Nabors’ biggest investor sells stake amid rising profits

HOUSTON – The largest shareholder of Nabors Industries hawked its 8.5 percent stake Thursday even as the driller appears to have crested over a long lull in profits.

Nabors shares dropped early Thursday before bouncing up again.  Even amid investor angst and failed advisory votes over CEO Anthony Petrello’s $68.2 million in pay and other corporate governance issues, Nabors has seen its profits and stock price surge over the past year as the U.S. drilling market has recovered from a supply glut.

In a statement Thursday, the shareholder that jettisoned its $630 million interest in Nabors, London investment firm Pamplona Capital Management, said it was “pleased by the progress made by Nabors since the acquisition of its stake.”

Nabors made its own moves Thursday to please investors. The driller said Thursday it would buy back about 40 percent of Pamplona’s stake for $250 million from an investment bank that had bought the shares.

Petrello said in a statement he has appreciated Pamplona management and its leader, billionaire investor Alex Knaster, for their “valuable input and support” over the past two years.

“I am pleased that we have had the opportunity to buy back a significant block of our shares at a compelling price,” Petrello said. The move was “consistent with our stated goal of increasing returns to our long-term shareholders.”

Nabors, based in Bermuda but largely operated out of Houston, earlier this year acquiesced to some shareholder demands, including that after Petrello leaves his post, the role of CEO and chairman will be split.

The company also agreed limit severance payments to three times an executive’s salary and bonus, after investors grew frustrated a few years ago with a proposed $100 million severance package to the company’s long-time leader Eugene Isenberg, who relinquished the role of CEO but kept his job as chairman at the time. Investors protested, and Isenberg eventually forfeited his rights to the package when he stepped down as chairman. Isenberg died at age 84 earlier this year

Nabors this year also said it would allow investors who own five percent of Nabors’ shares to initiate a vote on nominees for the company’s board of directors.

Nabors has failed to get investor’s approval on four advisory say-on-pay votes in a row, beginning in 2010 when federal regulators first handed investors a non-binding voice on top executive pay. In recent years, Nabors has shifted more of its executive pay into stock awards tied to the company’s performance.

Still, as oil companies in recent months have turned to advanced walking rigs to drill horizontally in West Texas, the U.S. drilling market has seen a merciful uptick in buyers for rigs and drilling equipment.

In the second quarter, Nabors made $64.4 million in profit, up from a $4.4 million loss in the same period last year, and its stock price has surged upward 48 percent since the beginning of the year.

Nabors shares inched up 19 cents to $24.97 in mid-day trading Thursday on the New York Stock Exchange.