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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) April 30, 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 April 30, 2019, Nabors Industries Ltd. (“Nabors” or the “Company”) issued a press release announcing its results of operations for the three-month period ended March 31, 2019.  A copy of that release is furnished herewith as Exhibit 99.1 and is incorporated herein by reference.

 

The press release includes forward-looking statements within the meaning of the Securities Act of 1933 (the “Securities Act”), and the Securities Exchange Act of 1934 (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, the Company’s actual results may differ materially from those indicated or implied by such forward-looking statements.

 

Nabors also presented in the press release certain “non-GAAP” financial measures. Nabors presented its adjusted EBITDA, adjusted operating income (loss), and net debt for all periods presented in the release. 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”). Adjusted operating income (loss) represents income (loss) from continuing operations before income taxes, interest expense, earnings (losses) from unconsolidated affiliates, investment income (loss), impairments and other charges and other, net. Adjusted EBITDA is computed similarly, but also excludes depreciation and amortization expenses. In addition, adjusted EBITDA and adjusted operating income (loss) exclude certain cash expenses that the Company is obligated to make. Net debt is calculated as total debt minus the sum of cash and cash equivalents and short-term investments. As part of the press release information, Nabors has provided a reconciliation of adjusted EBITDA and adjusted operating income (loss) to income (loss) from continuing operations before income taxes and net debt to total debt, which are the most closely comparable GAAP financial measures.

 

The Company included its adjusted EBITDA and adjusted operating income (loss) in the release because management evaluates the performance of the Company’s operating segments and consolidated results based on several criteria, including these non-GAAP measures, because it believes that these financial measures accurately reflect the Company’s ongoing profitability and performance. In addition, Nabors included net debt in the release because management uses net debt as a measure of the Company’s liquidity.  There are, however, certain limitations to these measures and therefore they should be considered in addition to and not as an alternative to the Company’s results in accordance with GAAP.

 

On May 1, 2019, Nabors will hold a conference call at 10 a.m. Central Time, regarding the Company’s financial results for the quarter ended March 31, 2019. Information about the call — including dial-in information, recording and replay of the call, and supplemental information — is available on the Investor Relations page of www.nabors.com.

 

The information in this Item 2.02, including Exhibit 99.1, shall not be deemed “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to liabilities of that Section or Sections 11 and 12(a)(2) of the Securities Act.

 

2


 

Item 7.01              Regulation FD Disclosure.

 

On May 1, 2019, Nabors will present certain information in connection with its call with shareholders, analysts and others relating to the Company’s results of operations discussed in Item 2.02 above. Attached hereto as Exhibit 99.2 are slides that will be presented at that time.

 

The information included in this Current Report on Form 8-K under Item 7.01, including Exhibit 99.2, is being furnished and 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.

 

Item 9.01              Financial Statements and Exhibits.

 

(d)  Exhibits

 

Exhibit No.

 

Description

 

 

 

99.1

 

Press Release

99.2

 

Investor Information

 

3


 

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: April 30, 2019

By:

/s/Mark D. Andrews

 

 

Mark D. Andrews

 

 

Corporate Secretary

 

4


(Back To Top)

Section 2: EX-99.1 (EX-99.1)

Exhibit 99.1

 

NEWS RELEASE

 

Nabors Announces First Quarter 2019 Results

 

HAMILTON, Bermuda, April 30, 2019 /PRNewswire/ — Nabors Industries Ltd. (“Nabors” or the “Company”) (NYSE: NBR) today reported first quarter 2019 operating revenue of $800 million, compared to operating revenue of $782 million in the fourth quarter of 2018. Net income from continuing operations attributable to Nabors common shareholders for the quarter was a loss of $122 million, or $0.36 per share, compared to a loss of $188 million, or $0.55 per share, in the prior quarter. Results for the fourth quarter of 2018 included net impairments and other charges of $52 million, or $0.15 per share after tax, and a separate non-cash income tax charge of $52 million, or $0.15 per share, related to the establishment of a reserve on our deferred tax asset in Canada.

