Financial Tables Included
HAMILTON, Bermuda, Oct. 23 /PRNewswire-FirstCall/ -- Nabors Industries
Ltd. (NYSE: NBR) today announced its results for the third quarter and nine
months ended September 30, 2007. Adjusted income derived from operating
activities was $287.3 million for the third quarter compared to $368.2 million
in the third quarter of 2006 and $280.5 million in the second quarter of this
year. Net income was $218.0 million ($0.76 per diluted share) for the third
quarter compared to $292.8 million ($1.02 per diluted share) in the third
quarter of 2006 and $228.3 million ($0.79 per diluted share) in the second
quarter of this year. The quarter's results include $22.3 million ($0.08 per
diluted share) in income from discontinued operations derived from the sale of
our Sea Mar unit, which was completed in early August. Previous periods have
been adjusted to reflect Sea Mar as a discontinued operation.
For the nine months ended September 30, 2007, adjusted income derived from
operating activities was $907.9 million compared to $1.07 billion in 2006.
Net income for the first nine months of 2007 was $708.5 million ($2.47 per
diluted share) compared to $782.9 million ($2.57 per diluted share) in the
first nine months of 2006.
Gene Isenberg, Nabors' Chairman and CEO, commented, "Our third quarter
results reflect the persistent challenges in our North American gas centric
and U.S. Offshore operations, as well as our land well-servicing markets. Our
International business again was impacted by timing and unusual cost issues
which masked the early stages of the powerful upside that is emerging.
Various other below the line income elements, including the gain on the sale
of our Sea Mar entity and a reduction in tax reserves, more than offset the
after tax impact of another net loss in investment income and a non-cash asset
impairment charge.
Year-over-year quarterly results significantly improved in our
International, Oil and Gas, Alaskan and Other Operating Segments. Other than
Alaska these units posted sequential improvements over those of the second
quarter, albeit most were below our previous expectations. Canada also
improved over the seasonally low second quarter. The largest sequential
decline came from our U.S. Lower 48 Land drilling operations, followed by our
U.S. Offshore and Alaskan units.
The sequential improvement of our International operations does not yet
reflect the strong potential that we expect to realize over the next two
years. Although it is the nature of this business to experience delays in the
short-term, we still expect an improvement of over 50% for the full year 2007
and again next year. The high degree of visibility of this unit's long-term
potential emanates from the fact that nearly all of the 2008 increase is
expected to be derived from a combination of the renewal of a large number of
contracts at current market prices, and the realization of a full year's
contribution from the 26 incremental rigs commencing operations throughout
2007. It should also be noted that while our growth expectations do not
reflect it, there is great potential for incremental rigs.
Alaska also enjoys a strong but smaller oil driven outlook and is
characterized by occasional delays and interruptions, as evidenced by the
sequential decline in the quarter's results due to higher than usual summer
maintenance work and the seasonal stacking of one rig. The results for the
quarter and the full year remain on track to increase substantially compared
to the prior year, with higher average rates and incremental rig activity late
in the year. Additional upside exists over the longer term as more of our
fleet renews at market rates early in 2008 and we realize a full year's
contribution from two new built heli-portable rigs which are deploying late
this year. Longer term results will benefit from the recent award of a
contract for a 15,000 ft. capacity coiled tubing drilling rig and will be
further improved if we are successful on recent bids for additional new
drilling rigs in this market.
Our Other Operating Segments improved slightly despite the loss of
contribution following the sale of our marine transportation business early in
the quarter. The improvement in this business resulted primarily from higher
third party sales in Canrig and solid performance by Ryan Energy Technologies,
our directional drilling operation. Income from this segment should continue
to be upwardly biased but subject to seasonal fluctuations with improving
prospects in our Alaskan logistics and construction joint ventures and the
timing of top drive shipments.
Our Oil and Gas operations posted improved results with the early quarter
sale of properties in the Fayetteville Shale, which resulted in a pre-tax gain
of approximately $15 million. We also completed a larger sale of properties
in the Barnett Shale in early October, which will result in a pre-tax gain of
approximately $70 million which will be reflected in our fourth quarter
results.
