Nabors' Second Quarter EPS Equals $0.19 Ex-Items of ($0.04) on Operating
Income of $125 Million.
</pre>
<p>HAMILTON, <span class="xn-location">Bermuda</span>, <span class="xn-chron">July 27</span> /CNW/ -- Nabors Industries Ltd. (NYSE: NBR) today announced its financial results for the second quarter and first six months of 2010. The Company posted adjusted income derived from operating activities of <span class="xn-money">$124.9 million</span> for the current quarter, which compares to <span class="xn-money">$143.9 million</span> in the second quarter of last year when certain non-cash items are excluded, and <span class="xn-money">$138.5 million</span> in the first quarter of this year. Net Income was <span class="xn-money">$43.6 million</span> or <span class="xn-money">$0.15</span> per diluted share, but when adjusted to exclude <span class="xn-money">$12.2 million</span> in non-operational items, net income was <span class="xn-money">$55.9 million</span> (<span class="xn-money">$0.19</span> per diluted share). This compares to <span class="xn-money">$90.9 million</span> (<span class="xn-money">$0.32</span> per diluted share) in the second quarter of last year and <span class="xn-money">$40.2 million</span> (<span class="xn-money">$0.14</span> per diluted share) in the first quarter of this year. Operating revenues and earnings from unconsolidated affiliates totaled <span class="xn-money">$915.3 million</span> in the current quarter compared to <span class="xn-money">$868.0 million</span> in the second quarter of last year and <span class="xn-money">$905.7 million</span> in the first quarter of this year. For the six months ended <span class="xn-chron">June 30, 2010</span> adjusted income derived from operating activities was <span class="xn-money">$263.4 million</span> compared to <span class="xn-money">$417.9 million</span> in the first six months of 2009. Net income for the first six months of 2010 was <span class="xn-money">$83.8 million</span> (<span class="xn-money">$0.29</span> per diluted share) which included <span class="xn-money">$33.4 million</span>, or <span class="xn-money">$0.11</span> in similar non-operational items as previously discussed. Operating revenues and earnings from unconsolidated affiliates for the first six months of 2010 totaled <span class="xn-money">$1.82 billion</span>, compared to <span class="xn-money">$2.1 billion</span> for the first six months of 2009.</p>
<p/>
<p><span class="xn-person">Gene Isenberg</span>, Nabors' Chairman and CEO, commented, "I believe the second quarter marks the start of a steady upward progression in our business. Operating income was slightly lower than the first quarter as improving rig activity in our International and US Land Drilling units along with strong third-party sales in Canrig essentially offset seasonal downturns in <span class="xn-location">Canada</span> and Alaska and <span class="xn-money">$2 million</span> in lost income in our US Offshore business due to the suspended operations in the Gulf of <span class="xn-location">Mexico</span>.</p>
<p/>
<p>"Net income was impacted by certain non-operational items amounting to approximately <span class="xn-money">$12.2 million</span>, or <span class="xn-money">$0.04</span> per share. These items consisted of <span class="xn-money">$4.8 million</span> in foreign exchange losses; <span class="xn-money">$3.6 million</span> in book losses on <span class="xn-money">$171 million</span> in additional purchases of our convertible notes due <span class="xn-chron">May 2011</span>; <span class="xn-money">$2.2 million</span> in tax adjustments internationally; a net reduction of <span class="xn-money">$0.5 million</span> in the carrying value of various equity holdings; and the elimination of <span class="xn-money">$1.1 million</span> in rig income derived from our oil and gas joint venture operations.</p>
<p/>
<p>"Our US Lower 48 Land Drilling unit posted good results driven by a 14 rig increase in our quarterly average rig count. Our second quarter average rig count was 172.3 with a current count of 179 that includes four idle rigs receiving termination revenue. Despite this sharp increase in activity operating income was essentially flat, primarily attributable to the <span class="xn-money">$14.1 million</span> (<span class="xn-money">$988</span> per rig day) reduction in contract termination income compared to the first quarter. This reduction, combined with higher labor and other operating costs, more than offsets the higher rig count as well as an increase in average dayrates of approximately <span class="xn-money">$1,100</span> per rig day. We expect the balance of the year will still achieve increases in rig count and rates, but at a more modest pace. Leading edge rates for our PACE® and SCR rigs continue to improve significantly across all of our markets, with the less capable rigs improving only modestly.</p>
<p/>
<p>"During the quarter we received additional long-term awards for five new PACE® rigs and three substantially upgraded SCR rigs. We now have 12 committed rigs under construction, including the four secured last quarter. We expect to secure at least five more new rig commitments in the near future, and we continue to receive inquiries regarding incremental PACE® and upgraded SCR rigs. Market demand continues to validate the benefits of AC rig technology, which can be approximated on our SCR rigs when we incorporate our proprietary K-BOX® and ROCKIT(TM) systems. Virtually all of these rigs are deploying into the shale plays where we continue to enjoy the largest market share. Of our 179 rigs working today, 82 are working on oil or liquids-rich wells, a market where we also enjoy the largest market share. Fewer than 20 of the remaining rigs are deployed on conventional gas projects, which are generally subject to term contracts, with the balance working in shale gas plays. We continue to expand in key areas, including the Bakken and Eagle Ford and most recently the Marcellus where we have commitments for 10 additional rigs to be deployed over the next year.</p>
