Nabors Industries Ltd. · NYSE:NBR
Nabors Industries — Q1 2013 Earnings Presentation
40 slides from Nabors Industries's earnings presentation, Apr 24, 2013
Slide 1: 1Q13 Earnings Presentation
1Q13 Earnings Presentation April 24, 2013 Presenter: Anthony G. Petrello Chairman, President & Chief Executive Officer
Slide 2: Forward-Looking Statements
Forward-Looking Statements 2 We often discuss expectations regarding our markets, demand for our products and services, and our future performance in our annual and quarterly reports, press releases, and other written and oral statements. Such statements, including statements in this document incorp
Slide 3: Recent Highlights
@) NABORS Recent Highlights
Slide 4: Two Primary Business Lines
Completion Services 20% Production Services 14% U.S. Drilling 31% Canada 6% International 17% Other Rig Services 12% Two Primary Business Lines 4 (1) Includes announced new build commitments (2) Revenue excludes other reconciling items > Drilling & Rig Services – U.S. Lower 48 – 279 rigs(1) – U.S. O
Slide 5: New Board Member Howard Wolf
New Board Member Howard Wolf 5 > Experience – Former senior partner at Fulbright & Jaworski L.L.P. (1959-2003) – Chaired State Bar of Texas Committee on Securities and Investment Banking and Section on Corporation, Banking, and Business Law – Served on, or chaired, numerous boards of directors inclu
Slide 6: Balance Sheet Management
6 Balance Sheet Management Targeted Net Debt Reduction (1) Coverage defined as LTM EBITDA / LTM Interest Expense (3) Based on consensus EBITDA as of 4/19/13 (2) Leverage defined as Total Debt / LTM EBITDA Actual Targeted(3) ($MM's) 4Q11 4Q12 1Q13 4Q13 Total Debt $4,624 $4,380 $4,380 $3,913 Cash and
Slide 7: PACE-X Rig Designed for Current and Future Market Demands
PACE®-X Rig Designed for Current and Future Market Demands 7 > Smaller modular footprint and walking system – Reduces pad construction and remediation costs – Faster and lower cost well-to-well and pad-to-pad moves – Fewer permit loads for anytime moving and reduced truck traffic – Minimizes environ
Slide 8: Alaska Legislature Repeals Progressive Tax
Alaska Legislature Repeals Progressive Tax 8 > Senate Bill 21 passed April 14, 2013 – Gov. Sean Parnell: “We are signaling to the world that Alaska is back, ready to compete, and ready to supply more energy once again.” > Goal to increase Alaska oil production – North Slope production • 1988 peaked
Slide 9: Financial Summary
9 Financial Summary ($M’s except EPS) 1Q12 2Q12 3Q12 4Q12 1Q13 Revenue $1,821,757 $1,602,797 $1,666,892 $1,596,807 $1,581,540 EBITDA 563,157 486,363 497,612 427,034 422,953 Operating Income 315,536 225,347 228,015 149,751 149,588 Diluted EPS(1) $0.49 $(0.34) $0.22 $0.44 $0.33 (1) Diluted EPS for con
Slide 10: Drilling & Rig Services
10 Drilling & Rig Services
Slide 11: Drilling & Rig Services Adjusted Income Derived from Operating Activities
11 Drilling & Rig Services Adjusted Income (Loss) Derived from Operating Activities ($M’s) 1Q12 2Q12 3Q12 4Q12 1Q13 Drilling & Rig Services: U.S. Drilling $166,733 $145,351 $115,207 $82,603 $77,595 Canada 43,146 (529) 21,679 27,064 30,518 International 21,138 16,401 30,299 23,388 21,469 Rig Services
Slide 12: Global Rig Fleet Details
Global Rig Fleet Details 12 AC SCR Mech Total Moving Systems Alaska Land 5 12 3 20 13 Lower 48 157 96 26 279 141 Canada 16 21 29 66 20 International Land 31 64 31 126 49 Offshore 6 40 2 48 n/a Total 215 233 91 539 223 As of 3/31/13, including contracted rigs scheduled to be delivered and moving syst
Slide 13: 1Q Rig Utilization & Availability