The significantly reduced results in our US Lower 48 Land drilling
business stems from the sequential decline in average rig margins of $767 per
rig day and a decline of seven rigs to an average of 222 rigs operating. We
deployed 16 new rigs in the third quarter but saw another 16 existing rigs
idled, bringing to 84 the total number of idle rigs at the end of the quarter.
We expect the next several quarters to show much more modest declines in
income despite the likelihood of an even more difficult industry environment
well into 2008. This resiliency in our results is attributable to the
positive effects on our average margins and rig count exerted by the
deployment of 57 new rigs in 2007 and early 2008 at average margins that are
roughly 40% higher than this quarter's full fleet average margin. These
effects coupled with diminishing costs limits further downside in this unit's
income, which is contrary to industry trends.
Our Canadian operations rebounded sharply from the dismal second quarter
but remain at less than one-half of the level of income we achieved last year,
reflecting the ongoing weakness in this market. We expect further improvement
in the fourth quarter with the onset of the winter activity ramp-up, leading
to a full year result that is also less than one-half the prior year. The
outlook for 2008 is essentially the same with no visible reasons to expect a
recovery before the 2008-2009 winter drilling season.
Our U.S. Well-servicing business experienced a 6% reduction in hours
worked compared to the second quarter, reflecting weaker market conditions
primarily in the lower price and more competitive markets such as West Texas.
Despite the lower hours, sequential income actually increased slightly but is
more than 20% below last year. The increased income on reduced hours was due
to the number of our new 500 hp Millennium and 200 hp rigs deployed into
higher revenue markets and strong results in the trucking and fluid handling
portion of this business.
We expect the fourth quarter to show a reduction in income as we enter the
seasonally slowest period of the year due to the holidays and short daylight
hours. The possibility of further deterioration in this largely oil driven
business has been the most significant adverse surprise, leading us to
significantly reduce our 2008 expectations to essentially flat.
Results in our U.S. Offshore operations were significantly below the
second quarter as softening gas prices and the threat of hurricanes led to
many project deferrals, especially for our jackup and barge rigs which
contribute meaningfully when working and incur significant costs when stacked
for short periods. Income from our barge rigs was further dampened when we
experienced an engine room fire early in the quarter which will keep a rig out
of service until early next year. We expect a much improved fourth quarter as
seven rigs have returned or will soon return to work. Next year should
reflect a modest increase despite moderating jackup and barge rig pricing as
we achieve a full year's contribution from the two new barge rigs that
deployed in mid-year, one of which only worked two months as a result of the
aforementioned fire.
In other income we experienced two losses and two gains, the net result of
which was a modest positive effect on net income. We recorded a pre-tax loss
of $30.5 million primarily related to the non-cash reduction in the book value
of our non-marketed inventory of rigs and components across several units. We
again incurred a net cash loss in our investment portfolio of approximately
$27.5 million, the majority of which occurred in August as the debt markets
experienced significant turmoil. We have substantially reduced the risk in
this portion of our portfolio and continue to redeem fixed income and high
beta funds as fast as possible.
Offsetting these losses were the gain on the sale of Sea Mar and a
reversal of certain tax reserves. The Sea Mar sale closed in early August and
resulted in a pre-tax gain of $50 million. This gain and the income from
operations during part of the quarter are included in the $0.08 in earnings
per share from discontinued operations. Our historical results, including our
Other Operating Segments breakout, are restated to reflect the Sea Mar results
as discontinued operations. The reduction in tax reserves amounted to
$38 million and occurred as a result of certain issues which were resolved in
our favor.
In summary, the quarter contained an inordinate number of moving parts,
with a series of short-term, negative developments obscuring the potential of
our businesses. 2007 earnings per share will likely be the second best in the
company's history, partly due to a lower effective tax rate and reduced share
count, and operating income should approximate last year's record level. We
expect 2008 also to achieve near record results in spite of continuing and
significant weakness in our North American gas directed and US land well
servicing units. These accomplishments are largely due to the strength of our
International operations and the limited downside in our U.S. Land Drilling
business.
