Feb 20 (Reuters) - Drilling rig contractor Nabors Industries
Ltd remains intent on cutting its debt pile down to size
in the face of scrutiny from its largest shareholder over the
underperformance of its stock.
Nabors shares were down 7 percent at $16.75 on Wednesday
after the company reported a decline in revenue for the fourth
quarter amid the worst slowdown in North American natural gas
drilling in more than a decade.
The shares have badly underperformed peers in the past year,
which caught the attention of Pamplona Capital Management -
owner of 9.3 percent of Nabors stock - which expressed its
concern in a regulatory filing last month.
Nabors has focused for many months on its balance sheet. The
combination of more cash flow and asset sales reduced its ratio
of debt to capitalization - net debt plus shareholders' equity -
to 38 percent from 42 percent earlier in 2012. Capital
expenditure fell by $700 million last year to $1.4 billion.
Nabors said these dual efforts at debt reduction would
continue this year, as it aims to achieve its end-2013
'debt-to-cap' target of 25 percent, which it set last October.
Chief Executive Tony Petrello, having now spent just over a
year in the top job, said he would shave another $400 million
off its $3.6 billion of net debt this year, regardless of
whether assets were sold.
'We expect to generate significant net operating cash flow
again in 2013 despite weaker North America market conditions,'
The company would also keep pursuing the sale of its
remaining oil and gas acreage in the Horn River area of British
Columbia, Alaska and the Eagle Ford basin in Texas, he added.
Nabors is also in the process of completing the sale to
private equity firm First Reserve of its 50 percent interest in
the $1 billion NFR joint venture - an oil and gas exploration
firm that First Reserve agreed to take control of in December.
As for Pamplona, that fund reported its stake as of the end
of July. The timing suggests it may have been what prompted
Nabors to authorize a shareholder rights plan, or 'poison pill,'
in July. Nabors said the plan gave shareholders rights to buy
new preferred stock to ensure 'fair and equal' treatment of all
investors if there were an effort to take over the company.
(Reporting by Braden Reddall in San Francisco; editing by
Keywords: NABORSINDUSTRIES RESULTS/DEBT
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