Nabors Announces Second-Quarter EPS of $0.21 after net charges of $0.03 per share

Second-Quarter Highlights Include:

- Signed definitive agreement to combine Completion & Production Services operations with C&J Energy Services

- Eight new term contract awards for PACE®-X rigs bringing total to 34 rigs

- Secured non-core asset divestitures set to yield nearly $100 million in cash proceeds

Jul 22, 2014, 17:32 ET from Nabors Industries Ltd.

HAMILTON, Bermuda, July 22, 2014 /PRNewswire/ -- Nabors Industries Ltd. (NYSE: NBR) today reported its financial results for the second quarter of 2014.  Operating revenues and earnings from unconsolidated affiliates for this quarter totaled $1.62 billion, compared to $1.50 billion in the same quarter of the prior year and $1.59 billion in the first quarter of 2014.  Net income from continuing operations was $65.7 million or $0.21 per diluted share, compared to $28.1 million or $0.08 per diluted share in the second quarter of 2013 and $49.0 million or $0.16 per diluted share in the first quarter of 2014.  The second quarter earnings per share include net charges of $0.03 per share, primarily related to losses on the sale of non-core assets or in unconsolidated businesses in the process of being divested. 

Tony Petrello, Nabors' Chairman, President & CEO, commented, "Operationally, our second quarter represented solid improvement in all of our larger segments, partially offset by the usual seasonal weakness in Canada and Alaska.  Our U.S. land operations led the way with improved pricing and a significant increase in rig activity.  Completion & Production Services recovered sharply with fewer interruptions and improving pricing and utilization.  Our International results also improved as the initial contribution of new rig startups more than compensated for the temporary suspension of several existing rigs. 

"Strategically, we achieved a major objective through the signing of a definitive agreement with C&J Energy Services to combine their operations with our Completion & Production Services segment to form a leading oilfield services provider with increased critical mass, broader geographic presence and strong international potential.  I view this as one of those rare transactions where both companies' shareholders stand to benefit in ways other than just strong accretion potential.  The combination of this segment of our business with a well-respected management team enables us to better concentrate our resources on bolstering our position as a preeminent global drilling company, while retaining the emerging upside of those operations.  Similarly, C&J immediately multiplies the size and breadth of its business, greatly expands its opportunity set, and inherits a highly capable operating team.  We anticipate the closing of the transaction to occur in the fourth quarter. 

"Notably, in the second quarter we received long-term contract awards for an additional eight PACE®-X rigs in the U.S. market.  We continue to see strong demand for new rigs, both domestically and internationally, leading us to significantly increase our new rig production schedule.  We also completed the sale of four of our non-core U.S. Offshore rigs and entered into a definitive agreement to divest our Alaska oil and gas holdings.  In the aggregate these transactions are expected to yield nearly $100 million in cash proceeds."

Operating cash flow (EBITDA) was $416.3 million for the second quarter, compared to $355.8 million in the same quarter last year and $391.2 million in the first quarter of this year.  Adjusted income from operating activities was $133.5 million, compared to $89.6 million in the second quarter of 2013 and $109.0 million in the first quarter of 2014.

Drilling & Rig Services

Operating income in the Drilling & Rig Services business line was down approximately $5.7 million sequentially at $149.8 million.  This unit also saw a similar decrease in operating cash flow, which was $376.8 million.  These represent modest decreases considering the normal seasonal decrease in Canada and Alaska, approximating $40 million in the second quarter.  The quarter's operating income reflects a 50% increase over the same period of last year, illustrating the strength of demand for rigs across virtually all global regions. 

In North America, U.S. Drilling results showed substantial improvement in sequential income at $90.0 million despite seasonally lower results in Alaska.  This improvement was largely attributable to increases in both utilization and pricing in the Lower 48 operation that amounted to 11 rigs and $600 in daily rig margins.  The outlook remains strong with growing pad rig demand, particularly in the Permian and South Texas, as indicated by the award of eight additional PACE®-X rigs.  This brings the total number of PACE®-X rig commitments to 34 and covers all new-builds scheduled to be deployed into early next year.  AC rig utilization remains high at 95% with only one rig on standby revenue versus 11 rigs two quarters ago.  

