Nabors Shares Rebound After Sharp Drop
Shares of Bermuda’s Nabors Industries rose today [Mar. 30] after a strategic move by the company to refocus on its core land-rig drilling business failed to stem a sharp drop in its stock price this month.
In possibly his biggest move since taking the reins of the Hamilton-based oil-service firm late last year, Nabors Chief Executive Officer Anthony Petrello laid out a change of course this week at the Howard Weil Energy Conference in New Orleans.
In a filing with regulators that provided details of his presentation, Mr. Petrello said Monday the land rig operator “went wrong” by investing in exploration and production businesses.
Nabors now plans to sell such assets as part of an $800 million divestment program.
The company’s stock buybacks were made with “unfortunate timing” and Nabors also missed out on growth opportunities in the US, which has seen a rise in domestic oil and gas production, he said.
Nabors shares fell three percent on the day of Mr. Petrello’s speech and for the three following sessions, but finally ticked up on Friday, rising 0.6 percent to $17.27.
In the month of March, Nabors has fallen more than 20 percent, compared to a drop of less than 10 percentby the Philadelphia Oil Service Index. Nabors is a component of that index.
Analyst Phil Weiss of Argus Research reiterated his buy rating on Nabors on Thursday.
“The shares of Nabors…offer a compelling opportunity to invest in a company with the potential to streamline operations, boost margins, strengthen the balance sheet, and improve capital efficiency,” Mr. Weiss said in a note to clients. ”Investors have the opportunity to realize significant profits by holding the shares of companies such as Nabors that are transitioning from weak to strong allocators of capital.”
On the minus side for Nabors, Weiss cut his 2012 earnings estimate for the company to $2.15 a share from $2.25 a share to reflect slimmer profit margins at the company’s pressure pumping and US land drilling segments.
Named chief executive in October, Mr. Petrello took over for Eugene Isenberg, who is now chairman.
Nabors said in February that Mr. Isenberg waived a $100 million payment, which would have been one of the largest termination checks in corporate history, according to a report by Dow Jones Newswires.
