While I wouldn't accuse Nabors Industries (NYSE:NBR) of being asleep on its feet, the driller's definitely been tripped up a bit. First, there was (and continues to be) crummy Canada. You can consult Precision Drilling Trust (NYSE:PDS) on that conundrum. Now, as foreshadowed by Schlumberger (NYSE:SLB), the U.S. land drilling and well services segments are looking limp as well.

Margins deteriorated sequentially across most segments, save for Canada (which rebounded from a horrific quarter) and international drilling (which is the company's rising star). In just 12 months, the international segment has doubled its contribution to Nabors' drilling-derived operating income, from 15% to 30%. That international exposure tops Helmerich & Payne (NYSE:HP), at around 20% as of last quarter, and even edges out Parker Drilling (NYSE:PKD), a venerable firm that prides itself on its far-flung drilling forays.

The good news is that adjusted operating income lifted sequentially, but last quarter was a very low hurdle to clear. That 2% boost becomes a 22% bust when compared to last year's figures. Even big numbers out of Nabors' E&P business weren't enough to save the firm from a gnarly 44% drop in pre-tax earnings. It also didn't help that the firm got fancy with its cash and lost a bundle on flaky fixed-income investments.

On balance, I feel pretty positive about Nabors' outlook, because the international upside seems to meaningfully outweigh the downside inherent in further stateside erosion. CEO Gene Isenberg stated on the call that he and his family picked up a million and a half shares over the past few months, so I'm not alone in my optimism.

For related Foolishness:

  • Here's what we expected heading into last quarter.
  • And this is what we digested from those results.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.