Really, guys? Were you that surprised that Nabors Industries
Despite the weekly documentation of a rig-count meltdown courtesy of Baker Hughes
I guess this kind of thing shouldn't surprise me by now. I've been covering hypervolatile land drillers like Nabors and Helmerich & Payne
This time around, Nabors reported revenue of $878 million, missing the consensus estimate by 7%. Net income before non-cash charges cratered to $0.32 per share, roughly half the level achieved in the previous quarter. Interestingly, that appears to actually beat the Street's expectation of $0.28. So it wasn't really the results that stung here.
Was it something CEO Gene Isenberg said, perhaps? I think so. With regard to the U.S. lower-48 land drilling unit's results next quarter, Isenberg braced investors for as much as a 50% decline in operating income.
Wondering how that's possible, with the rig count showing some firming in recent weeks? Well, we saw last time how Nabors was getting paid not to drill via lump-sum termination payments. As these payments give way to idle rig time, and contracts reprice at lower market rates, there's a good bit of room for further declines.
Still, 50% is more than I would have expected, and others were no doubt shaken by this outlook as well. A trio of Nabors' competitors -- including Patterson-UTI
All told, the energy services group, and the land drillers perhaps prime among them, has made quite a run on signs of stabilization alone, while an actual recovery in the space remains elusive. In that context, this sell-off was hardly out of place. If anything, it could be just a preview of the disappointment to come if a late-2009 rebound in oil patch activity doesn't materialize.