Nabors Industries sees third-quarter loss on refinance, impairment costs

Nabors Industries Ltd. lost $105 million in the third quarter on costs to refinance senior debt and impairments on its U.S. coiled tubing fleet and other assets, the company said late Tuesday.

The Houston-based rig contractor jumped on low interest rates to refinance $785 million in bond-market debt and slice annual interest payments by $45 million. The move drew a $208 million payment that hit the company’s net income for the July-September quarter.

Nabors collected $76.6 million in net income during the third quarter 2012.

The company’s stock price fell 5.4 percent to $16.86 in early afternoon trading Wednesday.

Nabors’ third-quarter revenue dipped 5.4 percent to $1.55 billion, even as it drew up 21 contracts for new-build rigs, a $1.4 billion haul.

Like other oil-industry providers with a stake in drilling activity, Nabors saw a marked upswing in international markets in the third quarter, driven by the most active drilling countries in the Middle East, including Saudi Arabia, where the company had 43 active rigs. The North American market remained stable, the company said.

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The company expects to see a modest increase in active drilling rigs next year as the U.S. market “has digested the bulk of the rig count disruption,” a side effect of increased wellhead efficiencies as producers drill more wells per rig, said Anthony Petrello, chairman and chief executive at Nabors, during a conference call with investors Wednesday morning.

“Our customers’ cash flows have been robust, which tease higher capital spending in 2014,” said Anthony Petrello, chairman and chief executive at Nabors.

Baker Hughes data shows the U.S. rig count has hovered around 1,700 since the first quarter of 2013 while wells drilled on land jumped by 641 in the same period.

Nabors operates 474 land drilling rigs globally.

Petrello said Nabors’ targeted capital spending could hit $1.4 billion to $1.5 billion next year as the company looks at the market’s appetite for additional rigs. The global market’s capacity has outpaced demand by about 25 to 30 percent since the fourth quarter, he said.

He said the market for the completion services business “remains tenuous.” The company’s completion and production segment saw a 52 percent year-over-year decline in operating income in the third quarter.

Nabors had said its pressure pumping business came back from a weather-weakened second quarter, but that uptick was offset by losses in Canada, where it suspended some operations and impaired equipment.