Activity in Alaska is expected to be less seasonal going forward, with increases in year-round work expected through 2016 and further upside from pending new rig awards.  Near-term Gulf of Mexico offshore activity is expected to be slower with the onset of hurricane season.  However, the intermediate term will benefit from the commencement of a large new deepwater platform drilling rig around the end of this year. 

International operating income of $50.6 million continued to improve sequentially as the initial contribution from several new startups more than compensated for a temporarily lower rig count in a few areas.  Jackup rig 660 returned to work mid-quarter, but its contribution was offset by unanticipated downtime on two other smaller jackups which are expected to return to operations in the near future.  As anticipated, two platform rigs in India and six land rigs in Mexico were down for most of the quarter but have good prospects to return to work.  The Company's bullish outlook for the near and intermediate term remains intact as new rig deployments accelerate and rates increase with contract renewals, further bolstered by the potential for additional new rig awards. 

Rig Services' operating income was $9.1 million, representing a sizable improvement in Canrig and Ryan which was partially offset by a loss in an unconsolidated affiliate.  Canrig's backlog increased to an all-time high, roughly half of which is third-party related.

Completion & Production Services

The Completion & Production Services business line recorded operating income of $29.3 million, with operating cash flow of $85.9 million.  Although the second quarter was still impacted by weather and other utilization interruptions, including sand supply, results rebounded sharply from the weather-induced weakness of the first quarter.  The sequential improvements in operating income amount to $33.1 million in completion operations and $2.7 million in U.S. Production Services despite key customer budget reductions in California.  These improvements were partially offset by a $3.4 million sequential decrease in Canada due to the spring breakup.  The outlook for the completions business has improved markedly in a relatively short time as increases in demand, particularly in West and South Texas, have increased utilization to a high level.  Today this operation's pumping calendar is fully committed into early next year, including a second 45,000 HHP dual-fuel spread which will deploy in early fourth quarter.  Price increases are being implemented in the more active markets with further price increases agreed to take effect shortly in all other regions outside of the northeast.  These increases, along with continuing cost reductions, suggest a significant improvement over the balance of this year and a strong 2015.  The long-term demographics for Production Services continue to indicate a strengthening market despite some near-term pockets of weakness. 

Financial Discussion

Earnings per share for the second quarter included several items that had a net impact of $0.03 cents per diluted share. During the quarter the Company disposed of several non-core assets—barges and other rigs—that generated losses of $0.02 per share. In addition, the development of the C&J transaction led the company to redeem at a loss preferred shares relating to the Superior Well Services acquisition, with an unfavorable impact of $0.01 per share. Finally, the unconsolidated Alaska construction business, which is in the process of being divested, yielded a loss of $0.01 during the quarter. These items were all partially offset by income tax benefits related to the filing of 2013 tax returns in a foreign jurisdiction.

SG&A for the second quarter of $133.6 million was in line with the first quarter with a slight sequential reduction of $0.6 million.  Higher investment income on the sale of certain financial assets was essentially offset by a similar increase in foreign-exchange losses.  The effective tax rate during the quarter was 13.8%, primarily reflecting the above-mentioned benefits.  Capital expenditures of $458 million for the quarter were below forecast and largely associated with the construction of new and upgraded rigs.  Nonetheless, expenditures for the full-year should reach the upper end of prior guidance of $1.8 billion with the additional PACE®-X rigs and the potential for additional international awards yet this year.

