Includes earnings (losses), net from unconsolidated affiliates, accounted for using the equity method, of $0.3 million and $0.2 million for the nine months ended September 30, 2015 and 2014, respectively.
(7) Represents the elimination of inter-segment transactions and unallocated corporate expenses.
(8) 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 our equity method investment 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. 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 Reconciliation of Non-GAAP Financial Measures to Income (loss) from Continuing Operations before Income Taxes.
(9) 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.
(10) International rig years includes our equivalent percentage ownership of rigs owned by unconsolidated affiliates, which totaled 2.5 years during the three months ended September 30, 2014 and 2.5 years for the nine months ended September 30, 2014. As of May 24, 2015, this was no longer an unconsolidated affiliate.
(11) Rig hours represents the number of hours that our well-servicing rig fleet operated during the period. This fleet was included in the Completion and Production Services business line that was merged with C&J Energy Services, Inc. in March 2015, therefore we will no longer report this performance metric.
1-4
NABORS INDUSTRIES LTD. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO
INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES
(Unaudited)
|
|
Three Months Ended |
|
Nine Months Ended |
|
|
|
September 30, |
|
June 30, |
|
September 30, |
|
(In thousands) |
|
2015 |
|
2014 |
|
2015 |
|
2015 |
|
2014 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA |
|
$ |
247,631 |
|
$ |
489,958 |
|
$ |
288,177 |
|
$ |
910,274 |
|
$ |
1,297,406 |
|
Less: Depreciation and amortization |
|
240,107 |
|
286,581 |
|
218,196 |
|
739,322 |
|
851,528 |
|
Adjusted income (loss) derived from operating activities |
|
7,524 |
|
203,377 |
|
69,981 |
|
170,952 |
|
445,878 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (losses) from equity method investment |
|
(35,100 |
) |
|
|
(800 |
) |
(35,900 |
) |
|
|
Interest expense |
|
(44,448 |
) |
(43,138 |
) |
(44,469 |
) |
(135,518 |
) |
(134,251 |
) |
Investment income (loss) |
|
(22 |
) |
2,189 |
|
1,181 |
|
2,128 |
|
10,235 |
|
Gains (losses) on sales and disposals of long-lived assets and other income (expense), net |
|
(259,731 |
) |
1,513 |
|
(1,338 |
) |
(205,227 |
) |
(16,467 |
) |
Income (loss) from continuing operations before income taxes |
|
$ |
(331,777 |
) |
$ |
163,941 |
|
$ |
24,555 |
|
$ |
(203,565 |
) |
$ |
305,395 |
|
1-5
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 amounts) |
|
2015 |
|
2014 |
|
2015 |
|
2015 |
|
2014 |
|
|
|
|
|
|
|
|
|
|
|
|
|
BASIC EPS: |
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations, net of tax |
|
$ |
(250,879 |
) |
$ |
102,430 |
|
$ |
(41,890 |
) |
$ |
(168,407 |
) |
$ |
217,136 |
|
Less: Net (income) loss attributable to noncontrolling interest |
|
320 |
|
(387 |
) |
44 |
|
453 |
|
(1,213 |
) |
Less: Redemption of preferred shares |
|
|
|
|
|
|
|
|
|
(1,688 |
) |
Less: Earnings allocated to unvested shareholders |
|
5,834 |
|
(1,579 |
) |
720 |
|
4,523 |
|
(3,286 |
) |
Adjusted income (loss) from continuing operations - basic and diluted |
|
$ |
(244,725 |
) |
$ |
100,464 |
|
$ |
(41,126 |
) |
$ |
(163,431 |
) |
$ |
210,949 |
|
Income (loss) from discontinued operations, net of tax |
|
$ |
(45,275 |
) |
$ |
4,005 |
|
$ |
5,025 |
|
$ |
(41,067 |
) |
$ |
4,488 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average number of shares outstanding-basic |
|
284,112 |
|
292,621 |
|
286,085 |
|
285,186 |
|
292,613 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (losses) per share: |
|
|
|
|
|
|
|
|
|
|
|
Basic from continuing operations |
|
$ |
(.86 |
) |
$ |
.34 |
|
$ |
(.14 |
) |
$ |
(.57 |
) |
$ |
.72 |
|
Basic from discontinued operations |
|
(.16 |
) |
.02 |
|
.01 |
|
(.15 |
) |
.02 |
|
Total Basic |
|
$ |
(1.02 |
) |
$ |
.36 |
|
$ |
(.13 |
) |
$ |
(.72 |
) |
$ |
.74 |
|
|
|
|
|
|
|
|
|
|
|
|
|
DILUTED EPS: |
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations attributed to common shareholders |
|
$ |
(244,725 |
) |
$ |
100,464 |
|
$ |
(41,126 |
) |
$ |
(163,431 |
) |
$ |
210,949 |
|
Add: Effect of reallocating undistributed earnings of unvested shareholders |
|
|
|
11 |
|
|
|
|
|
25 |
|
Adjusted income (loss) from continuing operations attributed to common shareholders |
|
$ |
(244,725 |
) |
$ |
100,475 |
|
$ |
(41,126 |
) |
$ |
(163,431 |
) |
$ |
210,974 |
|
