Nabors CEO: Expect flat oil rig counts in the second half

HOUSTON — The CEO of rig contractor Nabors Industries told investors Wednesday most oil companies are talking about keeping their fleets of drilling rigs flat because of the recent slump in oil prices, and some are bringing rigs down.

Nabors CEO Anthony Petrello said the tone of conversations with oil companies has changed since mid-May, when customers were talking about plans to steadily roll out drilling rigs in the second half of the year as the U.S. crude price had come up to about $57 a barrel at the time.

“Those people who had told us about plans to increase are now going back and saying we need to reconfirm given oil prices,” Petrello said. “We haven’t heard yet a dramatic drop in rigs but people are fine-tuning now in light of oil prices and I think it’s a function of how long we stay in this $40 range.”

His comments came even as the nation’s rig count has moved up in four of the past five weeks.

Nabors, which is based in Bermuda but has its main U.S. offices in Houston, lost $36.8 million in the second quarter as the nation’s rig count fell sharply. Nabors’ loss was down from a profit of $64.4 million in the April-June period last year. Revenues fell from $1.6 billion to $863.4 million.

Nabors has cut its U.S. Lower 48 workforce in half since the end of December, and about 31 percent of its rigs were sidelined in the region in the second quarter.

Nabors Chief Financial Officer William Restrepo said it appears U.S. oil production has begun to flatten out but recent international developments haven’t helped crude prices recover. Oil production has surged in Iraq and Saudi Arabia in recent months. Unless oil prices head back upward, the U.S. rig count will likely remain weak for the rest of the year, he said.