<p/>
<p>"Internationally, operating income increased to <span class="xn-money">$65 million</span> from the first quarter low point of <span class="xn-money">$53.6 million</span> as our rig count increased to 98 rigs compared to the 88 rigs working in the first quarter and the low of 84 rigs last November. Our rig count now stands at 100 rigs, and we expect continual quarterly increases through 2011. The ongoing deferrals of rig startups in <span class="xn-location">Mexico</span> and the more competitive environment in the <span class="xn-location">Middle East</span> have tempered our expectations as to the pace of recovery in the second half of this year. Consequently, we now expect this unit's full-year operating income to be on the order of <span class="xn-money">$260 million</span>, with virtually the entire decrease from last year attributable to lower results in our Mexican and Saudi Arabian operations. Despite progressing slower than we previously indicated, we believe there is good visibility of steady growth, with unexpected rig shutdowns abating and more than 20 rig start-ups scheduled through late 2011. Eight of these rigs commenced in the second quarter and will contribute more fully throughout the balance of the year.</p>
<p/>
<p>"In our US Land Well Servicing unit, results declined to <span class="xn-money">$3.2 million</span> as increased rig hours were more than offset by extraordinary expenses specific to this quarter. To meet rising demand we incurred significant costs refurbishing additional rigs, along with the higher overtime and wage increases necessary to staff increasing levels of activity in a tight market for experienced labor. Compared to the first quarter, activity increased from 148,000 to 157,000 hours at flat rates, with similar increases in trucking activity although with improving rates. In July, we implemented price increases of up to 10 percent in certain markets. Industry pricing is improving as we lead in implementing price increases in some areas and follow in others. With rig hours continuing to increase, we anticipate further rate progression, which should serve to more than offset the recent cost variances and return this unit to robust sequential growth.</p>
<p/>
<p>"Our US Offshore unit's growth trajectory was curtailed by the lingering effects of the recent events in the Gulf of <span class="xn-location">Mexico</span>. We estimate the impact on our business reduced second quarter operating income by approximately <span class="xn-money">$2 million</span>, limiting it to <span class="xn-money">$8.1 million</span> for the quarter. Operations on all but two of our six deepwater rigs were suspended and the remaining two rigs will likely cease operations soon. Another five shallower water operations are also being affected sporadically due to permitting delays and uncertainty which, along with the onset of hurricane season, is also inhibiting the commencement of numerous other projects, although political pressure is building to ease some of the obstacles. Consequently, we expect operating income for the second half to be reduced by over <span class="xn-money">$25 million</span>, with the potential for a modest loss in the third quarter. We are optimistic that the majority of these issues will begin to resolve in the fourth quarter and lead to an improved 2011 outlook.</p>
<p/>
<p>"Our Canadian operations posted a loss of <span class="xn-money">$9.5 million</span> during the seasonally weak second quarter. This result was slightly better than we anticipated due to improved rig activity with an average of 18 drilling and 50 well-servicing rigs operating during the quarter. We expect this trend to continue with significant increases in rig activity in the second half leading to a full-year result on the order of <span class="xn-money">$12 million</span>. This improvement compares favorably to last year's net loss, but is still well below the <span class="xn-money">$180 million</span> historical peak in this unit. This unit also has three new built PACE® rigs under construction that will deploy next winter and further improve prospective 2011 results.</p>
<p/>
<p>"Alaskan results were down only slightly at <span class="xn-money">$12.4 million</span> as the winding down of the winter exploration season resulted in less rig activity. The full-year outlook continues to be 40% lower than last year, and our outlook for 2011 has also diminished with a softening market exacerbated by the introduction of three new competitor rigs that will deliver in late 2010 and 2011 to begin long-term contracts. BP constitutes well over 50% of the rig demand in Alaska and their curtailment of discretionary spending is further reducing rig requirements. Other short-term prospects have emerged, but won't be quantifiable until later in the year. We believe our coiled tubing rig is still the best rig in the market and we expect to secure commitments for additional units next year.</p>
