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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
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CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported) February 2, 1999
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NABORS INDUSTRIES, INC.
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(Exact Name of Registrant as Specified in Its Charter)
Delaware
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(State or Other Jurisdiction of Incorporation)
1-9245 93-0711613
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(Commission File Number) (I.R.S. Employer Identification No.)
515 West Greens Road, Suite 1200, Houston, Texas 77067
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(Address of Principal Executive Offices) (Zip Code)
(281) 874-0035
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(Registrant's Telephone Number, Including Area Code)
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(Former Name or Former Address, if Changed Since Last Report)
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ITEM 5. OTHER EVENTS.
On February 2, 1999, Nabors Industries, Inc. issued its earnings release for the
quarter ended December 31, 1998. A copy of the release is attached to this
report as Exhibit 99.1, and is incorporated into this report by reference.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits.
Exhibit 99.1 Nabors Industries, Inc. Press Release dated
February 2, 1999
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
NABORS INDUSTRIES, INC.
(Registrant)
Date: February 3, 1999 By: /s/ Anthony G. Petrello
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Anthony G. Petrello
President and Chief Operating
Officer
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INDEX TO EXHIBITS
EXHIBIT NO. DESCRIPTION
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99.1 Nabors Industries, Inc. Press Release dated
February 2, 1999
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EXHIBIT 99.1
Nabors Industries, Inc. Press Release
dated February 2, 1999
NABORS 4Q98 NET $0.20 VS. $0.37, FULL YEAR $1.16 VS. $1.24
HOUSTON, TEXAS, FEBRUARY 2, 1999, Nabors Industries today announced its
operating results for the fourth quarter and full year ending December 31, 1998.
Net income for the fourth quarter of 1998 was $21.0 million or $0.20 per share
versus $41.3 million or $0.37 per share in 1997. Operating income was $31.5
million versus $64.2 million in the prior year period, with revenues at $208.2
million versus $302.8 million. For the full year 1998, net and operating income
were $125.0 million ($1.16 per share) and $182.3 million, respectively, versus
$136.0 million ($1.24 per share) and $195.3 million. Revenues for the full year
1998 were $968.2 million versus $1,115 million in 1997.
Eugene M. Isenberg, Nabors' Chairman and Chief Executive Officer commented on
the results. "Although 1998 represented the second best financial performance in
the Company's history, our fourth quarter results were well below the average
for the year. While our Alaskan, International and Canadian units all achieved
or approached record results in operating income, they also experienced a
deteriorating market outlook by the end of the year. Our US Lower 48 unit was
the first, and most severely, impacted by the steadily weakening market,
followed by our offshore platform and jackup workover rigs in the Gulf of
Mexico."
"Our fourth quarter results more closely reflect the ongoing state of our
business. Compared to the third quarter of 1998, we were adversely impacted by
roughly equal reductions in the contribution of our international and US Lower
48 units, while our other units fared relatively well. In our international land
business, the primary effects emanated from the previously discussed sharp drop
in activity in Saudi Arabia compounded by continuing activity reductions in
Venezuela and cessation of some other higher margin international projects. In
the US Lower 48, lower average fourth quarter crude prices of $11-12 per barrel
further reduced our active rig count and dayrates."
"Going forward, Alaska will experience a decrease in activity beginning in the
first quarter, following an extraordinary year wherein record operating income
was 40% higher than in 1997. The mid-fourth quarter addition of two new rigs on
firm contracts, along with a firm prognosis for 4 to 5 of our existing rigs,
will soften the impact. Curtailment of activity on the North Slope, including
development drilling, is projected to result in as much as a 250 thousand barrel
per day year-to-year drop in production. This follows an extensive effort to
arrest production decline on the North Slope, through increased drilling in
existing and new fields. This large drop in oil production is indicative of the
effect on supply of reduced spending. The magnitude of remaining reserves and
the installed infrastructure bode well for the longer-term outlook for this area
with an improvement in crude prices."
"Our International operations achieved a new record in operating income with an
increase in excess of 50% year-to-year. However, the fourth quarter represented
a substantial reduction in the run-rate, albeit only modestly below year ago
levels. Looking forward, 1999 is likely to have its ups and downs in this
business unit, although we anticipate that the current level of profitability
should be relatively stable as a result of new firm contracts commenced in late
1998. These contracts should substantially offset the reduced contribution of
Saudi Arabia and Venezuela, and other projects."
"Our US Lower 48 unit may well experience further erosion if current oil and gas
price levels persist. Canada appears stable with the contribution from a slight
increase in activity offset by somewhat lower average prices. Offshore, we
expect further reductions in Gulf of Mexico jackup and platform workover rig
utilization to be substantially offset by the new international contracts that
commenced in the fourth quarter. Our higher margin platform drilling rigs are
expected to maintain current results in the near term."
"During these difficult times we will continue to focus on maximizing
profitability, particularly in the face of any further deterioration in
activity, by ongoing reductions in overhead and operating costs. Similarly, we
intend to maintain healthy levels of free cash flow through substantial
reductions in cash spending for sustaining and discretionary capital
expenditures."
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"We also view the current market environment as an opportunity to enhance the
long-tem future of our business. We recently announced our two largest
acquisitions to date, Bayard Drilling Technologies and Pool Energy Services.
