Nabors 3Q2010 EPS Equals $0.29 From Continuing Operations, Excluding
Acquisition Expenses and Certain Non-Cash Asset Impairments
</pre>
<p>HAMILTON, <span class="xn-location">Bermuda</span>, <span class="xn-chron">Oct. 26</span> /CNW/ -- Nabors Industries Ltd. (NYSE: NBR) today announced its results for the third quarter and nine months ended <span class="xn-chron">September 30, 2010</span>. Adjusted income derived from operating activities was <span class="xn-money">$164.4 million</span> for the third quarter, compared to <span class="xn-money">$117.2 million</span> in the third quarter of 2009 and <span class="xn-money">$126.8 million</span> in the second quarter of this year. Excluding certain non-cash asset impairments and expenses related to the acquisition of Superior Well Services Inc., net income from continuing operations was <span class="xn-money">$84.7 million</span> (<span class="xn-money">$0.29</span> per diluted share) for the third quarter, compared to <span class="xn-money">$66.7 million</span> (<span class="xn-money">$0.23</span> per diluted share) in the third quarter of 2009 and <span class="xn-money">$44.0 million</span> (<span class="xn-money">$0.15</span> per diluted share) in the second quarter of this year. Including these charges, income from continuing operations was a loss of <span class="xn-money">$31.6 million</span> (<span class="xn-money">$0.11</span> per diluted share). For the nine months ended <span class="xn-chron">September 30, 2010</span>, adjusted income derived from operating activities was <span class="xn-money">$433.0 million</span>, compared to <span class="xn-money">$395.9 million</span> in 2009. Net income from continuing operations, excluding the aforementioned items, was <span class="xn-money">$172.2 million</span> (<span class="xn-money">$0.59</span> per diluted share) for the first nine months of 2010, compared to <span class="xn-money">$349.3 million</span> (<span class="xn-money">$1.23</span> per diluted share) in the first nine months of 2009. The excluded items during the quarter amounted to <span class="xn-money">$134 million</span>, or <span class="xn-money">$0.40</span> per share, the largest component of which was impairments to goodwill and various underutilized assets primarily in the Company's US Offshore operations. The drilling slowdown following the Gulf of <span class="xn-location">Mexico</span> blowout is likely to restrict utilization of these assets for some time. The impairments also included the writedown of an E&P investment. Because most of the Company's wholly owned and joint-venture interests in <span class="xn-location">Canada</span> and <span class="xn-location">Colombia</span> are being marketed for sale, their results have been classified as discontinued operations beginning this quarter.</p>
<p/>
<p><span class="xn-person">Gene Isenberg</span>, Nabors' Chairman and CEO, commented, "The quarter represented solid operational performance by most of our North American businesses. This is particularly notable considering the flat results in our International operations, a slight loss in our US Offshore unit and only 20 days of contribution from our recently acquired pressure pumping operations. GAAP net income reflected pre-tax charges of <span class="xn-money">$7 million</span> in acquisition transaction expenses and <span class="xn-money">$127 million</span> in non-cash asset impairment charges.</p>
<p/>
<p>"The most significant sequential increase occurred in our US Lower 48 operations which posted <span class="xn-money">$70.5 million</span> in operating income, compared to the <span class="xn-money">$58.2 million</span> this unit realized in the second quarter. The improvement was primarily due to an <span class="xn-money">$841</span> increase in average margins, bringing the quarterly average to <span class="xn-money">$8,629</span> per rig day, augmented by a ten-rig increase during the third quarter, bringing the average rig count to 182.2 rig years. Today's rig count stands slightly higher at 187 rigs. An important achievement during the quarter was the entry into long-term contractual commitments for 11 more new-build rigs, bringing the total to 23 for the year, including three economically equivalent major refurbishments. Eleven of these rigs are destined for the Bakken Shale where we enjoy a dominant position. Three of the remaining rigs will deploy in the Eagle Ford Shale, one in the Haynesville, the other five rigs to the Marcellus Shale, where we have a small but growing presence. The performance of our PACE® rigs, especially the new B Series, continues to lead to more inquiries and is supporting modest improvement in leading edge rates. The gap between these rates and our current average rates is significant but they continue to converge as contracts renew. Nevertheless, cost pressure still remains in the most active markets.</p>
<p/>
<p>"Recent increases in this unit's rig count are the net result of higher activity in the oil and liquids-rich drilling plays, significantly offset by reduced dry gas drilling. We expect this trend to continue given the disparity between the forward strips for oil compared to natural gas. This is leading to a net modest improvement in our rig count through next year and keeps us cautiously optimistic regarding the 2011 outlook.</p>
<p/>
<p>"International income was <span class="xn-money">$64.4 million</span>, essentially flat compared to the second quarter. The sequential rig count increased by five rigs, averaging 103 for the quarter. The incremental contribution from these rigs was largely offset by a <span class="xn-money">$562</span> decrease in average rates. Along with most of the other larger oil service companies, we have further tempered our international outlook as the market continues to lag everyone's expectations. We now anticipate a sequential decrease on the order of 15% in the fourth quarter and foresee 2011 as essentially flat compared to 2010. We have a significant number of incremental rig deployments scheduled over the next five quarters, but the associated <span class="xn-money">$50 million</span> in additional income will be mostly offset by a large number of expiring contracts renewing at market rates. The largest negative impact is expected from three jackup rig renewals in the Arabian Gulf during the fourth, first and second quarters.</p>
