Nabors Industries’ returns and key drivers
Oilfield equipment and services (or OFS) companies like Nabors Industries (NBR) are affected by rig counts and energy prices. In the past one year, the West Texas Intermediate (or WTI) crude oil price has gone up ~22%.
Analyzing Nabors Industries’ strategies and performance
Pricing pressure on NBR’s rigs and ongoing energy market uncertainty remain major concerns for North America. Rising short interests in NBR’s shares also point to possible pitfalls going forward. NBR’s debt level is also high. Nabors Industries’ outlook remains challenging until crude oil prices make a strong recovery.
On the other hand, a rise in the US rig count, NBR’s advanced AC rigs in the US onshore, nd reduced cost structure in the US land market can provide some cushion to NBR’s margin in 2016. NBR’s positive free cash flow and steady dividend show management’s confidence in its balance sheet strength.