Both of these fine companies will broaden Nabors' presence in several areas,
increase our operating efficiency and enhance our ability to reduce our
customer's costs. We currently intend to complete the Bayard acquisition by the
end of the first quarter and the Pool acquisition near the end of the second
quarter depending upon the timing of the necessary regulatory and shareholder
approvals. We plan immediately to implement the attendant cost savings and
operating economies following the completion of each transaction to minimize the
risk of possible short-term dilution. The consideration for both acquisitions is
essentially stock, which will preserve the quality of our balance sheet and
maintain our financial flexibility. We are pleased to see both major credit
rating agencies maintain our A3 and BBB+ credit ratings following announcement
of these major acquisitions. These actions reflect Nabors' inherent ability to
remain profitable in severe market downturns and capitalize on opportunities as
a result of our solid financial position, minimal use of financial leverage,
continuing strong cash flow and long-term earnings potential."
"I remain confident of the long-term outlook for Nabors. The current worldwide
curtailment in investment for exploration and development projects is likely to
have the effect of reducing excess production capability, particularly in those
areas where depletion is significant. Reduced productive capacity of existing
reserves, the multi-year lead times required to develop substantial new reserves
and a resumption of demand growth will eventually lead to supply/demand balance
in energy markets, probably sooner than expected under the current consensus.
This in turn should have a large and rapid positive effect on our business."
Nabors actively markets over 400 land drilling rigs worldwide. Offshore, the
Company operates 25 platform rigs, six jack-ups and two barge drilling rigs. The
Company participates in most of the significant oil, gas, and geothermal
drilling markets in the world. Nabors also manufactures top drives and drilling
instrumentation systems and provides comprehensive oilfield engineering, civil
construction, logistics and facility maintenance, and project management
services.
The information above includes forward-looking statements within the meaning of
the Securities Act of 1933 and the Securities Exchange Act of 1934. These
statements are based upon certain assumptions and analyses made by the Company,
in light of its experience, and its perception of historical and future trends,
on general economic and business conditions; and on numerous other factors,
including expected future developments, many of which are beyond the control of
the Company. Such forward-looking statements are also subject to certain risks
and uncertainties, as disclosed by the Company from time to time in its filings
with the Securities and Exchange Commission. As a result of these factors, the
Company's actual results may differ materially from those indicated in or
implied by such forward-looking statements.
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NABORS' STOCK IS LISTED ON THE AMERICAN STOCK EXCHANGE (NBR). FOR FURTHER
INFORMATION, PLEASE CONTACT DENNIS A. SMITH (281) 874-0035. TO REQUEST INVESTOR
MATERIALS, CALL (281) 775-8000 - EXT. 6363.
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NABORS INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS AND TWELVE MONTHS ENDED DECEMBER 31, 1998 AND 1997
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
(UNAUDITED)
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THREE MONTHS ENDED TWELVE MONTHS ENDED
DECEMBER 31, DECEMBER 31,
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1998 1997 1998 1997
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<S> <C> <C> <C> <C>
Revenues:
North America $159,570 $257,606 $760,379 $936,276
International 48,670 45,200 207,778 178,756
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Total revenues 208,240 302,806 968,157 1,115,032
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Operating expenses:
Direct costs 136,043 199,714 623,844 774,856
General and administrative
expenses 18,398 18,580 77,026 72,478
Depreciation and amortization 22,332 20,313 84,949 72,350
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Total operating expenses 176,773 238,607 785,819 919,684
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Operating income:
North America 26,723 59,142 148,175 172,377
International 8,775 9,178 48,946 38,480
Corporate expenses (4,031) (4,121) (14,783) (15,509)
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Total operating income 31,467 64,199 182,338 195,348
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Other income (expense):
Interest expense (3,624) (3,979) (15,463) (16,323)
Interest income 275 93 1,480 1,936
Other income; net 6,844 2,303 31,626 28,502
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Other income (expense) 3,495 (1,583) 17,643 14,115
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Income before income taxes 34,962 62,616 199,981 209,463
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Income taxes:
Current 11,019 7,103 40,256 17,273
Deferred 2,917 14,186 34,737 56,170
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Total income taxes 13,936 21,289 74,993 73,443
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Net income $21,026 $41,327 $124,988 $136,020
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Earnings per share:
Basic $.21 $.41 $1.24 $1.39
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Diluted (1) $.20 $.37 $1.16 $1.24
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Weighted average number of
shares outstanding:
Basic 100,795 100,814 100,807 98,180
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Diluted (1) 111,312 116,427 112,555 113,793
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</TABLE>
(1) Diluted earnings per share for the three and twelve months ended December 31
equals net income plus $1,358 and $5,432 for 1998, respectively, and $1,402
and $5,608 for 1997, respectively, of after tax interest expense incurred on
the $172,500 5% Convertible Subordinated Notes, issued on May 28, 1996 ("the
Notes"). This adjusted net income is divided by the weighted average number
of common shares outstanding, after giving effect to dilutive stock options
and warrants, as well as 9,517 shares assumed to be issued on conversion of
the Notes. The earnings per share amounts presented for the three and twelve
months ended December 31, 1997 have been restated in accordance with
Statement of Financial Accounting Standards No. 128, "Earnings Per Share."
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