<p/>
<p>"Our Other Operating Segments posted <span class="xn-money">$8.3 million</span> in operating income representing a 21 percent sequential increase primarily attributable to increased third-party sales in Canrig, which more than offset the second quarter seasonal slowdown in our Alaskan joint venture trucking operations and Ryan's Canadian business. The second-half outlook for Canrig remains very promising with further increases in its third-party top drive and other equipment sales and the increasing acceptance of its Rockit directional drilling technology. New innovative products like the SUREGRIP(TM) casing running tool are expected to contribute meaningfully in 2011.</p>
<p/>
<p>"Oil and Gas results were modestly positive although weak gas prices persist. We continue to focus on monetizing certain assets with the sale of our Colombian properties most likely to occur first, potentially later this year. We continue to explore the possibility of an initial public offering of our NFR joint venture, perhaps as early as the first half of 2011, and we recently engaged an investment banking firm with intimate knowledge of the Horn River region and the highest familiarity with interested Asian buyers to evaluate alternatives for our holdings there.</p>
<p/>
<p>"Our financial position remains solid, with <span class="xn-money">$987 million</span> in cash and other long-term investments. We still plan to establish a revolving credit facility before the end of this year, and we continue to opportunistically buy our convertible debt due <span class="xn-chron">May 2011</span>. As of <span class="xn-chron">June 30, 2010</span>, the outstanding face value of these notes was <span class="xn-money">$1.4 billion</span> reflecting <span class="xn-money">$171 million</span> in purchases in the second quarter at an average yield to maturity of over 2.5% compared to the 20 basis points we are earning on our short-term portfolio. Following redemption we expect our debt-to-EBITDA ratio to approach 2.0. Opportunities to deploy capital at good returns continue to emerge and we have sufficient resources and access to low-cost capital if needed to fund new rigs and any attractive acquisitions that may arise.</p>
<p/>
<p>"In summary, we are confident we have turned the corner and we are increasingly optimistic regarding steady and meaningful progress in our consolidated income throughout the balance of this year and in 2011. However, predicting the precise pace of this growth is more problematic. The last two years have been fraught with challenges including the weak gas price environment, the financial crisis, the economic downturn and most recently the events in the Gulf of <span class="xn-location">Mexico</span>, with all of them exerting adverse effects on our businesses. Nonetheless, we not only fared better than we expected internally, but we have been able to seize opportunities to enhance our business."</p>
<p/>
<p>The Nabors companies own and operate approximately 550 land drilling and approximately 728 land workover and well-servicing rigs in <span class="xn-location">North America</span>. Nabors' actively marketed offshore fleet consists of 39 platform rigs, 13 jackup units and 3 barge rigs in the <span class="xn-location">United States</span> and multiple international markets. In addition, Nabors 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.</p>
<p/>
<p>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.</p>
<p/>
<p>For further information, please contact Dennis A. Smith, Director of Corporate Development for Nabors Corporate Services, Inc., at 281-775-8038. To request Investor Materials, contact our corporate headquarters in Hamilton, <span class="xn-location">Bermuda</span> at 441-292-1510 or via email at <a href="mailto:[email protected]">[email protected]</a>.</p>
<p/>
<p> </p>
<p> </p>
<pre>
NABORS INDUSTRIES LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (LOSS)
(Unaudited)
</pre>
<p> </p>
<p> </p>
<pre>
Three Months Ended
------------------
June 30, March 31,
-------- ---------
</pre>
<p> </p>
<pre>
(In thousands, except per
share amounts) 2010 2009 2010
---- ---- ----
</pre>
<p> </p>
<pre>
Revenues and other income:
Operating revenues $905,058 $867,869 $902,049
Earnings (losses) from
unconsolidated affiliates
(1) 10,218 (8,127) 3,661
Investment income (loss) 2,525 18,248 (2,360)
Total revenues and other
income 917,801 877,990 903,350
------- ------- -------
</pre>
<p> </p>
<pre>
Costs and other deductions:
Direct costs 524,240 453,922 512,402
General and administrative
expenses 80,996 163,808 75,823
Depreciation and amortization 176,201 165,974 172,274
Depletion 8,922 2,590 6,755
Interest expense 65,226 66,027 66,745
Losses (gains) on sales and
retirements of
long-lived assets and other
expense (income), net 10,952 6,689 20,309
Impairments and other charges
(2) - 227,083 -
Total costs and other
deductions 866,537 1,086,093 854,308
------- --------- -------
</pre>
<p> </p>
<pre>
Income (loss) before income
taxes 51,264 (208,103) 49,042
------ -------- ------
</pre>
<p> </p>
<pre>
Income tax expense (benefit):
Current 17,652 (43,425) 12,645
Deferred (9,450) 28,528 (2,701)
Income tax expense (benefit) 8,202 (14,897) 9,944
----- ------- -----
</pre>
<p> </p>
<pre>
Net income (loss) 43,062 (193,206) 39,098
Less: Net loss attributable
to noncontrolling interest 559 220 1,102
Net income (loss)
attributable to Nabors $43,621 $(192,986) $40,200
------- --------- -------
</pre>
<p> </p>