William Restrepo, Nabors' Chief Financial Officer added, "We are pleased with the progress made during this quarter and the confirmation of the trends we highlighted during our first quarter conference call. Specifically, the C&J transaction together with the sale of several rigs and E&P assets clearly demonstrate our commitment to focus our resources on those businesses where we are able to generate attractive returns on capital and that are strategically aligned with our areas of strength. Further, the profitability improvement initiatives are well under way. We are starting to see their impact on our financial results and in the cost of building our rigs. And finally, the market has improved as we expected, with higher fracturing service intensity and incremental demand for higher specification drilling assets. During the second half of the year, we expect these favorable trends to contribute to further improvement and to boost the impact of the expected acceleration in international rig deployments."  

Summary and Outlook

Petrello concluded, "It is becoming increasingly apparent that virtually every element of our business is experiencing improving fundamentals manifested through improving utilization and pricing.  Construction of the numerous new rigs we have in progress remains on track and within budget.  The contribution of these deployments combined with a favorable pricing environment across every market and the incremental demand for new rigs globally yield a high degree of growth visibility for the foreseeable future.  We are particularly optimistic about the growth prospects for our venture with C&J in the Completion & Production Services business."   

About Nabors

The Nabors companies own and operate approximately 496 land drilling rigs throughout the world and approximately 544 land workover and well servicing rigs in North America. Nabors' actively marketed offshore fleet consists of 36 platform rigs in the United States and multiple international markets. In addition, Nabors is one of the largest providers of hydraulic fracturing, cementing, nitrogen and acid pressure pumping services with approximately 800,000 hydraulic horsepower currently in service. Nabors also manufactures top drives and drilling instrumentation systems.   Nabors participates in most of the significant oil and gas 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.  The projections contained in this release reflect management's estimates as of the date of the release.  Nabors does not undertake to update these forward-looking statements.   

MEDIA CONTACT:

Dennis A. Smith, Director of Corporate Development & Investor Relations, +1 281-775-8038. To request investor materials, contact Nabors' corporate headquarters in Hamilton, Bermuda at +441-292-1510 or via e-mail at mark.andrews@nabors.com

NABORS INDUSTRIES LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME (LOSS)

(Unaudited)

Three Months Ended

Six Months Ended

June 30,

March 31,

June 30,

(In thousands, except per share amounts)

2014

2013

2014

2014

2013

Revenues and other income:

   Operating revenues 

$ 1,616,981

$ 1,457,966

$ 1,589,618

$ 3,206,599

$ 2,993,444

   Earnings (losses) from unconsolidated affiliates

(576)

1,360

(2,445)

(3,021)

4,255

   Investment income (loss)

7,066

14,821

980

8,046

94,242

      Total revenues and other income

1,623,471

1,474,147

1,588,153

3,211,624

3,091,941

Costs and other deductions:

   Direct costs 

1,066,495

972,310

1,061,739

2,128,234

1,967,302

   General and administrative expenses

133,630

131,202

134,266

267,896

262,080

   Depreciation and amortization

282,820

266,210

282,127

564,947

535,575

   Interest expense

46,303

60,273

44,810

91,113

120,284

   Losses (gains) on sales and disposals of  long-lived assets and other expense (income), net

16,504

9,242

1,476

17,980

68,979

      Total costs and other deductions

1,545,752

1,439,237

1,524,418

3,070,170

2,954,220

Income (loss) from continuing operations before income taxes

77,719

34,910

63,735

141,454

137,721

Income tax expense (benefit)

10,756

6,032

14,008

24,764

15,886

Subsidiary preferred stock dividend

1,234

750

750

1,984

1,500

Income (loss) from continuing operations, net of tax

65,729

28,128

48,977

114,706

120,335

Income (loss) from discontinued operations, net of tax

(1,032)

(26,873)

1,515

483

(19,862)

Net income (loss)

64,697

1,255

50,492

115,189

100,473

     Less: Net (income) loss attributable to noncontrolling interest

(253)

(5,616)

(573)

(826)

(5,713)

Net income (loss) attributable to Nabors

$      64,444

$       (4,361)

$      49,919

$    114,363

$      94,760

Earnings (losses) per share: (1)

   Basic from continuing operations

$             .21

$             .08

$             .16

$             .37

$             .41

   Basic from discontinued operations

-

(.09)

