Nabors Reports 2Q04 Results



Nabors Industries Ltd. (Amex: NBR), announced its results for the second quarter and six months ended June 30, 2004. Adjusted income derived from operating activities(1) was $46.7 million for the current quarter compared to $38.0 million in the second quarter of last year and $85.1 million in the first quarter of this year. Net income was $46.3 million ($0.30 per diluted share) for the current quarter compared to $29.0 million ($0.19 per diluted share) in the prior year quarter and $71.7 million ($0.46 per diluted share) in the first quarter of this year. Operating revenues and earnings from unconsolidated affiliates were $531.9 million in the current quarter compared to $433.9 million in the prior year quarter and $596.8 million in the first quarter of this year. For the six months ended June 30, 2004, adjusted income derived from operating activities was $131.7 million compared to $94.0 million in the first six months of 2003. Net income for the first six months of 2004 was $118.1 million ($0.76 per diluted share) compared to $77.1 million ($0.50 per diluted share) in the first six months of 2003. Revenues and earnings from unconsolidated affiliates for the first six months were $1,128.7 million compared to $889.7 million for the first six months of 2003.

Gene Isenberg, Nabors' Chairman and Chief Executive Officer commented on the results, "I am quite pleased with the substantial year-over-year improvements in our results. This came primarily from higher utilization and pricing in our U.S. Lower 48 Land Drilling, Canadian, U.S. offshore and U.S. Land well-servicing operations."

"Comparing to the sequential first quarter of 2004, we posted sizeable improvements in both our U.S. Lower 48 Land Drilling and well-servicing businesses while results were essentially flat in our U.S. offshore and international units. Internationally, we performed relatively well despite the multiple elements of unexpected costs incurred during the quarter as previously announced. Canada was seasonally down with the spring thaw, but was substantially improved over the same period of 2003 with higher rig utilization and pricing reflecting the continuing strength in that market. Alaska was down as we anticipated with the windup of the winter exploration activity and a generally weak market. Oil and gas and other operating income was down but in line with our revised expectations which included $2.1 million in dry hole expense."

"Our outlook for the balance of the year continues to be quite positive as all of our businesses except Alaska anticipate improved results in the second half. We expect the largest improvement to come from our U.S. Lower 48 Land Drilling unit where higher rig activity and pricing combined with reduced expenses related to rig mobilizations and start-ups should generate increasingly higher results. Our international business should post the next most meaningful improvement with the unusual costs of the second quarter mostly behind us, and anticipated increases in rig activity and average per rig margins. Our U.S. offshore unit's results should also show significant improvement over the balance of the year with the contribution of two new MODS deepwater platform rigs which commenced late in the second quarter. Likewise, U.S. Land well servicing should benefit from continuing high activity levels and the contribution of recent pricing improvements. Canada is rapidly emerging from its second quarter seasonal trough with a much higher rig count and stronger rates, which should make the second half equal to or slightly better than first half.

"With each quarter we continue to see constructive trends in place that support our belief that the North American gas markets will require higher levels of drilling for an extended period to meet the supply challenges. While there is some degree of uncertainty as to the precise magnitude and timing of incremental rig pricing and utilization, we are very confident of our strategy over the long-term in both our North American and international markets. Our international business continues to demonstrate high potential with increasing activity both currently and prospectively, particularly in the Middle East and North African regions."

The Nabors companies own and operate almost 600 land drilling and approximately 950 land workover and well-servicing rigs worldwide. Offshore, Nabors operates 45 platform rigs, 19 jack-up units, and three barge rigs in the United States and multiple international markets. Nabors markets 31 marine transportation and support vessels, primarily in the U.S. Gulf of Mexico. In addition, Nabors manufactures top drives and drilling instrumentation systems and provides comprehensive oilfield hauling, engineering, civil construction, logistics and facilities maintenance, and project management services. Nabors participates in most of the significant oil, gas and geothermal markets in the world.
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