1Q Rig Utilization & Availability 13 Rig Fleet 1Q13 Rig Years Utilization U.S. Lower 48 AC 140 119 85% Legacy 122 51 42% U.S. Lower 48 Total 262 170 65% U.S. Offshore 22 14 64% Alaska 21 6 29% Canada 65 40 62% International 148 123 83% Subtotal 518 353 68% PACE®-X Construction(1) 16 Total Fleet 534
Slide 14: Leading Lower 48 Player
> Contract mix – 115 rigs (65%) term – 62 rigs (35%) spot > Commodity focus – 136 rigs (77%) oil and liquids – 26 rigs (15%) gas term – 15 rigs (8%) gas spot > Customer base – Super majors and majors 20% – Large independents 43% – Small and private 37% > 95% pad-capable rig utilization Leading Lower
Slide 15: Lower 48 Working Rigs by Region and Play
Lower 48 Working Rigs by Region and Play 5 Total Lower 48 Rigs on Revenue: 177 As of 3/31/13 15 Basin Rigs Marcellus/Utica 9 Haynesville 12 Bakken 49 Eagle Ford 30 Permian 25 Barnett 3 Granite Wash 11 Other 38 Total 177 62 25 20 16 30 10 9
Slide 16: Lower 48 Newbuild Deployments
0 2 4 6 8 10 12 14 16 2Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Lower 48 Newbuild Deployments 0% 45% 55% 2005 AC SCR Mech 28% 41% 31% 2009 AC SCR Mech 16 rigs left to be delivered in 2013 & 1 r
Slide 17: Lower 48 Pad-Capable Rigs
NBR Skid, 27 NBR Walking, 114 Non Pad-Capable 83% Pad-Capable (NBR) 6% Pad-Capable (Industry) 11% Industry Skid, 65 NBR Skid, 27 NBR Walking, 78 Industry Walking, 112 Lower 48 Pad-Capable Rigs 17 Source: Baker Hughes Land Rig Count, NBR Estimates Nabors currently has over 1/3 of industry’s padcapabl
Slide 18: Walking System Advantages
> Skidding System • Limited by guide track, problems with existing wells • Requires perfectly level guide track to prevent high-center of rig • Guide track is last to leave, first to be rigged up • Unforgiving if conductor is off-center • Requires additional loads > Stomper System • Reduced rig up •
Slide 19: Three Limitations of Skid Rigs: Misaligned Wells
Three Limitations of Skid Rigs 1. Accommodating misaligned wells 19
Slide 20: Three Limitations of Skid Rigs: Wellhead Installation
Three Limitations of Skid Rigs 2. Accommodating typical wellhead installation 20
Slide 21: Three Limitations of Skid Rigs: Uneven Ground
Three Limitations of Skid Rigs 3. Accommodating uneven ground 21
Slide 22: PACE-X Pad Drilling Capabilities
PACE®-X Pad Drilling Capabilities 22
Slide 23: U.S. Offshore
U.S. Offshore Two of the Largest Platform Drilling Rigs in the Gulf of Mexico 23 U.S. Offshore Rig Fleet Workover Platform 10 Drilling Platform 7 Workover Jackup 1 Barge 4 Total 22 Nabors designed, built and owned Nabors designed and built, customer-owned Two New 4,600 HP Rigs
Slide 24: Nabors Arctic Coiled Tubing Drilling Rig CDR-2
24 Nabors Arctic Coiled Tubing Drilling Rig CDR-2
Slide 25: Canada Rig Year Seasonality
0 10 20 30 40 50 60 2Q12 3Q12 4Q12 1Q13 Recent Seasonal Ramps 2010/2011 2011/2012 2012/2013 0 10 20 30 40 50 60 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 Canada Rig Year Seasonality Canada Rig Years Canada Drilling 25 1Q r
Slide 26: Canada Working Rigs by Play
Canada Working Rigs by Play 26 Play Target AC SCR Mechanical Walking Rigs Workover Rigs Montney Oil / Gas 3 8 5 1 Duvernay (NW Alberta) Oil 1 1 18 Cardium (Central Alberta) Oil 8 18 Saskatchewan Oil 4 Oil Sands Oil 2 2 4 10 Horn River Gas 1 2 1 Total 6 13 8 11 51 As of 3/31/13
Slide 27: International Working Rigs
International Working Rigs 27 Algeria 10 Ecuador 6 Kuwait 2 Romania 1 Angola 1 India 5 Malaysia 2 Russia 4 Argentina 15 Iraq 5 Mexico 14 Saudi Arabia 32 Colombia 8 Italy 1 Oman 4 Venezuela 5 Congo 2 Jordan 1 PNG 2 Yemen 3 Kazakhstan 1 Qatar 1 Total 125 10 2 15 8 1 6 5 5 1 1 1 2 2 14 4 2 1 1 4 32 5 3