.01

-

(.09)

   Basic

$             .21

$           (.01)

$             .17

$             .37

$             .32

   Diluted from continuing operations

$             .21

$             .08

$             .16

$             .37

$             .41

   Diluted from discontinued operations

-

(.09)

-

-

(.09)

   Diluted

$             .21

$           (.01)

$             .16

$             .37

$             .32

 Weighted-average number of common shares outstanding: (1)

   Basic 

297,984

294,747

296,210

297,097

293,217

   Diluted 

300,981

297,119

299,050

300,016

295,644

Adjusted EBITDA (2)

$    416,280

$    355,814

$    391,168

$    807,448

$    768,317

Adjusted income (loss) derived from operating activities (3)

$    133,460

$      89,604

$    109,041

$    242,501

$    232,742

 

(1)

See "Computation of Earnings (Losses) Per Share" included herein as a separate schedule. 

(2)

Adjusted EBITDA is computed by subtracting the sum of direct costs and general and administrative expenses from the sum of Operating revenues and Earnings (losses) from unconsolidated affiliates. There are limitations inherent in using adjusted EBITDA as a measure of overall profitability because it excludes significant expense items. However, management evaluates the performance of our business units and the consolidated company based on several criteria, including adjusted EBITDA and adjusted income (loss) derived from operating activities, because we believe that these financial measures accurately reflect our ongoing profitability. These amounts should not be used as a substitute for the amounts reported in accordance with GAAP. To compensate for the limitations in utilizing adjusted EBITDA as an operating measure, management also uses GAAP measures of performance, including income from continuing operations and net income, to evaluate performance, but only with respect to the Company as a whole and not on a segment basis.  A reconciliation of this non-GAAP measure to income (loss) from continuing operations before income taxes, which is a GAAP measure, is provided in the table set forth immediately following the heading "Reconciliation of Non-GAAP Financial Measures to Income (loss) from Continuing Operations before Income Taxes".

(3)

Adjusted income (loss) derived from operating activities is computed by subtracting the sum of direct costs, general and administrative expenses and depreciation and amortization from the sum of Operating revenues and Earnings (losses) from unconsolidated affiliates. These amounts should not be used as a substitute for those amounts reported in accordance with GAAP. However, management evaluates the performance of our business units and the consolidated company based on several criteria, including adjusted income (loss) derived from operating activities, because it believes that these financial measures accurately reflect our ongoing profitability.  A reconciliation of this non-GAAP measure to income (loss) from continuing operations before income taxes, which is a GAAP measure, is provided in the table set forth immediately following the heading "Reconciliation of Non-GAAP Financial Measures to Income (loss) from Continuing Operations before Income Taxes".

 

NABORS INDUSTRIES LTD. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

June 30,

March 31,

December 31,

(In thousands, except ratios)

2014

2014

2013

ASSETS

Current assets:

Cash and short-term investments

$      486,344

$      424,767

$       507,133

Accounts receivable, net

1,448,511

1,454,368

1,399,543

Assets held for sale

233,163

231,880

243,264

Other current assets

642,620

580,253

603,890

     Total current assets

2,810,638

2,691,268

2,753,830

Long-term investments and other receivables

2,724

2,915

3,236

Property, plant and equipment, net

8,832,966

8,690,759

8,597,813

Goodwill

512,897

512,391

512,964

Investment in unconsolidated affiliates

60,509

63,069

64,260

Other long-term assets

216,265

226,671

227,708

     Total assets

$ 12,435,999

$ 12,187,073

$  12,159,811

LIABILITIES AND EQUITY

Current liabilities:

Current debt

$              207

$           5,296

$          10,185

Other current liabilities

1,319,379

1,232,846

1,301,239

     Total current liabilities

1,319,586

1,238,142

1,311,424

Long-term debt

3,956,290

3,812,476

3,904,117

Other long-term liabilities

1,078,201

1,095,998

893,905

     Total liabilities

6,354,077

6,146,616

6,109,446

Subsidiary preferred stock (1)

-

69,188

69,188

Equity:

Shareholders' equity

6,071,426

5,960,469

5,969,086

Noncontrolling interest

10,496

10,800

12,091

     Total equity

6,081,922

5,971,269

5,981,177

     Total liabilities and equity

$ 12,435,999

$ 12,187,073

$  12,159,811

(1)

Represents subsidiary preferred stock from acquisition in September 2010.  All 75,000 outstanding shares were redeemed in June 2014.