<p/>
<p>"Income in our US Land Well Servicing unit was <span class="xn-money">$9.0 million</span>, a significant increase over the <span class="xn-money">$3.2 million</span> recorded in the second quarter. Rig hours in the quarter grew to 169,000, up 13,000 from second quarter, while average rig rates increased by <span class="xn-money">$25</span> per hour. This increased activity was enabled by the extraordinary overtime and rig reactivation expenses incurred last quarter. Today's level of activity represents a nearly 30% increase over last year, better than the industry average. The effective utilization of ready-to-run rigs and available crews combined with continuing strong oil prices augurs well for improved pricing industry wide. This pricing momentum, combined with further realization of synergistic opportunities through our newly acquired pressure pumping business, suggests solid results in the historically slow fourth quarter and a promising 2011, although still well below the peak levels this business achieved in 2006.</p>
<p/>
<p>"As expected, we incurred a <span class="xn-money">$1.1 million</span> loss in our US Offshore business due to the lower levels of activity in the Gulf of <span class="xn-location">Mexico</span> following the Macondo blowout. We expect a similar result in the fourth quarter, although we are cautiously optimistic the outlook will improve in 2011 in spite of ongoing permitting delays. However, we still expect activity in this market to be inhibited over the next few years given the more onerous regulatory environment, which led us to impair the carrying value of some of this unit's goodwill and underutilized assets. On the positive side, we are proceeding with engineering and construction of two first-of-a-kind 4,500 horsepower deepwater platform rigs recently awarded by two major customers. Both projects are scheduled to deploy in late 2012 and entail five to ten-year drilling programs. It is also likely that regulatory authorities will require that some 3,500 wells in the Gulf of <span class="xn-location">Mexico</span> be plugged and abandoned. This holds significant promise for our Sundowner platform and workover jackup rigs.</p>
<p/>
<p>"In <span class="xn-location">Canada</span>, we posted <span class="xn-money">$1.0 million</span> in operating income, a significant improvement over the <span class="xn-money">$9.5 million</span> loss in the seasonally low second quarter. We have significantly increased our income expectations for both this year and next as a result of higher activity and rigorous cost control. The higher activity is occurring in the British Columbia shale plays, the traditional oil areas of Alberta and Saskatchewan, and the emerging oil shale plays, particularly the Cardium Shale in south central Alberta. Another significant driver is drilling in support of potash development. This unit is building three new rigs, the first of which will deploy in our US Lower 48 operations. An award for the second rig is pending in <span class="xn-location">Canada</span>, and there is strong interest in the innovative design of the third rig, which is targeted at pad drilling applications and should deliver late next year.</p>
<p/>
<p>"Quarterly results in our Alaskan unit were higher than expected at <span class="xn-money">$14.3 million</span>, with extra income derived from higher rig activity, demobilization fees and camp rentals in support of various maintenance and construction projects. The quarter also benefited from the acceleration of deferred revenues triggered by the impending end of the primary term of a long-term contract. The end of this contract, the recent wind up of another 12-year contract and spending cuts by the largest operator in this market have caused us to lower our 2011 expectations considerably. Over time, we expect strong crude prices will result in a return to more robust spending and Nabors should be the largest beneficiary given the quality of our operations and rigs and our patented coiled technology.</p>
<p/>
<p>"Our Other Operating Segments posted an excellent quarter, primarily on the strength of strong results in Canrig which were driven by strong third-party equipment sales and increasing income from our Rockit(TM) directional drilling technology. Results in our Alaskan joint ventures also contributed significantly. We expect results to be sustainable given Canrig's third-party backlog, the continuing success of the Rockit(TM) technology and the rollout of additional directional drilling technologies.</p>
<p/>
<p>"Our Oil and Gas operations posted income of <span class="xn-money">$1.0 million</span> with the reclassification of our Colombian and Canadian entities as discontinued operations. The proposed sale of these two units is moving ahead expeditiously, with discussions underway with numerous interested parties regarding both regions. Two investment banks are marketing our Colombian properties, with one of them also representing us in <span class="xn-location">Canada</span>. Our expectations of realized value remain intact.</p>
<p/>
<p>"The most notable development of the quarter was the acquisition of Superior Well Services in an all-cash transaction with an enterprise value of approximately <span class="xn-money">$900 million</span>. We were able to close and finance the transaction within five weeks of the announcement of a definitive agreement. Our consolidated results reflect only <span class="xn-money">$12.0 million</span> in operating income from the 20 days this unit was part of Nabors. In the short time we have owned Superior, the quality of their equipment and technology and the capability of their field personnel and management teams have exceeded our expectations. We have already realized significant economies in procurement, consolidated certain facilities, and integrated Superior's fluids management business into Nabors Well Services. We still see further synergies and significant investment opportunities facilitated by Nabors' ability to fund this previously capital-constrained business.</p>
<p/>
