Nabors Industries’s segment-wise performance
In the Drilling & Rig Services segment in the US, NBR witnessed a 33% decline in revenues in 4Q16 over 4Q15. Its revenues from its International Operations segment fell 23.5% during the same period.
The energy sector makes up 6.6% of SPX-INDEX, which rose 11% in the past one-year period versus a 15% rise in NBR’s stock price.
Why NBR’s operating income declined in 4Q16
Looking at Nabors Industries’s adjusted EBITDA,[1. earnings before interest, tax, depreciation, and amortization] its International Operations segment was more resilient with a 20% decline. EBITDA is a measure of operating income.
The company’s US operations registered an ~48% fall from 4Q15 to 4Q16, which can be attributed to:
- activity declines and margin erosion in North America
- ~21% fewer rigs working in 4Q16 compared to 4Q15
The factors affecting NBR’s 4Q16 results positively include:
- Although lower than in 4Q15, the number of rigs increased in 4Q16 over 3Q16.
- NBR saw reduced costs and higher revenues from its service and repair operations.
Nabors Industries’s fiscal 2016 performance
In 2016, Nabors Industries (NBR) recorded $2.2 billion in revenues, which was 42% lower than in 2015. In 2016, the company’s net loss was $1.0 billion, a steep deterioration over its $372.6 million net loss in 2015. In 2016, NBR’s earnings were affected by nonrecurring items like $487 million after-tax impairments and other charges.
In the next article, we’ll discuss NBR’s implied volatility and stock price forecast in the near term.