Nabors Industries Ltd. · NYSE:NBR
Nabors Industries — Howard Weil 39th Annual Energy Conference 2011
26 slides from Nabors Industries's conference presentation, Mar 28, 2011
Slide 1: Howard Weil 39th Annual Energy Conference
Howard Weil 39th Annual Energy Conference March 28, 2011 Presenter: Gene Isenberg Chairman and CEO
Slide 2: Forward Looking Statements
Forward Looking Statements 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 incorpor
Slide 3: A Conservative and Flexible Financial Position
A Conservative and Flexible Financial Position Cash & Securities (1) Cash & Securities (1) $841,490 $841,490 $841,490 $841,490 $841,490 Accounts Receivable Accounts Receivable 1,116,510 1,116,510 1,116,510 1,116,510 1,116,510 Working Capital (1) Working Capital (1) 458,550 458,550 458,550 458,550 45
Slide 4: Nabors Key Value Drivers
Nabors Key Value Drivers Combined yield significant operational leverage Premium Assets Financial Flexibility Global Infrastructure Pricing Leverage Utilization Leverage Capacity Leverage Value Creation
Slide 5: Pricing & Utilization Leverage
Pricing & Utilization Leverage Incremental increase yields significant upside Pricing: 5% increase in pricing applied to annualized 4Q 2010 results of all operating business units (excluding oil & gas) yields a thirty percent 30% increase in full-year EBIT Utilization: 5% increase in utilization app
Slide 6: Acquisitions & Growth Additions
Acquisitions & Growth Additions ($U.S. Millions) Acquisition Costs (1) Actual 2010 EBIT 4Q 2010 EBIT Annualized EBIT Payback Est. ROCE 2010 $927.6 $66.7 $230.7 4x 16% ACQUISITIONS GROWTH ADDITIONS Growth Capital (2) Est. ROCE 2010 $643 20% 2011 $1,300 Est. 20% Includes $733.63 mm cash paid plus assu
Slide 7: Nabors Global Infrastructure
Nabors Global Infrastructure Largest portfolio of premium assets 13 JACKUPS 8 Drilling 5 Workover 3 BARGE RIGS 37 PLATFORM RIGS 24 Workover/Re-Drilling 14 Drilling 727 LAND WORKOVER RIGS 550 LAND DRILLING RIGS Actively Marketed Rigs Only As of December 31, 2010 DRILLING INSTRUMENTATION TOP DRIVE MAN
Slide 8: Nabors Global Infrastructure: International competitive advantages
Nabors Global Infrastructure International competitive advantages High barriers to entry Favorable international tax position Established footprint (yards, offices, facilities) Large pool of national management Large pool of TCN labor Comprehensive understanding of local labor, import, and tax regul
Slide 9: Nabors Global AC Rig Fleet
Nabors Global AC Rig Fleet New build rigs for U.S. lower 48 land is only part of the Nabors story 2/1/2011 To be delivered Total Alaska Drilling 3 0 3 U.S. Lower 48 Land Drilling 100 25 125 Canada Drilling 22* 2 24 International Drilling 33 3 36 U.S. Offshore Drilling 4 2 6 Total NBR 162 32 194 * In
Slide 10: Global Fleet - Cash Flow Equivalent to US Land Rigs
Global Fleet - Cash Flow Equivalent to US Land Rigs More to Nabors than just U.S. land drilling Actual 4Q 2010 Rig Years U.S. Lower 48 Equivalent Rig Count (1) Alaska 6.0 28 U.S. Lower 48 184.3 184 Canada 39.3 38 International 102.1 177 Offshore GOM 6.5 7 Well Servicing - 48 Canrig - 33 SWSI 14 Crew
Slide 11: Strategic Shift of Global Business Mix
Strategic Shift of Global Business Mix Significant movement towards oil & liquids Percent of drilling, well servicing, and pressure pumping subsidiary operating income derived from oil related activity and gas related activity 2006 65% 2010 North American Gas North American Liquids & Global Oil 20%
Slide 12: Strategic Shift - Marcellus Shale Expansion
Strategic Shift - Marcellus Shale Expansion Platform for drilling, well servicing, pressure pumping growth 2009 2010 2011 Strategic Growth SWSI (pressure pumping) Energy Contractors LLC (well servicing) 7 incremental drilling rigs Strategic Opportunities Further expansion to meet our customers' grow
Slide 13: Business Unit Overview: Alaska, Well Servicing, Offshore
Business Unit Overview Alaska: Activity down with BP spending curtailment Results down 17% 09-10; 2011 down another 60% Longer-term opportunities and broader applications emerging Leading position in coiled-tubing drilling and AC technology U.S. Well Servicing: Hours have steadily improved year-to-d
