Our results for 2006 set all-time records in virtually every financial and operational metric….Most importantly, Nabors generated opportunities to increase its average capital employed by $1.75 billion during the year, maintaining a 22% return which should underpin future growth.
The press release went on to say:
Our International operations are beginning to demonstrate the extraordinary upside we have been anticipating as existing contracts roll-over at much higher current market rates and a large volume of contracted and prospective new rig requirements materialize.
The press release was very up tone and positive. Considering that Nabors literally started the year with a rather pessimistic guidance complaining about Canadian and lower 48 operations, the expectations seemed to have turned around dramatically. Now the press release points out how well operating segments are doing. Any mildly negative news is considered to be mitigated by other factors so it will all be good.
But take a look at insider trading as reported by Yahoo Finance. Exactly one week ago on Jan 31, 2007 the Chairman & CEO Gene Isenberg purchased approximately 700,000 shares worth about $21 million. On exactly the same day Anthony Petrello COO purchased approximately 468,0000 shares worth about $14 million. The acquisitions are valued at $30.28 and carry non open market designations.
Have we aligned shareholder and management interests? Or did the boys just decide to step on the gas and power up the valuation?
NBR 1-yr chart: