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Nabors CEO: U.S. Offshore Delays Weigh on Projected Growth

Continued growth in the U.S. and Canadian onshore unconventional businesses will help to offset disappointing performances in 2Q2011 from the pressure pumping, U.S. offshore and international units, Nabors Industries Ltd. CEO Gene Isenberg said Monday.

Nabors is forecasting operating income of $165-170 million in 2Q2011, which is well below Wall Street's consensus forecast of $188.1 million. For the full year, the company projected that operating earnings would approach $900 million, which is below analyst forecasts of $926.4 million.

The Superior Well Services business, which Nabors acquired last year, was affected more than expected by late equipment deliveries and adverse weather in the Marcellus and Bakken shales, said Isenberg. However, the segment, which offers services for unconventional onshore drillers, expects to right its operations by the end of the year.

"The largest components of the shortfall in second quarter and full year operating income are from our pressure pumping and international segments," said Isenberg. "During the second quarter Superior has been impacted more than we anticipated by the protracted adverse weather in the Bakken and Marcellus areas, as well as by startup inefficiencies associated with late deliveries of new equipment. We expect Superior to be back on track with our expectations by the end of this year...

"Permitting delays continue to plague our U.S. Offshore operations, leading to the expectation of a modest loss in the second quarter. This situation is gradually improving, and we anticipate moderate profitability over the balance of the year and a return to more normal circumstances as we enter 2012."

The CEO said both the U.S. Lower 48 and Canadian operations "continue to meaningfully exceed our expectations. We have secured six more newbuild contracts in the Lower 48 since the last quarter, and we are preparing nine legacy rigs for work. The addition of these newbuilds brings the total number of new rigs in process to 36 in the U.S. Land segment and 40 worldwide, virtually all of which have work commitments."

Political unrest in the Middle East and other regions slowed down a prospective ramp-up in its international performance, Isenberg said. The segment also saw delays in contract awards.

For the first three months of this year Nabors reported profits more than doubled on continued strong growth from the U.S. onshore drilling operations. The company plans to release second quarter results on July 26.

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