<p>"Our financial position is strong with <span class="xn-money">$810 million</span> in cash and investments at the end of the quarter. This ending balance reflects the all-cash acquisition of Superior and the attendant issuance of <span class="xn-money">$700 million</span> in senior unsecured notes, due 2020, at an annual yield of 5%. In mid-September we also established a <span class="xn-money">$700 million</span>, four-year, committed revolving credit facility which allows us to borrow at LIBOR plus 1.50%. The availability of this credit facility, our expectation of significant free cash flow in subsequent quarters and the anticipated proceeds from the sale of certain E&P properties, leads us to conclude we can comfortably redeem the <span class="xn-money">$1.4 billion</span> in convertible notes due next May and fund anticipated capital expenditures. This should negate the need for issuance of equity in any form or additional borrowings, other than temporary draws on our revolver.</p>
<p/>
<p>"In summary, we are quite optimistic regarding the direction of our business, notwithstanding a persistently low natural gas strip and the tempered outlook for our International segment."</p>
<p/>
<p>The Nabors companies own and operate approximately 554 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 38 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>
<pre>
</pre>
<p> </p>
<pre>
NABORS INDUSTRIES LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (LOSS)
(Unaudited)
</pre>
<p> </p>
<pre>
Three Months Ended
------------------
September 30, June 30,
------------- --------
</pre>
<p> </p>
<pre>
(In thousands, except per
share amounts) 2010 2009 2010
---- ---- ----
</pre>
<p> </p>
<pre>
Revenues and other income:
Operating revenues $1,069,261 $789,200 $896,029
Earnings (losses) from
unconsolidated affiliates (1) 11,842 17,103 8,845
Investment income (loss) (733) (1,806) 2,314
Total revenues and other
income 1,080,370 804,497 907,188
--------- ------- -------
</pre>
<p> </p>
<pre>
Costs and other deductions:
Direct costs 625,561 431,280 517,531
General and administrative
expenses 87,194 81,637 80,337
Depreciation and amortization 198,151 173,701 175,397
Depletion 5,778 2,494 4,841
Interest expense 66,973 66,671 65,293
Losses (gains) on sales and
retirements of long-lived
assets and other expense
(income), net 9,407 10,516 11,024
Impairments and other charges
(2) 123,099 - -
Total costs and other
deductions 1,116,163 766,299 854,423
--------- ------- -------
</pre>
<p> </p>
<pre>
Income (loss) from continuing
operations before income
taxes (35,793) 38,198 52,765
------- ------ ------
</pre>
<p> </p>
<pre>
Income tax expense (benefit):
Current (71,276) 37,901 17,652
Deferred 67,046 (53,378) (8,858)
Income tax expense (benefit) (4,230) (15,477) 8,794
------ ------- -----
</pre>
<p> </p>
<pre>
Income (loss) from continuing
operations, net of tax (31,563) 53,675 43,971
Income (loss) from
discontinued operations, net
of tax (7,591) (23,250) (909)
</pre>
<p> </p>
<pre>
Net income (loss) (39,154) 30,425 43,062
Less: Net (income) loss
attributable to
noncontrolling interest (453) (895) 559
Net income (loss) attributable
to Nabors $(39,607) $29,530 $43,621
-------- ------- -------
</pre>
<p> </p>
<pre>
Earnings (losses) per share:
(3)
Basic from continuing
operations $(.11) $.18 $.15
Basic from discontinued
operations $(.03) $(.08) $-
----- ----- ---
Basic $(.14) $.10 $.15
</pre>
<p> </p>
<pre>
Diluted from continuing
operations $(.11) $.18 $.15
Diluted from discontinued
operations $(.03) $(.08) $-
----- ----- ---
Diluted $(.14) $.10 $.15
</pre>
<p> </p>
<p> </p>
<pre>
Weighted-average number of
common shares outstanding:
(3)
Basic 285,282 283,197 285,181
------- ------- -------
Diluted 285,282 287,407 289,796
------- ------- -------
</pre>
<p> </p>
<p> </p>
<pre>
Adjusted income (loss) derived
from operating activities (1)
(4) $164,419 $117,191 $126,768
======== ======== ========
</pre>
<p> </p>
<p> </p>
<pre>
Nine Months Ended
-----------------
September 30,
-------------
</pre>
<p> </p>
<pre>
(In thousands, except per share amounts) 2010 2009
---- ----
</pre>
<p> </p>
<pre>
Revenues and other income:
Operating revenues $2,856,636 $2,853,944
Earnings (losses) from unconsolidated
affiliates (1) 28,329 (53,132)
Investment income (loss) (976) 25,548
Total revenues and other income 2,883,989 2,826,360
--------- ---------
</pre>
<p> </p>
<pre>
Costs and other deductions:
Direct costs 1,648,289 1,546,076
General and administrative expenses 242,957 352,212
Depreciation and amortization 545,084 498,830
Depletion 15,646 7,837
Interest expense 199,035 199,776
Losses (gains) on sales and retirements of
long-lived assets and other expense
(income), net 40,798 625
Impairments and other charges (2) 123,099 227,083
Total costs and other deductions 2,814,908 2,832,439
--------- ---------
</pre>
<p> </p>
<pre>
Income (loss) from continuing operations
before income taxes 69,081 (6,079)
------ ------
</pre>
<p> </p>
<pre>
Income tax expense (benefit):
Current (40,979) 43,933
Deferred 54,133 (43,205)
Income tax expense (benefit) 13,154 728
------ ---
</pre>
<p> </p>
<pre>
Income (loss) from continuing operations, net
of tax 55,927 (6,807)
Income (loss) from discontinued operations,
net of tax (12,921) (31,855)
</pre>
<p> </p>
<pre>
Net income (loss) 43,006 (38,662)
Less: Net (income) loss attributable to
noncontrolling interest 1,208 376
Net income (loss) attributable to Nabors $44,214 $(38,286)
------- --------
</pre>
<p> </p>
<pre>
Earnings (losses) per share: (3)
Basic from continuing operations $.21 $(.03)
Basic from discontinued operations $(.05) $(.11)
----- -----
Basic $.16 $(.14)
</pre>
<p> </p>
<pre>
Diluted from continuing operations $.19 $(.03)
Diluted from discontinued operations $(.04) $(.11)
----- -----
Diluted $.15 $(.14)
</pre>
<p> </p>
<p> </p>
<pre>
Weighted-average number of common shares
outstanding: (3)
Basic 285,045 283,150
------- -------
Diluted 289,847 283,150
------- -------
</pre>
<p> </p>
<p> </p>
<pre>
Adjusted income (loss) derived from operating
activities (1) (4) $432,989 $395,857
======== ========
</pre>
<p> </p>
<pre>
(1) Includes our proportionate share of writedowns recorded by our
oil and gas joint ventures of $(83.3) million for the nine months
ended September 30, 2009.
</pre>
<p> </p>
<pre>
(2) Represents impairments and other charges recorded for the three
and nine months ended September 30, 2010 and the nine months ended
September 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) from continuing operations before
income taxes, which is a GAAP measure, is provided within the table
set forth immediately following the heading "Segment Reporting".