 

NABORS INDUSTRIES LTD. AND SUBSIDIARIES

SEGMENT REPORTING

(Unaudited)

The following tables set forth certain information with respect to our reportable segments and rig activity:

Three Months Ended

Six Months Ended

June 30,

March 31,

June 30,

(In thousands, except rig activity)

2014

2013

2014

2014

2013

Reportable segments:

Operating revenues and Earnings (losses) from unconsolidated affiliates:

    Drilling and Rig Services: 

      U.S.

$    532,894

$    467,129

$    510,476

$ 1,043,370

$    951,902

      Canada

54,861

64,789

111,621

166,482

191,656

      International

391,251

351,421

375,069

766,320

672,937

      Rig Services (1)

161,740

118,120

143,726

305,466

252,351

       Subtotal Drilling and Rig Services (2)

1,140,746

1,001,459

1,140,892

2,281,638

2,068,846

    Completion and Production Services:

      Completion Services

276,639

254,016

227,899

504,538

516,154

      Production Services

258,378

244,602

275,400

533,778

496,173

       Subtotal Completion and Production Services (3)

535,017

498,618

503,299

1,038,316

1,012,327

    Other reconciling items (4)

(59,358)

(40,751)

(57,018)

(116,376)

(83,474)

      Total operating revenues and earnings (losses) from unconsolidated affiliates

$ 1,616,405

$ 1,459,326

$ 1,587,173

$ 3,203,578

$ 2,997,699

Adjusted EBITDA: (5)

    Drilling and Rig Services: 

      U.S.

$    206,061

$    178,799

$    187,637

$    393,698

$    363,658

      Canada

14,216

18,067

40,119

54,335

63,598

      International

139,336

117,491

137,991

277,327

224,005

      Rig Services (1)

17,176

2,273

16,491

33,667

11,607

       Subtotal Drilling and Rig Services (2)

376,789

316,630

382,238

759,027

662,868

    Completion and Production Services:

      Completion Services

27,614

33,479

(6,654)

20,960

80,203

      Production Services

58,267

48,036

60,056

118,323

99,154

       Subtotal Completion and Production Services (3)

85,881

81,515

53,402

139,283

179,357

    Other reconciling items (6)

(46,390)

(42,331)

(44,472)

(90,862)

(73,908)

      Total adjusted EBITDA

$    416,280

$    355,814

$    391,168

$    807,448

$    768,317

Adjusted income (loss) derived from operating activities:  (7)

    Drilling and Rig Services: 

      U.S.

$      89,977

$      69,813

$      72,494

$    162,471

$    147,408

      Canada

225

3,895

26,160

26,385

34,413

      International

50,583

32,481

48,119

98,702

53,950

      Rig Services (1)

9,059

(5,383)

8,728

17,787

(4,096)

       Subtotal Drilling and Rig Services (2)

149,844

100,806

155,501

305,345

231,675

    Completion and Production Services:

      Completion Services

(581)

6,870

(33,635)

(34,216)

24,626

      Production Services

29,889

23,471

30,591

60,480

49,485

       Subtotal Completion and Production Services (3)

29,308

30,341

(3,044)

26,264

74,111

    Other reconciling items (6)

(45,692)

(41,543)

(43,416)

(89,108)

(73,044)

   Total adjusted income (loss) derived from operating activities

$    133,460

$      89,604

$    109,041

$    242,501

$    232,742

Rig activity:

Rig years: (8)

   U.S.

