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Nabors Industries Warns

Shares fall 2.6%.

Drilling contractor

Nabors Industries

(NBR) - Get Nabors Industries Ltd. Report

expects its results for the third quarter to fall short of analysts' estimates, in part because of low rig activity in North America.

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The company believes earnings will be 73 cents to 76 cents a share, including gains from the sale of certain oil and gas properties and of its Sea Mar assets.

On average, analysts surveyed by Thomson Financial are looking for a profit of 81 cents. Shares of Nabors fell 2.6% early Friday.

"The operational component of our reduced third-quarter outlook primarily is attributable to lower-than-expected rig activity across most of our North American rig operations and various factors in our international business unit. We also expect a net negative impact from several cash and noncash items in our other income and investment income categories," said Gene Isenberg, Nabors' chairman and CEO, in a press release.

Nabors said its "outlook for the near term has been dampened by the increased potential for persistent weak market conditions throughout 2008 in our North American natural gas directed and U.S. Land Well Servicing businesses."

Still, it thinks its fourth-quarter's results will be in line with the consensus estimate of 89 cents. However, Nabors lowered its expectations for next year, saying its results will probably be essentially flat with or slightly lower than 2007.