</pre>
<p> </p>
<pre>
NABORS INDUSTRIES LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
</pre>
<p> </p>
<p> </p>
<pre>
September December
30, June 30, 31,
(In thousands, except ratios) 2010 2010 2009
---- ---- ----
</pre>
<p> </p>
<pre>
ASSETS
Current assets:
Cash and short-term investments $772,469 $892,876 $1,090,851
Accounts receivable, net 1,002,974 762,589 724,040
Assets held for sale 345,138 - -
Other current assets 445,343 369,943 361,773
------- ------- -------
Total current assets 2,565,924 2,025,408 2,176,664
Long-term investments and other
receivables 37,448 93,965 100,882
Property, plant and equipment, net 7,884,874 7,641,563 7,646,050
Goodwill 463,427 164,078 164,265
Investment in unconsolidated
affiliates 272,432 321,293 306,608
Other long-term assets 396,623 253,834 250,221
Total assets $11,620,728 $10,500,141 $10,644,690
=========== =========== ===========
</pre>
<p> </p>
<pre>
LIABILITIES AND EQUITY
Current liabilities:
Current portion of long-term debt $1,442,714 $1,345,819 $163
Other current liabilities 818,806 642,263 608,459
------- ------- -------
Total current liabilities 2,261,520 1,988,082 608,622
Long-term debt 3,066,748 2,364,703 3,940,605
Other long-term liabilities 1,002,702 918,947 913,484
--------- ------- -------
Total liabilities 6,330,970 5,271,732 5,462,711
</pre>
<p> </p>
<p>Preferred Stock (1) 69,188 - -</p>
<p> </p>
<pre>
Equity:
Shareholders' equity 5,207,632 5,216,308 5,167,656
Noncontrolling interest 12,938 12,101 14,323
------ ------ ------
Total equity 5,220,570 5,228,409 5,181,979
Total liabilities and equity $11,620,728 $10,500,141 $10,644,690
=========== =========== ===========
</pre>
<p> </p>
<p> </p>
<p> </p>
<pre>
Cash, short-term and long-term
investments (2) $809,917 $986,841 $1,191,733
</pre>
<p> </p>
<pre>
Funded debt to capital ratio: (3)
- Gross 0.43 : 1 0.39 : 1 0.41 : 1
- Net of cash and investments 0.38 : 1 0.32 : 1 0.33 : 1
Interest coverage ratio: (4) 6.3 : 1 5.9 : 1 6.3 : 1
</pre>
<p> </p>
<pre>
(1) Represents preferred stock outstanding at the time of our
acquisition of Superior. Seventy-five thousand shares of such stock
are outstanding and pay quarterly dividends at an annual rate of 4%.
</pre>
<p> </p>
<pre>
(2) The September 30 and June 30, 2010 and December 31, 2009
amounts included $30.2 million, $86.6 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>
(3) 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>
(4) The interest-coverage ratio is a trailing 12-month quotient
of the sum of income (loss) from continuing operations, net of tax,
net income (loss) attributable to noncontrolling interest, 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
------------------
September 30, June 30,
------------- --------
</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 $350,348 $212,004 $303,417
U.S. Land Well-servicing 119,127 89,459 104,860
U.S. Pressure Pumping (2) 61,611 - -
U.S. Offshore 26,504 25,708 38,978
Alaska 45,920 45,210 43,385
Canada 85,728 58,219 60,759
International 288,535 307,660 267,007
Subtotal Contract
Drilling (3) 977,773 738,260 818,406
</pre>
<p> </p>
<pre>
Oil and Gas (4) 11,280 11,022 9,800
Other Operating Segments
(5) (6) 130,392 89,774 107,749
Other reconciling items
(7) (38,342) (32,753) (31,081)
Total $1,081,103 $806,303 $904,874
========== ======== ========
</pre>
<p> </p>
<pre>
Adjusted income (loss)
derived from operating
activities:
Contract Drilling: (1)
U.S. Lower 48 Land
Drilling $70,452 $46,382 $58,169
U.S. Land Well-servicing 9,049 342 3,231
U.S. Pressure Pumping (2) 11,987 - -
U.S. Offshore (1,090) (163) 8,104
Alaska 14,299 11,145 12,388
Canada 1,013 (10,448) (9,497)
International 64,379 86,865 64,972
------ ------ ------
Subtotal Contract
Drilling (3) 170,089 134,123 137,367
</pre>
<p> </p>
<pre>
Oil and Gas (4) 1,037 4,322 1,998
Other Operating Segments
(5) (6) 17,969 3,978 8,317
Other reconciling items
(8) (24,676) (25,232) (20,914)
------- ------- -------
Total 164,419 117,191 126,768
Interest expense (66,973) (66,671) (65,293)
Investment income (loss) (733) (1,806) 2,314
(Losses) gains on sales
and retirements of long-
lived assets and other
(expense) income, net (9,407) (10,516) (11,024)
Impairments and other
charges (9) (123,099) - -
Income (loss) before
income taxes from
continuing operations $(35,793) $38,198 $52,765
======== ======= =======
</pre>
<p> </p>
<p> </p>
<pre>
Rig activity:
Rig years: (10)
U.S. Lower 48 Land
Drilling 182.2 123.6 172.3
U.S. Offshore 8.2 7.8 11.0
Alaska 6.7 9.0 8.0
Canada 27.5 12.3 17.7
International (11) 103.0 97.1 97.6
Total rig years 327.6 249.8 306.6
===== ===== =====
Rig hours: (12)
U.S. Land Well-servicing 168,949 135,040 157,199
Canada Well-servicing 44,606 31,686 32,211
Total rig hours 213,555 166,726 189,410
======= ======= =======
</pre>
<p> </p>
<p> </p>
<pre>
Nine Months Ended
-----------------
September 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 $925,262 $851,742
U.S. Land Well-servicing 321,978 323,901
U.S. Pressure Pumping (2) 61,611 -
U.S. Offshore 103,680 128,047
Alaska 139,099 161,199
Canada 262,043 217,464
International 800,886 977,867
Subtotal Contract Drilling (3) 2,614,559 2,660,220
</pre>
<p> </p>
<pre>
Oil and Gas (4) 31,682 (53,874)
Other Operating Segments (5) (6) 333,654 350,173
Other reconciling items (7) (94,930) (155,707)
Total $2,884,965 $2,800,812
========== ==========
</pre>
<p> </p>
<pre>
Adjusted income (loss) derived from
operating activities:
Contract Drilling: (1)
U.S. Lower 48 Land Drilling $188,907 $245,699
U.S. Land Well-servicing 19,465 20,192
U.S. Pressure Pumping (2) 11,987 -
U.S. Offshore 14,387 23,391
Alaska 40,644 48,344
Canada 6,398 (7,651)
International 182,930 291,143
------- -------
Subtotal Contract Drilling (3) 464,718 621,118
</pre>
<p> </p>
<pre>
Oil and Gas (4) 5,654 (76,105)
Other Operating Segments (5) (6) 33,176 28,253
Other reconciling items (8) (70,559) (177,409)
------- --------
Total 432,989 395,857
Interest expense (199,035) (199,776)
Investment income (loss) (976) 25,548
(Losses) gains on sales and retirements
of long-lived assets and other
(expense) income, net (40,798) (625)
Impairments and other charges (9) (123,099) (227,083)
Income (loss) before income taxes from
continuing operations $69,081 $(6,079)
======= =======
</pre>
<p> </p>
<p> </p>
<pre>
Rig activity:
Rig years: (10)
U.S. Lower 48 Land Drilling 171.2 152.8
U.S. Offshore 10.4 11.7
Alaska 7.9 10.7
Canada 26.6 19.2
International (11) 96.3 105.0
Total rig years 312.4 299.4
===== =====
Rig hours: (12)
U.S. Land Well-servicing 474,495 457,404
Canada Well-servicing 122,849 105,806
Total rig hours 597,344 563,210
======= =======
</pre>
<p> </p>
<p> </p>
<pre>
(1) These segments include our drilling, well-servicing, fluid
logistics and workover operations, on land and offshore.
