Toggle SGML Header (+)


Section 1: 8-K (8-K)

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

Form 8-K

 

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

 

Date of Report (Date of earliest event reported) January 8, 2019

 

NABORS INDUSTRIES LTD.

(Exact name of registrant as specified in its charter)

 

Bermuda

 

001-32657

 

98-0363970

(State or Other Jurisdiction of
Incorporation or Organization)

 

(Commission File Number)

 

(I.R.S. Employer
Identification No.)

 

Crown House
4 Par-la-Ville Road
Second Floor
Hamilton, HM08 Bermuda

 

N/A

(Address of principal executive offices)

 

(Zip Code)

 

(441) 292-1510

(Registrant’s telephone number, including area code)

 

N/A

(Former name or former address, if changed since last report.)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

o       Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

o       Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

o       Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

o       Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

 

Emerging growth company o

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

 

 

 


 

Item 2.02                                           Results of Operations and Financial Condition.

 

On January 8, 2019, Nabors Industries Ltd. issued a press release, a copy of which is attached hereto as Exhibit 99.1 and incorporated herein by reference (the “Press Release”).

 

On January 9, 2019, Mr. William Restrepo, CFO of Nabors Industries Ltd., will participate in the Goldman Sachs Global Energy Conference.  Slides related to Mr. Restrepo’s participation in the conference are attached hereto as Exhibit 99.2 and are incorporated herein by reference (the “Presentation Slides”).

 

The Press Release and Presentation Slides referenced above contain forward-looking statements within the meaning of the Securities Act of 1933, as amended (the “Securities Act”), and the Securities Exchange Act of 1934, as amended (the “Exchange Act”).  Such forward-looking statements are subject to risks and uncertainties, as disclosed from time to time in the Company’s filings with the Securities and Exchange Commission.  As a result of these factors, actual results may differ materially from those indicated or implied by such forward-looking statements.

 

The information in this Item 2.02 to this Current Report on Form 8-K, including Exhibits 99.1 and 99.2, shall not be deemed “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities of that section or Sections 11 and 12(a)(2) of the Securities Act.  This current report on Form 8-K will not be deemed an admission as to the materiality of any information contained herein (including the information incorporated by reference herein).

 

Item 9.01                                           Financial Statements and Exhibits.

 

(d)  Exhibits

 

Exhibit No.

 

Description

 

 

 

99.1

 

Press Release

 

 

 

99.2

 

Presentation Slides

 

2


 

SIGNATURE

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

 

NABORS INDUSTRIES LTD.

 

 

 

 

Date: January 8, 2019

By:

/s/Mark D. Andrews

 

 

Mark D. Andrews

 

 

Corporate Secretary

 

3


(Back To Top)

Section 2: EX-99.1 (EX-99.1)

Exhibit 99.1

 

NEWS RELEASE

 

Nabors CFO to Discuss Industry and Company Outlook at Goldman Sachs Energy Conference

 

HAMILTON, Bermuda, January 8, 2019 /PRNewswire/ — Nabors Industries Ltd. (“Nabors” or the “Company”) (NYSE: NBR) today announced that William Restrepo, Nabors Chief Financial Officer, will participate in the Goldman Sachs Energy Conference on Wednesday morning January 9, 2019, wherein he will discuss the industry environment and Nabors outlook for 2019.

 

In connection with Mr. Restrepo’s participation at the conference, the Company is announcing the following financial highlights for the fourth quarter:

 

·                  Reduced net debt by approximately $230 million and total debt by $150 million based upon preliminary fourth quarter financial information.

·                  Preliminary year-end 2018 net debt was approximately $3.12 billion on total debt of approximately $3.59 billion

·                  Repurchased $108 million of long term debt during the fourth quarter

·                  Full-year 2018 capital spending was well under $500 million

 

Nabors fourth quarter financials are not yet finalized. The company does not intend for the above metrics to be taken as an indication of GAAP financial results for the fourth quarter. They are only intended to provide investors with advance information on Nabors’ financial position, given investors’ level of interest on that specific issue. Nabors will release its full financial and operational results for the fourth quarter and full year of 2018 in late February.

 

Mr. Restrepo commented, “As anticipated, fourth quarter cash flow generation allowed us to reduce our net debt significantly. The industry experienced a sharp drop in oil prices during the fourth quarter of 2018. Given the recent oil price rally this past week, it is uncertain to what extent this volatility could lead our U.S. customers to scale back investment.  To date, there has been minimal negative impact on U.S. activity and the demand for our high-specification rigs in the Lower 48 remains strong, with leading edge dayrates at attractive levels.