The longer term outlook for our international business is even stronger
and we expect it to be the primary driver of our future growth. We expect
this growth to compound with the eventual self-correction in our North
American gas and U.S. Well servicing businesses. Nabors is in an excellent
position to capitalize on strengthening markets because of the strategic
investments we have made in new rig capacity over the last three years, which
have been substantially underwritten by long-term contracts yielding good
returns. By mid-2008 our expanded fleet will have over 140 new state-of-the-
art drilling rigs and 200 new generation workover/well-servicing rigs. This
gives Nabors the largest fleet of enhanced capability rigs and positions us to
achieve much higher returns in the future."
The Nabors companies own and operate approximately 670 land drilling and
approximately 825 land workover and well-servicing rigs in North America.
Nabors' actively marketed offshore fleet consists of; 41 platform rigs, 14
jack-up units and 4 barge rigs in the United States 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, gas and geothermal markets in the world.
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.
For further information, please contact Dennis A. Smith, Director of
Corporate Development of Nabors Corporate Services, Inc. at 281-775-8038. To
request Investor Materials, call our corporate headquarters in Hamilton,
Bermuda at 441-292-1510 or via email at mark.andrews@nabors.com.
NABORS INDUSTRIES LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Three Months Ended
----------------------------------
September 30, June 30,
---------------------- ----------
(In thousands, except per share
amounts) 2007 2006 2007
---------- ---------- ----------
Revenues and other income:
Operating revenues $1,250,299 $1,213,252 $1,134,684
Earnings from unconsolidated
affiliates 2,689 5,706 3,436
Investment (loss) income (27,466) 37,155 (9,272)
---------- ---------- ----------
Total revenues and other income 1,225,522 1,256,113 1,128,848
---------- ---------- ----------
Costs and other deductions:
Direct costs 722,058 654,265 637,104
General and administrative expenses 105,975 92,783 99,952
Depreciation and amortization 125,089 95,937 111,372
Depletion 12,533 7,731 9,160
Interest expense 13,450 13,744 13,733
Losses (gains) on sales of long-
lived assets, impairment charges
and other expense (income), net 30,524 4,076 (39,634)
---------- ---------- ----------
Total costs and other deductions 1,009,629 868,536 831,687
---------- ---------- ----------
Income before income taxes from
continuing operations 215,893 387,577 297,161
---------- ---------- ----------
Income tax (benefit) expense:
Current 4,211 15,207 53,973
Deferred 15,919 87,587 22,326
---------- ---------- ----------
Income tax expense 20,130 102,794 76,299
---------- ---------- ----------
Income from continuing operations, net
of tax 195,763 284,783 220,862
---------- ---------- ----------
Income from discontinued operations,
net of tax 22,265 7,968 7,487
Net income $ 218,028 $ 292,751 $ 228,349
---------- ---------- ----------
Earnings per share (1):
Basic from continuing operations $ .70 $ 1.02 $ .79
Basic from discontinued operations $ .08 $ .03 $ .03
---------- ---------- ----------
Total Basic $ .78 $ 1.05 $ .82
---------- ---------- ----------
Diluted from continuing operations $ .68 $ .99 $ .77
Diluted from discontinued
operations $ .08 $ .03 $ .02
---------- ---------- ----------
Total Diluted $ .76 $ 1.02 $ .79
---------- ---------- ----------
Weighted-average number of
common shares outstanding (1):
Basic 280,152 277,553 279,253
---------- ---------- ----------
Diluted 287,969 286,544 287,898
---------- ---------- ----------
Adjusted income derived from operating
activities (2) $ 287,333 $ 368,242 $ 280,532
========== ========== ==========
Nine Months Ended
----------------------------------
September 30,
----------------------------------
(In thousands, except per share
amounts) 2007 2006
---------- ----------
Revenues and other income:
Operating revenues $3,620,996 $3,439,989
Earnings from unconsolidated
affiliates 18,566 19,475
Investment (loss) income (8,029) 67,753