</pre>
<p> </p>
<pre>
(2) Includes operating results related to our acquisition of Superior
for the period September 10, 2010 through September 30, 2010.
</pre>
<p> </p>
<pre>
(3) Includes earnings (losses), net from unconsolidated affiliates,
accounted for using the equity method, of $.6 million, $4.9 million
and $2.9 million for the three months ended September 30, 2010 and
2009 and June 30, 2010, respectively, and $3.7 million and $6.8
million for the nine months ended September 30, 2010 and 2009,
respectively.
</pre>
<p> </p>
<pre>
(4) Includes earnings (losses), net from unconsolidated affiliates,
accounted for using the equity method, of $6.8 million, $7.7 million
and $3.2 million for the three months ended September 30, 2010 and
2009 and June 30, 2010, respectively, and $14.5 million and $(73.2)
million for the nine months ended September 30, 2010 and 2009,
respectively.
</pre>
<p> </p>
<pre>
(5) Includes our drilling technology and top drive manufacturing,
directional drilling, rig instrumentation and software, and
construction and logistics operations.
</pre>
<p> </p>
<pre>
(6) Includes earnings (losses), net from unconsolidated affiliates,
accounted for using the equity method, of $4.4 million, $4.5 million
and $2.7 million, for the three months ended September 30, 2010 and
2009 and June 30, 2010, respectively, and $10.1 million and $13.3
million for the nine months ended September 30, 2010 and 2009,
respectively.
</pre>
<p> </p>
<p>(7) Represents the elimination of inter-segment transactions.</p>
<p> </p>
<pre>
(8) Represents the elimination of inter-segment transactions and
unallocated corporate expenses.
</pre>
<p> </p>
<pre>
(9) Represents impairments and other charges recorded for the three
and nine months ended September 30, 2010 and the nine months ended
September 30, 2009.
</pre>
<p> </p>
<pre>
(10) 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>
(11) International rig years included our equivalent percentage
ownership of rigs owned by unconsolidated affiliates which totaled
2.0 years, 2.5 years and 2.4 years during the three months ended
September 30, 2010 and 2009 and June 30, 2010, respectively, and 2.3
years and 2.6 years during the nine months ended September 30, 2010
and 2009, respectively.
</pre>
<p> </p>
<pre>
(12) 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>
<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
------------------
September 30, June 30,
------------- --------
</pre>
<p> </p>
<pre>
(In thousands, except per share
amounts) 2010 2009 2010
---- ---- ----
</pre>
<p> </p>
<pre>
Net income (loss) attributable
to Nabors (numerator):
Income (loss) from continuing
operations, net of tax $(31,563) $53,675 $43,971
Less: net (income) loss
attributable to noncontrolling
interest (453) (895) 559
---- ---- ---
Adjusted income (loss) from
continuing operations, net of
tax -basic $(32,016) $52,780 $44,530
Add interest expense on assumed
conversion of our 0.94% senior
exchangeable notes due 2011,
net of tax (1) - - -
--- --- ---
</pre>
<p> </p>
<pre>
Adjusted income (loss) from
continuing operations, net of
tax -diluted $(32,016) $52,780 $44,530
Income (loss) from discontinued
operations, net of tax (7,591) (23,250) (909)
------ ------- ----
Total adjusted net income
(loss) $(39,607) $29,530 $43,621
-------- ------- -------
</pre>
<p> </p>
<pre>
Earnings (losses) per share:
Basic from continuing
operations $(.11) $.18 $.15
Basic from discontinued
operations (.03) (.08) -
Total Basic $(.14) $.10 $.15
----- ---- ----
Diluted from continuing
operations $(.11) $.18 $.15
Diluted from discontinued
operations (.03) (.08) -
Total Diluted $(.14) $.10 $.15
----- ---- ----
</pre>
<p> </p>
<pre>
Shares (denominator):
Weighted-average number of
shares outstanding-basic (2) 285,282 283,197 285,181
Net effect of dilutive stock
options, warrants and
restricted stock awards based
on the if-converted method - 4,210 4,615
Assumed conversion of our 0.94%
senior exchangeable notes due
2011 (1) - - -
--- --- ---
Weighted-average number of
shares outstanding - diluted 285,282 287,407 289,796
------- ------- -------
</pre>
<p> </p>
<p> </p>
<pre>
Nine Months Ended
-----------------
September 30,
-------------
</pre>
<p> </p>
<pre>
(In thousands, except per share amounts) 2010 2009
---- ----
</pre>
<p> </p>
<pre>
Net income (loss) attributable to Nabors
(numerator):
Income (loss) from continuing operations,
net of tax $55,927 $(6,807)
Less: net (income) loss attributable to
noncontrolling interest 1,208 376
----- ---
Adjusted income (loss) from continuing
operations, net of tax -basic $57,135 $(6,431)
Add interest expense on assumed conversion
of our 0.94% senior exchangeable notes
due 2011, net of tax (1) - -
--- ---
</pre>
<p> </p>
<pre>
Adjusted income (loss) from continuing
operations, net of tax -diluted $57,135 $(6,431)
Income (loss) from discontinued
operations, net of tax (12,921) (31,855)
------- -------
Total adjusted net income (loss) $44,214 $(38,286)
------- --------
</pre>
<p> </p>
<pre>
Earnings (losses) per share:
Basic from continuing operations $.21 $(.03)
Basic from discontinued operations (.05) (.11)
Total Basic $.16 $(.14)
---- -----
Diluted from continuing operations $.19 $(.03)
Diluted from discontinued operations (.04) (.11)
Total Diluted $.15 $(.14)
---- -----
</pre>
<p> </p>
<pre>
Shares (denominator):
Weighted-average number of shares
