Press Release

Nabors Announces Second Quarter 2021 Results

Company Release -
7/27/2021 4:10 PM ET

HAMILTON, Bermuda, July 27, 2021 /PRNewswire/ -- Nabors Industries Ltd. ("Nabors" or the "Company") (NYSE: NBR) today reported second quarter 2021 operating revenues of $489 million, compared to operating revenues of $461 million in the first quarter of 2021. The net loss from continuing operations attributable to Nabors common shareholders for the quarter was $196 million, or $26.59 per share. The second quarter results included charges of $81 million comprised mainly of an impairment of assets in Canada, related to the pending sale of our Canada drilling rigs, and a tax reserve for contingencies in our International segment. This compares to a loss from continuing operations of $141 million, or $20.16 per share in the prior quarter. Excluding the above unusual items in the second quarter, the net loss improved by $26 million, primarily reflecting higher adjusted EBITDA, and lower depreciation and income tax expense. Second quarter adjusted EBITDA was $117 million, compared to $108 million in the first quarter.

Anthony G. Petrello, Nabors Chairman, CEO and President, commented, "Our second quarter results validate our strategy as we made concrete progress on our goals. All of our segments performed well. Second quarter adjusted EBITDA was 9% higher than the first quarter, and above our expectations. We benefitted from continued activity increases in U.S. and International markets. Sequential improvements were achieved in our Drilling Solutions business, as well as Rig Technologies, which recorded its highest performance in the last year.

"We had another outstanding quarter in terms of free cash flow generation, which drove further progress in cutting our debt.

"During the second quarter, global oil prices increased steadily. Oilfield activity responded, and in particular in our drilling markets. The Lower 48 land drilling market grew by 16% on average in the second quarter. Activity also strengthened in our major international markets, notably for Nabors, in Saudi Arabia and Latin America. With the strength in commodity markets since the pandemic lows, we expect continued increases in drilling activity both in the U.S. and internationally. In tandem with improved utilization, we also expect pricing to increase in the second half of 2021."

Consolidated and Segment Results

The U.S. Drilling segment reported $59.8 million in adjusted EBITDA for the second quarter of 2021, a 2% increase from the prior quarter. For the quarter, Nabors' average Lower 48 rig count, at 64, increased by more than seven rigs, or 13%. Average daily margins in the Lower 48 were $7,017, as rigs were added at current market rates. The U.S. Drilling segment's rig count currently stands at 72, with 67 rigs in the Lower 48. Based on the Company's current outlook, the third quarter average Lower 48 rig count is expected to increase by four to six rigs over the second quarter average.  Nabors expects third quarter Lower 48 drilling margins in line with the second quarter level. For the third quarter, for the U.S. Offshore and Alaska operations, the Company expects adjusted EBITDA similar to the second quarter.

International Drilling adjusted EBITDA increased sequentially by 14%, to $71.3 million. The rig count averaged 68 rigs, a 5% increase from the first quarter. This improvement was driven primarily by new contracts in Colombia and the resumption of drilling rigs that had been temporarily idled in Saudi Arabia. Average margin per day was $13,420, an increase of more than $500, driven by improved performance in Saudi Arabia and more generally in the Eastern Hemisphere.

The third quarter outlook for the International segment includes a slight decline in rig count, and daily margins in line with the second quarter. This change in rig count reflects idle time as one of the Company's rigs moves between customers and an additional rig moves between platforms to accommodate the client's change in activity profile.

In Drilling Solutions, adjusted EBITDA of $12.8 million increased by 12% compared to the previous quarter, due to stronger activity across all service lines. The main contributors to the improvement were performance drilling software and casing running services. The Company expects third quarter Drilling Solutions adjusted EBITDA to increase versus the second quarter. 

In the Rig Technologies segment, second quarter adjusted EBITDA was $2.0 million, an improvement of $2.6 million compared to the first quarter. The increase was mainly due to a better sales mix of repairs and capital equipment. The Company expects third quarter adjusted EBITDA for Rig Technologies above the second quarter level.

