PDE Pride International (DE)

Weighed down by lower-than-expected performances in the Pressure Pumping and International business units, Nabors Industries Ltd. (NBR) projects operating income in the range of $165 million to $170 million for the second quarter of 2011. The negative effects will be partially offset by strong contributions from the U.S. Lower 48 and Canadian operations.

For full-year 2011, global land drilling contractor, Nabors, expects operating income to reach about $900 million.

Management commented that Superior Well Services, bought in August, 2010, to boost pressure pumping operations, failed to function as per expectation in the second quarter, thereby hurting results. This was primarily due to unfavorable weather conditions in the Bakken and Marcellus areas coupled with glitches in start-up of the new equipments. Superior is expected to operate smoothly by the end of 2011.

Internationally, delays in contract awards along with geo-political disruptions slowed down the company’s activities in Saudi Arabia and Iraq and, to some extent in Yemen, Colombia and Mexico. We expect this tardiness to persist throughout 2011 and improve in 2012.

On a positive note, Nabors’ U.S. Lower 48 segment won six more new build contracts since the last quarter and is in the process of working with nine legacy rigs. 

Barbados-based Nabors conducts oil, gas and geothermal land drilling operations and is one of the largest land well servicing companies and workover contractors in the U.S. The company competes with peers such as Patterson-UTI Energy (PTEN) and Pride International (PDE).

We are maintaining our long-term Neutral rating on the stock.

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