 

Adjusted operating income for the Company was a narrowing loss of $13 million in the first quarter, compared to a loss of $25 million in the fourth quarter of 2018. First-quarter consolidated adjusted EBITDA was $197 million compared to $202 million in the previous quarter. An $11 million improvement in the U.S. market was offset by an $8 million reduction in International. Results in Latin America were affected by market-related and operational issues. These included the U.S. sanctions and turmoil in Venezuela, as well as an activity drop in Argentina driven by the recent reduction in regulated natural gas prices. In addition, the Canada rig count and margins fell as the normal seasonal peak was overwhelmed by the currently weak market. Finally, the two fewer calendar days in the first quarter translated into an unfavorable impact of $6 million in adjusted EBITDA for the global drilling and drilling solutions operations.

 

Anthony G. Petrello, Nabors Chairman, CEO and President, commented, “Our U.S. Drilling segment continues to perform exceptionally well as illustrated by a 10% sequential increase in quarterly adjusted EBITDA on a 5% increase in revenue. This was principally due to improved pricing on a slightly higher rig count in our Lower 48 operations. Our current rig count in the Lower 48 stands at 115 rigs, four more than both our quarterly average and our exit rate for the first quarter. Dayrates for our high-specification rigs continue to exceed the mid-$20,000 level. We expect to see further improvement in this market throughout the year. During the quarter, our International segment hampered our consolidated results due to activity and operational issues in Latin America. We anticipate compensating for these unfavorable items during the second quarter with additional rigs and improved operational performance. Canada also faced headwinds as the current market weakness resulted in an atypical sequential reduction in what should be our peak seasonal quarter.”

 

Mr. Petrello continued, “During the quarter, we achieved several milestones in our various automation and integration initiatives that should bolster results going forward. Most notable among these was the securing of multiple commercial jobs for our Navigator™ and ROCKit® Pilot directional drilling automation systems. Today the majority of these installations are operated remotely with no directional drillers at the rig site. We also are seeing increasing adoption of our automated tubular running technologies and our rotary steerable system is delivering good results in customer field trials. Additionally, we

 


 

installed and commissioned our first drill floor robot on a semisubmersible rig in the North Sea and signed a contract for our first complete robotic drill floor automation system. This system is planned for installation on a North Sea platform around the end of the year.”

 

Consolidated and Segment Results

 

The U.S. Drilling segment reported a 10% sequential increase in adjusted EBITDA, to $125 million. The increase is attributable to improved results in the Lower 48 and Alaska operations. The average rig count in the Lower 48 increased slightly, as contracted deployments of upgraded rigs offset a minor decline in the number of legacy rigs operating, while nearly all of the Company’s high-specification rigs remained under contract. The performance of these rigs, equipped with the Company’s proprietary Rigtelligence® software, is receiving strong customer recognition as evidenced by Nabors’ increasing share in the demanding unconventional market. This segment’s rig count currently stands at a cyclical high of 123, with 115 of those working in the Lower 48. The Company still expects the Lower 48 rig count to increase to approximately 120 by year-end, as the remaining contracted rig upgrades deploy.

 

International Drilling adjusted EBITDA decreased sequentially by 9%, to $86 million, primarily reflecting idled rigs and other operational issues in Latin America, mainly in Argentina and Venezuela. The two fewer calendar days in the first quarter accounted for $2.3 million of the sequential decrease. The quarterly average rig count increased by two to 90, primarily reflecting the full-quarter contribution from fourth-quarter rig deployments in Colombia and Saudi Arabia. The average margin per day decreased sequentially from approximately $13,500 to $12,600, reflecting costs associated with idled rigs, as well as the last of the pricing concessions granted on the rollover of a number of contracts in the Eastern Hemisphere.

 

Canada operations were adversely impacted by the industry-wide weak rig count in what would usually be the seasonally strongest quarter. Adjusted EBITDA of $7.4 million was down from $9.5 million in the fourth quarter. Daily gross margin decreased sequentially to nearly $6,100. Although the quarterly average rig count declined sequentially from 18 to 16, Nabors has gained market share year over year.

 

In Drilling Solutions, adjusted EBITDA of $21.0 million was $2.0 million below the fourth quarter, with lower project-related revenue. The segment’s drilling performance software revenue continued to strengthen with increased penetration of its automation systems.