 

Our goal is to remain focused on cash generation and reduce our leverage, as previously announced.  To that end, we are targeting a $200 to $250 million net debt reduction during 2019.”

 

Consistent with those objectives, and to ensure we can reach our Nabors’ 2019 planned objectives in a volatile market, we are prudently taking the following premptive steps:

 

·                  Targeting  2019 capital spending at the $400 million level

·                  Optimizing 2019 G&A and R&E expenses through a reduction of approximately 10% compared to 2018

·                  Planning an 83% reduction in the quarterly cash dividend to common shareholders, to $0.01 per share, beginning in the second quarter of 2019

 

Anthony G. Petrello, Nabors Chairman, CEO and President, commented, “We believe our combination of top quality personnel, superior assets, market position and technology serves us well in any environment.   We will continue our focus on reducing our leverage over the next two to three years.  We can accomplish this through stringent capital allocation and still continue the progress we have made in modernizing our fleet, introducing new automation technologies

 


 

NEWS RELEASE

 

and enhancing our performance drilling capabilities.  We continue to expect 2019 to be an improvement over 2018 and another good step forward for the company.”

 

About Nabors

 

Nabors  (NYSE: NBR) owns and operates one of the world’s largest land-based drilling rig fleets and is a provider of offshore platform rigs in the United States and numerous international markets. Nabors also provides directional drilling services, performance tools, and innovative technologies for its own rig fleet and those of third parties. Leveraging our advanced drilling automation capabilities, Nabors highly skilled workforce continues to set new standards for operational excellence and transform our industry.

 

Forward-looking Statements

 

The information included in this press release includes forward-looking statements within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934. Such forward-looking statements are subject to a number of risks and uncertainties, as disclosed by Nabors from time to time in its filings with the Securities and Exchange Commission. As a result, of these factors, Nabors’ actual results may differ materially from those indicated or implied by such forward-looking statements.  The forward-looking statements contained in this press release reflect management’s estimates and beliefs as of the date of this press release.  Nabors does not undertake to update these forward-looking statements.

 

Non-GAAP Disclaimer

 

This press release presents certain “non-GAAP” financial measures.  The components of these non-GAAP measures are computed by using amounts that are determined in accordance with accounting principles generally accepted in the United States of America (“GAAP”).  Net debt is calculated as total debt minus the sum of cash and cash equivalents and short-term investments. This non-GAAP measure has limitations and therefore should not be used in isolation or as a substitute for the amounts reported in accordance with GAAP. However, management evaluates the performance of its operating segments and the consolidated Company based on several criteria, including net debt, because it believes that these financial measures accurately reflect the Company’s ongoing profitability and performance.  Securities analysts and investors also use these measures as some of the metrics on which they analyze the Company’s performance. Other companies in this industry may compute these measures differently.  A reconciliation of net debt to total debt, which is the nearest comparable GAAP financial measures, is included in the tables at the end of this press release.

 

Media Contact:  Dennis A. Smith, Vice President of Corporate Development & Investor Relations, +1 281-775-8038 or William C. Conroy, Senior Director of Corporate Development & Investor Relations, +1 281-775-2423.   To request investor materials, contact Nabors’ corporate headquarters in Hamilton, Bermuda at +441-292-1510 or via e-mail at [email protected]

 


 

NABORS INDUSTRIES LTD. AND SUBSIDIARIES

RECONCILIATION OF NET DEBT TO TOTAL DEBT

 

 

 

September 30,

 

December 31,

 

(in billions)

 

2018

 

2018

 

 

 

(unaudited)

 

 

 

 

 

 

 

Current portion of debt

 

$

 

$

 

Long-term debt

 

3.74

 

3.59

 

Total Debt

 

3.74

 

3.59

 

Less: Cash and short-term investments

 

0.39

 

0.47

 

Net Debt

 

3.35

 

3.12

 

 


(Back To Top)

Section 3: EX-99.2 (EX-99.2)

Exhibit 99.2

Goldman Sachs Global Energy Conference January 8-9, 2019 Presented by: William Restrepo Chief Financial Officer

GRAPHIC

 