<pre>
Earnings (losses) per share:
(3)
Basic $.15 $(.68) $.14
Diluted $.15 $(.68) $.14
</pre>
<p> </p>
<p> </p>
<pre>
Weighted-average number
of common shares outstanding:
(3)
Basic 285,181 283,154 284,672
------- ------- -------
Diluted 289,796 283,154 290,736
------- ------- -------
</pre>
<p> </p>
<p> </p>
<pre>
Adjusted income (loss)
derived from operating
activities (1) (4) $124,917 $73,448 $138,456
======== ======= ========
</pre>
<p> </p>
<p> </p>
<pre>
Six Months Ended
----------------
June 30,
--------
</pre>
<p> </p>
<pre>
(In thousands, except per share amounts) 2010 2009
---- ----
</pre>
<p> </p>
<pre>
Revenues and other income:
Operating revenues $1,807,107 $2,065,914
Earnings (losses) from unconsolidated
affiliates (1) 13,879 (72,554)
Investment income (loss) 165 27,389
Total revenues and other income 1,821,151 2,020,749
--------- ---------
</pre>
<p> </p>
<pre>
Costs and other deductions:
Direct costs 1,036,642 1,119,209
General and administrative expenses 156,819 271,151
Depreciation and amortization 348,475 325,126
Depletion 15,677 5,343
Interest expense 131,971 133,105
Losses (gains) on sales and retirements
of
long-lived assets and other expense
(income), net 31,261 (9,557)
Impairments and other charges (2) - 227,083
Total costs and other deductions 1,720,845 2,071,460
--------- ---------
</pre>
<p> </p>
<pre>
Income (loss) before income taxes 100,306 (50,711)
------- -------
</pre>
<p> </p>
<pre>
Income tax expense (benefit):
Current 30,297 6,032
Deferred (12,151) 12,344
Income tax expense (benefit) 18,146 18,376
------ ------
</pre>
<p> </p>
<pre>
Net income (loss) 82,160 (69,087)
Less: Net loss attributable to
noncontrolling interest 1,661 1,271
Net income (loss) attributable to Nabors $83,821 $(67,816)
------- --------
</pre>
<p> </p>
<pre>
Earnings (losses) per share: (3)
Basic $.29 $(.24)
Diluted $.29 $(.24)
</pre>
<p> </p>
<p> </p>
<pre>
Weighted-average number
of common shares outstanding: (3)
Basic 284,927 283,126
------- -------
Diluted 290,266 283,126
------- -------
</pre>
<p> </p>
<p> </p>
<pre>
Adjusted income (loss) derived from
operating activities (1) (4) $263,373 $272,531
======== ========
</pre>
<p> </p>
<p> </p>
<pre>
(1) Included our proportionate share of full-cost ceiling test
writedowns recorded by our oil and gas joint ventures of $(75.0)
million for the six months ended June 30, 2009.
</pre>
<p> </p>
<pre>
(2) Represents impairments and other charges recorded for the three
months ended June 30, 2009.
</pre>
<p> </p>
<pre>
(3) See "Computation of Earnings (Losses) Per Share" included herein
as a separate schedule.
</pre>
<p> </p>
<pre>
(4) Adjusted income (loss) derived from operating activities is
computed by: subtracting direct costs, general and administrative
expenses, depreciation and amortization, and depletion expense from
Operating revenues and then adding Earnings (losses) from
unconsolidated affiliates. These amounts should not be used as a
substitute to those amounts reported under accounting principles
generally accepted in the United States of America ("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 are an accurate reflection of
the ongoing profitability of our Company. A reconciliation of this
non-GAAP measure to income (loss) before income taxes, which is a
GAAP measure, is provided within the table set forth immediately
following the heading "Segment Reporting".
</pre>
<p> </p>
<p> </p>
<pre>
NABORS INDUSTRIES LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
</pre>
<p> </p>
<p> </p>
<pre>
June 30, March 31, December 31,
(In thousands, except ratios) 2010 2010 2009
---- ---- ----
</pre>
<p> </p>
<pre>
ASSETS
Current assets:
Cash and short-term investments $892,876 $1,061,014 $1,090,851
Accounts receivable, net 762,589 735,432 724,040
Other current assets 369,943 358,255 361,773
------- ------- -------
Total current assets 2,025,408 2,154,701 2,176,664
Long-term investments and other
receivables 93,965 99,195 100,882
Property, plant and equipment,
net 7,641,563 7,646,608 7,646,050
Goodwill 164,078 164,756 164,265
Investment in unconsolidated
affiliates 321,293 307,044 306,608
Other long-term assets 253,834 252,421 250,221
Total assets $10,500,141 $10,624,725 $10,644,690
=========== =========== ===========
</pre>
<p> </p>
<pre>
LIABILITIES AND EQUITY
Current liabilities:
Current portion of long-term debt $1,345,819 $209 $163
Other current liabilities 642,263 579,075 608,459
------- ------- -------
Total current liabilities 1,988,082 579,284 608,622
Long-term debt 2,364,703 3,855,897 3,940,605
Other long-term liabilities 918,947 930,861 913,484
------- ------- -------
Total liabilities 5,271,732 5,366,042 5,462,711
Equity:
Shareholders' equity 5,216,308 5,245,031 5,167,656
Noncontrolling interest 12,101 13,652 14,323
------ ------ ------
Total equity 5,228,409 5,258,683 5,181,979
Total liabilities and equity $10,500,141 $10,624,725 $10,644,690
=========== =========== ===========
</pre>
<p> </p>
<p> </p>
<p> </p>
<pre>
Cash, short-term and long-term
investments (1) $986,841 $1,160,209 $1,191,733
</pre>
<p> </p>
<pre>
Funded debt to capital ratio: (2)
- Gross 0.39 : 1 0.40 : 1 0.41 : 1
- Net of cash and investments 0.32 : 1 0.32 : 1 0.33 : 1
Interest coverage ratio: (3) 5.9 : 1 5.5 : 1 6.2 : 1
</pre>
<p> </p>
<p> </p>
<pre>
(1) The June 30, 2010, March 31, 2010 and December 31, 2009 amounts
included $86.6 million, $91.4 million and $92.5 million,
respectively, in oil and gas financing receivables that were
included in long-term investments and other receivables.