 

In the Rig Technologies segment, first quarter adjusted EBITDA loss of $2.3 million was approximately $1.0 million less than the fourth quarter. The results reflect improved positive results in Canrig, which were more than offset by costs related to the commercialization of the rotary steerable tool and higher expenses associated with the recently-signed contract for an integrated robotic drilling system.

 


 

Capital Expenditures and Liquidity

 

During the first quarter, net debt increased by $104 million in line with the Company’s expectations. This increase includes $81 million in semi-annual interest payments on senior unsecured notes. In addition, operations in the first quarter tend to consume more cash as various annual expenses are incurred at the beginning of the year, including property and other taxes as well as the payment of annual incentive bonuses to employees. These outflows accounted for approximately $50 million in the first quarter. Capital expenditures for the quarter were $146 million. The full year capital expenditures are anticipated to be front-loaded as most of the U.S. Lower 48 rig upgrades are planned for the first half of the year. Nabors expects to reduce capital expenditures for the second quarter to approximately $100 million.

 

William Restrepo, Nabors Chief Financial Officer, stated, “Cash flow consumption in the first quarter was near the top of the range of our internal expectations. The first quarter is normally burdened with significant beginning-of-year cash outlays, which will not repeat during the year. We remain committed to containing capital spending to approximately $400 million for the full year. We expect strong cash flow generation in the second quarter. Interest and dividend payments should decrease by approximately $100 million. In addition, our second quarter expectations are supported by the absence of the beginning-of-year cash outlays, the reduction in capex, improving operating results and a reduction in working capital. We maintain our net debt reduction target of $200 to $250 million during 2019.”

 

Mr. Petrello concluded, “We remain confident in our full-year targets for income, cash flow and a corresponding net debt reduction. In the U.S., our strategy of deploying high-specification intelligent rigs to the industry’s most demanding customers is paying off in both utilization and rates. The second quarter should continue to deliver higher margins on higher rig count in the Lower 48 as we continue to deploy contracted rig upgrades.  International adjusted EBITDA should return to the $90 million mark. In our remaining segments other than Canada, we also expect improved adjusted EBITDA in the second quarter. Notwithstanding the uncertainty during the first half of this year, we anticipate further progress throughout 2019 with an acceleration in the second half of this year.”

 

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”).  Adjusted operating income (loss) represents income (loss) from continuing operations before income taxes, interest expense, earnings (losses) from unconsolidated affiliates, investment income (loss), impairments and other charges and other, net. Adjusted EBITDA is computed similarly, but also excludes depreciation and amortization expenses. In addition, adjusted EBITDA and adjusted operating income (loss) exclude certain cash expenses that the Company is obligated to make. Net debt is calculated as total debt minus the sum of cash and cash equivalents and short-term investments. Each of these non-GAAP measures 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 adjusted EBITDA, adjusted operating income (loss), and 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 consolidated adjusted EBITDA and adjusted operating income (loss) to income (loss) from continuing operations before income taxes and net debt to total debt, which are their nearest comparable GAAP financial measures, are 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 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 [email protected]

 


 

NABORS INDUSTRIES LTD. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS)

(Unaudited)

 

 

 

Three Months Ended

 

 

 

March 31,

 

December 31,

 

(In thousands, except per share amounts)

 

2019

 

2018

 

2018

 

 

 

 

 

 

 

 

 

Revenues and other income:

 

 

 

 

 

 

 

Operating revenues

 

$

799,640

 

$

734,194

 

$

782,080

 

Earnings (losses) from unconsolidated affiliates

 

(5

)

2

 

 

Investment income (loss)

 

9,677

 

465

 

(5,458

)

Total revenues and other income

 

809,312

 

734,661

 

776,622

 

 

 

 

 

 

 

 

 

Costs and other deductions:

 

 

 

 

 

 

 

Direct costs

 

520,957

 

475,403

 

510,402

 

General and administrative expenses

 

68,167

 

74,571

 

56,615

 

Research and engineering

 

13,520

 

15,806

 

13,444

 

Depreciation and amortization

 

210,391

 

213,448

 

226,643

 

Interest expense

 

52,352

 

61,386

 

53,731

 

Other, net

 

17,502

 

14,089

 

59,381

 

Total costs and other deductions

 

882,889

 

854,703

 

