HAMILTON, Bermuda, July 13/PRNewswire-FirstCall/ -- Nabors Industries Ltd.
(NYSE: NBR) today announced that its second quarter results will include
non-cash pre-tax charges of approximately $240 million. These charges
primarily relate to approximately $178 million in impairments and reserves
recorded for certain assets across multiple business units, and also include
approximately $62 million related to the acceleration into the second quarter
of the expensing of certain unvested stock grants issued in prior years. The
company has also tempered its full-year expectations for virtually all of its
operations and now expects 2009 operating cash flow (EBITDA) to exceed $1.3
billion. The reductions in pre-tax income will generate a net tax benefit in
our US tax position, significantly offsetting the impact to free cash flow
from the moderated operating outlook.
Included in the asset impairment charges is $28 million associated with
certain non-active workover jackups in the Company's US Offshore operations,
$18 million for the structural frames of the eight remaining uncompleted
coiled tubing rigs in Canada, $18 million related to miscellaneous rig
components in its Alaskan and International operations and $15 million related
to the elimination of the remaining goodwill in Canada associated with its
helicopter business. The decision to impair the value of these assets arises
from the uncertainty regarding the timing of a market upturn of sufficient
magnitude to justify placing these assets in service in the foreseeable
future. The remainder of the charges include the establishment of a $51
million reserve against a specific investment in its oil and gas operations in
light of weak forward natural gas prices, a $35 million reserve against MBIA
bonds owned by the Company which, although they have suffered an impairment in
value, continue to pay interest at a rate of 14% per annum on the principal
amount of $65 million, and $13 million as its share of reduction in the value
of casing and tubing held in inventory by its NFR oil and gas joint venture.
The acceleration of expensing of unvested stock grants results from the
recently announced amendments to the employment contracts of the Company's two
principal executives wherein their performance compensation metrics and other
benefits were reduced substantially. In previous years, the executives
received equity at then current market prices that was subject to vesting into
2011 in lieu of a substantial portion of their immediately payable cash
bonuses. The contract revisions precipitated the recording of the full
expense of these previously awarded and reported outstanding grants in the
current quarter because the risk of forfeiture of the equity awards was
effectively eliminated. This acceleration, along with the reductions in bonus
compensation payable under the terms of the new contracts, will benefit future
results and make them more reflective of actual current year compensation.
The Nabors companies own and operate approximately 534 land drilling and
approximately 763 land workover and well-servicing rigs in North America.
Nabors' actively marketed offshore fleet consists of; 39 platform rigs, 13
jackup units and 3 barge rigs in the United States and multiple international
markets. In addition, Nabors manufactures top drives and drilling
instrumentation systems and provides comprehensive oilfield hauling,
engineering, civil construction, logistics and facilities maintenance, and
project management services. Nabors participates in most of the significant
oil, gas and geothermal markets in the world.
The information above includes forward-looking statements within the
meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934.
Such forward-looking statements are subject to certain risks and
uncertainties, as disclosed by Nabors from time to time in its filings with
the Securities and Exchange Commission. As a result of these factors, Nabors'
actual results may differ materially from those indicated or implied by such
forward-looking statements. For further information, please contact Dennis A.
Smith, Director of Corporate Development of Nabors Corporate Services, Inc. at
281-775-8038. To request Investor Materials, call our corporate headquarters
in Hamilton, Bermuda at 441-292-1510 or via email at email@example.com.
SOURCE Nabors Industries Ltd.
CONTACT: Dennis A. Smith, Director of Corporate Development,
+1-281-775-8038, or Investor Materials, corporate headquarters,
both of Nabors Industries Ltd.