---------- ----------
Total revenues and other income 3,631,533 3,527,217
---------- ----------
Costs and other deductions:
Direct costs 2,043,459 1,835,523
General and administrative expenses 319,824 267,709
Depreciation and amortization 340,069 262,035
Depletion 28,318 28,661
Interest expense 40,235 33,970
Losses (gains) on sales of long-
lived assets, impairment charges
and other expense (income), net 4,775 11,925
---------- ----------
Total costs and other deductions 2,776,680 2,439,823
---------- ----------
Income before income taxes from
continuing operations 854,853 1,087,394
---------- ----------
Income tax (benefit) expense:
Current 164,038 125,865
Deferred 17,300 200,907
---------- ----------
Income tax expense 181,338 326,772
---------- ----------
Income from continuing operations, net
of tax 673,515 760,622
---------- ----------
Income from discontinued operations, net
of tax 35,024 22,324
Net income $ 708,539 $ 782,946
---------- ----------
Earnings per share (1):
Basic from continuing operations $ 2.42 $ 2.58
Basic from discontinued operations $ .12 $ .07
---------- ----------
Total Basic $ 2.54 $ 2.65
---------- ----------
Diluted from continuing operations $ 2.35 $ 2.50
Diluted from discontinued operations $ .12 $ .07
---------- ----------
Total Diluted $ 2.47 $ 2.57
---------- ----------
Weighted-average number
of common shares outstanding (1):
Basic 278,782 294,987
---------- ----------
Diluted 286,894 305,066
---------- ----------
Adjusted income derived from
operating activities (2) $ 907,892 $1,065,536
========== ==========
(1) See "Computation of Earnings Per Share" included herein as a separate
schedule.
(2) Adjusted income 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 from unconsolidated affiliates.
Such 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 derived from operating
activities, because it believes that this financial measure is an
accurate reflection of the ongoing profitability of our company. A
reconciliation of this non-GAAP measure to income before income taxes,
which is a GAAP measure, is provided within the table set forth
immediately following the heading "Segment Reporting".
NABORS INDUSTRIES LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
September 30, June 30, December 31,
(In thousands, except ratios) 2007 2007 2006
---------- ---------- ----------
ASSETS
Current assets:
Cash and short-term investments $ 879,973 $ 827,291 $ 1,140,016
Accounts receivable, net 1,043,235 1,035,895 1,109,738
Other current assets 623,213 395,040 255,102
---------- ---------- ----------
Total current assets 2,546,421 2,258,226 2,504,856
Long-term investments 383,288 480,341 513,269
Property, plant and equipment, net 6,466,732 6,298,371 5,410,101
Goodwill, net 367,376 388,981 362,269
Other long-term assets 314,590 486,341 351,808
---------- ---------- ----------
Total assets $10,078,407 $9,912,260 $ 9,142,303
========== ========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $ 700,000 $ 700,000 $ --
Other current liabilities 857,496 948,685 854,360
---------- ---------- ----------
Total current liabilities 1,557,496 1,648,685 854,360
Long-term debt 3,305,840 3,305,249 4,004,074
Other long-term liabilities 801,378 835,711 747,216
---------- ---------- ----------
Total liabilities 5,664,714 5,789,645 5,605,650
Shareholders' equity 4,413,693 4,122,615 3,536,653
---------- ---------- ----------
Total liabilities and
shareholders' equity $10,078,407 $ 9,912,260 $ 9,142,303
========== ========== ==========
Cash, short-term and long-term
investments (1) $ 1,306,816 $ 1,360,545 $ 1,653,285
Funded debt to capital ratio: (2)
- Gross 0.45 : 1 0.46 : 1 0.50:1
- Net of cash and investments 0.35 : 1 0.36 : 1 0.37:1
Interest coverage ratio: (3) 32.2:1 33.4:1 38.1:1
(1) The September 30, 2007 amount includes $43.6 million in cash proceeds
receivable from brokers from the sale of non-marketable securities
that is included in the other current assets. These proceeds were
received during October. The June 30, 2007 amount includes $52.9
million in cash proceeds receivable from brokers from the sale of
certain equity securities that is included in other current assets.
