Tesco Update: Positive Read From Nabors Industries Earnings

| About: Tesco Corporation (TESO)


Nabors Industries made positive comments about trends in its Canrig business during the second quarter 2014 earnings conference call.

Canrig competes with Tesco’s Top Drive division.

Tesco is likely seeing similar positive trends as Canrig.

Nabors Industries (NYSE:NBR) reported second quarter 2014 earnings on July 22nd and held an earnings conference call on July 23rd. Nabors owns a company called Canrig, which manufactures top-drives, catwalks, adjacent products and provides associated services. See canrig.com for more details. Canrig directly competes with Tesco's (NASDAQ:TESO) Top Drive division, and therefore it should be interesting to Tesco's investors what Nabors' management had to say about Canrig.

Indeed, the management made positive comments about Canrig on the earnings call. For simplicity purposes, I'm pasting below direct quotes from the call obtained from the Seeking Alpha transcripts service.

"Our rig services which consists mainly of Canrig, eclipsed its first quarter performance which at that time was its best performance in over a year."

- Tony Petrello, Chairman and CEO of Nabors Industries

"Within our rig services business, backlog at Canrig continues to build both the third-party and Nabors internal business. Canrig's backlog now sits at an all-time record since bottoming in the second quarter of last year, total backlog is up 250%. With the current backlog composition, we expect a slight shift in Canrig's business mix between third-parties and internal needs. We also anticipate an investment in necessary resources to support the expected ramp up in production and lot of its growing backlog."

- Tony Petrello, Chairman and CEO of Nabors Industries

Source: Seeking Alpha transcripts service

These comments should have a positive read-across for Tesco's Top Drive business segment. The Top Drive business segment accounted for about 59% of the company's 2013 revenue. If Tesco is experiencing the improvements and growth that Canrig is seeing, it should have meaningful impact on the company's earnings in the coming quarters and contribute to its efforts to achieve the targets outlined in its 5-Year Plan. See my article discussing Tesco's 5-Year Plan.

Disclosure: The author is long TESO, NBR. The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it (other than from Seeking Alpha). The author has no business relationship with any company whose stock is mentioned in this article.

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