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Nabors Industries’ Revenues Could Increase in 1Q18

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Apr. 5 2018, Published 7:28 a.m. ET

Nabors Industries’ revenue trend

In 4Q17, Nabors Industries’ (NBR) revenues increased 31%—compared to 4Q16. From 3Q17 to 4Q17, the company’s revenues increased 7%. Nabors Industries accounts for 3.2% of the SPDR S&P Oil & Gas Equipment & Services ETF (XES). XES provides exposure to the oil and gas equipment and services segment. XES has decreased 15% year-to-date—compared to a 2% rise in Nabors Industries’ stock price during the same period.

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Nabors Industries’ US operations witnessed a 56.5% revenue increase in 4Q17—compared to 4Q16. The revenues from international operations, which accounted for 50% of Nabors Industries’ 4Q17 revenues, increased 11% during the same period. Approximately 47% more average US rigs working in 4Q17 compared to 4Q16, an increase in the daily average margin, and increased rig equipment shipments helped Nabors Industries improve its revenues in 4Q17.

Revenues versus estimates

In 1Q18, Wall Street analysts expect to see 6.5% revenue growth for Nabors Industries—compared to 4Q17. From 1Q16 to 4Q17, Nabors Industries’ reported revenues beat analysts’ estimates by ~1%.

Nabors Industries’ revenues could increase

Nabors Industries expects that the US will be the primary driver of its revenue and operating earnings growth in 2018. Nabors Industries expects decreasing costs in the US onshore to add to its margins. Nabors Industries also expects rigs to be priced at higher rates again in 2018. Nabors Industries’ newbuild and upgraded rigs joining the fleet will likely have a positive impact on its revenues.

However, contract rollover and repricing are expected to be more substantial in 2Q18. The average number of Nabors Industries’ working rigs could fall marginally in 1Q18—compared to 4Q17.

Next, we’ll discuss U.S. Silica Holdings’ (SLCA) past revenue trend and why sell-side analysts expect to see revenue growth in 1Q18.

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