920,216

 

 

 

 

 

 

 

 

 

Income (loss) from continuing operations before income taxes

 

(73,577

)

(120,042

)

(143,594

)

Income tax expense (benefit)

 

29,799

 

23,545

 

21,957

 

 

 

 

 

 

 

 

 

Income (loss) from continuing operations, net of tax

 

(103,376

)

(143,587

)

(165,551

)

Income (loss) from discontinued operations, net of tax

 

(157

)

(75

)

(71

)

 

 

 

 

 

 

 

 

Net income (loss)

 

(103,533

)

(143,662

)

(165,622

)

 

 

 

 

 

 

 

 

Less: Net (income) loss attributable to noncontrolling interest

 

(14,176

)

(539

)

(17,796

)

Net income (loss) attributable to Nabors

 

$

(117,709

)

$

(144,201

)

$

(183,418

)

Less: Preferred stock dividend

 

$

(4,313

)

$

 

$

(4,312

)

Net income (loss) attributable to Nabors common shareholders

 

$

(122,022

)

$

(144,201

)

$

(187,730

)

 

 

 

 

 

 

 

 

Amounts attributable to Nabors common shareholders:

 

 

 

 

 

 

 

Net income (loss) from continuing operations

 

$

(121,865

)

$

(144,126

)

$

(187,659

)

Net income (loss) from discontinued operations

 

(157

)

(75

)

(71

)

Net income (loss) attributable to Nabors common shareholders

 

$

(122,022

)

$

(144,201

)

$

(187,730

)

 

 

 

 

 

 

 

 

Earnings (losses) per share:

 

 

 

 

 

 

 

Basic from continuing operations

 

$

(0.36

)

$

(0.46

)

$

(0.55

)

Basic from discontinued operations

 

 

 

 

Total Basic

 

$

(0.36

)

$

(0.46

)

$

(0.55

)

 

 

 

 

 

 

 

 

Diluted from continuing operations

 

$

(0.36

)

$

(0.46

)

$

(0.55

)

Diluted from discontinued operations

 

 

 

 

Total Diluted

 

$

(0.36

)

$

(0.46

)

$

(0.55

)

 

 

 

 

 

 

 

 

Weighted-average number of common shares outstanding:

 

 

 

 

 

 

 

Basic

 

350,764

 

308,788

 

350,236

 

Diluted

 

350,764

 

308,788

 

350,236

 

 

 

 

 

 

 

 

 

Adjusted EBITDA

 

$

196,996

 

$

168,414

 

$

201,619

 

 

 

 

 

 

 

 

 

Adjusted operating income (loss)

 

$

(13,395

)

$

(45,034

)

$

(25,024

)

 

1


 

NABORS INDUSTRIES LTD. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

 

 

 

March 31,

 

December 31,

 

(In thousands)

 

2019

 

2018

 

 

 

(Unaudited)

 

ASSETS

 

 

 

 

 

Current assets:

 

 

 

 

 

Cash and short-term investments

 

$

469,717

 

$

481,802

 

Accounts receivable, net

 

743,528

 

756,320

 

Assets held for sale

 

12,330

 

12,250

 

Other current assets

 

330,328

 

343,191

 

Total current assets

 

1,555,903

 

1,593,563

 

Property, plant and equipment, net

 

5,399,514

 

5,467,870

 

Goodwill

 

184,104

 

183,914

 

Other long-term assets

 

634,163

 

608,597

 

Total assets

 

$

7,773,684

 

$

7,853,944

 

 

 

 

 

 

 

LIABILITIES AND EQUITY

 

 

 

 

 

Current liabilities:

 

 

 

 

 

Current portion of debt

 

$

850

 

$

561

 

Other current liabilities

 

723,961

 

831,516

 

Total current liabilities

 

724,811

 

832,077

 

Long-term debt

 

3,677,580

 

3,585,884

 

Other long-term liabilities

 

311,331

 

280,796

 

Total liabilities

 

4,713,722

 

4,698,757

 

 

 

 

 

 

 

Redeemable noncontrolling interest in subsidiary

 

409,923

 

404,861

 

 

 

 

 

 

 

Equity:

 

 

 

 

 

Shareholders’ equity

 

2,586,335

 

