Nabors (NBR) Q2 Loss Narrower Than Expected, Sales Beat

On Aug 2, Nabors Industries Ltd. (NYSE:NBR) reported second-quarter 2016 adjusted loss from continuing operations of 26 cents per share, significantly narrower than the Zacks Consensus Estimate of a loss of 43 cents. The lower-than-expected quarterly loss may be attributed to aggressive cost reduction. Notably, the company’s reported figure was wider than the year-ago adjusted loss of 14 cents per share.

Total revenue of $517.1 million came in above the Zacks Consensus Estimate of $503 million but plunged almost 40.1% from $863 million in second-quarter 2015.

Nabors’ U.S. operations recorded quarterly revenues of $140.3 million, down 56.3% from the year-ago level. The unit slipped to an operating loss of $48.3 million from a profit of $31.4 million in the prior-year period.

The Canadian market witnessed a year-over-year decline of 69.2% in revenues and recorded sales of $6.6 million. Moreover, the segment’s quarterly loss of $10.8 million was wider than the operating loss of $8.3 million in the year-ago quarter. Lower rig activity caused the deterioration.

Nabors’ international operations saw a 12.5% year over year decline in revenue generation to $401 million. Operating income plunged 35.5% from second-quarter 2015 to $53.9 million.

Revenues at the Rig Services segment decreased 61% from the prior-year quarter to $39.2 million. The unit incurred loss of $19.7 million, substantially wider than a loss of $1.6 million in the year-earlier quarter.

Direct Cost

The direct expenses related to operations came at $341.3 million, down 30.1% from the year-ago quarter.

Balance Sheet

As of Jun 30, 2016, the company had $255.9 million in cash and short-term investments and $3,503.2 million in long-term debt, with a debt-to-capitalization ratio of approximately 48.5%.

Zacks Rating

Nabors currently has a Zacks Rank #3 (Hold), implying that the stock will perform in line with the broader U.S. equity market over the next one to three months.

Some better-ranked stocks in the oil and gas sector include GeoPark Limited (NYSE:GPRK) , Sasol Ltd. (NYSE:SSL) and North Atlantic Drilling Limited (NYSE:NADL) . All these sport a Zacks Rank #1 (Strong Buy).