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Nabors Industries: Exponential Trajectory

Mar. 01, 2021 7:17 PM ETNabors Industries Ltd. (NBR)2 Comments
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  • Nabors Industries reported third quarter 2020 revenues and other income totaling $437.61 million, down significantly from $756.64 million in the same quarter of last year.
  • The average Lower 48 rig count is anticipated to increase in the first quarter of 2021.
  • I believe NBR is now overbought and I recommend selling about 40% of your position above $115.
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Source: NBR website

Investment Thesis

Nabors Industries (NYSE:NBR) released its fourth quarter and full year 2020 results on Feb. 26, 2021.

I have recently published my views on the Helmerich & Payne (HP) fourth quarter results on Seeking Alpha, and the two companies are quite similar.

Nabors' smaller-than-expected loss was a relief. However, the loss essentially due to weak performance at the U.S. drilling and Drilling Solutions segments was substantial.

The investment thesis is not easy to formulate after this recent rally. I realize that Nabors' outlook is getting better, but on the other side, it's difficult to ignore the stock valuation.

I believe it's still a great time to trade short term NBR and take advantage of the volatility, but it may be wise also to keep a small long-term position betting on a full recovery in this sector by H2 2021. However, the stock is now obviously overbought, and caution is required.

Nabors Industries is doing very well in early 2021 with a recent jump of more than 40%, while Helmerich & Payne is not responding.

CEO Tony Petrello said in the conference call:

Our financial discipline paid off in 2020. For the full year, we reduced overhead spending by 24%. This effort began in the second quarter. Our run rate in the fourth quarter represents nearly 27% drop over the 2019 quarterly average. We also made further progress on our twin priorities, namely, generate free cash flow and reduce net debt. We began the year at just under $2.9 billion in net debt. We delevered by nearly $400 million fueled in part by free cash flow generation of $184 million. We ended 2020 with net debt less than $2.5 billion.

Nabors Fleet Status Snapshot 4Q'20

The total is 132 rigs working, with average utilization of

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This article was written by

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Fun Trading is a retired engineer and independent investor. In addition to writing on investing in all aspects of gold, oil, and gas, he runs his own portfolio..

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Comments (2)

sell this and buy RIG?
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The best move is to take profits on NBR and eventually change of industry focus. I recommend buying some good gold names like NEM or GOLD...
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