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Acquisitions | 12 Months Ended
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Dec. 31, 2017
Acquisitions |
Acquisitions | Note 5 Acquisitions 2017 Acquisitions Robotic Drilling Systems On September 5, 2017 we paid approximately $50.7 million in cash, subject to customary closing adjustments, to acquire Robotic Drilling Systems AS (“RDS”), a provider of automated tubular and tool handling equipment for the onshore and offshore drilling markets based in Stavanger, Norway. This transaction will allow us to integrate RDS’s highly capable team and product offering with the technology portfolio of Canrig and strengthens the development of Canrig’s drilling automation solutions. As part of our purchase price allocation, we have recorded intangible assets of $53.3 million ($20.8 million of developed technology and $32.5 million of in process research and development), goodwill of approximately $5.7 million and other liabilities of $7.3 million (net of other working capital items). The intangible assets related to developed technology are being amortized using the straight-line method over the estimated useful life of 10 years. We have consolidated the operating results of RDS since the acquisition date and reported those results in our Rig Technologies segment. The pro forma effect on revenue and net income (loss) have been determined to be immaterial to our financial statements. Further, tests of significance for this acquisition do not result in a significant acquisition and as such we have not included disclosures of the allocation of the purchase price or any pro forma information. Tesco Corporation On December 15, 2017, Nabors completed the acquisition of Tesco Corporation (“Tesco”). Tesco’s tubular services business will benefit our Drilling Solutions segment as we expand into numerous key regions globally. Additionally, the acquisition combined Tesco’s rig equipment manufacturing, rental and aftermarket service business into our Rig Technologies segment, creating a leading rig equipment and drilling automation provider. Under the terms of the acquisition, Nabors acquired all common shares of Tesco in an all-stock transaction, with Tesco shareholders receiving 0.68 common shares of Nabors for each Tesco share owned, or approximately 32.1 million Nabors common shares. The fair value of common shares issued was $179.0 million based on the closing price of Nabors common shares as of the last trading day prior to the issuance as stipulated in the acquisition agreement. The following table provides the preliminary allocation of the purchase price as of the acquisition date.
|  | Fair Value |
(In thousands) |  | at Acquisition |
Assets: |  |  |  |
Cash and cash equivalents |  | $ | 59,804 |
Accounts receivable |  |  | 41,565 |
Inventory |  |  | 44,525 |
Other current assets |  |  | 13,889 |
Property, plant and equipment |  |  | 61,650 |
Other long-term assets |  |  | 3,647 |
Total assets |  |  | 225,080 |
Liabilities: |  |  |  |
Accounts payable |  | $ | 14,111 |
Accrued liabilities |  |  | 29,542 |
Other long-term liabilities |  |  | 2,436 |
Total liabilities |  |  | 46,089 |
Net assets acquired |  | $ | 178,991 |
We expect to finalize the allocation of the purchase price during the first half of 2018 when we are able to perform reviews of all book versus tax variances by jurisdiction. We have consolidated the operating results of Tesco since the acquisition date and reported those results in our Drilling Solutions and Rig Technologies segments. We included an additional $7.7 million in operating revenues and $0.1 million in earnings from the acquisition date through December 31, 2017 in our consolidated statements of income (loss) as a result of this acquisition. The following unaudited supplemental pro forma results present consolidated information as if the acquisition had been completed as of January 1, 2016. The unaudited supplemental pro forma results should not be considered indicative of the results that would have occurred if the acquisition had been consummated as of January 1, 2016; nor are they indicative of future results.
|  | Year Ended |
|  | December 31, |
(In thousands, except per share amounts) |  | 2017 |  | 2016 |
Operating revenues |  | $ | 2,717,933 |  | $ | 2,362,576 |
Income (loss) from continuing operations, net of tax |  |  | (554,235) |  |  | (1,129,172) |
Income (loss) from continuing operations per share - basic |  | $ | (1.75) |  | $ | (3.59) |
Income (loss) from continuing operations per share - diluted |  | $ | (1.75) |  | $ | (3.59) |
2015 Acquisitions On May 24, 2015, we paid $106.0 million in cash to acquire the remaining 49% equity interest in Nabors Arabia, our joint venture in Saudi Arabia, making it a wholly owned subsidiary. Previously, we held a 51% equity interest with a carrying value of $44.7 million and we had accounted for the joint venture as an equity method investment. The acquisition of the remaining interest allows us to strategically align our future growth in this market by providing additional flexibility to invest capital and pursue future investment opportunities. As a result, we consolidated the assets and liabilities of Nabors Arabia on May 24, 2015 based on their respective fair values. We have also consolidated the operating results of Nabors Arabia since the acquisition date and reported those results in our International drilling segment. The excess of the estimated fair value of the assets and liabilities over the net carrying value of our previously held equity interest resulted in a gain of $2.3 million and was reflected in other, net in the consolidated statement of income (loss) for the year ended December 31, 2015. The following table provides the allocation of the purchase price as of the acquisition date. The purchase price was allocated to the net tangible and intangible assets acquired and liabilities assumed based on fair value. The excess of the purchase price over such fair values was recorded as goodwill.
|  | Fair Value |
(In thousands) |  | at Acquisition |
Assets: |  |  |  |
Cash |  | $ | 48,058 |
Accounts receivable |  |  | 153,819 |
Other current assets |  |  | 58,021 |
Property, plant and equipment, net |  |  | 89,643 |
Intangible assets |  |  | 28,784 |
Goodwill |  |  | 75,634 |
Other long-term assets |  |  | 7,709 |
Total assets |  |  | 461,668 |
Liabilities: |  |  |  |
Accounts payable |  | $ | 206,599 |
Accrued liabilities |  |  | 74,393 |
Intangible liability |  |  | 13,472 |
Deferred tax liability |  |  | 4,823 |
Other long-term liabilities |  |  | 9,400 |
Total liabilities |  |  | 308,687 |
Net assets acquired |  | $ | 152,981 |
The goodwill recognized as a result of the acquisition of $75.6 million is primarily attributable to the workforce of the acquired business, strategic market access, ability to provide other services and products, a strategic customer with a long history of business and the expected synergies from combining the operations. This goodwill is not expected to be deductible for tax purposes. The identifiable intangible asset of $28.8 million and liability of $13.5 million consist of the fair value of the acquired favorable and unfavorable contracts, respectively, with a weighted-average amortization period of 2 years. We included an additional $248.9 million in operating revenues and $6.0 million in earnings from the acquisition date through December 31, 2015 in our consolidated statements of income (loss) as a result of this acquisition.

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