Canada Drilling reported second quarter adjusted EBITDA of $3.0 million, reflecting the usual seasonal reduction in activity. The previously announced sale of the Canada drilling assets is expected to close around the end of July.

Free Cash Flow and Capital Discipline

Free cash flow, defined as net cash provided by operating activities less net cash used by investing activities, as presented in the Company's cash flow statement, totaled $68 million in the second quarter after funding capital expenditures of $77 million. The Company improved total debt by $76 million during the second quarter and improved net debt, defined as total debt less cash, cash equivalents and short-term investments, by $58 million. For the full year, capital expenditures are expected to total approximately $300 million, including roughly $100 million funded by SANAD, to support the SANAD rig newbuild program.

William Restrepo, Nabors CFO, stated, "The improving commodity markets are favorable for oilfield activity. We have seen clients become increasingly selective in their vendors, favoring those that can deliver high performance with advanced drilling and information solutions, combined with best in class safety results. We believe our fleet capabilities combined with our smart app portfolio continue to be industry leading.

"We have seen a strong activity response by our client base to the improvement in commodity prices over the past year. The Lower 48 appears poised to strengthen further, especially among private and smaller operators. We are optimistic for growth in our International markets later in 2021.

"Our commitment to capital discipline was once again demonstrated by strong free cash flow generation. With our cash flow performance, we have funded the global operation, including the newbuild rigs for SANAD, while improving our net debt. We recently launched an innovative delevering transaction with the issuance of warrants to shareholders. We believe the exercise of these warrants will be one more milestone in our progress towards a strong capital structure."  

Mr. Petrello concluded, "The second quarter results exceeded our expectations. We made solid progress on our twin goals to generate free cash flow and reduce net debt. Our improving operating performance and timely asset sales demonstrate our commitment to optimizing our capital allocation and improving our leverage.

"Our commitment to ESG and Sustainability continues. We recently improved our performance in both Environmental and Social score metrics, and are working to advance these efforts further.

"We made additional progress on our initiatives in the energy transition. We are making investments in geothermal companies with potentially disruptive technology. We also signed agreements that give us access to technologies in fuel efficiency and emissions reduction, as well as carbon capture. These efforts are in addition to our own internal initiatives focused on power management and energy storage.  

"In parallel, we are pressing our leadership position further in the automation and digitalization of the well construction process. We are determined to continue delivering and realizing value with our advanced solutions.

"For the second half of 2021, we expect further improvement in oilfield industry fundamentals, notwithstanding the challenges posed by the COVID Delta variant. With our outstanding workforce, global fleet capability that is second to none, and our growing technology portfolio, we believe we will make even more progress on our financial goals this year."

About Nabors Industries

Nabors Industries is a leading provider of advanced technology for the energy industry. With operations in approximately 20 countries, Nabors has established a global network of people, technology and equipment to deploy solutions that deliver safe, efficient and sustainable energy production. By leveraging its core competencies, particularly in drilling, engineering, automation, data science and manufacturing, Nabors aims to help shape the future of energy and enable the transition to a lower carbon world. Learn more about Nabors and its 100-year history of energy technology leadership: www.nabors.com.

Forward-looking Statements

The information included in this 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 a number of 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 press release reflect management's estimates and beliefs as of the date of this press release. Nabors does not undertake to update these forward-looking statements. 

