Whatever your shale play, Nabors Industries
On Wednesday, the big dog in onshore drilling gave more attention to these burgeoning North American resource plays than on any previous conference call. After a quick run through the numbers, I'll turn to just how important these plays are, for both Nabors and competitors like Patterson-UTI Energy
The bottoming process that Nabors envisioned last quarter became reality this time around. Canada saw its worst-ever quarter, while most other segments turned upward. Rig margins strengthened in the U.S. offshore and international segments, while operating income posted sequential improvement pretty much across the board. The only exceptions were Canada, which we'll talk about in a moment, and Alaska, which experienced an early winter wind-down.
To approach the shale subject, let's start up in Canada. We met the Horn River play back in April, when Quicksilver Resources
Nabors' E&P joint venture, alluded to in the above paragraph, is key to the firm's approach across the continent's many shale plays. By acquiring acreage and drilling for its own account, Nabors learns which rigs are optimal in each location. For shallower targets, National Oilwell Varco
In one of the most hyped areas -- the Haynesville -- Nabors has 32 rigs running, up from 20 at the outset of the year, and expects close to 50 by year-end. If the Haynesville flames out, there's always the Fayetteville, the Floyd, the Bakken, and the list goes on and on.
Interestingly, Nabors noted on its call that across all of these shale plays, the company's own acreage all appears to "work" at $8 natural gas, or less. Not every E&P is this prudent, but the economics of shale plays continue to strike me as extremely robust, whether prices return to recent lofty levels or slide further from here.