Forward-Looking Statements This presentation discusses certain forward-looking statements including new rig technology, rig margin improvement potential, job growth opportunities, cost savings, expectations regarding the performance of our industry, our current and future markets and demand for our products and services, and other statements related to our future performance. Such statements, including statements relating to matters that are not historical facts, are “forward-looking statements” within the meaning of the safe harbor provisions of Section 27A of the Securities Act, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These “forward-looking statements” are based on an analysis of currently available competitive, financial and economic data and our operating plans and expectations. They are inherently uncertain and investors should recognize that events and actual results could turn out to be significantly different from our expectations. By way of illustration, when used in this document, words such as “anticipate,” “believe,” “expect,” “plan,” “intend,” “forecast”, “estimate,” “project,” “will,” “should,” “could,” “may,” “predict,” “illustrative,” “hypothetical,” “target” and similar expressions are intended to identify forward-looking statements. Factors to consider when evaluating these forward-looking statements include, but are not limited to: • • • • • • • • • fluctuations and volatility in worldwide prices of and demand for oil and natural gas; fluctuations in levels of oil and natural gas exploration and development activities; fluctuations in the demand for our services; competitive and technological changes and other developments in the oil and gas and oilfield services industries; our ability to renew customer contracts in order to maintain competitiveness; the existence of operating risks inherent in the oil and gas and oilfield services industries; the possibility of the loss of one or a number of our large customers; the impact of long term indebtedness and other financial commitments on our financial and operating flexibility; our access to and the cost of capital, including the impact of a downgrade in our credit rating, covenant restrictions, availability under our unsecured revolving credit facilities, and future issuances of debt or equity securities; our dependence on our operating subsidiaries and investments to meet our financial obligations; our ability to retain skilled employees; our ability to complete, and realize the expected benefits of strategic transactions, including our joint venture in Saudi Arabia and recent acquisition of Tesco Corporation; the recent changes in U.S. tax laws and the possibility of changes in other tax laws and other laws and regulations; the possibility of political or economic instability, civil disturbance, war or acts of terrorism in any of the countries in which we do business; general economic conditions, including the capital and credit markets; and our expectations regarding future trends of EBITDA, net debt and free cash flow. • • • • • • • Our businesses depend, to a large degree, on the level of spending by oil and gas companies for exploration and production activities. Therefore, sustained lower oil or natural gas prices that have a material impact on exploration, development, or production activities could also materially affect our financial position, results of operations, and cash flows. 2

GRAPHIC

 

Non-GAAP Financial Measures The above description of risks and uncertainties is by no means all-inclusive, but is designed to highlight what we believe are important factors to consider. For a discussion of these factors and other risks and uncertainties, please refer to our filings with the Securities and Exchange Commission ("SEC"), including those contained in our Annual Reports of Form 10-K and Quarterly Reports on Form 10-Q, which are available at the SEC's website at www.sec.gov. This presentation refers to Net Debt. Net Debt is calculated as Total Debt minus the sum of cash and cash equivalents and short term investments. Net Debt should not be used in isolation or as a substitute for the amounts reported in accordance with generally accepted accounting principles (“GAAP”). Management uses net debt as a measure of our overall liquidity. In addition, securities analysts use this and other measures as some of the metrics on which they analyze our performance. For a reconciliation of Net Debt to Total Debt, which is the most closely comparable GAAP measure, see the Appendix at the end of this presentation. 3

GRAPHIC

 

Current Market Environment • WTI crude price weakened to $43-$50 range at end of 2018 • Lower 48 • • • Commodity price drop creates uncertainty within the client base Oil price volatility could lead U.S. customers to scale back investment Leading edge dayrates have stabilized at current attractive levels • International • • • • Land rig market continues to add rigs Leading-edge rig dayrates remain below prior peak Uneven market recovery across major markets Focus on reactivating rigs that require limited capex 4

GRAPHIC

 

Recent Company Highlights • Lower 48 • • End-of-year rig count at 114 Estimate 4Q daily gross margin above $9,000 • International • • End-of-year rig count at 93 (after sale of Argentina workover rigs) 4Q daily gross margin below third-quarter actual • Net Debt reduction of approximately $230 million included net million from SANAD JV partner and $25 million payment for a acquisition payment of $157 small technology • Preliminary year-end 2018 Net Debt of approximately $3.12 billion, compared to $3.35 billion at 9/30/2018. Total Debt at year-end was approximately $3.59 billion, compared to $3.74 billion at 9/30/2018. • Since the end of 3Q we have redeemed $108 million of senior notes Note, Nabors fourth quarter financials are not yet finalized. The company does not intend for the above metrics to be taken as an indication of GAAP financial results for the fourth quarter. They are only intended to provide investors with advance information on Nabors’ financial position, given investors’ level of interest on that specific issue. Nabors will release its full financial and operational results for the fourth quarter and full year of 2018 in late February.

