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Nabors (NBR)

Nabors (NBR). By: Cameron Shunta. General Information. Largest provider of land and platform drilling contracting services for exploration development of oil, gas and geothermal wells. Also conduct drilling them selves. Types of Oil Rigs. Barge Rigs - 3

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Nabors (NBR)

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  1. Nabors(NBR) By: Cameron Shunta

  2. General Information • Largest provider of land and platform drilling contracting services for exploration development of oil, gas and geothermal wells. • Also conduct drilling them selves.

  3. Types of Oil Rigs • Barge Rigs - 3 • Jack-up Rigs - 19 • Marine Vessels - 28 • Platform Rigs - 43 • Land Drilling Wells - 588 • Land work over Rigs - 781

  4. Position of Rigs • Alaska • United States (Lower 48) • U.S. Gulf of Mexico • Canada • International (South America, Middle East, and Africa)

  5. Other Services Provided • Selling Mud Density Sensors – extremely accurate, little maintenance required. Detects the level of Mud in the pit of the Oil Well. • Quantitative Fluorescence Technique – technology to detect lighter fraction aromatic hydrocarbons. (Used in Drill Cuttings)

  6. (Cont) • Projection Acceleration Software System – Build operational plans while graphically attaching activities and resources. • Moreover, this software facilitates technical limits, safety concerns, and learning initiatives.

  7. Current Board of Directors • Eugene M. Isenberg, 76 – CEO since 1987. Highest paid CEO in 2005. • Anthony G. Petrello, 51 – Deputy Chairman, Chief Operating Officer. • Bruce P. Koch, 46 – CFO – Principal Accounting Officer

  8. (Cont.) • Daniel Mclachlin, 68 – Vice President of Administration. • Mickey M. Sheinfield – Senior Counsel • 3 other Counsel members • Other Full Time Employees: 22,599

  9. Competitive Edge • Hires the best employee’s – (8 year straight winner of for safety of employee’s. Pays employee’s better then competitors). • Provides other services besides drilling unlike competitors. • Many newer rigs that are more efficient unlike other companies who’s oil wells are getting old. • Future Advancements

  10. Future Advancements • New Technology – 5c Rig – incorporates programmable logical control systems, their safer, more efficient, more durable, and easier to operate. • Plan on providing 40 of these innovative rigs in the next 2 years.

  11. Market Capitalization • 9.81 Billion • Large Cap Company – (2 – 10 million) • This was derived by following equation (stock price X Number of Shares)

  12. Expected Growth Rate

  13. Evaluating The Company • Things Warrant Buffet looks for in a company. • Has the company consistently performed well? • Has the company avoided excess debt? • Are profit margins high? Are they increasing? • How long has the company been public?

  14. (Continued) • Do the company's products rely on a commodity? • Is the stock selling at a 25% discount to its real value? • Also will include other analyst opinion on what to look for.

  15. History of the Company • Since 1987, Nabors Industries, Ltd has been under the same management team. • During 1987 it was limited to just US operations. However, as explained, today it is now a world wide company having operations across the globe.

  16. Nabors –ROE 29.01% As Shown ROE – Is above average compared to it’s competitors. Also, Nabors meets 15% ROE standard Globalsantafe Corp. (GSF) 17.36% Patterson-UTI Energy Inc. (PTEN) 47.33% Pride International Inc. (PDE) 11.34% ROE

  17. Nabors –ROA 11.14% As Shown ROA – Is above average compared to it’s competitors. Nabors 11.14% ROA meets the <5% standard GSF – 8.76% PTEN - 33.96% PDE - 7.13% ROA

  18. Debt / Equity • Total Debt/Equity Ration (mrq) = 1.2 • Ideally we would a company to have a smaller debt to equity ratio; however, 1.2 falls within the analyst standards of being between .5 – 1.5. • Although it is 1.2, as shown taking on this debt the company has provided a great return on asset and equity with this debt. Thus, it has been beneficial. • In the near future, they plan on paying off more of the long term debt.

  19. Current Ratio • Current Ratio = (Current Assets / Current Liabilities) is 3.73 • This number is significantly high, which means the company has a large amount of cash to pay off short term debt. • However, I would expect this number to go down slightly in the future as the company starts to use some of the cash to pay off the long term debt.

  20. Nabors Price to Sales Ratio - 2.1 Share Price/Revenue Per Share Tells a limited story, but helps show that the company is undervalued. Were looking for a low price to sales ratio. As shown. Its below the Industry average Comparing this to its Competitors GSF – 4.45 PTEN – 1.68 Industry – 3.71 Prices / Sales

  21. Price/Book Ratio Stock Price / (Total Asset – Intangible Asset and Liabilities) Nabors - P/B Ratio 2.69 Ratio tells you if the company is under valued or if there is something fundamentally wrong with the company. Price to Book Ratio of Competitors GSF - 2.75 PTEN – 2.75 PDE - 2. 01 Price / Book

  22. PE/G Ratio – Nabors - .26 Were looking for a low number, which shows the company is under valued. Competitors PE/G GSF - .33 PTEN – .33 PDE - .53 Industry - .51 PE/G

  23. Earning / Share Nabors – 3.18 Looking for a high number. Competitors Earning/Share GSF – 3.39 PTEN – 3.794 PDE - 1.561 Earning/Share

  24. BETA • Nabors Beta = 1.2 • This means that this company will be 20% more volatile compared to the market as a whole. • Thus, this stock choice should be combined with other stocks with much smaller beta in order to balance out the portfolio volatility.

  25. Risks with Investment • Things to consider before investing into this company • How the price of oil and natural gas and industry expectations will be in the future? • Political Stability in the countries that they operate. • Change in Laws and Regulations. • Electric / Fuel-Efficient Cars

  26. Answer to these Risks • Although these concerns may seem to hamper investment, Nabors Incorporated specifically is the best oil company ready to handle these challenges. • Specifically – If oil prices rise, there is a great chance that revenue will increase dramatically because oil is an inelastic good. • Political Stability – Having a diverse set of locations helps mitigate political instability in one area. However, if political instability arises where they are not drilling it will force prices to rise and generate greater revenues.

  27. (Continued) • The Change in laws and regulations will only help this company because they have a completive edge in safety products. • The last concern – Efficient Fuel Cars / Electric Cars - This is a probably the strongest concern. However, I strongly believe electric cars will not be highly produced for several years, which means the United States will still be dependent on oil.

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