Non-GAAP Disclaimer

This press release presents certain "non-GAAP" financial measures.  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 operating income (loss) represents income (loss) from continuing operations before income taxes, interest expense, earnings (losses) from unconsolidated affiliates, investment income (loss), (gain)/loss on debt buybacks and exchanges, impairments and other charges and other, net. Adjusted EBITDA is computed similarly, but also excludes depreciation and amortization expenses. In addition, adjusted EBITDA and adjusted operating income (loss) exclude certain cash expenses that the Company is obligated to make. Net debt is calculated as total debt minus the sum of cash, cash equivalents and short-term investments.  Free cash flow represents net cash provided by operating activities less cash used for investing activities. Free cash flow is an indicator of our ability to generate cash flow after required spending to maintain or expand our asset base. Management believes that this non-GAAP measure is useful information to investors when comparing our cash flows with the cash flows of other companies. Each of these non-GAAP measures has limitations and therefore should not be used in isolation or as a substitute for the amounts reported in accordance with GAAP. However, management evaluates the performance of its operating segments and the consolidated Company based on several criteria, including adjusted EBITDA, adjusted operating income (loss), net debt, and free cash flow, because it believes that these financial measures accurately reflect the Company's ongoing profitability and performance.  Securities analysts and investors also use these measures as some of the metrics on which they analyze the Company's performance. Other companies in this industry may compute these measures differently.  Reconciliations of consolidated adjusted EBITDA and adjusted operating income (loss) to income (loss) from continuing operations before income taxes, net debt to total debt, and free cash flow to cash flow provided by operations, which are their nearest comparable GAAP financial measures, are included in the tables at the end of this press release. 

Media Contact:  William C. Conroy, Vice President of Corporate Development & Investor Relations, +1 281-775-2423 or via e-mail william.conroy@nabors.com, or Kara Peak, Director of Corporate Development & Investor Relations, +1 281-775-4954 or via email kara.peak@nabors.com. To request investor materials, contact Nabors' corporate headquarters in Hamilton, Bermuda at +441-292-1510 or via e-mail mark.andrews@nabors.com


NABORS INDUSTRIES LTD. AND SUBSIDIARIES


CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS)


(Unaudited)
















Three Months Ended


Six Months Ended




June 30,


March 31,


June 30,


(In thousands, except per share amounts)


2021


2020


2021


2021


2020














Revenues and other income:












Operating revenues 


$           489,333


$           533,931


$           460,511


$           949,844


$        1,252,295


Investment income (loss)


(62)


2,036


1,263


1,201


(1,162)


Total revenues and other income


489,271


535,967


461,774


951,045


1,251,133














Costs and other deductions:












Direct costs


312,466


326,557


290,654


603,120


788,397


General and administrative expenses


51,580


46,244


54,660


106,240


103,628


Research and engineering


7,965


7,305


7,467


15,432


18,714


Depreciation and amortization


174,775


211,120


177,276


352,051


438,183


Interest expense


41,714


51,206


42,975


84,689


105,928


Impairments and other charges


59,868


57,852


2,483


62,351


334,286


Other, net


6,587


(30,795)


4,863


11,450


(47,905)


Total costs and other deductions


654,955


669,489


580,378


1,235,333


1,741,231














Income (loss) from continuing operations before income taxes


(165,684)


(133,522)


(118,604)


(284,288)


(490,098)


Income tax expense (benefit)


24,719


4,446


9,725


34,444


22,139














Income (loss) from continuing operations, net of tax


(190,403)


(137,968)


(128,329)


(318,732)


(512,237)


Income (loss) from discontinued operations, net of tax


8


23


19


27


(70)














Net income (loss)


(190,395)


(137,945)


(128,310)


(318,705)


(512,307)


Less: Net (income) loss attributable to noncontrolling interest


(5,614)


(10,167)


(8,776)


(14,390)


(27,632)


Net income (loss) attributable to Nabors


(196,009)


(148,112)


(137,086)


(333,095)


(539,939)


Less: Preferred stock dividend


-


(3,653)


(3,653)


(3,653)


(7,305)


Net income (loss) attributable to Nabors common shareholders

$         (196,009)


$         (151,765)


$         (140,739)


$         (336,748)


$         (547,244)














Amounts attributable to Nabors common shareholders:












Net income (loss) from continuing operations


$         (196,017)