</pre>
<p> </p>
<pre>
(2) The gross funded debt to capital ratio is calculated by dividing
* funded debt by (y) funded debt plus deferred tax liabilities
(net of deferred tax assets) plus capital. Funded debt is the sum of
(1) short-term borrowings, (2) the current portion of long-term
debt and (3) long-term debt. Capital is shareholders' equity. The
net funded debt to capital ratio is calculated by dividing * net
funded debt by (y) net funded debt plus deferred tax liabilities
(net of deferred tax assets) plus capital. Net funded debt is
funded debt minus the sum of cash and cash equivalents and short-
term and long-term investments and other receivables. Both of
these ratios are used to calculate a company's leverage in relation
to its capital. Neither ratio measures operating performance or
liquidity as defined by GAAP and, therefore, may not be comparable
to similarly titled measures presented by other companies.
</pre>
<p> </p>
<pre>
(3) The interest coverage ratio is a trailing 12-month quotient of
the sum of net income (loss) attributable to Nabors, interest
expense, depreciation and amortization, depletion expense,
impairments and other charges, income tax expense (benefit) and our
proportionate share of writedowns from our unconsolidated oil and
gas joint ventures less investment income (loss) divided by cash
interest expense. This ratio is a method for calculating the amount
of operating cash flows available to cover cash interest expense.
The interest coverage ratio is not a measure of operating
performance or liquidity defined by GAAP and may not be comparable
to similarly titled measures presented by other companies.
</pre>
<p> </p>
<p> </p>
<pre>
NABORS INDUSTRIES LTD. AND SUBSIDIARIES
SEGMENT REPORTING
(Unaudited)
</pre>
<p> </p>
<pre>
The following tables set forth certain information with respect to
our reportable segments and rig activity:
</pre>
<p> </p>
<p> </p>
<pre>
Three Months Ended
------------------
June 30, March 31,
-------- ---------
</pre>
<p> </p>
<pre>
(In thousands, except rig
activity) 2010 2009 2010
---- ---- ----
</pre>
<p> </p>
<pre>
Reportable segments:
Operating revenues and Earnings
(losses) from
unconsolidated affiliates:
Contract Drilling: (1)
U.S. Lower 48 Land Drilling $303,417 $249,859 $271,497
U.S. Land Well-servicing 104,860 100,080 97,991
U.S. Offshore 38,978 41,947 38,198
Alaska 43,385 53,207 49,794
Canada 60,759 45,651 115,556
International 267,007 327,551 245,344
Subtotal Contract Drilling (2) 818,406 818,295 818,380
</pre>
<p> </p>
<pre>
Oil and Gas (3) 20,202 (6,001) 17,324
Other Operating Segments (4) (5) 107,749 104,931 95,513
Other reconciling items (6) (31,081) (57,483) (25,507)
Total $915,276 $859,742 $905,710
======== ======== ========
</pre>
<p> </p>
<pre>
Adjusted income (loss) derived
from
operating activities:
Contract Drilling: (1)
U.S. Lower 48 Land Drilling $58,169 $70,075 $60,286
U.S. Land Well-servicing 3,231 6,192 7,185
U.S. Offshore 8,104 6,724 7,373
Alaska 12,388 16,374 13,957
Canada (9,497) (10,538) 14,882
International 64,972 101,303 53,579
------ ------- ------
Subtotal Contract Drilling (2) 137,367 190,130 157,262
</pre>
<p> </p>
<pre>
Oil and Gas (3) 147 (15,228) (727)
Other Operating Segments (4) (5) 8,317 5,321 6,890
Other reconciling items (7) (20,914) (106,775) (24,969)
------- -------- -------
Total 124,917 73,448 138,456
Interest expense (65,226) (66,027) (66,745)
Investment income (loss) 2,525 18,248 (2,360)
(Losses) gains on sales and
retirements of
long-lived assets and other
(expense) income, net (10,952) (6,689) (20,309)
Impairments and other charges (8) - (227,083) -
Income (loss) before income taxes $51,264 $(208,103) $49,042
======= ========= =======
</pre>
<p> </p>
<p> </p>
<pre>
Rig activity:
Rig years: (9)
U.S. Lower 48 Land Drilling 172.3 142.9 158.6
U.S. Offshore 11.0 12.2 12.0
Alaska 8.0 11.3 9.1
Canada 17.7 11.1 34.8
International (10) 97.6 104.1 88.3
Total rig years 306.6 281.6 302.8
===== ===== =====
Rig hours: (11)
U.S. Land Well-servicing 157,199 142,797 148,347
Canada Well-servicing 32,211 23,896 46,032
------ ------ ------
Total rig hours 189,410 166,693 194,379
======= ======= =======
</pre>
<p> </p>
<p> </p>
<pre>
Six Months Ended
