What: Shares of Nabors Industries (NBR -1.83%) jumped as much as 15% by 12:30 p.m. ET on Wednesday. Fueling that gain was its better-than-expected fourth-quarter results.

So what: Nabors Industries reported a fourth-quarter loss from continuing operations of $161.1 million, or $0.57 per share. However, $101.2 million, or $0.35 per share, of that amount was due to asset impairments.

Furthermore, the quarter also included a $45.4 million, or $0.16 per share, loss due to Nabors' equity share of C&J Energy Services (NYSE: CJES) third-quarter results. That equity ownership stems from merging its completions and production services business with C&J Energy Services last year, so while that business is no longer consolidated with Nabors Industries' financials, it is reported as an unconsolidated affiliate on a quarter-lag basis. That business has been under a lot of pressure due to the downturn, with C&J Energy Services experiencing a number of problems during the third quarter, which are now showing up in Nabors' results.

Once investors sorted out all that accounting, they actually liked what they saw. They were also pleased with the amount of debt reduction the company has been able to accomplish, having repurchased $27.5 million of its notes last quarter while total debt decreased by $677 million last year.

The other thing investors liked about the report was Nabors' outlook, which will see the company continue to pare down its costs to match its rig count while using any excess liquidity to take out more debt. In fact, it expects to remain free cash flow positive in 2016, so it should have the cash to make more progress on debt reduction. Investors see this as a sign that the company will be able to muddle through the tough operating conditions that will likely persist throughout 2016.

Now what: Times are tough right now in the energy industry, and things don't look to get better anytime soon. That said, Nabors Industries is making the necessary cuts to right-size its business as well as to bolster its balance sheet, which puts it in a position to weather the storm.