outstanding-basic (2) 285,045 283,150
Net effect of dilutive stock options,
warrants and restricted stock awards
based on the if-converted method 4,802 -
Assumed conversion of our 0.94% senior
exchangeable notes due 2011 (1)
Weighted-average number of shares
outstanding - diluted 289,847 283,150
------- -------
</pre>
<p> </p>
<p> </p>
<pre>
(1) Diluted earnings (losses) per share for the three and nine months
ended September 30, 2010 and 2009 and the three months ended June
30, 2010 excluded any incremental shares issuable upon exchange of
the 0.94% senior exchangeable notes due 2011. Between 2008 and
September 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
nine months ended September 30, 2010 and 2009 or the three months
ended June 30, 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: 285.3 million shares
cumulatively for the three months ended September 30, 2010; 285.0
million shares, cumulatively, for the three months ended September
30, 2009; 285.2 million shares cumulatively for the three months
ended June 30, 2010; 285.0 million shares cumulatively for the nine
months ended September 30, 2010; and 283.1 million and .1 million
shares, respectively, for the nine months ended September 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
32,543,395 and 16,595,790 shares during the three months ended
September 30, 2010 and 2009, respectively; and 14,894,841 shares
during the three months ended June 30, 2010; and 14,108,644 and
34,085,988 shares during the nine months ended September 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) EXCLUDING CERTAIN NON-CASH
CHARGES (NON-GAAP)
(Unaudited)
</pre>
<p> </p>
<p> </p>
<pre>
Three Months Ended
------------------
September 30, 2010
As adjusted
to Exclude
(In thousands, Charges
except per share Actuals (Non-
amounts) (GAAP) Charges GAAP)(1)
-------- ------- ----------------
</pre>
<p> </p>
<pre>
Revenues and other
income:
Operating revenues $1,069,261 $- $1,069,261
Earnings (losses)
from unconsolidated
affiliates 11,842 - 11,842
Investment income (733) 3,656 2,923
Total revenues and
other income 1,080,370 3,656 1,084,026
--------- ----- ---------
</pre>
<p> </p>
<pre>
Costs and other
deductions:
Direct costs 625,561 - 625,561
General and
administrative
expenses 87,194 - 87,194
Depreciation and
amortization 198,151 - 198,151
Depletion 5,778 - 5,778
Interest expense 66,973 - 66,973
Losses (gains) on
sales and
retirements of
long-lived assets
and other expense
(income), net 9,407 (7,000) 2,407
Impairments and
other charges 123,099 (123,099) -
Total costs and
other deductions 1,116,163 (130,099) 986,064
--------- -------- -------
</pre>
<p> </p>
<pre>
Income (loss) from
continuing
operations before
income taxes (35,793) 133,755 97,962
Income tax expense
(benefit) (4,230) 17,475 13,245
------ ------ ------
Income (loss) from
continuing
operations, net of
tax (31,563) 116,280 84,717
Income (loss) from
discontinued
operations, net of
tax (7,591) - (7,591)
------ --- ------
Net income (loss) (39,154) 116,280 77,126
Less: Net (income)
loss attributable
to noncontrolling
interest (453) - (453)
Net income (loss)
attributable to
Nabors $(39,607) $116,280 $76,673
-------- -------- -------
</pre>
<p> </p>
<pre>
Earnings (losses)
per share:
Diluted from
continuing
operations $(.11) $.40 $.29
Diluted from
discontinued
operations (.03) - (.02)
---- --- ----
Earnings (losses)
per share -
diluted $(.14) $.40 $.27
</pre>
<p> </p>
<pre>
Weighted-average
number of common
shares outstanding
- diluted 285,282 289,008
------- -------
</pre>
<p> </p>
<p> </p>
<pre>
Adjusted income
(loss) derived from
operating
activities (2) $164,419 $- $164,419
======== === ========
</pre>
<p> </p>
<p> </p>
<pre>
Three Months Ended
------------------
June 30, 2010
-------------
As adjusted
to Exclude
(In thousands, except per Actuals Charges
share amounts) (GAAP) Charges (Non-
-------- ------- ------------
GAAP)(1)
-------
</pre>
<p> </p>
<pre>
Revenues and other income:
Operating revenues $896,029 $- $896,029
Earnings (losses) from
unconsolidated affiliates 8,845 - 8,845
Investment income 2,314 - 2,314
Total revenues and other
income 907,188 - 907,188
------- --- -------
</pre>
<p> </p>
<pre>
Costs and other deductions:
Direct costs 517,531 - 517,531
General and administrative
expenses 80,337 - 80,337
Depreciation and amortization 175,397 - 175,397
Depletion 4,841 - 4,841
Interest expense 65,293 - 65,293
Losses (gains) on sales and
retirements of
long-lived assets and other
expense (income), net 11,024 - 11,024
Impairments and other charges - - -
Total costs and other
deductions 854,423 - 854,423
------- --- -------
</pre>
<p> </p>
<pre>
Income (loss) from continuing
operations before income
taxes 52,765 - 52,765
Income tax expense (benefit) 8,794 - 8,794
----- --- -----
Income (loss) from continuing
operations, net of tax 43,971 - 43,971
Income (loss) from discontinued
operations, net of tax (909) - (909)
---- --- ----
Net income (loss) 43,062 - 43,062
Less: Net (income) loss
attributable to
noncontrolling interest 559 - 559
Net income (loss) attributable
to Nabors $43,621 $- $43,621
------- --- -------
</pre>
<p> </p>
<pre>
Earnings (losses) per share:
Diluted from continuing
operations $.15 $- $.15
Diluted from discontinued
operations - - -
--- --- ---
Earnings (losses) per
share -diluted $.15 $- $.15
</pre>
<p> </p>
<pre>
Weighted-average number of
common shares outstanding -