----------------
June 30,
--------
</pre>
<p> </p>
<pre>
(In thousands, except rig
activity) 2010 2009
---- ----
</pre>
<p> </p>
<pre>
Reportable segments:
Operating revenues and Earnings
(losses) from
unconsolidated affiliates:
Contract Drilling: (1)
U.S. Lower 48 Land Drilling $574,914 $639,738
U.S. Land Well-servicing 202,851 234,442
U.S. Offshore 77,176 102,339
Alaska 93,179 115,989
Canada 176,315 159,245
International 512,351 670,207
Subtotal Contract Drilling (2) 1,636,786 1,921,960
</pre>
<p> </p>
<pre>
Oil and Gas (3) 37,526 (66,045)
Other Operating Segments (4) (5) 203,262 260,399
Other reconciling items (6) (56,588) (122,954)
Total $1,820,986 $1,993,360
========== ==========
</pre>
<p> </p>
<pre>
Adjusted income (loss) derived
from
operating activities:
Contract Drilling: (1)
U.S. Lower 48 Land Drilling $118,455 $199,317
U.S. Land Well-servicing 10,416 19,850
U.S. Offshore 15,477 23,554
Alaska 26,345 37,199
Canada 5,385 2,797
International 118,551 204,278
------- -------
Subtotal Contract Drilling (2) 294,629 486,995
</pre>
<p> </p>
<pre>
Oil and Gas (3) (580) (86,562)
Other Operating Segments (4) (5) 15,207 24,275
Other reconciling items (7) (45,883) (152,177)
------- --------
Total 263,373 272,531
Interest expense (131,971) (133,105)
Investment income (loss) 165 27,389
(Losses) gains on sales and
retirements of
long-lived assets and other
(expense) income, net (31,261) 9,557
Impairments and other charges
(8) - (227,083)
Income (loss) before income
taxes $100,306 $(50,711)
======== ========
</pre>
<p> </p>
<p> </p>
<pre>
Rig activity:
Rig years: (9)
U.S. Lower 48 Land Drilling 165.5 167.7
U.S. Offshore 11.5 13.7
Alaska 8.5 11.6
Canada 26.2 22.7
International (10) 93.0 109.0
Total rig years 304.7 324.7
===== =====
Rig hours: (11)
U.S. Land Well-servicing 305,546 322,364
Canada Well-servicing 78,243 74,120
------ ------
Total rig hours 383,789 396,484
======= =======
</pre>
<p> </p>
<p> </p>
<pre>
(1) These segments include our drilling, well-servicing and
workover operations, on land and offshore.
</pre>
<p> </p>
<pre>
(2) Included earnings (losses), net from unconsolidated affiliates,
accounted for using the equity method, of $2.9 million, $.6 million
and $.1 million for the three months ended June 30, 2010 and 2009
and March 31, 2010, respectively, and $3.0 million and $1.9 million
for the six months ended June 30, 2010 and 2009, respectively.
</pre>
<p> </p>
<pre>
(3) Included earnings (losses), net from unconsolidated affiliates,
accounted for using the equity method, of $4.6 million, $(11.0)
million and $.6 million for the three months ended June 30, 2010 and
2009 and March 31, 2010, respectively, and $5.1 million and $(83.3)
million for the six months ended June 30, 2010 and 2009,
respectively.
</pre>
<p> </p>
<pre>
(4) Includes our drilling technology and top drive manufacturing,
directional drilling, rig instrumentation and software, and
construction and logistics operations.
</pre>
<p> </p>
<pre>
(5) Included earnings (losses), net from unconsolidated affiliates,
accounted for using the equity method, of $2.7 million, $2.3 million
and $3.0 million, for the three months ended June 30, 2010 and 2009
and March 31, 2010, respectively, and $5.8 million and $8.8 million
for the six months ended June 30, 2010 and 2009, respectively.
</pre>
<p> </p>
<p>(6) Represents the elimination of inter-segment transactions.</p>
<p> </p>
<pre>
(7) Represents the elimination of inter-segment transactions and
unallocated corporate expenses.
</pre>
<p> </p>
<pre>
(8) Represents impairments and other charges recorded for the three
months ended June 30, 2009.
</pre>
<p> </p>
<pre>
(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.
</pre>
<p> </p>
<pre>
(10) International rig years included our equivalent percentage
ownership of rigs owned by unconsolidated affiliates which totaled
2.4 years, 2.3 years and 2.5 years during the three months ended
June 30, 2010 and 2009 and March 31, 2010, respectively, and 2.5
years and 2.6 years during the six months ended June 30, 2010 and
2009, respectively.
</pre>
<p> </p>
<pre>
(11) Rig hours represents the number of hours that our well-
servicing rig fleet operated during the period.
