Nabors has announced it is taking several actions in light of current market conditions, which have arisen from the combination of the COVID-19 outbreak and the ongoing dispute between two of the largest oil exporters.
“The safety of our employees remains our top priority,” Anthony Petrello, Nabors’ Chairman, CEO and President, said. “In the face of COVID-19, we have implemented several measures throughout our operations globally to protect our employees and to mitigate operational impact. Additionally, the industry has experienced a significant drop in oil prices as consumption of hydrocarbons has fallen precipitously. As a result, many E&P operators are implementing activity reductions in the US Lower 48, in excess of the cuts they had previously announced for 2020. Internationally, activity is expected to hold up better, although we could experience disruptions from the effect of government actions aimed at containing the virus. Given the expected deterioration in our activity, triggered by the steep drop in oil prices, as well as the uncertain duration and severity of the virus outbreak, we have already taken several actions to bolster our company’s liquidity.”
In response to current market and industry conditions, Nabors has implemented measures aimed at mitigating the impact on its financial results, including:
- An additional $75 million reduction in planned 2020 capital expenditures. The new reduced target is $275 to $295 million, compared to $350 to $370 million previously;
- A recommendation by management to the board of directors to suspend the dividend on Nabors’ common shares;
- Salary reductions totaling 20% for each of the CEO and CFO, as well as a 20% reduction in the annual retainer paid to non-employee members of the board of directors; and
- Salary reductions of 10% for US, corporate and expatriate employees with base salaries exceeding $100,000.
The company is also actively reviewing its organizational structure and taking additional steps to further streamline its operations, all with the view of improving liquidity while still retaining the ability to deliver safe and outstanding performance to our customers.
Given the uncertainty in the current market conditions, primarily in the Lower 48, Nabors has withdrawn any previously issued guidance for its full-year 2020 results. The company expects its Q1 2020 results to fall somewhat below the guidance provided on its Q4 earnings conference call.
“The announced reactions from operators have been swift and substantial, and the market conditions we face are sure to be difficult,” Mr Petrello added. “We are acting quickly and decisively. We remain committed to improving the company’s capital structure this year even under the expected market conditions, and we are confident these announced measures will support that goal.”