These proceeds were received during the first week of July.
(2) The gross funded debt to capital ratio is calculated by dividing
funded debt by funded debt plus deferred tax liabilities net of
deferred tax assets plus capital. Funded debt is defined as the sum of
(1) short-term borrowings, (2) current portion of long-term debt and
(3) long-term debt. Capital is defined as shareholders' equity. The
net funded debt to capital ratio is calculated by dividing net funded
debt by net funded debt plus deferred tax liabilities net of deferred
tax assets plus capital. Net funded debt is defined as the sum of
(1) short-term borrowings, (2) current portion of long-term debt and
(3) long-term debt reduced by the sum of cash and cash equivalents and
short-term and long-term investments. Capital is defined as
shareholders' equity. Both of these ratios are a method for
calculating the amount of leverage a company has in relation to its
capital.
(3) The interest coverage ratio is a trailing twelve-month computation of
the sum of income from continuing operations before income taxes,
interest expense, depreciation and amortization, and depletion expense
less investment income and then dividing by interest expense. This
ratio is a method for calculating the amount of operating cash flows
available to cover interest expense.
NABORS INDUSTRIES LTD. AND SUBSIDIARIES
SEGMENT REPORTING
(Unaudited)
The following tables set forth certain information with respect to our
reportable segments and rig activity:
Three Months Ended
----------------------------------
September 30, June 30,
---------------------- ----------
(In thousands, except rig activity) 2007 2006 2007
---------- ---------- ----------
Reportable segments:
Operating revenues and Earnings from
unconsolidated affiliates: (1)
Contract Drilling: (2)
U.S. Lower 48 Land Drilling $ 416,525 $ 498,173 $ 426,787
U.S. Land Well-servicing 180,370 188,650 182,410
U.S. Offshore 48,895 56,219 60,316
Alaska 30,854 24,098 36,777
Canada 132,434 167,705 75,088
International 296,219 195,445 261,262
---------- ---------- ----------
Subtotal Contract Drilling (3) 1,105,297 1,130,290 1,042,640
Oil and Gas (4) (5) 35,770 9,268 18,110
Other Operating Segments (6) (7) 163,397 120,539 140,024
Other reconciling items (8) (51,476) (41,139) (62,654)
---------- ---------- ----------
Total $1,252,988 $1,218,958 $1,138,120
========== ========== ==========
Adjusted income (loss) derived from
continuing operating activities: (1)
Contract Drilling: (2)
U.S. Lower 48 Land Drilling $ 130,761 $ 219,485 $ 154,667
U.S. Land Well-servicing 42,291 54,495 40,105
U.S. Offshore 9,245 17,492 19,206
Alaska 4,214 2,123 8,225
Canada 16,920 42,549 (7,992)
International 88,574 58,145 85,409
---------- ---------- ----------
Subtotal Contract Drilling 292,005 394,289 299,620
Oil and Gas 17,868 (5,101) 3,374
Other Operating Segments 10,297 7,975 6,739
Other reconciling items (9) (32,837) (28,921) (29,201)
---------- ---------- ----------
Total 287,333 368,242 280,532
Interest expense (13,450) (13,744) (13,733)
Investment (loss) income (27,466) 37,155 (9,272)
Losses (gains) on sales of long-lived
assets, impairment charges and other
expense (income), net (30,524) (4,076) 39,634
---------- ---------- ----------
Income before income taxes from
continuing operations $ 215,893 $ 387,577 $ 297,161
========== ========== ==========
Rig activity:
Rig years: (10)
U.S. Lower 48 Land Drilling 221.6 257.3 228.5
U.S. Offshore 14.4 16.0 17.6
Alaska 8.4 9.3 8.8
Canada 37.0 52.9 18.5
International (11) 117.9 100.8 117.1
---------- ---------- ----------
Total rig years 399.3 436.3 390.5
========== ========== ==========
Rig hours: (12)
U.S. Land Well-servicing 274,084 322,445 291,430
Canada Well-servicing 72,593 91,047 41,613
---------- ---------- ----------
Total rig hours 346,677 413,492 333,043
========== ========== ==========
Nine Months Ended
----------------------------------