$         (151,788)


$         (140,758)


$         (336,775)


$         (547,174)


Net income (loss) from discontinued operations


8


23


19


27


(70)


Net income (loss) attributable to Nabors common shareholders

$         (196,009)


$         (151,765)


$         (140,739)


$         (336,748)


$         (547,244)














Earnings (losses) per share:












Basic from continuing operations


$              (26.59)


$              (22.13)


$              (20.16)


$              (46.90)


$              (78.85)


Basic from discontinued operations


-


-


-


-


(0.01)


Total Basic


$              (26.59)


$              (22.13)


$              (20.16)


$              (46.90)


$              (78.86)














Diluted from continuing operations


$              (26.59)


$              (22.13)


$              (20.16)


$              (46.90)


$              (78.85)


Diluted from discontinued operations


-


-


-


-


(0.01)


Total Diluted


$              (26.59)


$              (22.13)


$              (20.16)


$              (46.90)


$              (78.86)


























Weighted-average number of common shares outstanding:












   Basic 


7,460


7,052


7,102


7,281


7,052


   Diluted 


7,460


7,052


7,102


7,281


7,052


























Adjusted EBITDA


$           117,322


$           153,825


$           107,730


$           225,052


$           341,556














Adjusted operating income (loss)


$            (57,453)


$            (57,295)


$            (69,546)


$         (126,999)


$            (96,627)

 

NABORS INDUSTRIES LTD. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS





















June 30,


March 31,


December 31,



(In thousands)


2021


2021


2020





(Unaudited)





ASSETS









Current assets:









Cash and short-term investments


$            399,897


$            417,561


$            481,746



Accounts receivable, net


312,136


331,453


362,977



Assets held for sale


111,682


16,563


16,562



Other current assets


263,424


270,454


270,180



     Total current assets


1,087,139


1,036,031


1,131,465



Property, plant and equipment, net


3,562,350


3,829,222


3,985,707



Other long-term assets


392,829


389,653


386,256



     Total assets


$         5,042,318


$         5,254,906


$         5,503,428












LIABILITIES AND EQUITY









Current liabilities:









Current portion of debt


$                         -


$                         -


$                         -



Other current liabilities


529,116


490,797


515,469



     Total current liabilities


529,116


490,797


515,469



Long-term debt


2,823,125


2,898,879


2,968,701



Other long-term liabilities


354,637


341,109


319,610



     Total liabilities


3,706,878


3,730,785


3,803,780












Redeemable noncontrolling interest in subsidiary


398,497


396,167


442,840












Equity:









Shareholders' equity


818,919


1,013,753


1,151,384



Noncontrolling interest


118,024


114,201


105,424



     Total equity


936,943


1,127,954


1,256,808



     Total liabilities and equity


$         5,042,318


$         5,254,906


$         5,503,428



 

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


Six Months Ended





June 30,


March 31,


June 30,


(In thousands, except rig activity)


2021


2020


2021


2021


2020















Operating revenues:













U.S. Drilling


$           161,606


$           173,784


$           142,299


$           303,905


$           448,685



Canada Drilling


12,313


3,564


20,989


33,302


29,155



International Drilling


255,282


301,078


246,838


502,120


638,188



Drilling Solutions


39,111


33,129


35,706


74,817


88,513



Rig Technologies (1)


34,552


33,582


25,748


60,300


75,732



Other reconciling items (2)


(13,531)


(11,206)


(11,069)


(24,600)


(27,978)



Total operating revenues


$           489,333


$           533,931


$           460,511


$           949,844


$        1,252,295















Adjusted EBITDA: (3)













U.S. Drilling


$             59,784


$             77,659


$             58,786


$           118,570


$           179,468



Canada Drilling


3,008


(564)


9,659


12,667


7,367



International Drilling


71,322


93,510


62,611


133,933


185,019



Drilling Solutions


12,796


9,411


11,458


24,254


28,850



Rig Technologies (1)