diluted 289,796 289,796
------- -------
</pre>
<p> </p>
<p> </p>
<pre>
Adjusted income (loss) derived
from operating activities (2) $126,768 $- $126,768
======== === ========
</pre>
<p> </p>
<p> </p>
<pre>
Nine Months Ended
-----------------
September 30, 2010
------------------
As adjusted
to Exclude
(In thousands, Charges
except per share Actuals (Non-
amounts) (GAAP) Charges GAAP)(1)
-------- ------- ----------------
</pre>
<p> </p>
<pre>
Revenues and other
income:
Operating revenues $2,856,636 $- $2,856,636
Earnings (losses)
from unconsolidated
affiliates 28,329 - 28,329
Investment income (976) 3,656 2,680
Total revenues and
other income 2,883,989 3,656 2,887,645
--------- ----- ---------
</pre>
<p> </p>
<pre>
Costs and other
deductions:
Direct costs 1,648,289 - 1,648,289
General and
administrative
expenses 242,957 - 242,957
Depreciation and
amortization 545,084 - 545,084
Depletion 15,646 - 15,646
Interest expense 199,035 - 199,035
Losses (gains) on
sales and
retirements of
long-lived assets
and other expense
(income), net 40,798 (7,000) 33,798
Impairments and
other charges 123,099 (123,099) -
Total costs and
other deductions 2,814,908 (130,099) 2,684,809
--------- -------- ---------
</pre>
<p> </p>
<pre>
Income (loss) from
continuing
operations before
income taxes 69,081 133,755 202,836
Income tax expense
(benefit) 13,154 17,475 30,629
------ ------ ------
Income (loss) from
continuing
operations, net of
tax 55,927 116,280 172,207
Income (loss) from
discontinued
operations, net of
tax (12,921) - (12,921)
------- --- -------
Net income (loss) 43,006 116,280 159,286
Less: Net (income)
loss attributable
to noncontrolling
interest 1,208 - 1,208
Net income (loss)
attributable to
Nabors $44,214 $116,280 $160,494
------- -------- --------
</pre>
<p> </p>
<pre>
Earnings (losses)
per share:
Diluted from
continuing
operations $.19 $.40 $.59
Diluted from
discontinued
operations (.04) - (.04)
---- --- ----
Earnings (losses)
per share -
diluted $.15 $.40 $.55
</pre>
<p> </p>
<pre>
Weighted-average
number of common
shares outstanding
- diluted 289,847 289,847
------- -------
</pre>
<p> </p>
<p> </p>
<pre>
Adjusted income
(loss) derived from
operating
activities (2) $432,989 $- $432,989
======== === ========
</pre>
<p> </p>
<p> </p>
<pre>
(1) As-adjusted amounts include Non-GAAP financial measures. These
measures are presented to provide management and investors an
opportunity to make meaningful assessments and comparisons of
results from operations, exclusive of certain charges detailed
below. The presentation of Non-GAAP information is not intended to
suggest that such information is superior to the presentation of
GAAP information, but only to clarify some information and assist
the reader.
</pre>
<p> </p>
<pre>
(2) 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. Such amounts should not be used as a
substitute to those amounts reported under GAAP. However,
management evaluates the performance of our business units and the
consolidated company based on several criteria, including adjusted
income derived from operating activities, because it believes that
this financial measure is an accurate reflection of the ongoing
profitability of our Company.
</pre>
<p> </p>
<p> </p>
<pre>
NABORS INDUSTRIES LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (LOSS) EXCLUDING CERTAIN NON-CASH
CHARGES (NON-GAAP)
(Unaudited)
</pre>
<p> </p>
<p> </p>
<pre>
Three Months Ended
------------------
September 30, 2009
------------------
As adjusted
to Exclude
(In thousands, Charges
except per share Actuals (Non-
amounts) (GAAP) Charges GAAP)(1)
-------- ------- ----------------
</pre>
<p> </p>
<pre>
Revenues and other
income:
Operating revenues $789,200 $- $789,200
Earnings (losses)
from unconsolidated
affiliates 17,103 - 17,103
Investment income
(loss) (1,806) - (1,806)
Total revenues and
other income 804,497 - 804,497
------- --- -------
</pre>
<p> </p>
<pre>
Costs and other
deductions:
Direct costs 431,280 - 431,280
General and
administrative
expenses 81,637 - 81,637
Depreciation and
amortization 173,701 - 173,701
Depletion 2,494 - 2,494
Interest expense 66,671 - 66,671
Losses (gains) on
sales and
retirements of
long-lived assets
and other expense
(income), net 10,516 - 10,516
Impairments and
other charges - - -
Total costs and
other deductions 766,299 - 766,299
------- --- -------
</pre>
<p> </p>
<pre>
Income (loss) from
continuing
operations before
income taxes 38,198 - 38,198
Income tax expense
(benefit) (15,477) (12,997) (28,474)
------- ------- -------
Income (loss) from
continuing
operations, net of
tax 53,675 12,997 66,672
Income (loss) from
discontinued
operations, net of
tax (23,250) - (23,250)
------- --- -------
Net income (loss) 30,425 12,997 43,422
Less: Net (income)
loss attributable
to noncontrolling
interest (895) - (895)
Net income (loss)
attributable to
Nabors $29,530 $12,997 $42,527
------- ------- -------
</pre>
<p> </p>
<pre>
Earnings (losses)
per share:
Diluted from
continuing
operations $.18 $.05 $.23
Diluted from
discontinued
operations (.08) - (.08)
---- --- ----
Earnings (losses)
per share -
diluted $.10 $.05 $.15
</pre>
<p> </p>
<pre>
Weighted-average
number of common
shares outstanding
- diluted 287,407 287,407
------- -------
</pre>
<p> </p>
<p> </p>
<pre>
Adjusted income
(loss) derived from
operating
activities (2) $117,191 $- $117,191
======== === ========
</pre>