September 30,
----------------------------------
(In thousands, except rig activity) 2007 2006
---------- ----------
Reportable segments:
Operating revenues and Earnings from
unconsolidated affiliates: (1)
Contract Drilling: (2)
U.S. Lower 48 Land Drilling $ 1,295,908 $ 1,393,310
U.S. Land Well-servicing 544,998 518,224
U.S. Offshore 164,986 162,299
Alaska 115,467 75,816
Canada 400,802 514,849
International 781,963 511,487
---------- ----------
Subtotal Contract Drilling (3) 3,304,124 3,175,985
Oil and Gas (4) (5) 67,009 48,808
Other Operating Segments (6) (7) 433,771 366,416
Other reconciling items (8) (165,342) (131,745)
---------- ----------
Total $ 3,639,562 $ 3,459,464
========== ==========
Adjusted income (loss) derived from
continuing operating activities:
(1)
Contract Drilling: (2)
U.S. Lower 48 Land Drilling $ 458,354 $ 611,912
U.S. Land Well-servicing 125,752 148,000
U.S. Offshore 43,500 51,613
Alaska 29,006 9,749
Canada 62,056 145,524
International 240,001 146,142
---------- ----------
Subtotal Contract Drilling 958,669 1,112,940
Oil and Gas 22,370 7,751
Other Operating Segments 28,630 24,345
Other reconciling items (9) (101,777) (79,500)
---------- ----------
Total 907,892 1,065,536
Interest expense (40,235) (33,970)
Investment (loss) income (8,029) 67,753
Losses (gains) on sales of long-lived
assets, impairment charges and other
expense (income), net (4,775) (11,925)
---------- ----------
Income before income taxes
from continuing operations $ 854,853 $ 1,087,394
========== ==========
Rig activity:
Rig years: (10)
U.S. Lower 48 Land Drilling 231.0 255.3
U.S. Offshore 16.4 16.3
Alaska 8.9 8.1
Canada 37.8 54.6
International (11) 115.6 93.5
---------- ----------
Total rig years 409.7 427.8
========== ==========
Rig hours: (12)
U.S. Land Well-servicing 864,602 953,174
Canada Well-servicing 211,794 273,919
---------- ----------
Total rig hours 1,076,396 1,227,093
========== ==========
(1) All segment information excludes the Sea Mar business which has
been classified as a discontinued operation.
(2) These segments include our drilling, workover and well-servicing
operations, on land and offshore.
(3) Includes earnings (losses), net, from unconsolidated affiliates,
accounted for by the equity method, of $3.4 million, $1.1 million and
$.7 million for the three months ended September 30, 2007 and 2006
and June 30, 2007, respectively, and $5.9 million for each of the
nine months ended September 30, 2007 and 2006, respectively.
(4) Represents our oil and gas exploration, development and production
operations.
(5) Includes earnings (losses), net, from unconsolidated affiliates,
accounted for by the equity method, of ($2.0) million, $0 and ($.8)
million for the three months ended September 30, 2007 and 2006 and
June 30, 2007, respectively, and ($2.8) million and $0 for the nine
months ended September 30, 2007 and 2006, respectively.
(6) Includes our drilling technology and top drive manufacturing,
directional drilling, rig instrumentation and software, and
construction and logistics operations.
(7) Includes earnings (losses), net, from unconsolidated affiliates,
accounted for by the equity method, of $1.3 million, $4.6 million and
$3.5 million for the three months ended September 30, 2007 and 2006
and June 30, 2007, respectively, and $15.5 million and $13.6 million
for the nine months ended September 30, 2007 and 2006, respectively.
(8) Represents the elimination of inter-segment transactions.
(9) Represents the elimination of inter-segment transactions and
unallocated corporate expenses.
(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.
(11) International rig years include our equivalent percentage
ownership of rigs owned by unconsolidated affiliates which totaled
4.0 years during the three months ended September 30, 2007 and 2006
and June 30, 2007 and the nine months ended September 30, 2007 and
2006, respectively.
