Nabors Industries(NBR) Message Board

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Gold/Mining/Energy : Nabors Industries(NBR)

NBR 48.52

-1.7%

Oct 31 9:30 AM EDT

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To: Fredman who wrote (165)	1/1/2015 10:24:51 AM
From: Lance Bredvold	of 174

I have little idea. I've owned some NBR for many years and have wished I didn't. It seems to me that rig contracts are being dropped all across the US as fast as the operators can get away with it or are forced to sacrifice. I had hoped for a fairly rapid though slow recovery of oil prices like what happened in 08 and 09. Possible, but prices could also hold at a less extreme level like they are now for a longer period of time--say $50 or $55. That would still wipe out or damage severely a couple of my small E & P investments (WLL and OAS). OAS will be fine until May 2015 or so as they drop the number of rigs from 16 in November, 2014 to 6 as contracts expire. Also they will realize prices of $80+ to over $90 on much of their output due to hedges placed in 2014. If WTI prices have not recovered at least to $70 by the second half, I expect more extreme cuts which might well further damage companies like NBR. I don't understand NBR's business all that well, but I am guessing most of their business (both domestic and international) is extremely vulnerable to changes in drilling schedules. Rates go down and new contracts are not forthcoming. Well service is minimized and becomes marginally profitable not covering overhead. From the viewpoint of Oasis, they want to utilize the rigs they are forced to keep utilizing on sweet spots where they can still cover some overhead when prices are below $80 (that's what they based their predictions on in recent years though they apparently raised that breakeven level in 2014 planning). They are scared and should be. I know they had not renegotiated contracts for 2 rigs in Montana by December. Also that Fidelity had laid down one, expected to drop their second rig in N. Dakota and sell the whole MDU division (if they could find a buyer which seems doubtful at this point). If prices were at a nadir in December 2014 like they were in December of 08 (then about $33 to $35 for just a few days) followed by gradually rising prices over a couple of years, we could see NBR's prospects becoming hopeful again and speculators might run the price up to $30 like they did in 2011 hoping against hope that NBR would become hugely profitable. Seems to me NBR is poorly run with high overhead and little self control as evidenced by the way they pay their executives and slowly adapt to changing conditions. But those are just general observations without much real knowledge as I don't enjoy studying the company much.

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