<p> </p>
<p> </p>
<pre>
Nine Months Ended
-----------------
September 30, 2009
------------------
As adjusted
to Exclude
(In thousands, Charges
except per share Actuals (Non-
amounts) (GAAP) Charges GAAP)(1)
-------- ------- ----------------
</pre>
<p> </p>
<pre>
Revenues and other
income:
Operating revenues $2,853,944 $- $2,853,944
Earnings (losses)
from unconsolidated
affiliates (53,132) 83,295 30,163
Investment income
(loss) 25,548 - 25,548
Total revenues and
other income 2,826,360 83,295 2,909,655
--------- ------ ---------
</pre>
<p> </p>
<pre>
Costs and other
deductions:
Direct costs 1,546,076 (62,114) 1,483,962
General and
administrative
expenses 352,212 - 352,212
Depreciation and
amortization 498,830 - 498,830
Depletion 7,837 - 7,837
Interest expense 199,776 - 199,776
Losses (gains) on
sales and
retirements of
long-lived assets
and other expense
(income), net 625 - 625
Impairments and
other charges 227,083 (227,083) -
Total costs and
other deductions 2,832,439 (289,197) 2,543,242
--------- -------- ---------
</pre>
<p> </p>
<pre>
Income (loss) from
continuing
operations before
income taxes (6,079) 372,492 366,413
Income tax expense
(benefit) 728 16,351 17,079
--- ------ ------
Income (loss) from
continuing
operations, net of
tax (6,807) 356,141 349,334
Income (loss) from
discontinued
operations, net of
tax (31,855) - (31,855)
------- --- -------
Net income (loss) (38,662) 356,141 317,479
Less: Net (income)
loss attributable
to noncontrolling
interest 376 - 376
Net income (loss)
attributable to
Nabors $(38,286) $356,141 $317,855
-------- -------- --------
</pre>
<p> </p>
<pre>
Earnings (losses)
per share:
Diluted from
continuing
operations $(.03) $1.26 $1.23
Diluted from
discontinued
operations (.11) - (.11)
---- --- ----
Earnings (losses)
per share -
diluted $(.14) $1.26 $1.12
</pre>
<p> </p>
<pre>
Weighted-average
number of common
shares outstanding
- diluted 283,150 283,150
------- -------
</pre>
<p> </p>
<p> </p>
<pre>
Adjusted income
(loss) derived from
operating
activities (2) $395,857 $145,409 $541,266
======== ======== ========
</pre>
<p> </p>
<p> </p>
<pre>
(1) As-adjusted amounts include Non-GAAP financial measures. These
measures are presented to provide management and investors an
opportunity to make meaningful assessments and comparisons of
results from operations, exclusive of certain charges detailed
below. The presentation of Non-GAAP information is not intended to
suggest that such information is superior to the presentation of
GAAP information, but only to clarify some information and assist
the reader.
</pre>
<p> </p>
<pre>
(2) 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. Such amounts should not be used as a
substitute to those amounts reported under GAAP. However,
management evaluates the performance of our business units and the
consolidated company based on several criteria, including adjusted
income derived from operating activities, because it believes that
this financial measure is an accurate reflection of the ongoing
profitability of our Company.
</pre>
<p> </p>
<pre>
NABORS INDUSTRIES LTD. AND SUBSIDIARIES
SUMMARY OF NON-CASH CHARGES (NON-GAAP)
(Unaudited)
</pre>
<p> </p>
<pre>
Three Months Ended
------------------
September 30, June 30,
------------- --------
</pre>
<p> </p>
<pre>
(In thousands) 2010 2009 2010
---- ---- ----
</pre>
<p> </p>
<pre>
Equity method oil and gas
joint venture impairments $- $- $-
Goodwill impairment (10,707) - -
Rig asset retirements and
impairments (58,045) - -
Stock compensation charge - - -
Impairments of oil and gas
financing receivable (54,347) - -
Other-than-temporary
impairments on securities - - -
Acquisition related expenses (7,000) - -
Other non-operational items (3,656) - -
------ --- ---
Total charges before income
taxes (133,755) - -
</pre>
<p> </p>
<pre>
Tax benefit (expense) 17,475 (12,997) (1) -
------ ------- ---
</pre>
<p> </p>
<pre>
Total charges after income
taxes $(116,280) $(12,997) $-
========= ======== ===
</pre>
<p> </p>
<p> </p>
<pre>
Nine Months Ended
-----------------
September 30,
-------------
</pre>
<p> </p>
<pre>
(In thousands) 2010 2009
---- ----
</pre>
<p> </p>
<pre>
Equity method oil and gas joint venture
impairments $- $(83,295)
Goodwill impairment (10,707) (14,689)
Rig asset retirements and impairments (58,045) (64,229)
Stock compensation charge - (62,114)
Impairments of oil and gas financing
receivable (54,347) (112,516)
Other-than-temporary impairments on
securities - (35,649)
Acquisition related expenses (7,000) -
Other non-operational items (3,656) -
------ ---
Total charges before income taxes (133,755) (372,492)
</pre>
<p> </p>
<pre>
Tax benefit (expense) 17,475 16,351
------ ------
</pre>
<p> </p>
<pre>
Total charges after income taxes $(116,280) $(356,141)
========= =========
</pre>
<p> </p>
<pre>
(1) This represents the difference between the tax (expense) benefit
recorded during the period in accordance with the interim period tax
allocation rules and the amount of tax (expense) benefit that would
have resulted from the application of the interim period tax
allocation rules if the non-cash charges were excluded.
For further information: Dennis A. Smith, Director of Corporate Development for Nabors Corporate Services, Inc., +1-281-775-8038, or Nabors Industries Ltd., corporate headquarters, 441-292-1510, [email protected]
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