Driller Nabors Beats, Holds on Outlook

Oil and gas driller Nabors Industries beats Street consensus, but provides a cautious outlook on the rest of the year.
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Nabors Industries

(NBR) - Get Report

reported second-quarter earnings of 19 cents per share, a penny ahead of the Street consensus. Nabors Industries reported revenue of $915 million, versus a Street projection of $875 million in revenue. The revenue figure was ahead of the first quarter revenue of $905 million.

Nabors was cautious in its outlook for the remainder of 2010, expecting land-based rig activity to slow, the Gulf of Mexico to drive a $25 million income drop, and the potential for a third quarter loss.

Nabors net income of $55.9 million was ahead of the $40 million the first quarter of the year. The 19 cents earnings was compared to 32 cent earnings in the second quarter 2009.

Nabors said it lost $2 million in income in its offshore business due to the suspended operations in the Gulf of Mexico. Nabors' reported income of $8.1 million for the quarter from offshore operations with all but two of our six deepwater rigs suspended.

Nabors said it expects operating income for the second half of 2010 to be reduced by over $25 million, with the potential for a modest loss in the third quarter. "We are optimistic that the majority of these issues will begin to resolve in the fourth quarter and lead to an improved 2011 outlook," Isenberg said.

The oil and gas driller expects the rig count increase -- 14% in the quarter -- to slow. "We expect the balance of the year will still achieve increases in rig count and rates, but at a more modest pace," said Nabors' CEO Isenberg.

Operating income of $125 million was lower than the first quarter income of $144 million, but Nabors Industries still tried to position the second quarter as a turnaround. Gene Isenberg, Nabors' Chairman and CEO, commented in the earnings statement that the second quarter marked the start of a steady upward progression, and that even though operating income was slightly lower than the first quarter, improving rig activity in international and U.S. land drilling units offset seasonal downturns in Canada and Alaska.

-- Written by Eric Rosenbaum from New York.

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