(12) Rig hours represents the number of hours that our well-servicing
rig fleet operated during the period.
NABORS INDUSTRIES LTD. AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER SHARE
(Unaudited)
A reconciliation of the numerators and denominators of the basic and
diluted earnings per share computations is as follows:
Three Months Ended
----------------------------------
September 30, June 30,
---------------------- ----------
(In thousands, except per share
amount) 2007 2006 2007
---------- ---------- ----------
Net income (numerator):
Income from continuing operations,
net of tax - basic $ 195,763 $ 284,783 $ 220,862
Add interest expense on assumed
conversion of our zero coupon
convertible/exchangeable senior
debentures/notes, net of tax:
$2.75 billion due 2011 (1) -- -- --
$82.8 million due 2021 (2) -- -- --
$700 million due 2023 (3) -- -- --
Adjusted income from continuing ---------- ---------- ----------
operations, net of tax - diluted 195,736 284,783 220,862
Income from discontinued operations,
net of tax 22,265 7,968 7,487
---------- ---------- ----------
Total adjusted net income $ 218,028 $ 292,751 $ 228,349
---------- ---------- ----------
Earnings per share:
Basic from continuing operations $ .70 $ 1.02 $ .79
Basic from discontinued operations $ .08 $ .03 $ .03
---------- ---------- ----------
Total Basic $ .78 $ 1.05 $ .82
---------- ---------- ----------
Diluted from continuing operations $ .68 $ .99 $ .77
Diluted from discontinued operations $ .08 $ .03 $ .02
---------- ---------- ----------
Total Diluted $ .76 $ 1.02 $ .79
---------- ---------- ----------
Shares (denominator):
Weighted-average number of shares
outstanding - basic (4) 280,152 277,553 279,253
Net effect of dilutive stock options,
warrants and restricted stock awards
based on the treasury stock method 7,817 8,991 8,645
Assumed conversion of our zero coupon
convertible/exchangeable senior
debentures/notes:
$2.75 billion due 2011 (1) -- -- --
$82.8 million due 2021 (2) -- -- --
$700 million due 2023 (3) -- -- --
---------- ---------- ----------
Weighted-average number of shares
outstanding - diluted 287,969 286,544 287,898
---------- ---------- ----------
Nine Months Ended
----------------------------------
September 30,
----------------------------------
(In thousands, except per share amounts) 2007 2006
---------- ----------
Net income (numerator):
Income from continuing operations,
net of tax - basic $ 673,515 $ 760,622
Add interest expense on assumed
conversion of our zero coupon
convertible/exchangeable senior
debentures/notes, net of tax:
$2.75 billion due 2011 (1) -- --
$82.8 million due 2021 (2) -- --
$700 million due 2023 (3) -- --
Adjusted net income from continuing ---------- ----------
operations - diluted 673,515 760,622
---------- ----------
Income from discontinued operations,
net of tax 35,024 22,324
---------- ----------
Total adjusted net income $ 708,539 $ 782,946
---------- ----------
Earnings per share:
Basic from continuing operations $ 2.42 $ 2.58
Basic from discontinued operations $ .12 $ .07
---------- ----------
Total Basic $ 2.54 $ 2.65
---------- ----------
Diluted from continuing operations $ 2.35 $ 2.50
Diluted from discontinued operations $ .12 $ .07
---------- ----------
Total Diluted $ 2.47 $ 2.57
---------- ----------
Shares (denominator):
Weighted-average number of shares
outstanding - basic (4) 278,782 294,987
Net effect of dilutive stock options,
warrants and restricted stock awards
based on the treasury stock method 8,112 9,893
Assumed conversion of our zero coupon
convertible/exchangeable senior
debentures/notes:
$2.75 billion due 2011 (1) -- --
$82.8 million due 2021 (2) -- --
$700 million due 2023 (3) -- 186
---------- ----------
Weighted-average number of shares
outstanding - diluted 286,894 305,066
---------- ----------
(1) Diluted earnings per share for the three and nine months ended
September 30, 2007 and 2006 and the three months ended June 30, 2007
do not include any incremental shares issuable upon the exchange of
the $2.75 billion 0.94% senior exchangeable notes. 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 only issue an
incremental number of shares upon exchange of these notes. Such
shares are only included in the calculation of the weighted-average
number of shares outstanding in our diluted earnings per share
calculation, when the price of our shares exceeds $45.83 on the last
trading day of the quarter, which did not occur during the three
months ended September 30, 2007 and 2006 and June 30, 2007 and the
nine months ended September 30, 2007 and 2006.