2,700,850

 

Noncontrolling interest

 

63,704

 

49,476

 

Total equity

 

2,650,039

 

2,750,326

 

Total liabilities and equity

 

$

7,773,684

 

$

7,853,944

 

 

2


 

NABORS INDUSTRIES LTD. AND SUBSIDIARIES

SEGMENT REPORTING

(Unaudited)

 

The following tables set forth certain information with respect to our reportable segments and rig activity:

 

 

 

Three Months Ended

 

 

 

March 31,

 

December 31,

 

(In thousands, except rig activity)

 

2019

 

2018

 

2018

 

 

 

 

 

 

 

 

 

Operating revenues:

 

 

 

 

 

 

 

U.S. Drilling

 

$

320,209

 

$

241,002

 

$

303,834

 

Canada Drilling

 

25,315

 

31,887

 

29,026

 

International Drilling

 

337,256

 

368,845

 

345,082

 

Drilling Solutions

 

65,422

 

62,648

 

66,812

 

Rig Technologies (1)

 

71,753

 

64,669

 

61,357

 

Other reconciling items (2)

 

(20,315

)

(34,857

)

(24,031

)

Total operating revenues

 

$

799,640

 

$

734,194

 

$

782,080

 

 

 

 

 

 

 

 

 

Adjusted EBITDA: (3)

 

 

 

 

 

 

 

U.S. Drilling

 

$

125,005

 

$

73,067

 

$

113,945

 

Canada Drilling

 

7,446

 

9,299

 

9,450

 

International Drilling

 

85,844

 

123,990

 

94,030

 

Drilling Solutions

 

21,046

 

14,728

 

23,025

 

Rig Technologies (1)

 

(2,296

)

(8,684

)

(1,274

)

Other reconciling items (4)

 

(40,049

)

(43,986

)

(37,557

)

Total adjusted EBITDA

 

$

196,996

 

$

168,414

 

$

201,619

 

 

 

 

 

 

 

 

 

Adjusted operating income (loss): (5)

 

 

 

 

 

 

 

U.S. Drilling

 

$

24,683

 

$

(19,746

)

$

8,977

 

Canada Drilling

 

(59

)

(592

)

929

 

International Drilling

 

(5,637

)

24,536

 

(481

)

Drilling Solutions

 

12,855

 

8,721

 

11,853

 

Rig Technologies (1)

 

(5,148

)

(12,976

)

(5,212

)

Other reconciling items (4)

 

(40,089

)

(44,977

)

(41,090

)

Total adjusted operating income (loss)

 

$

(13,395

)

$

(45,034

)

$

(25,024

)

 

 

 

 

 

 

 

 

Rig activity:

 

 

 

 

 

 

 

Average Rigs Working: (6)

 

 

 

 

 

 

 

U.S. Drilling

 

120.9

 

111.8

 

117.3

 

Canada Drilling

 

16.3

 

21.1

 

18.3

 

International Drilling

 

89.7

 

94.6

 

88.0

 

Total average rigs working

 

226.9

 

227.5

 

223.6

 

 

3


 


(1)

 

Includes our oilfield equipment manufacturing, automated systems, and downhole tools.

 

 

 

(2)

 

Represents the elimination of inter-segment transactions.

 

 

 

(3)

 

Adjusted EBITDA represents income (loss) from continuing operations before income taxes, interest expense, depreciation and amortization, earnings (losses) from unconsolidated affiliates, investment income (loss) and other, net. Adjusted EBITDA is a non-GAAP financial measure and should not be used in isolation or as a substitute for the amounts reported in accordance with GAAP. In addition, adjusted EBITDA excludes certain cash expenses that the Company is obligated to make. However, management evaluates the performance of its operating segments and the consolidated Company based on several criteria, including adjusted EBITDA and adjusted operating income (loss), because it believes that these financial measures accurately reflect the Company’s ongoing profitability and performance. 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 these measures differently. A reconciliation of this non-GAAP measure to income (loss) from continuing operations before income taxes, which is the most closely comparable GAAP measure, is provided in the table set forth immediately following the heading “Reconciliation of Non-GAAP Financial Measures to Income (loss) from Continuing Operations before Income Taxes”.

