Evren Looking at the debt stack (to be clear, this is my opinion by looking through past press releases) I come up with (based on last earnings presentation from Q2 2021): $141m@ 5.l%, $4m@ 5.5%, due 2023, $558m@ approx 4.5% due Oct. 11, 2023, $287m@ 0.75% due 2024, $642m@ 5.75% due 2025, $213m@ 9.0% due 2025, $560m@ 7.25% due Jan. 15, 2026, $390m@ 7.50% due Jan. 15, 2028 I'm hoping to see the further paydown of debt announced next earnings above and beyond the previously announced retirement of the remaining 2021 notes, and I suspect that the 2023 notes will be reduced because of the clue announced that the next maturity was the $25 million in early 2023, but this is only a guess on my part. If my guesstimates are in the ballpark, this would mean the annual interest payments are roughly $160.6m at this time, going forward. This coincides with the $41,741m quarterly interest expense listed in the most recent Q2 earnings presentation. If Nabors can renegotiate an extension of the revolving credit facility at or near current terms (I'm guessing to 2027), then they easily pay off the remaining 2023 and 2024 debt with current cash flows, as well as the 9% notes due Feb 2025. That leaves the remaining $600m plus due 2025 to be refinanced via a new debt offering, which I arbitrarily estimate to be at 7.5%. Add in the $558m revolver at the 5% level, and we still have $145 million in annual interest accrued. This is why I don't see as rapid a rate of payoff of the debt as you expect. The good news is that further paydown of the debt makes a much bigger impact on the interest payments after 2025. Of course, a big increase in drilling could really improve the rate of debt repayment, and I am very gratified by the way oil prices are holding up, but I've learned not to rely too heavily on the expectation of good times in the oil industry. I hope this helps you to see where I'm coming from.
e
Thanks for reaching out . I will be waiting for your input after you review your spreadsheets. They are definitely trying to reduce the debt but the my question has always been are they really doing everything possible in that effort when oil is relatively trading at a high level. We all know good days don’t last forever. They should not leave any stones unturned while the energy markets support it . I am a little nervous . The speed at which they are biting the debt is questionable. I think .
e
THINK - I have a question for you . Knowing that you are tracking debt profile real close, how is that next due is $25m in 2023 after paying $82M - 9/21 dues? In the last earning release they reported $558m revolving credit facility + $145m notes outstanding for 2023 dues? I am a Litte lost when the news reads next fist due is $25m in 2023. Did they already refi the credit facility and $145m 2023 notes? If so I totally missed it . Thanks .
T
While Nabors is racking up a dismal record of quarter over quarter GAAP losses, I think it is important to consider the positive EBIDTA, the very real progress made toward debt reduction, the pickup in drilling activity that accompanies the rise in oil prices, the projected increase in rig count coming online from the SANAD JV, and the steady, but slow recovery in rig count utilization in the lower 48. It think it is far too premature to predict a Chesapeake-like scenario for Nabors. I also believe next quarter, when the $82 million 2021 notes have been retired, there will be positive uptick in share price. If Nabors retains a disciplined approach to debt reduction, as it has the past few years, it will be far easier to negotiate a new revolving credit facility at less onerous terms than is currently required by the bond market. I don't think Nabors is bleeding money; rather Nabors is slowly plugging the leak.
T
ItsJustMyOpinion You are wrong, as usual. A declining share price does not automatically lead to BK. It is an indicator of market sentiment, to be sure, but there is a big difference between the financial condition of Chesapeake and Nabors. Nabors refinanced a large portion of debt in 2020, extending maturities until 2026 and 2028, and has been aggressively reducing debt for the past 2 years. The drilling market is slowly, but steadily improving.
T
Petrello has deleveraged the company $740 million in the last two years, during an unprecedented collapse in oil prices combined with a worldwide pandemic. There is an enormous amount of depreciation to take advantage of, which is smart accounting, and free cash flow is so far holding up. Easy to armchair quarterback here, but the company appears to be doing the right thing for this situation. If you have a better plan to make the company more money than by paying off debt at this point, I'm all for hearing it. If your assertion is that the company, which is paying down debt aggressively, while being cash flow positive, and is in compliance with all debt covenants, is doomed to BK because they are depreciating assets in accordance with GAAP principles, then I'm not sure you are the person to be pontificating.
T
Again, 'ItsJustMyOpinion', offers no reasoning or analysis to his opinion, except for the brilliant observation that if you bought higher you are experiencing losses. How about some facts to support your opinion that Nabors will go BK? I couldn't help but notice all your previous posts have been deleted. Buy Nabors now for long term profit!
