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Nabors (NBR) Q2 Loss Wider Than Expected, Sales Beat Mark

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Nabors Industries Ltd. (NBR - Free Report) recently reported second-quarter 2021 loss from continuing operations (excluding special items) of $18.01 per share, wider than the Zacks Consensus Estimate of a loss of $16.61 as well as the year-ago loss of $14.45. This underperformance was primarily due to weaker-than-expected sales at the Canadian Drilling segment.

Quarterly revenues of $489.27 million beat the Zacks Consensus Estimate of $465 million, attributable to better-than-expected sales from both the Drilling Solutions unit and the Rig Technologies unit. However, the top line declined from the year-ago level of $535.97 million.

Year over year, Nabors’ adjusted EBITDA fell from $153.8 million to $117.3 million.

Segmental Performance

U.S. Drilling generated quarterly operating revenues of $161.6 million, down 7.01% from the year-ago level of $173.8 million but surpassed the Zacks Consensus Estimate of $154 million owing to increase in average Lower 48 rig count. The segment recorded an operating loss of $20.86 million, narrower than the year-ago loss of $23.4 million.

Canadian Drilling’s revenues of $12.3 million in the quarter under review increased from the year-ago figure of $3.6 million. However, the same missed the Zacks Consensus Estimate of $13.4 million. The segment’s operating loss came in at $2.61 million, narrower than the year-ago quarter’s loss of $5.8 million.

International Drilling’s operational revenues of $255.3 million decreased from the year-ago quarter’s sales of $301.1 million but outpaced the Zacks Consensus Estimate of $235 million, attributable to new contracts in Colombia and the reactivation of drilling rigs that had been idled in Saudi Arabia for quite some time. While the segmental operating loss came in at $8.44 million in the reported quarter, the prior-year quarter reported a profit of $276,000.

Revenues from the Drilling Solutions rose 18.1% to $39.11 million in the second quarter from $33.1 million a year ago. The same outpaced the Zacks Consensus Estimate of $39.10 million, attributable to increased activity across all service lines.  Performance drilling software and casing running services were the primary contributors to this improvement. Moreover, the unit’s operating income of $6.5 million rose from the year-ago profit of $1.7 million.

Revenues from the Rig Technologies segment climbed 2.9% to $34.6 million from the prior-year level of $33.6 million. The metric also surpassed the Zacks Consensus Estimate of $26.20 million on a more balanced sales mix of maintenance and capital equipment. Moreover, the segment’s operating loss narrowed to $692,000 from the prior-year loss of $1.5 million.

Nabors Industries Ltd. Price, Consensus and EPS Surprise

Nabors Industries Ltd. Price, Consensus and EPS Surprise

Nabors Industries Ltd. price-consensus-eps-surprise-chart | Nabors Industries Ltd. Quote

Financials

Total costs and expenses declined to $655 million from $669.5 million in the year-ago quarter, reflecting lower depreciation costs and interest expenses.  

As of Jun 30, 2020, the company had $399.9 million in cash and short-term investments, and a long-term debt of $2.82 billion with total debt-to-total capital of 75.1%.

Nabors generated free cash flow of $67.9 million in the second quarter.

Guidance

Nabors’ third-quarter 2021 average Lower 48 rig count is anticipated to be in line with the second-quarter level, which is at 64 rigs.

This Hamilton-based entity’s International Drilling segment’s third-quarter 2021 rig activity is estimated to decline slightly. The company expects September-quarter adjusted EBITDA for Drilling Solutions to increase from the June-quarter results.

Capital expenditures for 2021 are projected to reach above $300 million with around $100 million funded by SANAD to support the rig newbuild program.

Despite the constraints provided by the coronavirus Delta variant, Nabors anticipates a significant improvement in the oilfield segment fundamentals during the second half of 2021. The firm expects to make higher progress on the basis of its financial targets set for this year, courtesy of its exceptional staff, unrivalled global fleet capabilities and an expanding technology portfolio.

Zacks Rank & Key Picks

Nabors  currently has a Zacks Rank #3 (Hold). Some better-ranked stocks in the  energy  space are Matador Resources Company (MTDR - Free Report) , Devon Energy Corporation (DVN - Free Report) and Continental Resources, Inc. , each presently flaunting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.


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