Exhibit 99.1
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NEWS RELEASE |
Nabors Expects 3Q 2008 EPS to be $0.65 to $0.68 per Diluted Share
Much higher North American results more than offset by non-operating items
Much higher North American results more than offset by non-operating items
Hamilton, Bermuda, October 1, 2008 /PRNewswire-FirstCall/ Nabors Industries Ltd. (NYSE: NBR) today
announced that, notwithstanding higher than expected Adjusted Income Derived from Operating
Activities (operating income) for the third quarter of 2008, it will incur significant charges in
its Investment Income and Other Expense items as well as a tax rate adjustment for an expected
higher full-year effective tax rate, all of which will adversely impact Net Income and Earnings Per
Share. The aggregate impact is expected to approximate $0.18 per diluted share which will be
slightly offset by a $0.01 per diluted share gain resulting from a lower share count. This should
result in reported quarterly earnings of between $0.65 and $0.68 per diluted share.
The most significant component is a non-cash charge to investment income of approximately $22
million pre-tax ($0.07 per diluted share), inclusive of a $6 million cash dividend received on the
same investment. The charge represents the decline in the market price, since the end of the
second quarter, in the “Trading” portion of the Company’s total holdings of 450 million shares in
Honghua Group Ltd. (HH), which must be marked-to-market through the income statement at the
quarter-ended share price of 1.48 HKD ($0.19 USD). The current valuation still represents a
cumulative gain of approximately $17 million on the trading securities and $65 million on our total
holdings. HH became a publicly traded stock on the Hong Kong Exchange in March of 2008 at an
initial price of 3.83 HKD (USD $0.49). Upon receipt of the public shares Nabors designated 26.7%
of its shares as “Trading” so that it could readily sell these shares upon expiration of the lock
up period. The designation of a portion of our holdings as trading securities anticipated the
eventual reduction of Nabors’ ownership in HH to less than 10% at or above which the Hong Kong
Exchange rules would deem Nabors an affiliated party. These shares were originally obtained
through the settlement of a litigation matter relating to certain warranty and other claims that
Nabors asserted against HH in 2007. All of the warranty issues have since been fully rectified and
the rigs are now performing exceptionally well, setting numerous performance records in multiple
regions worldwide, particularly the high profile North American shale development projects.
Additionally, the third quarter’s Other Expense line will reflect approximately $13 million pre-tax
($0.05 per share) in estimated property losses during the quarter, consisting of $11 million for
Barge Rig 100 which was partially submerged during Hurricane Gustav and $2 million for minor damage
to several rigs during Hurricane Ike.
The Company will also record a tax adjustment in the third quarter of nearly $0.06 per diluted
share as North American income continues to exceed our earlier forecast and International income is
almost flat sequentially, resulting in an estimated higher effective tax rate for the full year.
The current quarter tax adjustment includes the tax impact of all of the above items. The lower
International results during this quarter stem primarily from excessive downtime in Mexico and
Saudi Arabia combined with the delayed start-up of jack-up 657 early in the quarter and other less
significant delays in Russia, Angola and Oman.