Nabors Industries Ltd. (NBR:US), the world’s largest land-rig contractor, fell the most in more than a year after forecasting a lower margin for its largest drilling unit this quarter.
Nabors dropped 7.4 percent to $16.67 at the close in New York, after earlier falling as much as 8 percent, the biggest (NBR:US) intraday decline for the Hamilton, Bermuda-based company since Nov. 1, 2011.
Normalized margins for the company’s drilling business in the U.S. lower 48 states are expected to fall by about $1,000 a day as rigs roll off expiring higher-rate contracts and work for lower “spot” prices without long-term agreements, Chief Executive Officer Tony Petrello told analysts and investors today on an earnings conference call.
“We’re still in an environment where E&P operators don’t feel any sense of urgency to necessarily contract rigs,” Byron Pope, an analyst at Tudor Pickering Holt & Co. in Houston, said in a telephone interview. He rates the shares at accumulate, which means investors should buy the stock, and owns none. “You still have a fair number of idle rigs out there that are competing for work. That’s reflective of the dynamics in the spot market.”
The number of land rigs working in the U.S. fell 12.2 percent to an average of 1,763, according to Baker Hughes Inc., which tracks global rig use.
Nabors, the second-worst performer in the Philadelphia Oil Service Index last year after falling 17 percent, reported yesterday after the close of regular trading that fourth-quarter total revenue dropped 6.5 percent to $1.6 billion compared to a year earlier.
The company is expected (NBR:US) to earn $1.29 a share this year, after excluding one-time items, according to an average of 28 analysts’ estimates compiled by Bloomberg.
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