Slide 28: International Land Fleet Details
International Land Fleet Details 28 AC SCR Mech Total Moving Systems International 32 64 30 126 49 25% 51% 24% Rigs by Power Type AC SCR Mech 39% 61% Rigs with Moving Systems Moving Systems Non-Moving 90% 10% Rigs with Top Drives Top Drive No Top Drive 31% 35% 34% Since 2005 Newbuild Refurbished Ori
Slide 29: Closing the Loop on Drilling Automation
Manufacturing Automated Drilling Equipment Drilling Software & Automation Technology Directional Drilling Expertise Operational Excellence Advanced Rig Designs Closing the Loop on Drilling Automation 29
Slide 30: Completion & Production Services
30 Completion & Production Services
Slide 31: Completion & Production Services Adjusted Income Derived from Operating Activities
Completion & Production Services Adjusted Income Derived from Operating Activities 31 ($M’s) 1Q12 2Q12 3Q12 4Q12 1Q13 Completion & Production Services: Completion Services $64,860 $46,144 $47,218 $30,296 $17,756 Production Services 28,029 25,397 34,035 21,374 26,014 Total $92,889 $71,541 $81,253 $51
Slide 32: Completion & Production Services Fleet
Completion & Production Services Fleet Region Rigs Frac Crews Trucks Frac Tanks CTU Cementing Wireline Additional Equipment Western 181 108 99 15 12 P&A Rigs, Foam Units Rockies 69 10 56 322 2 9 10 P&A Rigs, Pumps, Swivels Mid-Con 36 1 111 438 2 8 8 Reverse Units, Foam Units Northeast 11 4 105 602 5
Slide 33: Stimulation Fleet Contract Detail
Stimulation Fleet Contract Detail Region # of Crews Term Spot Idle Oil/Liquids Dry Gas 24 Hr. Rockies 10 6 4 10 6 Mid-Con 1 1 Northeast 4 1 3 2 2 3 West Texas 3 1 1 1 2 South Texas 3 2 1 3 3 Ark-La-Tex 2 2 Gulf Coast 1 1 Canada 2 2 2 Total 26 10 11 5 19 2 12 33 21working
Slide 34: U.S. Production Services Rates & Hours
U.S. Production Services Rates & Hours 34 500,000 600,000 700,000 800,000 900,000 $380 $420 $460 $500 $540 $580 2009 2010 2011 2012 Well Servicing Rigs Annual Rates and Hours Rig Hours Rig Rate 0 500,000 1,000,000 1,500,000 2,000,000 2,500,000 $80 $90 $100 $110 $120 $130 2009 2010 2011 2012 Fluid Ha
Slide 35: Summary
35 Summary
Slide 36: Key Takeaways
Key Takeaways > Near term remains challenging with limited visibility > Outsized operating leverage over longer term > Global optionality relative to North America-centric peers > Continued focus on EBITDA generation > Multiple opportunities for high-impact investments > Focused on matters within ou
Slide 37: EBITDA
EBITDA 37 ($M’s) 1Q12 2Q12 3Q12 4Q12 1Q13 Drilling & Rig Services $455,225 $399,217 $398,741 $359,889 $356,688 Completion & Production Services 146,560 123,176 136,488 107,732 97,842 Other reconciling items (38,628) (36,030) (37,617) (40,587) (31,577) Total $563,157 $486,363 $497,612 $427,034 $422,9
Slide 38: Ancillary Information
Ancillary Information @) NABORS 38
Slide 39: Nabors Global Infrastructure Margins and Activities
39 Nabors Global Infrastructure Margins and Activities 1Q12 4Q12 1Q13 Drilling Margin (1) Rig Yrs Margin (1) Rig Yrs Margin (1) Rig Yrs U.S. Lower 48 $10,942 219.0 $12,363 172.7 $9,955 169.5 U.S. Offshore 19,630 11.9 (428) 12.4 19,163 14.1 Alaska 48,124 8.2 22,344 5.2 48,491 6.0 Canada 14,282 48.7 1
Slide 40: Quarter-end Number of Rigs Subject to Term Contracts
Quarter-end Number Of Rigs Subject To Term Contracts(1) 1Q13 2Q13 3Q13 4Q13 1Q14 4Q 2012 95 81 69 63 55 1Q 2013 111 92 79 76 64 U.S. Lower 48 Term Contracts in Force at March 31, 2013 (1) Represents the quarterend number of contracts in force with no incremental contract awards in the future 40 ($MM