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Nabors Industries (NBR)

Q4 2011 Earnings Call

February 22, 2012 11:00 am ET


Dennis A. Smith - Director of Corporate Development for Nabors Corporate Services Inc

Anthony G. Petrello - Deputy Chairman, Chief Executive Officer, President, Member of Executive Committee and Member of Technical & Safety Committee

Joseph Hudson -

R. Clark Wood - Principal Financial & Accounting Officer and Controller


James M. Rollyson - Raymond James & Associates, Inc., Research Division

Kevin Simpson - Miller Tabak + Co., LLC, Research Division

Ole H. Slorer - Morgan Stanley, Research Division

John M. Daniel - Simmons & Company International, Research Division



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Good day, ladies and gentlemen. Thank you for standing by. Welcome to the Nabors Industries Ltd. Fourth Quarter 2011 Earnings Conference Call. [Operator Instructions] This conference is being recorded today, Wednesday, February 22 of 2012. I would now like to turn the conference over to Dennis Smith, Director of Corporate Development. Please go ahead, sir.

Dennis A. Smith

Good morning, everyone, and thank you for joining us again. In addition to myself, this morning, Tony Petrello is with us, our President and new CEO, and he will be conducting the call today. Also in attendance is Laura Doerre, our General Counsel; Clark Wood, our Principal Accounting Officer; and essentially all the heads of all of our various business units.

Today's call, we're going to take a lot of extra time to not only review the quarter and the forward outlook, but talk about a lot of more specific information, a little bit of our plans that are in motion. And as such, in support of that, we put some slides on the website. That's on our website. You can find them if you want to follow along, and Tony will referring to them, a few, as he goes. It's at under Investor Information, and then under the sub-menu under Events Calendar. You'll find it where the conference call is listed with the discussion.

As I said, we'll limit the call as we usually do to about an hour. The remarks will probably be more like 45 minutes today, so we'll have a limited time for questions and answers, but we'll try to get to as many as we can. And with that, I want to just remind everybody that obviously a lot of what we're talking about is forward-looking and subject to change as the market goes. We encourage you to read our 10-K and 10-Q filings for all the risk factors that are involved with that.

And with that, I'll turn it over to Tony to get started this morning.

Anthony G. Petrello

Good morning, everyone. Welcome to the conference call, and I want to thank everyone for participating. As Dennis said, we have posted to the Nabors website the slides, please refer to them. And as he also said, I expect to be going on a bit longer. Hopefully, I intend to address much of what is on your mind. And if I don't get it right, I apologize.

Before we begin a review of our fourth quarter and recent developments, I would like to share with you some of the reasons why I'm so excited about the opportunities that are available at Nabors. This quarter, every player in the sector is focused on exploiting their liquids-rich market position given the respective gas and oil commodity prices. Think back just 4 years ago how everyone was exploiting their operating leverage to U.S. gas. Things change often. Today, everyone is also focused exploiting their competitive advantage because of new equipment, whether that is new spec rigs or frac spreads. But as we know, commodity prices change and ramp-ups eventually ease.

Today, when you look at where the operators' investment is directed on a large scale basis, whether that is in deepwater or in the shales, there is a common denominator, the desire and ability to invest in projects that can provide a reasonable return for the duration. Successful execution of these projects require that they be done in a safe, predictable and consistent manner. While access to new fit for purpose equipment is often optimal or even necessary in certain applications, they are in the end just tools.

The real need is to have organizations that have resources, power, processes and know-how that can deliver reliable and safe solutions that address the real risk factors economically and in today's world, on scale. And the challenge is to do this in an industry that is talent-starved and keenly aware that everything it does is subject to increasing public scrutiny.

Nabors today, in my view, is in a unique position to grow in this role. We have a large footprint in many of the development markets. We have quality assets, financial resources and human capital, all on a global scale that is really unique in our space. We have built an infrastructure that can provide the operator of today and tomorrow with a level of support and risk mitigation that assures their projects require. And we now have a record, which I will elaborate on in the unit reports, of technological leadership that increasingly is being noted by our customers.

We are committed to expand and build upon that expertise. We will focus on operational excellence and using our considerable asset base and know-how to drive operational performance. We hope to use the technology tools that we now have available and are committed to develop further to enhance the value proposition for our customers, provide challenging opportunities for our employees and create superior returns for our shareholders.

Now this focus requires us as an organization to address some of the missteps, which I think we've been pretty candid about, that we have to respond to and move forward to get where we want to be.

If you turn to Slide 3, that speaks to our priorities. Accordingly, we have first, commence steps to monetize our E&P assets on a prudent basis. We're obviously focusing on the oily assets. As you all know, we have an Eagle Ford asset. That process is underway. We have an asset in Alaska. That also is underway because our joint venture partner is looking to monetize as well.

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