 

 

 

(4)

 

Represents the elimination of inter-segment transactions and unallocated corporate expenses.

 

 

 

(5)

 

Adjusted operating income (loss) represents income (loss) from continuing operations before income taxes, interest expense, earnings (losses) from unconsolidated affiliates, investment income (loss) and other, net. Adjusted operating income (loss) is a non-GAAP financial measure and should not be used in isolation or as a substitute for the amounts reported in accordance with GAAP. In addition, adjusted operating income (loss) excludes certain cash expenses that the Company is obligated to make. However, management evaluates the performance of its operating segments and the consolidated Company based on several criteria, including adjusted EBITDA and adjusted operating income (loss), because it believes that these financial measures accurately reflect the Company’s ongoing profitability and performance. 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 these measures differently. A reconciliation of this non-GAAP measure to income (loss) from continuing operations before income taxes, which is the most closely comparable GAAP measure, is provided in the table set forth immediately following the heading “Reconciliation of Non-GAAP Financial Measures to Income (loss) from Continuing Operations before Income Taxes”.

 

 

 

(6)

 

Represents a measure of the average number of rigs operating during a given period. For example, one rig operating 45 days during a quarter represents approximately 0.5 average rigs working for the quarter. On an annual period, one rig operating 182.5 days represents approximately 0.5 average rigs working for the year.

 

4


 

NABORS INDUSTRIES LTD. AND SUBSIDIARIES

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO

INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES

(Unaudited)

 

 

 

Three Months Ended

 

 

 

March 31,

 

December 31,

 

(In thousands)

 

2019

 

2018

 

2018

 

 

 

 

 

 

 

 

 

Adjusted EBITDA

 

$

196,996

 

$

168,414

 

$

201,619

 

Depreciation and amortization

 

(210,391

)

(213,448

)

(226,643

)

Adjusted operating income (loss)

 

(13,395

)

(45,034

)

(25,024

)

 

 

 

 

 

 

 

 

Earnings (losses) from unconsolidated affiliates

 

(5

)

2

 

 

Investment income (loss)

 

9,677

 

465

 

(5,458

)

Interest expense

 

(52,352

)

(61,386

)

(53,731

)

Other, net

 

(17,502

)

(14,089

)

(59,381

)

Income (loss) from continuing operations before income taxes

 

$

(73,577

)

$

(120,042

)

$

(143,594

)

 

5


 

NABORS INDUSTRIES LTD. AND SUBSIDIARIES

RECONCILIATION OF NET DEBT TO TOTAL DEBT

 

 

 

March 31,

 

December 31,

 

(In thousands)

 

2019

 

2018

 

 

 

(Unaudited)

 

 

 

 

 

 

 

Current portion of debt

 

$

850

 

$

561

 

Long-term debt

 

3,677,580

 

3,585,884

 

Total Debt

 

3,678,430

 

3,586,445

 

Less: Cash and short-term investments

 

469,717

 

481,802

 

Net Debt

 

$

3,208,713

 

$

3,104,643

 

 

6


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Section 3: EX-99.2 (EX-99.2)

Exhibit 99.2

1Q19 Earnings May 1st, 2019 Presentation Presented by: Anthony G. Petrello Chairman, President, & Chief Executive Officer William J. Restrepo Chief Financial Officer

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Forward-Looking Statements and Non-GAAP Financial Measures We often discuss expectations regarding our future markets, demand for our products and services, and our performance in our annual, quarterly, and current reports, press releases, and other written and oral statements. Such statements, including statements in this document that relate to matters that are not historical facts, are “forward-looking statements” within the meaning of the safe harbor provisions of Section 27A of the U.S. Securities Act of 1933 and Section 21E of the U.S. Securities Exchange Act of 1934. These “forward-looking statements” are based on our analysis of currently available competitive, financial and economic data and our operating plans. They are inherently uncertain, and investors should recognize that events and actual results could turn out to be significantly different from our expectations. 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, covenants 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; the recent changes in U.S. tax laws and the possibility of changes in other tax laws and other laws and regulation; the possibility of political or economic instability, civil disturbance, war or acts of terrorism in any of the countries in which we do business; the possibility of changes to U.S. trade policies and regulations including the imposition of trade embargoes or sanctions; and general economic conditions, including the capital and credit markets. Our businesses depend, to a large degree, on the level of spending by oil and gas companies for exploration, development 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. 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 on Form 10-K and Quarterly Reports on Form 10-Q, which are available at the SEC's website at www.sec.gov. Non-GAAP Financial Measures This presentation refers to certain “non-GAAP” financial measures, such as adjusted EBITDA, adjusted operating income (loss) and net debt.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”). A reconciliation of adjusted EBITDA and adjusted operating income (loss) to income (loss) from continuing operations before income taxes and net debt to total debt, which are their nearest comparable GAAP financial measures, is provided in the Appendix at the end of this presentation. 2