Income (loss) from discontinued operations |
|
$ |
(45,275 |
) |
$ |
4,005 |
|
$ |
5,025 |
|
$ |
(41,067 |
) |
$ |
4,488 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average number of shares outstanding-basic |
|
284,112 |
|
292,621 |
|
286,085 |
|
285,186 |
|
292,613 |
|
Add: dilutive effect of potential common shares |
|
|
|
2,384 |
|
|
|
|
|
2,740 |
|
Weighted-average number of diluted shares outstanding |
|
284,112 |
|
295,005 |
|
286,085 |
|
285,186 |
|
295,353 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted from continuing operations |
|
$ |
(.86 |
) |
$ |
.34 |
|
$ |
(.14 |
) |
$ |
(.57 |
) |
$ |
.71 |
|
Diluted from discontinued operations |
|
(.16 |
) |
.01 |
|
.01 |
|
(.15 |
) |
.02 |
|
Total Diluted |
|
$ |
(1.02 |
) |
$ |
.35 |
|
$ |
(.13 |
) |
$ |
(.72 |
) |
$ |
.73 |
|
Restricted stock grants that contain non-forfeitable rights to dividends are considered participating securities. As such, these grants are included in our basic and diluted earnings (losses) per share computation using the two-class method of accounting. For all periods presented, the computation of diluted earnings (losses) per share excluded outstanding stock options 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 that were excluded from diluted earnings (losses) per share that would have potentially diluted earnings (losses) per share were 9,416,647, 5,389,090 and 9,860,422 shares during the three months ended September 30, 2015 and 2014 and June 30, 2015, respectively, and 9,910,476 and 6,341,624 shares during the nine months ended September 30, 2015 and 2014, respectively. In any period during which the average market price of Nabors common shares exceeds the exercise prices of these stock options, such stock options are included in our diluted earnings (losses) per share computation using the if-converted method of accounting.
1-6
Exhibit 99.2
3Q15 Earnings Presentation October 28, 2015 Presenters: Anthony G. Petrello Chairman, President & Chief Executive Officer William J. Restrepo Chief Financial Officer
Forward-Looking Statements We often discuss expectations regarding our markets, demand for our products and services, and our future performance in our annual and quarterly reports, press releases, and other written and oral statements. Such statements, including statements in this document incorporated by reference that relate to matters that are not historical facts are forward-looking statements within the meaning of the safe harbor provisions of Section 27A of the U.S. Securities Act of 1933, as amended (the Securities Act) and Section 21E of the U.S. Securities Exchange Act of 1934. These forward-looking statements are based on our analysis of currently available competitive, financial and economic data and our operating plans. They are inherently uncertain, and investors must recognize that events and actual results could turn out to be significantly different from our expectations. Factors to consider when evaluating these forward-looking statements include, but are not limited to: fluctuations in worldwide prices and demand for natural gas and oil; fluctuations in levels of natural gas and oil exploration and development activities; fluctuations in the demand for our services; the existence of competitors, technological changes and developments in the oilfield services industry; our ability to complete, and realize the expected benefits of, any strategic transactions; the existence of operating risks inherent in the oilfield services industry; the possibility of changes in tax laws and other laws and regulations; the possibility of political or economic instability, civil disturbance, war or acts of terrorism in any of the countries in which we do business; and general economic conditions including the capital and credit markets. Our businesses depend, to a large degree, on the level of spending by oil and gas companies for exploration, development and production activities. Therefore, a continued decrease in the price of natural gas or oil, which could have a material impact on exploration and production activities, could also materially affect our financial position, results of operations and cash flows. The above description of risks and uncertainties is by no means all inclusive, but is designed to highlight what we believe are important factors to consider. Statements made in this presentation include non-GAAP financial measures. The required reconciliation to the nearest comparable GAAP financial measures is included in the investor relations section of our website. 2