2,035


3,176


(533)


1,502


(2)



Other reconciling items (4)


(31,623)


(29,367)


(34,250)


(65,873)


(59,146)



Total adjusted EBITDA


$           117,322


$           153,825


$           107,730


$           225,052


$           341,556















Adjusted operating income (loss): (5)













U.S. Drilling


$            (20,869)


$            (23,395)


$            (23,336)


$            (44,205)


$            (30,799)



Canada Drilling


(2,608)


(5,795)


3,907


1,299


(5,758)



International Drilling


(8,439)


276


(18,632)


(27,071)


(3,871)



Drilling Solutions


6,524


1,733


4,710


11,234


12,282



Rig Technologies (1)


(692)


(1,492)


(2,569)


(3,261)


(9,643)



Other reconciling items (4)


(31,369)


(28,622)


(33,626)


(64,995)


(58,838)



Total adjusted operating income (loss)


$            (57,453)


$            (57,295)


$            (69,546)


$         (126,999)


$            (96,627)















Rig activity:












Average Rigs Working: (6)













     Lower 48


63.5


57.2


56.2


59.9


73.1



     Other US


5.7


6.6


4.3


5.0


7.0



U.S. Drilling


69.2


63.8


60.5


64.9


80.1



Canada Drilling


8.2


2.2


13.7


10.9


9.5



International Drilling


68.3


82.4


64.8


66.5


84.6



Total average rigs working


145.7


148.4


139.0


142.3


174.2















Daily Rig Revenue:













     Lower 48


$             21,015


$             24,744


$             21,656


$             21,314


$             26,238



     Other US


78,215


74,825


83,793


80,624


78,089



U.S. Drilling (8)


25,694


29,927


26,115


25,890


30,776



Canada Drilling


16,512


18,105


16,995


16,813


16,920



International Drilling


41,102


40,129


42,347


41,704


41,456















Daily Rig Margin: (7)













     Lower 48


$               7,017


$             10,449


$               8,466


$               7,694


$             10,110



     Other US


48,657


46,032


54,974


51,385


44,828



U.S. Drilling (8)


10,424


14,132


11,803


11,064


13,148



Canada Drilling


4,993


899


8,160


6,968


5,146



International Drilling


13,420


14,091


12,917


13,176


13,773




























(1)

Includes our oilfield equipment manufacturing, automated systems, and downhole tools.














(2)

Represents the elimination of inter-segment transactions related to our Rig Technologies operating segment.














(3)

Adjusted EBITDA represents income (loss) from continuing operations before income taxes, interest expense, depreciation and amortization, earnings (losses) from unconsolidated affiliates, investment income (loss), impairments and other charges and other, net. Adjusted EBITDA is a non-GAAP financial measure and should not be used in isolation or as a substitute for the amounts reported in accordance with GAAP. In addition, adjusted EBITDA excludes certain cash expenses that the Company is obligated to make. However, management evaluates the performance of its operating segments and the consolidated Company based on several criteria, including adjusted EBITDA and adjusted operating income (loss), because it believes that these financial measures accurately reflect the Company's ongoing profitability and performance.  Securities analysts and investors use this measure as one of the metrics on which they analyze the Company's performance.  Other companies in this industry may compute these measures differently.  A reconciliation of this non-GAAP measure to income (loss) from continuing operations before income taxes, which is the most closely comparable 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".














(4)

Represents the elimination of inter-segment transactions and unallocated corporate expenses.