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Recent Company Highlights Increased U.S. Drilling average daily margins to $12,350 from $11,428 in Q4 • L48 Margins increased to $10,170 from $9,428, an 8% sequential increase from Q4 Recent U.S. Rig Deployments • • • 2 Upgraded PACE®-F rigs in the Permian in 1Q 2019: Two upgraded PACE®-M750 rig in South and West Texas in 1Q 2019 Five additional PACE®-M750 deployments scheduled through 2Q 2019 Deployed one upgraded International rig during 1Q in Argentina Additional International deployments pending • Algeria (1), Kazakhstan (1), Mexico (2) Saudi Arabia (1), Argentina (1), Italy (1) 3

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Financial Overview '1111NABORS 4

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Financial Summary ($000 except EPS) 1Q18 2Q18 3Q18 4Q18 1Q19 Operating Revenues $734,194 $761,920 $779,425 $782,080 $799,640 Adjusted EBITDA(1) 168,414 187,683 200,960 201,619 196,996 Adjusted Operating(1) Income (Loss) (45,034) (30,579) (7,557) (25,024) (13,395) Income (Loss) from Continuing Operations before income taxes (120,042) (171,937) (83,221) (143,594) (73,577) GAAP Diluted EPS(2) (0.46) (0.61) (0.31) (0.55) (0.36) (1) See reconciliations in the Appendix (2) Diluted Earnings (Losses) Per Share from continuing operations 5

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Debt and Liquidity (As of March 31, 2019) Liquidity (at March 31, 2019) • Cash & Available Capacity: $2,103* (1) See reconciliations in the Appendix (2) Capitalization defined as Net Debt plus Shareholders’ Equity (3) Coverage defined as TTM Adjusted EBITDA / TTM Interest Expense (4) Leverage defined as Net Debt / TTM Adjusted EBITDA Note: Subtotals may not foot due to rounding * Available capacity subject to compliance with covenants in credit facilities High 3/31/12 3Q184Q181Q19 9/30/1812/31/183/31/19 Change 1Q19 from 4Q18 ($MM's) Total Debt Cash and ST Investments Net Debt(1) Shareholders’ Equity Net Debt to Capitalization(2) Coverage(3) Leverage(4) $4,750 494 $3,738$3,586$3,678 389482470 $92 (12) $4,256 5,811 42% 7.8x 2.2x $3,349$3,105$3,209 2,9312,7012,586 53%53%55% 3.1x3.3x3.6x 4.7x4.1x4.1x $104 (115) 2% 0.3x 0.0x

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Debt Maturity Profile as of 3/31/19 All figures in millions Capacity + Cash) (1) Annual figures shown at maturity value. (2) Debt balances reflect carrying values as of 31-March-2019 (3) Availability under Revolving Credit Lines subject to covenants Nearest Maturity in 2020 (1) $2,500 $2,000 $1,500 $1,000 $500 $0 Total Liquidity: $2.10 Billion 470 1,633 792 300 615 637 577 575 337 201820192020202120221H232H23202420252026 Bonds, Notes & Revolving Credit Other Facilities (2)Cash Available Liquidity (Revolver Debt @ 3/31/19 Total Debt: $3.68Bn(2) Net Debt: $3.21Bn(2) Available Liquidity: $2.10Bn(3)

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Business Segments '1111NABORS 8

