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Analyzing Nabors Industries’ 3Q17 Segment Performance

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Nabors Industries’ segment performance in 3Q17

Nabors Industries (NBR) makes up 2.0% of the iShares US Oil Equipment & Services (IEZ). IEZ fell 20.0% in the past year compared to a 50.0% fall in NBR stock for the same period. Revenue for NBR’s US operations rose 92.0% in 3Q17 over 3Q16. Its revenues from international operations, which accounted for 53.0% of its 3Q17 revenues, rose a modest 3.0% during the same period.

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Why NBR’s operating income fell in 3Q17

By adjusted EBITDA (earnings before interest, tax, depreciation, and amortization), NBR’s international operations fell 8.0%, while US operations rose ~16.0% from 3Q16 to 3Q17. EBITDA is a measure of operating income.

Earnings drivers: Negatives

Let’s look now at Nabors Industries’ negative earnings drivers:

  • 6.0% lower average rigs in NBR’s international operations
  • marginally lower average rig margin per day
  • lower volume in Canrig, a part of NBR’s Rig Services segment, due to delivery deferrals triggered by commodity concerns by several of NBR’s customers
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Factors affecting 3Q17 results positively

Below are some positive drivers that affected NBR’s 3Q17 results:

  • 87.0% higher average US rigs working in 3Q17 compared to 3Q16
  • 53.0% higher average Canada rigs working in 3Q17 compared to 3Q16

How is Nabors Industries doing so far in 2017?

In the first nine months of 2017, NBR’s revenues have risen 10.0% over the first nine months of 2016. It was able to reduce its net losses during that period. Its net loss was ~$430.0 million compared to $694.0 million in the first nine months of 2016.

Next, we’ll take a look at Nabors Industries’ returns.

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