</pre>
<p> </p>
<p> </p>
<pre>
NABORS INDUSTRIES LTD. AND SUBSIDIARIES
COMPUTATION OF EARNINGS (LOSSES) PER SHARE
(Unaudited)
</pre>
<p> </p>
<p> </p>
<pre>
A reconciliation of the numerators and denominators of the basic and
diluted earnings (losses) per share computations is as follows:
</pre>
<p> </p>
<p> </p>
<pre>
Three Months Ended
------------------
June 30, March 31,
-------- ---------
</pre>
<p> </p>
<pre>
(In thousands, except per
share amounts) 2010 2009 2010
---- ---- ----
</pre>
<p> </p>
<pre>
Net income (loss)
attributable to Nabors
(numerator):
Net income (loss)
attributable to Nabors $43,621 $(192,986) $40,200
Add interest expense on
assumed conversion of our
0.94% senior
exchangeable notes due 2011,
net of tax (1) - - -
--- --- ---
</pre>
<p> </p>
<pre>
Adjusted net income (loss)
attributable to Nabors -
diluted $43,621 $(192,986) $40,200
------- --------- -------
</pre>
<p> </p>
<pre>
Earnings (losses) per share:
Basic $.15 $(.68) $.14
---- ----- ----
Diluted $.15 $(.68) $.14
---- ----- ----
</pre>
<p> </p>
<pre>
Shares (denominator):
Weighted-average number of
shares outstanding-basic
(2) 285,181 283,154 284,672
Net effect of dilutive stock
options, warrants and
restricted
stock awards based on the if-
converted method 4,615 - 6,064
Assumed conversion of our
0.94% senior exchangeable
notes due 2011 (1) - - -
--- --- ---
Weighted-average number of
shares outstanding -
diluted 289,796 283,154 290,736
------- ------- -------
</pre>
<p> </p>
<p> </p>
<pre>
Six Months Ended
----------------
June 30,
--------
</pre>
<p> </p>
<pre>
(In thousands, except per share amounts) 2010 2009
---- ----
</pre>
<p> </p>
<pre>
Net income (loss) attributable to Nabors
(numerator):
Net income (loss) attributable to Nabors $83,821 $(67,816)
Add interest expense on assumed conversion
of our 0.94% senior
exchangeable notes due 2011, net of tax
(1) - -
--- ---
</pre>
<p> </p>
<pre>
Adjusted net income (loss) attributable to
Nabors -diluted $83,821 $(67,816)
------- --------
</pre>
<p> </p>
<pre>
Earnings (losses) per share:
Basic $.29 $(.24)
---- -----
Diluted $.29 $(.24)
---- -----
</pre>
<p> </p>
<pre>
Shares (denominator):
Weighted-average number of shares
outstanding-basic (2) 284,927 283,126
Net effect of dilutive stock options,
warrants and restricted
stock awards based on the if-converted
method 5,339 -
Assumed conversion of our 0.94% senior
exchangeable notes due 2011 (1) - -
</pre>
<p> </p>
<pre>
Weighted-average number of shares
outstanding - diluted 290,266 283,126
------- -------
</pre>
<p> </p>
<p> </p>
<pre>
(1) Diluted earnings (losses) per share for the three and six months
ended June 30, 2010 and 2009 and the three months ended March 31,
2010 excluded any incremental shares issuable upon exchange of the
0.94% senior exchangeable notes due 2011. Between 2008 and through
June 30, 2010, we purchased approximately $1.3 billion par value of
these notes in the open market, leaving approximately $1.4 billion
par value outstanding. The number of shares that we would be
required to issue upon exchange consists of only the incremental
shares that would be issued above the principal amount of the notes,
as we are required to pay cash up to the principal amount of the
notes exchanged. We would issue an incremental number of shares only
upon exchange of these notes. These shares are included in the
calculation of the weighted-average number of shares outstanding in
our diluted earnings per share calculation only when our stock price
exceeds $45.83 as of the last trading day of the quarter and the
average price of our shares for the ten consecutive trading days
beginning on the third business day after the last trading day of
the quarter exceeds $45.83, which did not occur during the three and
six months ended June 30, 2010 and 2009 or the three months ended
March 31, 2010.
</pre>
<p> </p>
<pre>
(2) On July 31, 2009, the exchangeable shares of Nabors (Canada)
Exchangeco Inc. ("Nabors Exchangeco") were exchanged for Nabors
common shares on a one-for-one basis. Basic shares outstanding
included (1) the weighted-average number of common shares and
restricted stock of Nabors and (2) the weighted-average number of
exchangeable shares of Nabors Exchangeco: 285.2 million shares
cumulatively for the three months ended June 30, 2010; 283.1 million
and .1 million shares, respectively, for the three months ended June
30, 2009; 284.7 million shares cumulatively for the three months
ended March 31, 2010; 284.9 million shares cumulatively for the six
months ended June 30, 2010; and 283.0 million and .1 million shares,
respectively, for the six months ended June 30, 2009.
</pre>
<p> </p>
<pre>
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
14,894,841 and 35,783,476 shares during the three months ended June
30, 2010 and 2009, respectively; and 10,055,869 shares during the
three months ended March 31, 2010; and 12,475,355 and 33,403,319
shares during the six months ended June 30, 2010 and 2009,
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 it is
considered a participating security.
