HOUSTON – Supped-up drilling rigs might be eating into the U.S. market for old mechanical models, but some of the aging units have found a home in North Dakota, Nabors Industries CEO said Wednesday.
“The mechanical rigs as a class have a limited life, but in certain locations in North Dakota, they perform really well,” Nabors CEO Anthony Petrello said in a conference call with investors, adding that he had anticipated analyst questions on whether a rise in sales of the company’s new rigs are simply cannibalizing the old. “We’re going to keep running them until they’re no longer useful.”
Rising prices for the Bermuda rig contractor’s most advanced machines are helping Nabors crank out more of them for operators in U.S. shale plays. If oil prices hover around $80 a barrel, producers will aim to drill more efficiently, prompting them to turn to Nabors’ newest models – and that may offset declines in U.S. drilling activity, Petrello said.
“That should help drive business for us,” he said. “We can’t eliminate the risk (of falling commodity prices) but we can do our best to minimize it.”
Oil companies are eyeing falling oil prices closely as they weigh 2015 spending budgets, but more than 80 percent of Nabors’ top customers “see steady programs,” he added.
Nabors on Tuesday reported $61 million in profit in the third quarter, as North American oil companies pump more sand into their wells and stimulate more wellbore segments called stages.
The jump in hydraulic fracturing activity has helped turn around the North American oil field services market this year. Nabors said the number of stages stimulated in its pressure pumping services business climbed 46 percent compared to last year’s third quarter.
The Bermuda driller, which has its main offices in Houston, had faced a loss of $105.4 million in the July-September period last year on asset impairments and other charges. In this year’s third quarter, its completion and production services business saw sales increase 19 percent to $612 million.
The company said it has contracts in hand for 43 of its Pace-X rigs, 28 of which have been deployed in the United States. They were designed to work well on multi-well production platforms called pads, one of the most significant developments in U.S. oil-field efficiency in the last few years.
Nabors’ nine contracts for new rigs in international markets validate the view that “the global drilling market continues to improve,” Petrello said.
Nabors shares dipped 19 cents in early trading Monday to $18.46 on the New York Stock Exchange.
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