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1Q19 Rig Utilization & Availability Rigs Working Utilization (1) As of March 31st, 2019 Note: Subtotals may not foot due to rounding 9 U.S. Lower 48 AC >1500HP ACOthers SCR Rigs Rig Fleet(1) 1Q19 AverageAverage 114 68 12 10289% 710% 217% U.S. Lower 48 Total U.S. Offshore Alaska Canada International 194 12 16 41 148 11258% 433% 531% 1639% 9061% Total Fleet 411 22755%

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Lower 48 Rig Utilization by Type As of April 26, 2019 * Rig X27 is under repair. 10 Total Rigs ActiveTotal Util. 60% 98% 100% 100% 100% 100% 82% 22% 100% 14% 0% 25% 109182 4647 44 66 44 2929 911 29 66 750 016 28 115190 61% Rig Type AC PACE®-X* PACE®-M750 PACE®-M800 PACE®-M1000 PACE®-B PACE®-S PACE®-F UPGRADED PACE®-F PACE®-M550 Other AC Rigs SCR Total

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Nabors Drilling Operations As of April 26, 2019 11 UAE0 Mexico2 Ecuador0 Italy0 PNG0 Russia3 Venezuela3 India2 Kuwait2 Canada9 Oman4 Algeria3 Kazakhstan 3 US124 Saudi Arabia42 Argentina10 Columbia14 Total = 221

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Appendix '1111NABORS 12

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Rig Margins & Activity Margin Margin Margin Margin Working Working Working Working (1) Margin = gross margin per rig per day for the period. Gross margin is computed by subtracting direct costs from operating revenues for the period. 13 1Q18 2Q18 3Q18 4Q18 1Q19 Margin(1) Avg. Rigs Working (1) Avg. Rigs (1) Avg. Rigs (1) Avg. Rigs (1) Avg. Rigs U.S. Drilling Canada Drilling International Drilling $8,171111.8 5,84721.1 16,61994.6 $9,381112.1 6,66210.2 16,34993.1 $10,540111.6 5,35217.9 15,00396.0 $11,428117.3 6,49218.3 13,52788.0 $12,350120.9 6,05516.3 12,62289.7

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Reconciliation of Adjusted EBITDA to Income (Loss) from Cont. Operations Before Income Taxes Adjusted operating income (loss) represents income (loss) from continuing operations before income taxes, interest expense, earnings (losses) from unconsolidated affiliates, investment income (loss), impairments and other changes and other, net. Adjusted EBITDA is computed similarly, but also excludes depreciation and amortization expenses. In addition, adjusted EBITDA and adjusted operating income (loss) exclude certain cash expenses that the Company is obligated to pay. Each of these non-GAAP measures 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 adjusted EBITDA and adjusted operating income (loss), because it believes that these financial measures accurately reflect the Company’s ongoing profitability and performance. Securities analysts and investors 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 adjusted EBITDA and adjusted operating income (loss) to income (loss) from continuing operations before income taxes which is the nearest comparable GAAP financial measure, is provided in the table below. 14 Earnings (losses) from unconsolidated affiliates 2 (1) 0 0 (5) Investment Income (loss) 465 (3,164) (1,342) (5,458) 9,677 Interest Expense (61,386) (60,592) (51,415) (53,731) (52,352) Other, net (14,089) (77,601) (22,907) (59,381) (17,502) Income (loss) from continuing operations before income taxes (120,042) (171,937) (83,221) (143,594) (73,577) Three Months Ended March 31, June 30, September 30, December 31, March 31, (In Thousands) 2018 2018 2018 2018 2019 Adjusted EBITDA $168,414 $187,683 $200,960 $201,619 $196,996 Depreciation and Amortization 213,448 218,262 208,517 226,643 210,391 Adjusted Operating Income (loss) (45,034) (30,579) (7,557) (25,024) (13,395)

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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. net debt to total debt, which is the nearest comparable GAAP financial measure, is provided in the table below. A reconciliation of 15 $4,256,139$3,349,148$3,104,643$3,208,713 Net Debt $354,022$347,525$447,766$429,127 139,95041,03334,03640,590 Cash & Cash Equivalents ST Investments (In Thousands) Long-Term Debt Current Debt Total Debt March 31,September 30,December 31,March 31, 2012201820182019 $4,474,495$3,737,273$3,585,884$3,677,580 275,616433561850 $4,750,111$3,737,706$3,586,445$3,678,430

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