T
ItsJustMyOpinion
I'm not surprised you lost money in Nabors. You apparently think it is time to sell when the price is low, and buy when the price is high. You also don't seem to understand that a company can be making money while taking advantage of allowed depreciation to show an accounting loss. It is that free cash flow that is being used to pay down the debt. Every $50 million of debt retired is like another rig being put to work at current margin for more than a year, each and every year. And Nabors is paying off that much and more each and every quarter.
T
Nabors getting to attractive valuations at these prices. Oil prices down with COVID concerns again, but people showing a lot more reluctance to return to lockdowns again. I think any dip below $60 oil will be short lived.
T
Lets go back 90 days and review your prediction, 'ItsJustMyOpinion'. Hmmm, don't see anything from you. Your analysis suggests BK because the stock price is down. Well, the price is down, which is a better time to buy than when the price is up. Nothing you have said suggests future direction of the price of Nabors stock. Very easy to say you should have sold 3 months ago today, when viewing todays price. It is much harder to predict today as a good price to sell at today. One thing is certain, Nabors is paying down debt out of free cash flow, reducing future debt obligations, managing CAPEX, and showing improved rig utilization in a recovering drilling market. If your investment focus is what happens in a week, then you aren't really investing, you're speculating. You have yet to post a single item that shows declining operational fundamentals in the past two years. If you want to make money investing, you buy when the price is down, and sell when the price is up. You have it backwards. Perhaps that's why you delete your posts.
T
If you are waiting for a company with positive free cash flow that is paying off debt aggressively to go BK, I suspect you will be waiting a long time. The price is down today, along with the market, and the price of oil. No great mystery there. Will Nabors survive? I say yes, as long as they are making money and paying off debt.
T
Actually, Nabors should be trading higher than it is now. Steady progress over an extended time paying down debt, increasing EBITDA, recovery in drilling activity, and other positives. Much of the loss attributed to the quarterly loss are non-cash entries, along with large amounts of interest paid. With each quarter, the interest charges go down. As long as this continues, there is light at the end of the tunnel.
e
Let’s hope oil will not want to continue going down and crash just yet.. it needs to stay at or above $60 for the next 2 years for nabors to come out ok in the end .
T
Some are unable to do simple math. 'ItsJustMyOpinion' is one of those people. If you don't understand the difference between cash losses and depreciation, just admit it and move on. No one will miss you.
T
Conference call was optimistic in tone. I was glad to hear the $94 million from sale of Canadian assets would be largely earmarked for further debt reduction. I suspected that the warrants were intended as a means to reduce the credit revolver, and it will be interesting to see how this plays out. They did say it was a mechanism to convert outstanding debt into equity without being dilutive, but this anticipates a much higher price in the future, at least for a cash transaction. A much higher price would be way OK with me. Comparing the conference presentation from Q 2 to the one from Q 1, it shows a reduction of $75 million in the revolver, $1 million in the notes due 2023, and $4 million in the notes due this year. I anticipate we see the 2021 $82 million disappear soon, using the proceeds from the sale of Canadian assets. That will save almost $.95 million each quarter all by itself, though we won't see that until the notes are actually extinguished. The debt payments made in Q 2 should translate into another approx. $.67 million savings on interest. So maybe $1.57 million by Q 4? With near $175 million in depreciation and amortization being charged off per (this) quarter, Nabors won't be GAAP bottom line in the black for some time, but the $1.4 billion in debt reduction since Q 1, 2018 is a great step in the right direction. Especially if the interest saved is used to reduce debt further.
j
Looking for a reason to buy….no reason found. Old times are gone and for a long time if so. I hope Nabors survives but it looks that Petrello is abusing the stockholders to the max.
T
Q 2 earnings pretty much in line with expectations, removing the $81 million impairment charge for the sale of Canadian rigs. Improved free cash flow, with optimistic forward guidance for the rest of 2021. Another $58 million of debt reduction less cash and investments. More rigs working now than Q1 (? Canada rigs), with expectation average rigs working will improve slightly in Q 3. Overall, I think the release is on the positive side.
T
Assuming no major worsening of the oil market (a huge if!), I think it is quite likely that Nabors pays off the 2021 notes (due 9/15/2021), and the 2023 notes, along with a very large chunk of the revolving credit line (maybe $480 million?) unless they can get a new credit facility negotiated. The revolver doesn't expire until 10/11/2023 (AFAIK), so that Nabors has around 9 quarters to pay down debt. The revolver is bumping up against the 5.5 EBITDA limit right now, so presumable that is why we saw the decrease in the (cheaper) revolver debt as opposed to a drawdown of the 2023 notes.