 

2019 Priorities Cautious Start to the New Year • Continued focus on cost reductions • Reduce annual combined G&A and R&E expenses by 10% • Target 2019 capital spending to $400 million • Management proposal to reduce quarterly dividend on common shares, beginning with payment in 2Q, to $0.01 per share • Estimate 2019 impact of approximately $54 million • Anticipate $200-$250 million reduction in Net Debt in 2019 6

GRAPHIC

 

Key Investment Highlights 1 One of the world’s largest global land drilling fleets 2 Capitalizing on global drilling rebound 3 Differentiated cyclical resilience through International 4 Modern super-spec L48 Fleet 5 Growth and margin expansion through NDS and automation 6 Committed to free cash flow generation and net debt reduction 7 Please refer to the disclaimers on slides 2 and 3 of the presentation deck.

GRAPHIC

 

Lower 48 Direction Industry rig count grew by 27 rigs in the fourth quarter, to 1056 • Super-Spec rigs fully utilized at significant premiums with strong day rates • Rig upgrade candidates at attractive returns are limited in current market environment • We expect margin re-price to market expansion as rigs • 8 Please refer to the disclaimers on slides 2 and 3 of the presentation deck.

GRAPHIC

 

International Direction Rig count continues to increase, with stable pricing and limited pricing traction in certain markets • Sold seven non-contributing small workover rigs in Argentina During 4Q, deployed two rigs in Colombia, one in Saudi Arabia, and one in Russia. During 2019 expect to deploy two in Mexico, two in Argentina, one in Ecuador, one in Kazakhstan, one in Algeria. Currently seeking opportunities prefunding of capex only with substantial customer 9 Please refer to the disclaimers on slides 2 and 3 of the presentation deck.

GRAPHIC

 

Debt Maturity Profile - Preliminary as of 12/31/18 All figures in billions Capacity + Cash) (1) Debt balances reflect preliminary carrying values as of 31-December-2018 (2) Revolving Credit Lines subject to covenants (3) Annual figures shown at maturity value. Nearest Maturity in 2020 (3) $2,500 $2,000 $1,500 $1,000 $500 $0 Total Liquidity: $2.20 Billion 438 1,763 792 669 615 586 575 170 344 201820192020202120221H232H23202420252026 Bonds, Notes & Revolving Credit Other Facilities (2)Cash Available Liquidity (Revolver Preliminary Debt @ 12/31/18 Total Debt: $3.59Bn(1) Net Debt: $3.12Bn(1) Available Liquidity: $2.20Bn

GRAPHIC

 

Near-Term Drivers L48 Margins 1 Project Free Cash Flow expansion throughout 2018-2019 Operations began April 1, 2018 with healthy margin and cash contribution 2 MODS™-400 Protects Saudi Arabia business and offers upside with newbuild deployments.Recently renewed 25 long-term contracts. SANAD 3 Incremental revenues from increased L48 penetration, additional software offerings, rig automation and geographic expansion 4 Automation Please refer to the disclaimers on slides 2 and 3 of the presentation deck. 11 NDS &

GRAPHIC

 

Appendix 1/JIIl NABORS 12

GRAPHIC

 

Reconciliation of Net Debt to Total Debt Net debt is computed by subtracting the sum of cash, cash equivalents, and short-term investments from total debt. This non-GAAP measure has limitations and therefore should not be used in isolation or as a substitute for the amounts reported in accordance with GAAP. However, management evaluates the performance of its operating segments and the consolidated Company based on several criteria, including net debt, because it believes that this financial measure accurately measures the Company’s liquidity. In addition, securities analysts and investors use this measure as one of the metrics on which they analyze the company’s performance. Other companies in this industry may compute this measure differently. A reconciliation of net debt to total debt, which is the nearest comparable GAAP financial measure, is provided in the table below. 2012 2017 2018 2018 (1) (1) Amounts based on preliminary unaudited financial information. These preliminary results are based on management’s initial analysis of operations for the quarter ended December 31, 2018. 13 $4.26$3.74$3.35$3.12 Net Debt $0.35$0.19$0.35$0.44 0.140.030.040.03 Cash & Cash Equivalents ST Investments March 31,September 30,September 30,December 31, $4.47$3.96$3.74$3.59 0.280.000.000.00 $4.75$3.96$3.74$3.59 (In Billions) Long-Term Debt Current Debt Total Debt

GRAPHIC

 

(Back To Top)