(2) Diluted earnings per share for the three and nine months ended
September 30, 2007 and 2006 and the three months ended June 30, 2007
exclude approximately 1.2 million potentially dilutive shares
initially issuable upon the conversion of the $82.8 million zero
coupon convertible senior debentures. We would only issue an
incremental number of shares upon conversion of these debentures, and
such shares would only be included in the calculation of the
weighted-average number of shares outstanding in our diluted earnings
per share calculation if the price of our shares exceeded
approximately $51.
(3) Diluted earnings per share for the three months ended September 30,
2007 and 2006 and June 30, 2007 and the nine months ended September
30, 2007 do not include any incremental shares issuable upon the
exchange of the $700 million zero coupon senior exchangeable notes.
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 only issue an
incremental number of shares upon exchange of these notes. Such
shares are only included in the calculation of the weighted-average
number of shares outstanding in our diluted earnings per share
calculation, when the price of our shares exceeds $35.05 on the last
trading day of the quarter. This was the case for the quarter ended
March 31, 2006, and is, therefore, included in the weighted-average
number of shares outstanding in our diluted earnings per share
calculation for the nine months ended September 30, 2006.
(4) Includes the following weighted-average number of common shares of
Nabors and weighted-average number of exchangeable shares of our
subsidiary Nabors (Canada) Exchangeco Inc., respectively: 280.1
million and .1 million shares for the three months ended September 30,
2007; 277.4 million and .2 million shares for the three months ended
September 30, 2006; 279.2 million and .1 million for the three months
ended June 30, 2007; 278.6 million and .2 million shares for the nine
months ended September 30, 2007; and 294.8 million and .2 million
shares for the nine months ended September 30, 2006. The exchangeable
shares of Nabors Exchangeco are exchangeable for Nabors' common shares
on a one-for-one basis, and have essentially identical rights as
Nabors Industries Ltd. common shares, including but not limited to,
voting rights and the right to receive dividends, if any.
For all periods presented, the computation of diluted earnings per share
excludes outstanding stock options and warrants with exercise prices greater
than the average market price of Nabors' common shares, because the inclusion
of such options and warrants would be anti-dilutive. The average number of
options and warrants that were excluded from diluted earnings per share that
would potentially dilute earnings per share in the future were 4,601,925,
4,327,513 and 4,322,513 shares during the three months ended September 30,
2007 and 2006 and June 30, 2007, respectively, and 4,629,158 and 2,443,254
shares during the nine months ended September 30, 2007 and 2006, 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 will be included in our diluted earnings per share
computation using the treasury stock method of accounting. Restricted stock
will similarly be included in our diluted earnings per share computation using
the treasury stock method of accounting in any period where the amount of
restricted stock exceeds the number of shares assumed repurchased in those
periods based upon future unearned compensation.
SOURCE Nabors Industries Ltd.
-0- 10/23/2007
/CONTACT: Dennis A. Smith, Director of Corporate Development of Nabors
Corporate Services, Inc., +1-281-775-8038, or for Investor Materials,
+1-441-292-1510, mark.andrews@nabors.com/
/Photo: NewsCom: http://www.newscom.com/cgi-bin/prnh/20070205/NABORSLOGO
AP Archive: http://photoarchive.ap.org
PRN Photo Desk, photodesk@prnewswire.com/
(NBR)
CO: Nabors Industries Ltd.
ST: Bermuda
IN: OIL
SU: ERN
CD
-- LATU174A --
4457 10/23/2007 16:20 EDT http://www.prnewswire.com
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