215.3

195.8

206.6

211.0

192.8

   Canada

21.6

17.4

43.8

32.6

28.6

   International (9)

127.3

125.2

129.8

128.6

124.0

      Total rig years 

364.2

338.4

380.2

372.2

345.4

Rig hours: (10)

   U.S. Production Services

210,750

224,681

209,982

420,732

436,979

   Canada Production Services

28,671

28,802

41,540

70,211

76,829

      Total rig hours

239,421

253,483

251,522

490,943

513,808

(1)

Includes our drilling technology and top drive manufacturing, directional drilling, rig instrumentation and software services. These services represent our other companies that are not aggregated into a reportable operating segment.

(2)

Includes earnings (losses), net from unconsolidated affiliates, accounted for using the equity method, of ($.8) million, $1.2 million and ($2.5) million for the three months ended June 30, 2014 and 2013 and March 31, 2014, respectively and ($3.3) million and $4.0 million for the six months ended June 30, 2014 and 2013, respectively.

(3)

Includes earnings (losses), net from unconsolidated affiliates, accounted for using the equity method, of $.2 million, $.2 million and $.1 million for the three months ended June 30, 2014 and 2013 and March 31, 2014, respectively and $.3 million for each of the six months ended June 30, 2014 and 2013.

(4)

Represents the elimination of inter-segment transactions.

(5)

Adjusted EBITDA is computed by subtracting the sum of direct costs and general and administrative expenses from the sum of Operating revenues and Earnings (losses) from unconsolidated affiliates. There are limitations inherent in using adjusted EBITDA as a measure of overall profitability because it excludes significant expense items. However, management evaluates the performance of our business units and the consolidated company based on several criteria, including adjusted EBITDA and adjusted income (loss) derived from operating activities, because we believe that these financial measures accurately reflect our ongoing profitability. These amounts should not be used as a substitute for the amounts reported in accordance with GAAP. To compensate for the limitations in utilizing adjusted EBITDA as an operating measure, management also uses GAAP measures of performance, including income from continuing operations and net income, to evaluate performance, but only with respect to the Company as a whole and not on a segment basis.  A reconciliation of this non-GAAP measure to income (loss) from continuing operations before income taxes, which is a GAAP measure, is provided in the table set forth immediately following the heading "Reconciliation of Non-GAAP Financial Measures to Income (loss) from Continuing Operations before Income Taxes". 

(6)

Represents the elimination of inter-segment transactions and unallocated corporate expenses.

(7)

Adjusted income (loss) derived from operating activities is computed by subtracting the sum of direct costs, general and administrative expenses and depreciation and amortization from the sum of Operating revenues and Earnings (losses) from unconsolidated affiliates. These amounts should not be used as a substitute for the amounts reported in accordance with GAAP. However, management evaluates the performance of our business units and the consolidated company based on several criteria, including adjusted income (loss) derived from operating activities, because it believes that these financial measures accurately reflect our ongoing profitability. A reconciliation of this non-GAAP measure to income (loss) from continuing operations before income taxes, which is a GAAP measure, is provided in the table set forth immediately following the heading "Reconciliation of Non-GAAP Financial Measures to Income (loss) from Continuing Operations before Income Taxes".

(8)

Excludes well-servicing rigs, which are measured in rig hours.  Includes our equivalent percentage ownership of rigs owned by unconsolidated affiliates.  Rig years represent a measure of the number of equivalent rigs operating during a given period.  For example, one rig operating 182.5 days during a 365-day period represents 0.5 rig years.

(9)

International rig years includes our equivalent percentage ownership of rigs owned by unconsolidated affiliates, which totaled 2.5 years during each of the three months ended June 30, 2014 and 2013 and March 31, 2014 and 2.5 years for each of the six months ended June 30, 2014 and 2013.

(10)

Rig hours represents the number of hours that our well-servicing rig fleet operated during the period.