Recent Highlights 1111, NABORS 3
Financial Summary ($000 except EPS) 3Q14 4Q14 1Q15 2Q15 3Q15 Operating Revenues $1,813,762 $1,783,836 $1,414,707 $863,305 $847,553 Adjusted EBITDA 489,958 445,692 374,466 288,177 247,631 Adjusted Income 203,377 152,120 93,447 69,981 7,524 GAAP Diluted EPS(1) 0.34(2) (3.06)(3) 0.43(4) (0.14)(5) (0.86)(6) (1) (2) Diluted Earnings Per Share from continuing operations Includes charges of 5¢ per share for income tax and merger-related fees, net of early termination payment, gain on sale of Alaska E&P and other items Includes charges and impairments of $3.39 per share related to asset impairments and transaction costs Includes net benefit of 23¢ per share for net gain from the C&J Energy Services transaction, tax benefits from various international jurisdictions, and severance charges from workforce reductions Includes 23¢ per share of tax expense Includes 7¢ in favorable tax adjustments as well as charges and impairments of 79¢ related to our holdings in C&J Energy Services Ltd., other small asset impairments, and severance costs (3) (4) (5) (6) 4
Current Debt and Liquidity Liquidity(4) (at September 30, 2015) Cash & Available Capacity: $2,481 Investment in Affiliate (at September 30, 2015) C&J Energy Services shares: $ 220 (1) (2) (3) (4) Capitalization defined as Net Debt plus Shareholders Equity Coverage defined as TTM Adjusted EBITDA / TTM Interest Expense Leverage defined as Total Debt / TTM Adjusted EBITDA Includes the proceeds from the term loan in September 2015 Note: Subtotals may not foot due to rounding 5 High 2Q15 3Q15 Change Change ($MM's) 3/31/12 6/30/15 9/30/15 2Q15 to 3Q15 3Q15 from High Total Debt Cash and ST Investments Net Debt Shareholders Equity Net Debt to Capitalization(1) Coverage(2) Leverage(3) $4,773 $3,758 $3,747 ($11) ($1,026) 494 470 277 (193) (217) $4,279 $3,288 $3,470 182 ($809) 5,811 4,932 4,502 (430) (1,309) 42.4% 40.0% 44.0% 4.0% 1.6% 7.8x 9.0x 7.6x (1.4x) (0.2x) 2.5x 2.4x 2.8x 0.4x 0.3x
Drilling & Rig Services 1111, NABORS 6
3Q15 Rig Utilization & Availability 3Q15 Rig Average Rig Fleet(1) Years Utilization U.S. Lower 48 AC Legacy U.S. Lower 48 Total U.S. Offshore Alaska 172 85 257 17 19 79 10 89 7 7 46% 12% 35% 41% 37% 63 17 27% Canada International 180 121 67% Subtotal PACE®-X Construction(2) Intl. Newbuilds & Upgrades(2) U.S. & Intl. Offshore Newbuilds(2) 536 3 1 1 242 45% Total Fleet 541 (1) As of 9/30/15 (2) Includes announced newbuild commitments and rigs to be completed in 2015 Numbers may not calculate due to rounding 7
3Q15 U.S. Rig Utilization Power Type and Pad Capability % As of 9/30/15 8 Walking Skidding Pad Capable Not Pad Capable Total Rigs Total AC Legacy Grand Total Working Total 64 120 17 Util. 53% 14% Working Total 4 18 5 13 Util. 22% 38% Total 49% 30% WorkingTotal 6 34 5 65 Util. 18% 8% 172 85 Util. 43% 13% 65 127 51% 9 31 29% 47% 11 99 11% 257 33%
PACE®-X Rig Deployments & Rig Years 50 ---------------------------------------------------------------------45 +-----------------------------------------------------------------40 +-----------------------------------------------------------35 +-----------------------------------------------------30 +----------------------------------------------25 +----------------------------------------20 +---------------------------15 +---------------------10 +---------------------5 +--------------0 +---------- 1013 2013 3013 4013 1014 2014 3014 4014 1015 2015 3015 Lower 48 Deployments - lnt'l Deployments - cumulative Deployments - Cumulative Rig Years 1111, NABORS As of 9/30/15 9
3Q15 International Working Rigs As of 9/30/15 10 Total 119 PNG1 Russia5 Saudi44 Venezuela5 Kurdistan2 Kuwait2 Malaysia1 Mexico5 Oman4 Ecuador3 India3 Iraq1 Italy1 Kazakhstan2 Algeria10 Angola0 Argentina20 Colombia9 Congo1
Outlook and Summary 1111, NABORS 11
Strategic Focus Capitalize on the existing asset base > Differentiate the rig and service offerings > Enhance operational excellence > Improve financial flexibility > 12
Appendix 1111, NABORS 13
Rig Margins & Activity (1) Margin = gross margin per rig per day for the period. Gross margin is computed by subtracting direct costs from operating revenues for the period. 14 Drilling 4Q14 1Q15 2Q15 3Q15 Margin (1) Rig Yrs Margin (1) Rig Yrs Margin (1) Rig Yrs Margin (1) Rig Yrs U.S. Drilling$11,525212.2 Canada9,88936.9 International17,803121.2 $13,487167.6 9,92725.6 18,865130.1 $13,739119.5 7,7719.7 17,263127.1 $11,177103.0 6,34917.2 18,613121.3
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