Nabors Industries Has Record Year
|Thursday, January 24, 2002
Nabors Industries, Inc. announced its financial results for the fourth quarter and full year 2001. Income derived from operating activities(1) was $85.3 million and $535.7 million for the quarter and full year 2001. This compares to $84.1 million and $217.4 million for the fourth quarter and full year 2000. Net income was $62.1 million or $0.41 per diluted share for the quarter and $357.5 million or $2.24 per diluted share for the full year, which compares to $54.9 million or $0.35 per diluted share and $137.4 million or $0.90 per diluted share for the respective prior year periods. Revenues and other income were $444.0 million for the quarter and $2.2 billion for the full year versus $434.5 million and $1.4 billion for the fourth quarter and full year 2000. Other income expense for the quarter included a pre-tax loss of $5.6 million on the sale of certain marketable securities. Similarly, there was a $9.7 million gain, net of taxes ($0.06 per diluted share), on the Company's repurchase of a portion of its convertible notes that is required to be recorded as extraordinary income under US GAAP. The current quarter's results also reflect both a lower effective tax rate and decreased depreciation rate. The lower tax rate emanates from a higher proportion of foreign income at lower tax rates and reduced income in the US, as well as a reduction in the Canadian corporate tax rate. The lower depreciation amounts to approximately $0.03 per diluted share and results from an extension of the useful lives of certain rigs and equipment to more accurately reflect their useful lives based upon Nabors' experience and general industry practices. Gene Isenberg, Nabors Chairman and Chief Executive Officer commented, "I am relatively pleased with the quarter's results, considering the magnitude and rapidity of the activity declines in our US Lower 48 natural gas-directed markets. Otherwise, compared to the third quarter, our international unit realized a large increase in its results as contributions from a number of recent rig deployments, primarily in Algeria and Saudi Arabia, began to have an impact. Canada also improved significantly as the winter season commenced and incremental contribution was realized from the mid-November acquisition of Command Drilling Corporation. "Our US Lower 48 land drilling operations accounted for the majority of the contraction in our consolidated income. Our US well servicing business experienced a much more modest but still significant reduction as a result of fewer natural gas stimulation support projects and fewer drilling completion jobs, coupled with the normal fourth quarter reduction in available hours due to holidays and less daylight. In our marine transportation business, the functionality of our Super 200 dynamically-positioned, deepwater support vessels is reflected in their continuing full utilization and firm pricing, partially offset by weak utilization in the older, standard configuration, platform supply vessels. Our remaining businesses were flat to down slightly compared to third quarter. "The near-term outlook is quite positive for our international, Alaskan and Canadian units. Internationally, the first quarter of 2002 will reflect a full quarter of contribution from the two recently acquired jackups that commenced long-term contracts for Saudi Aramco and two additional long-term land rig contracts in Yemen. Further enhancing the outlook internationally are two recent awards for deep land rigs from Saudi Aramco, which should commence operations in the second quarter, and multiple prospects for a third jackup that we have committed to acquire. Bidding activity internationally remains healthy. Alaska should realize a significant increase in the first quarter with a busy exploration season leading to higher results in both drilling and construction. The balance of the year is likely to remain good, but not as robust as previously anticipated, with some work within existing fields being curtailed. In Canada, we expect a record first quarter and improved full year results as a result of the Command Drilling acquisition and a relatively good deeper rig market despite overall lower industry utilization and a less certain outlook after the spring thaw. "The strength in these businesses is increasingly mitigating the declining contribution of our US Lower 48 land drilling operation, where we expect to see real signs of improvement sometime in the second half. Longer-term, I remain very positive on the outlook for all of our markets and our increasing ability to achieve superior returns on capital and long-term earnings growth. Meanwhile, we continue to improve our cost structure and competitive position through various means as we await the inevitable upturn. "Late in the fourth quarter, we repurchased approximately $157 million book value of our convertible notes at a substantial discount to our carrying value. This repurchase also reduced the diluted share count by another two million shares, which is only partially reflected in this quarter's diluted count. When combined with previous share repurchases in 2001 this brings the total reduction in diluted shares to approximately 8.3 million year to date. "We recently announced a proposal to reorganize as a Bermuda entity, subject to shareholder approval and certain other conditions. This plan of reorganization should allow Nabors to compete more effectively worldwide because it should result in greater operational flexibility, greater access to international capital markets and increased competitiveness regarding international acquisition opportunities while improving our cash management and global tax position."