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What affected Nabors Industries’ 4Q17 Performance?

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Nabors Industries’ geographic performance

Nabors Industries (NBR) is 2.3% of the iShares US Oil Equipment & Services ETF (IEZ). IEZ declined 24% in the past year versus a 55% decrease in NBR’s stock price. NBR’s US operations witnessed a 56.5% revenue rise in 4Q17 versus 4Q16. Its revenues from its international operations, which accounted for 50% of its 4Q17 revenues, increased by a relatively modest 11% during the period.

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NBR’s operating income by segment

By adjusted EBITDA (earnings before interest, tax, depreciation, and amortization), NBR’s international operations remained steady in 4Q17 compared to 4Q16, while the Drilling Solutions segment registered a ~456% rise from 4Q16 to 4Q17.

Earnings drivers: Negatives

  • 1% lower average rigs in NBR’s international operations
  • delays in the commencement of certain rig deployments in the international operations
  • operating margin growth slowed in NBR’s international operations

Factors affecting 4Q17 results positively

  • 47% higher average US rigs working in 4Q17 compared to 4Q16
  • 4% higher average Canadian rigs working in 4Q17 compared to 4Q16
  • an increase in daily average margins for the U.S. Drilling segment
  • an improvement in the US onshore day rate for higher-specification rigs
  • an increase in rig equipment shipments, benefiting the Rig Technologies segment

Next in this series, we’ll discuss Nabors Industries’ returns.

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