 

NABORS INDUSTRIES LTD. AND SUBSIDIARIES

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO 

INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES

(Unaudited)

Three Months Ended

Six Months Ended

June 30,

March 31,

June 30,

(In thousands)

2014

2013

2014

2014

2013

Adjusted EBITDA

$ 416,280

$ 355,814

$ 391,168

$ 807,448

$ 768,317

Less: Depreciation and amortization 

282,820

266,210

282,127

564,947

535,575

Adjusted income (loss) derived from operating activities

133,460

89,604

109,041

242,501

232,742

Interest expense

(46,303)

(60,273)

(44,810)

(91,113)

(120,284)

Investment income (loss)

7,066

14,821

980

8,046

94,242

Gains (losses) on sales and disposals of long-lived assets and other income (expense), net

(16,504)

(9,242)

(1,476)

(17,980)

(68,979)

Income (loss) from continuing operations before income taxes

$   77,719

$   34,910

$   63,735

$ 141,454

$ 137,721

 

NABORS INDUSTRIES LTD. AND SUBSIDIARIES

COMPUTATION OF EARNINGS (LOSSES) PER SHARE

(Unaudited)

A reconciliation of the numerators and denominators of the basic and diluted earnings (losses) per share computations is as follows:

Three Months Ended

Six Months Ended

June 30,

March 31,

June 30,

(In thousands, except per share amounts)

2014

2013

2014

2014

2013

Net income (loss) attributable to Nabors (numerator):

Income (loss) from continuing operations, net of tax

$65,729

$28,128

$  48,977

$ 114,706

$ 120,335

   Less: Net (income) loss attributable to noncontrolling interest

(253)

(5,616)

(573)

(826)

(5,713)

   Less: Earnings allocated to unvested shareholders

(974)

(814)

(733)

(1,707)

-

   Less: Redemption of preferred shares

(1,688)

-

-

(1,688)

-

Adjusted income (loss) from continuing operations - basic and diluted

$62,814

$21,698

$  47,671

$ 110,485

$ 114,622

Income (loss) from discontinued operations, net of tax

(1,032)

(26,873)

1,515

483

(19,862)

$61,782

$ (5,175)

$  49,186

$ 110,968

$   94,760

   Earnings (losses) per share:

     Basic from continuing operations

$       .21

$       .08

$         .16

$         .37

$         .41

     Basic from discontinued operations

-

(.09)

.01

-

(.09)

Total Basic

$       .21

$      (.01)

$         .17

$         .37

$         .32

     Diluted from continuing operations

$       .21

$       .08

$         .16

$         .37

$         .41

     Diluted from discontinued operations

-

(.09)

-

-

(.09)

Total Diluted

$       .21

$      (.01)

$         .16

$         .37

$         .32

Shares (denominator): 

   Weighted-average number of shares outstanding-basic

297,984

294,747

296,210

297,097

293,217

     Net effect of dilutive stock options, warrants and restricted stock awards based on the if-converted method

2,997

2,372

2,840

2,919

2,427

   Weighted-average number of shares outstanding - diluted

300,981

297,119

299,050

300,016

295,644

For all periods presented, the computation of diluted earnings (losses) per share excluded outstanding stock options and warrants with exercise prices greater than the average market price of Nabors' common shares because their inclusion would have been anti-dilutive and because they were not considered participating securities. The average number of options and warrants that were excluded from diluted earnings (losses) per share that would have potentially diluted earnings (losses) per share were 5,782,273 and 11,578,175 shares during the three months ended June 30, 2014 and 2013, respectively; 7,853,509 shares during the three months ended March 31, 2014; and 6,817,891 and 12,015,219 shares during the six months ended June 30, 2014 and 2013, respectively. In any period during which the average market price of Nabors' common shares exceeds the exercise prices of these stock options and warrants, such stock options and warrants are included in our diluted earnings (losses) per share computation using the if-converted method of accounting.  Restricted stock is included in our basic and diluted earnings (losses) per share computation using the two-class method of accounting in all periods because such stock is considered a participating security.

SOURCE Nabors Industries Ltd.