</pre>
<p> </p>
<p> </p>
<pre>
NABORS INDUSTRIES LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (LOSS) ITEMS EXCLUDING CERTAIN
NON-CASH CHARGES (NON-GAAP)
(Unaudited)
</pre>
<p> </p>
<p> </p>
<pre>
As adjusted to
(In thousands, except per Actuals Exclude Charges
share amounts) (GAAP) Charges (Non-GAAP)
------ ------- ----------
</pre>
<p> </p>
<pre>
2010: Three Months Ended June 30, 2010
--------------------------------
</pre>
<p> </p>
<pre>
Income (loss) before income
taxes $51,264 $(11,506) $62,770
Net income (loss)
attributable to Nabors 43,621 (12,230) 55,851
Diluted earnings
(losses) per share $0.15 $(0.04) $0.19
</pre>
<p> </p>
<pre>
Six Months Ended June 30, 2010
------------------------------
</pre>
<p> </p>
<pre>
Income (loss) before income
taxes $100,306 $(33,182) $133,488
Net income (loss)
attributable to Nabors 83,821 (33,415) 117,236
Diluted earnings
(losses) per share $0.29 $(0.11) $0.40
</pre>
<p> </p>
<pre>
Three Months Ended March 31, 2010
---------------------------------
</pre>
<p> </p>
<pre>
Income (loss) before income
taxes $49,042 $(21,676) $70,718
Net income (loss)
attributable to Nabors 40,200 (21,185) 61,385
Diluted earnings
(losses) per share $0.14 $(0.07) $0.21
</pre>
<p> </p>
<pre>
2009: Three Months Ended June 30, 2009
--------------------------------
</pre>
<p> </p>
<pre>
Operating revenues and
Earnings (losses) from
unconsolidated
affiliates $859,742 $(8,295) $868,037
Adjusted income (loss) derived
from operating activities 73,448 (70,409) 143,857
Income (loss) before income
taxes (208,103) (297,492) 89,389
Net income (loss)
attributable to Nabors (192,986) (283,894) 90,908
Diluted earnings
(losses) per share $(0.68) $(1.00) $0.32
</pre>
<p> </p>
<pre>
Six Months Ended June 30, 2009
------------------------------
</pre>
<p> </p>
<pre>
Operating revenues and
Earnings (losses) from
unconsolidated
affiliates $1,993,360 $(83,295) $2,076,655
Adjusted income
(loss) derived
from operating
activities 272,531 (145,409) 417,940
Income (loss) before income
taxes (50,711) (372,492) 321,781
Net income (loss)
attributable to Nabors (67,816) (343,144) 275,328
Diluted earnings
(losses) per share $(0.24) $(1.21) $0.97
</pre>
<p> </p>
<p> </p>
<pre>
NABORS INDUSTRIES LTD. AND SUBSIDIARIES
SUMMARY OF NON-CASH CHARGES (NON-GAAP)
(Unaudited)
</pre>
<p> </p>
<p> </p>
<pre>
Three Months Ended
------------------
June 30, March 31,
-------- ---------
(In thousands) 2010 2009 2010
---- ---- ----
</pre>
<p> </p>
<p> </p>
<pre>
Equity method oil and gas joint
venture impairments $- $(8,295) $-
Goodwill impairment - (14,689) -
Impairments of long-lived assets
to be disposed of other than
by sale - (64,229) -
Stock compensation charge - (62,114) -
Impairment of oil and gas
financing receivable - (112,516) -
Other-than-temporary impairment
on debt security - (35,649) -
Other non-operational items (11,506) - (21,676)
------- --- -------
</pre>
<p> </p>
<p>Total charges before income taxes (11,506) (297,492) (21,676)</p>
<p> </p>
<pre>
Taxes, net (724) 13,598 491
---- ------ ---
</pre>
<p> </p>
<pre>
Total charges after income taxes $(12,230) $(283,894) $(21,185)
======== ========= ========
</pre>
<p> </p>
<p> </p>
<pre>
Six Months Ended
----------------
June 30,
--------
(In thousands) 2010 2009
---- ----
</pre>
<p> </p>
<p> </p>
<pre>
Equity method oil and gas joint venture
impairments $- $(83,295)
Goodwill impairment - (14,689)
Impairments of long-lived assets to be
disposed of other than
by sale - (64,229)
Stock compensation charge - (62,114)
Impairment of oil and gas financing
receivable - (112,516)
Other-than-temporary impairment on
debt security - (35,649)
Other non-operational items (33,182) -
------- ---
</pre>
<p> </p>
<p>Total charges before income taxes (33,182) (372,492)</p>
<p> </p>
<pre>
Taxes, net (233) 29,348
---- ------
</pre>
<p> </p>
<pre>
Total charges after income taxes $(33,415) $(343,144)
======== =========
For further information: Dennis A. Smith, Director of Corporate Development for Nabors Corporate Services, Inc., +1-281-775-8038, or to request Investor Materials, Corporate Headquarters, +1-441-292-1510, [email protected].
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