T
Again, 'ItsJustMyOpinion', offers no reasoning or analysis to his opinion, except for the brilliant observation that if you bought higher you are experiencing losses. How about some facts to support your opinion that Nabors will go BK? I couldn't help but notice all your previous posts have been deleted. Buy Nabors now for long term profit!
T
You are mistaking book keeping entries for cash flow, IJMO. Positive cash flow, and paying off debt is far from living off borrowed money. There is a large debt, to be sure, but you are omitting the fact that $740 million in net debt was paid off in the last 8 quarters. Each successive debt repayment makes it easier to continue paying debt off because of the savings in interest no longer owed on the repaid debt. I think over the next 4 quarters we are likely to see another $500 million knocked off of net debt. That does not square well with your statement about living off borrowed money. BK extremely unlikely in the near to intermediate term, and recovery very likely in the long term if oil prices hold up.
Looking at the debt stack (to be clear, this is my opinion by looking through past press releases) I come up with (based on last earnings presentation from Q2 2021):
$141m@ 5.l%, $4m@ 5.5%, due 2023,
$558m@ approx 4.5% due Oct. 11, 2023,
$287m@ 0.75% due 2024,
$642m@ 5.75% due 2025,
$213m@ 9.0% due 2025,
$560m@ 7.25% due Jan. 15, 2026,
$390m@ 7.50% due Jan. 15, 2028
I'm hoping to see the further paydown of debt announced next earnings above and beyond the previously announced retirement of the remaining 2021 notes, and I suspect that the 2023 notes will be reduced because of the clue announced that the next maturity was the $25 million in early 2023, but this is only a guess on my part.
If my guesstimates are in the ballpark, this would mean the annual interest payments are roughly $160.6m at this time, going forward. This coincides with the $41,741m quarterly interest expense listed in the most recent Q2 earnings presentation.
If Nabors can renegotiate an extension of the revolving credit facility at or near current terms (I'm guessing to 2027), then they easily pay off the remaining 2023 and 2024 debt with current cash flows, as well as the 9% notes due Feb 2025. That leaves the remaining $600m plus due 2025 to be refinanced via a new debt offering, which I arbitrarily estimate to be at 7.5%. Add in the $558m revolver at the 5% level, and we still have $145 million in annual interest accrued. This is why I don't see as rapid a rate of payoff of the debt as you expect. The good news is that further paydown of the debt makes a much bigger impact on the interest payments after 2025. Of course, a big increase in drilling could really improve the rate of debt repayment, and I am very gratified by the way oil prices are holding up, but I've learned not to rely too heavily on the expectation of good times in the oil industry.
I hope this helps you to see where I'm coming from.
You are wrong, as usual. A declining share price does not automatically lead to BK. It is an indicator of market sentiment, to be sure, but there is a big difference between the financial condition of Chesapeake and Nabors. Nabors refinanced a large portion of debt in 2020, extending maturities until 2026 and 2028, and has been aggressively reducing debt for the past 2 years. The drilling market is slowly, but steadily improving.
I'm not surprised you lost money in Nabors. You apparently think it is time to sell when the price is low, and buy when the price is high. You also don't seem to understand that a company can be making money while taking advantage of allowed depreciation to show an accounting loss. It is that free cash flow that is being used to pay down the debt. Every $50 million of debt retired is like another rig being put to work at current margin for more than a year, each and every year. And Nabors is paying off that much and more each and every quarter.
Perhaps that's why you delete your posts.
Comparing the conference presentation from Q 2 to the one from Q 1, it shows a reduction of $75 million in the revolver, $1 million in the notes due 2023, and $4 million in the notes due this year. I anticipate we see the 2021 $82 million disappear soon, using the proceeds from the sale of Canadian assets. That will save almost $.95 million each quarter all by itself, though we won't see that until the notes are actually extinguished. The debt payments made in Q 2 should translate into another approx. $.67 million savings on interest. So maybe $1.57 million by Q 4?
With near $175 million in depreciation and amortization being charged off per (this) quarter, Nabors won't be GAAP bottom line in the black for some time, but the $1.4 billion in debt reduction since Q 1, 2018 is a great step in the right direction. Especially if the interest saved is used to reduce debt further.
$740 million in net debt was paid off in the last 8 quarters. Each successive debt repayment makes it easier to continue paying debt off because of the savings in interest no longer owed on the repaid debt. I think over the next 4 quarters we are likely to see another $500 million knocked off of net debt. That does not square well with your statement about living off borrowed money. BK extremely unlikely in the near to intermediate term, and recovery very likely in the long term if oil prices hold up.