Slide 14: Business Unit Overview: Canada and Other Segments
Business Unit Overview Canada: 2010 saw continued improvement throughout the year 2011 2x 2010; Outlook continues to improve with oil activity We remain optimistic on our long-term position as market direction favors NBR fleet Significant upside remaining as 2010 EBIT only 12% of 2006 Other Segments
Slide 15: Oil & Gas - Planned Sales
Oil & Gas - Planned Sales Oil Assets: Colombia: Sale process proceeding in multiple transactions covering roughly 50% of acreage Proceeds of $250+ million expected Expect to spend additional capital on remaining acreage to position for future sale Gas Assets: British Columbia and NFR: Postponed sale
Slide 16: U.S. Lower Land Drilling
U.S. Lower 48 Land Drilling As of 3/18/11, NDUSA has 194 rigs on revenue Virtually all PACE(r) rigs committed Full utilization of PACE(r) rigs has improved the market for SCR rigs Activity increasing in oil & liquids driven regions Percent of Cash Flow (EBITDA) in 2006: 85% gas; 15% Oil & Liquids Pe
Slide 17: U.S. Lower Land Drilling Premium Fleet Makeup
U.S. Lower 48 Land Drilling Premium Fleet Makeup U.S. Land Fleet 225 Electric 93 Mechanical A/C 31% MECH 30% SCR 39% NDUSA Rig Fleet NDUSA Rig Fleet AC Rigs @ 2/1/2011 100 AC Rigs still to be deployed 25 SCR Upgraded 65 SCR 60 Mechanical 93 Current Total 318
Slide 18: U.S. Lower Land Drilling Recent Achievements
U.S. Lower 48 Land Drilling Recent Achievements Bakken: NDUSA rig achieved 1,000 days without recordable incident. Drilled a horizontal well in 15.88 days (spud to td) Marcellus: NDUSA rig drilled 8,000 ft in 3.88 days (spud to td) compared with major peer's published 2010 average of approximately 7
Slide 19: International Drilling
International Drilling Full-year 2011 EBIT down 10% year-over-year 4Q 2011 EBIT should approximate 4Q 2010 EBIT Jackup repricing and downtime ? ($90) million in 2011 EBIT Largest impact in 1Q 2011 and 2Q 2011 Downtime on 4 Saudi jackups for dry dock and upgrades Lower rates on 3 jackups, 2 renewed t
Slide 20: Superior Well Services Acquisition
Superior Well Services Acquisition Leading provider of comprehensive, high-tech completion services 12 crews at 09/2010 ? 14 currently ? 23 by EOY 2011 Current focus on term contracts 4Q 2010 results: $54.6 million EBIT 1Q 2011 expectations down with weather impact Capacity balance not until at leas
Slide 21: Summary & Outlook
Summary & Outlook Macro Risk Still Present: Risk remains in North American Gas Markets Risk remains on International timing Nonetheless 2011 is Promising: International and U.S. Offshore - 2nd Half Turnaround Canada - growing with rig activity U.S. Land Well Servicing - growing with volume, pricing
Slide 22: Auxiliary Information
Auxiliary Information (@) naeons mousrmies ro.
Slide 23: Margins and Activities
Margins and Activities Margin = gross margin per rig per day for the period. Gross margin is computed by subtracting direct costs from operating revenues for the period. 4Q 2010 4Q 2010 3Q 2010 3Q 2010 4Q 2009 4Q 2009 Margin (1) Rig Yrs Margin (1) Rig Yrs Margin (1) Rig Yrs U.S. Lower 48 $9,472 184.
Slide 24: Quarterly Adjusted Income Derived from Operating Activities
Quarterly Adjusted Income Derived from Operating Activities ($000's) 4Q 2010 3Q 2010 4Q 2009 U.S. Lower 48 $85,308 $70,452 $48,980 Nabors Well Services 12,132 9,049 8,758 U.S. Pressure Pumping 54,664 11,987 ---- U.S. Offshore (5,142) (1,090) 7,117 Alaska 11,252 14,299 14,398 Canada 16,572 1,013 632
Slide 25: Non-GAAP Financial Information
Non-GAAP Financial Information Within the preceding slides in this presentation, we present, both historically and on a forward-looking basis, our adjusted income derived from operating activities, which is a "non-GAAP" financial measure under Regulation G. The components of adjusted income derived
Slide 26: Non-GAAP Financial Information (continued)
Non-GAAP Financial Information (continued) The following table provides a reconciliation of adjusted income derived from operating activities for our reportable segments to income (loss) from continuing operations before income taxes for the three months ended December 31, 2010, September 30, 2010 a
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