Nabors Industries (NBR +2.6%) shares push higher after the drilling contractor agrees to sell its Alaska-focused support services unit Peak Oilfield Service to Bristol Bay Native Corp. for an undisclosed sum.
NBR says the sale and other Q3 asset sales will more than cover the ~$207M premium paid to refinance $785M of higher-cost debt through its recent tender offer which reduced annual interest expense by more than $40M.
Though offshore drilling fundamentals remain challenged, Deutsche Bank believes some oilfield services stocks (OIH) are "very underappreciated."
The firm's top three sector stocks: Baker Hughes (BHI +2%), with a long restructuring that's finally complete; Halliburton (HAL +1.3%), whose international margins should improve dramatically; and Nabors (NBR +1.2%), whose high-end U.S. rigs and strong international business will drive growth.
NBR says proceeds, along with cash on hand and borrowings from its revolving credit facility, will be used for its tender offer for any and all of the 9.25% senior notes.
Companies are rushing to fit in as many bond sales as possible in the days ahead of Friday’s release of monthly payrolls data; Starbucks (SBUX), Home Depot (HD), Caterpillar (CAT) and Unilever (UL) have tapped the market for a combined $10B worth of new securities, plus another $5B in debt offerings from companies such as Lowe's (LOW) and NBR.
More on Nabors Industries' (NBR) Q2 results: Unadjusted loss of $4.4M (-$0.01/share) vs. a year-ago loss of $72.8M (-$0.25/share) included a $9.3M loss on sales and disposals of long-lived assets vs. a $160.9M loss a year earlier. Revenue slipped 6.2% to $1.51B. Operating earnings for drilling and rig services fell 46%; completion and production business slid 58%. NBR -0.2% AH.
Goldman Sachs removes Nabors Industries (NBR -5.2%) from its Conviction Buy list and drops its price target to $19.50 from $22, disappointed by NBR's downside guidance as it had felt confident in its forecast of $119M in EBIT. Goldman cuts its estimates for 2013 and 2014 EPS to $0.82 and $1.37 from $1.04 and $1.85, respectively; 2013-14 EBITDA was cut 5% and 9%.
Nabors Industries (NBR) warns that its Q2 will come in below estimates. Operating Income is projected to be in the range of $88M to $91M, with the shortfall most pronounced in its Rig Services and Completion and Production Services lines. The firm cites lower sales of capital equipment and reduced service and rental activity for the miss, along with adverse weather and intense competition, particularly for pressure pumping in the U.S. and Canada. Shares -4% AH.
Helmerich & Payne (HP) and Pioneer Energy Services (PES) are downgraded to Hold from Buy at Jefferies, which also cuts estimates on other land drillers in anticipation of ongoing higher capex and lower earnings growth. The firm cuts its price target on HP to $71 from $74, PES to $8 from $9, and Patterson-UTI (PTEN) to $20 from $23, but raises its target on Nabors (NBR) to $15 from $14.
Fitch revises its outlook for Nabors Industries (NBR -1.4%) to Negative while affirming the drilling contractor's credit rating at BBB, citing a long-term trend of declining market share in the U.S., low utilization on older equipment, industry conditions including a lower average U.S. rig count in 2013, and risks to the rig count from the transition to pad drilling and other higher efficiency operations.
Brushing aside the wishes of shareholders, Nabors Industries (NBR) rejects the resignations of directors John Lombardi and John Yearwood after both received less than 48% of shareholder votes cast at its annual meeting earlier this week. NBR, which had unsuccessfully sought to exclude proxy access from the ballot, counted broker non-votes in the outcome of the non-binding resolutions.