Nabors Industries Ltd. · NYSE:NBR
Nabors Industries — Howard Weil 40th Annual Energy Conference (March 2012)
28 slides from Nabors Industries's conference presentation, Mar 26, 2012
Slide 1: Howard Weil 40th Annual Energy Conference
March 26, 2012 Presenter: Anthony G. Petrello President & Chief Executive Officer Howard Weil 40 th Annual Energy Conference Exhibit 99.1
Slide 2: Improving Our Performance: Back to the Future
Improving Our Performance: Back to the Future Where we went wrong What will not be different What will be different
Slide 3: Where We Went Wrong
Improving Our Performance: Back to the Future Where We Went Wrong: E&P Investments Unfortunate timing on stock buy backs Suboptimal international capital deployment Missed US growth opportunity
Slide 4: What Will Not Be Different
Improving Our Performance: Back to the Future What Will Not Be Different Core principles that built Nabors – Maintain a strong and flexible balance sheet – Invest capital for returns well above our cost of capital – Make use of our size – Deliver operational excellence Taking responsibility
Slide 5: What Will Be Different: Our Priorities
Improving Our Performance: Back to the Future What Will Be Different: Our Priorities Streamlined scope of services Free cash flow generation Extract more from our asset base
Slide 6: Our Priorities: Streamlined Scope of Services
Our Priorities: Streamlined Scope of Services Review each Business Unit based upon: – Leadership position – Growth capability or otherwise strategic – Superior operational performance – Reliable financial performance – Attractive investment returns – Reasonable sustaining capital requirements Strate
Slide 7: Our Priorities: Streamlined Scope of Services
Our Priorities: Streamlined Scope of Services Two areas of divestitures – Oil & Gas assets – Other non-core operations
Slide 8: Monetize Oil & Gas Properties
Our Priorities: Streamlined Scope of Services Monetize Oil & Gas Properties: Oil & Gas Assets Status Estimated Value Colombia Acreage In process Included below Eagle Ford In process Included below Alaska North Slope In process Included below Subtotal 2H 2012 $300 - $400 Million British Columbia Horn
Slide 9: Monetize Other Non-Core Asset Sales
Monetize Other Non-Core Asset Sales: Status Timing # of Rigs Canada: Blue Sky/Airborne In process Hybrid Coiled Tubing Drilling Rigs In process Workover & Well Services In process Alaska: Peak Oilfield Services In process Subtotal $300 - $400 Million Offshore: US GOM Jackup Rigs Evaluating TBD US GO
Slide 10: Our Priorities: Free Cash Flow Generation
Our Priorities: Free Cash Flow Generation Refined capital spending Consolidation savings and synergies – Higher selectivity on capital projects – Higher scrutiny on sustaining capital
Slide 11: Our Priorities: Enhance Balance Sheet Flexibility
Our Priorities: Enhance Balance Sheet Flexibility Solid credit metrics at 2.2x leverage, >7:1 coverage and long dated maturities Balance sheet data as of December 31, 2011 ($ Millions) Cash & Securities Accounts Receivable 1,577 Working Capital 1,286 Property, Plant and Equipment, Net 8,630 Total As
Slide 12: Targeted Net Debt Reduction
Actual Targeted ($Millions) EOY 2011 EOY 2012 EOY 2013 Total Debt $4,624 $4,900 $3,500 Cash and Investments 1,100 Net Debt 4,074 3,900 2,400 Shareholders’ Equity 5,588 6,300 7,100 Gross Debt to Capitalization 45% 42% 33% Net Debt to Capitalization 42% 37% 25% Coverage 7.2x 10.2x 11.7x Leverage 2.5x
Slide 13: Simplify the Operations: Two Divisions
Simplify the operations: Two Divisions – Drilling and Rig Services – Completion and Production Services Our Priorities: Extract More From The Asset Base
Slide 14: Extract More From the Asset Base: Drilling and Rig Services
Our Priorities: Extract More From the Asset Base Drilling and Rig Services (DRS) LAND RIGS - Global leadership position - Premium fleet - New build economics - US Lower 48, International, Canada and Alaska OFFSHORE RIGS - Unique niche - High market share - Highly innovative organization - Attractive
Slide 15: Extract More From the Asset Base: Operating Cash Flow
Our Priorities: Extract More From the Asset Base Operating Cash Flow ($000’s) 2008A 2010A 2011A 4Q Annualized Land $1,361 $925 $1,176 $1,302 Offshore Canrig / Other Total $1,782 $1,291 $1,435 $1,587 * Includes assets scheduled to deploy in 2012 Assets Tier 1 Tier 2 Tier 3 Land Offshore Total
Slide 16: Extract More From the Asset Base: Completion and Production Services
Our Priorities: Extract More From the Asset Base Completion and Production Services (CPS) PRESSURE PUMPING - Attractive returns - Term contracts - Global growth with NBR footprint - Synergies with well-servicing and fluids COILED TUBING RIGS - Synergies with pressure pumping - Synergies with workove
Slide 17: Extract More From the Asset Base: Operating Cash Flow
Our Priorities: Extract More From the Asset Base Operating Cash Flow ($000’s) 2008A 2010A 2011A 4Q Annualized Well-Servicing Fluid Services $214 $97 $153 $180 Pressure Pumping - Total $214 $196 $484 $590 * Includes assets scheduled to deploy in 2012 Assets Total Workover / Well-Servicing Rigs Coil T
Slide 18: Planned Change: Two Product-Oriented Business Lines
Planned Change: Two effective, product-oriented business lines Migrate away from business unit structure Consolidate regional operations management Establish customer account managers Consolidate operational and technical support functions Consolidate corporate support functions Our Priorities: Extr
Slide 19: Target Benefits - Financial
Target Benefits - Financial Economies from business unit consolidation – Elimination of redundant unit support functions – Elimination of redundant facilities Improved asset utilization Increased capital discipline and accountability Our Priorities: Extract More From the Asset Base
Slide 20: Target Benefits - Operational and Technical
Target Benefits - Operational and Technical Centralized engineering, project management and technology development – More effective use of technical resources – More rapid and uniform adoption of technology Standardization of operational processes – Health, Safety and Environmental – Human Resources
Slide 21: Looking Ahead: What We Will Look Like
Looking Ahead: What We Will Look Like Operating Cash Flow ($000’s) 2008A 2011A 4Q Annualized Drilling & Rig Services $1,795 $1,437 $1,587 Completion & Production Services Total (1) $2,038 $2,017 $2,214 (1) Operating cash flow before corporate expenses, eliminations, Oil & Gas operations and disconti
Slide 22: Assets Strategically Positioned in Major US Plays
Looking Ahead: Assets Strategically Positioned in Major US Plays Shale Plays & Basin Working Drilling Rigs Frac Crews CTU Well Svc Rigs Fluid Svc Trucks Frac Tanks Marcellus Haynesville - Bakken/Rockies Eagle Ford Permian - Barnett - Granite Wash - Other - Total
Slide 23: Looking Ahead: Risk Factors
Current risk primarily results from weaker natural gas pricing & growing supply of frac crews Anticipate US land rig count for the industry will be flat to down slightly in second half of 2012 Anticipate increasingly competitive spot market for pressure pumping throughout 2012 Looking Ahead: Risk Fa
Slide 24: Looking Ahead: Risk Mitigation
Repositioned to oil, ~80% of 2012 global cash flow Long-term contracts significantly mitigate NBR exposure in both segments US Land: 186 of 220 rigs under term contracts at 12/31/11 – cancellation revenue of approximately $1.2 billion Pressure pumping: 14 out of 27 spreads under term contract at 12/
Slide 25: Looking Ahead: What Contributes to Our Optimism
Looking Ahead: What Contributes to Our Optimism Lower 48 drilling expected to increase – 25 additional rigs operating in 2012 – 21 newbuilds to be deployed in 2012 – Margins up slightly on mix International expected to improve – 18 incremental rigs operating in 2012 – 2H margin improvement from favo
Slide 26: Expanded Use of Technology as Differentiator
Looking Ahead: What Contributes to Our Optimism Expanded Use of Technology as Differentiator – 200th ROCKIT ® system installed in 2011 – REVIT ™ Stick-Slip system commercialized in – over installations to date – Commercializing of new award-winning Casing Running Tool – Rollout of new ROCKIT ® PILOT
Slide 27: Summary: Why Nabors?
Summary: Why Nabors? Visibility on 2012 upside – International, Offshore, Well-Servicing Significant efficiency and consolidation savings Global footprint provides opportunity Long-term contracts limit downside in pressure pumping and gas drilling Lowering leverage Free cash flow generation Multiple
Slide 28: Nabors Industries Ltd.
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