In December 2016, the US rig count fell 6% over December 2015. The US rig count reached its multiyear high in September 2014. Since then, it dropped 62% as of February 10, 2017. By December 31, 2016, the international rig count fell 15% over a year ago, which is lower compared to the US rig count fall.
Between December 31, 2016, and the week ending February 10, the US rig count rose 13% to close at 741. A higher US rig count can increase Nabors Industries’ (NBR) revenues and earnings.
Nabors Industries’ US revenues
In 2015, Nabors Industries’ (NBR) revenue share from the US fell. In 2015, NBR’s US revenue share fell to 47% compared to 69% in 2014. NBR’s revenue share from international operations went up to 53% in 2015 from 31% in 2014.
Large oilfield services’ North America revenue share in 4Q16
In 4Q16, Schlumberger’s (SLB) North America revenue share was 25%, while Halliburton’s (HAL) 4Q16 revenue share from North America was 45%. Baker Hughes’s (BHI) 4Q16 revenue share from North America was 32%. NBR is only 0.02% of the iShares Russell 3000 ETF (IWV). The energy sector makes up 6.5% of IWV. To know more about the US rig count and crude oil prices, read Market Realist’s Is OPEC’s Production Cut Rebalancing the Crude Oil Market?
Next, we’ll discuss how NBR’s operating margin was affected by upstream companies’ capex.