(5)

Adjusted operating income (loss) represents income (loss) from continuing operations before income taxes, interest expense, earnings (losses) from unconsolidated affiliates, investment income (loss), impairments and other charges and other, net. Adjusted operating income (loss) is a non-GAAP financial measure and should not be used in isolation or as a substitute for the amounts reported in accordance with GAAP. In addition, adjusted operating income (loss) excludes certain cash expenses that the Company is obligated to make. However, management evaluates the performance of its operating segments and the consolidated Company based on several criteria, including adjusted EBITDA and adjusted operating income (loss), because it believes that these financial measures accurately reflect the Company's ongoing profitability and performance.  Securities analysts and investors use this measure as one of the metrics on which they analyze the Company's performance.  Other companies in this industry may compute these measures differently.  A reconciliation of this non-GAAP measure to income (loss) from continuing operations before income taxes, which is the most closely comparable 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".














(6)

Represents a measure of the average number of rigs operating during a given period.  For example, one rig operating 45 days during a quarter represents approximately 0.5 average rigs working for the quarter.  On an annual period, one rig operating 182.5 days represents approximately 0.5 average rigs working for the year.














(7)

Daily rig margin represents operating revenue less operating expenses, divided by the total number of revenue days during the quarter.   














(8)

The U.S. Drilling segment includes the Lower 48, Alaska, and Gulf of Mexico operating areas.





 

NABORS INDUSTRIES LTD. AND SUBSIDIARIES

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO 

INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES

(Unaudited)



























Three Months Ended


Six Months Ended




June 30,


March 31,


June 30,


(In thousands)


2021


2020


2021


2021


2020














Adjusted EBITDA


$           117,322


$           153,825


$           107,730


$           225,052


$           341,556


Depreciation and amortization 


(174,775)


(211,120)


(177,276)


(352,051)


(438,183)


Adjusted operating income (loss)


(57,453)


(57,295)


(69,546)


(126,999)


(96,627)














Investment income (loss)


(62)


2,036


1,263


1,201


(1,162)


Interest expense


(41,714)


(51,206)


(42,975)


(84,689)


(105,928)


Impairments and other charges


(59,868)


(57,852)


(2,483)


(62,351)


(334,286)


Other, net


(6,587)


30,795


(4,863)


(11,450)


47,905


Income (loss) from continuing operations before income taxes


$         (165,684)


$         (133,522)


$         (118,604)


$         (284,288)


$         (490,098)


 

NABORS INDUSTRIES LTD. AND SUBSIDIARIES



RECONCILIATION OF NET DEBT TO TOTAL DEBT

















June 30,


March 31,


December 31,





(In thousands)


2021


2021


2020







(Unaudited)


















Current portion of debt


$                         -


$                         -


$                         -





Long-term debt


2,823,125


2,898,879


2,968,701





     Total Debt


2,823,125


2,898,879


2,968,701





Less: Cash and short-term investments


399,897


417,561


481,746





     Net Debt


$         2,423,228


$         2,481,318


$         2,486,955
















 

NABORS INDUSTRIES LTD. AND SUBSIDIARIES

RECONCILIATION OF FREE CASH FLOW TO

NET CASH PROVIDED BY OPERATING ACTIVITIES

(Unaudited)













Three Months Ended


Six Months Ended





June 30,


March 31,


June 30,



(In thousands)


2021


2021


2021












Net cash provided by operating activities


$            133,713


$              79,490


$            213,203



Less: Net cash used for investing activities


(65,800)


(19,119)


(84,919)



Free cash flow


$              67,913


$              60,371


$            128,284






























Free cash flow represents net cash provided by operating activities less cash used for investing activities. Free cash flow is an indicator of our ability to generate cash flow after required spending to maintain or expand our asset base. Management believes that this non-GAAP measure is useful information to investors when comparing our cash flows with the cash flows of other companies. This non-GAAP measure has limitations and therefore should not be used in isolation or as a substitute for the amounts reported in accordance with GAAP. However, management evaluates the performance of the consolidated Company based on several criteria, including free cash flow, because it believes that these financial measures accurately reflect the Company's ongoing profitability and performance.

 

Cision View original content:https://www.prnewswire.com/news-releases/nabors-announces-second-quarter-2021-results-301342560.html

SOURCE Nabors Industries Ltd.

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