Nabors Industries Inc. NII, a fully owned affiliate of land drilling contractor Nabors Industries Ltd. NBR, recently declared the pricing of senior unsecured notes of $500 million. The notes will be offered to selected institutional investors.
The notes are scheduled to mature in 2024 and will carry an interest rate of 0.75%, payable semi-annually from Jul 15, 2017. Also, NII gives a 30-day option to purchase additional senior unsecured notes worth $75 million under the same terms and conditions. This option is made available to purchasers in order to cover over allotments, if any.
NII intends to utilize the proceeds from the aforesaid offering to prepay the remainder of NII's unsecured term loan, which matures in 2020. In addition to this, the proceeds will be used to pay the cost of the capped call transaction entered into with respect to Nabors' common shares. The remaining proceeds, if any, will be used for general corporate purposes.
Barbados-based Nabors, which is the largest land drilling contractor in the world, conducts oil, gas, and geothermal land drilling operations. Moreover, the company is well positioned with a sound mix of high performance rigs and new rigs in the key shale plays. Nabors also enjoys good exposure to oil plays with presence in the Bakken, Permian and International plays.
Over the past year, the Zacks categorized Oil and Gas Drilling industry has registered an impressive growth of 63.1%. However, the Nabors stock has outperformed the industry by registering growth of 155.3%.
The company carries a Zacks Rank #3 (Hold), which implies that the stock will perform in line with the broader U.S. equity market over the next one to three months.
Some better-ranked players from the broader energy sector include Braskem S.A. BAK and Cheniere Energy Partners, L.P. CQP. Both these stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
In the last four quarters, Braskem posted an average positive earnings surprise of 105.5%.
In the last quarter, Cheniere Energy Partners posted a positive earnings surprise of 185.71%.
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