Reuters: Private Equity: UPDATE 1-Nabors sees pressure pump dip worse than rig count

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UPDATE 1-Nabors sees pressure pump dip worse than rig count Apr 25th 2012, 16:50 April 25 | Wed Apr 25, 2012 12:50pm EDT April 25 (Reuters) - Nabors Industries Ltd, owner of the world's largest land-drilling fleet, expects its hydraulic fracturing business to weather this year better than others as the market squeezes out excess pressure pumping supply. The extent of the decline in that market, caused by the U.S. natural gas glut and the resulting shift in rig activity, has been a widely discussed theme this month for rivals including market leader Halliburton Co and Baker Hughes Inc . Chief Executive Tony Petrello, whose company also owns the sixth-largest pressure pumping fleet in North America, said he did not expect a sharp drop in overall rig activity in the region at current oil prices. "On the other hand, the impact on pressure pumping will likely be much more severe and protracted given the excess pumping capacity and the number of new entrants that have to work their way out of the system," Petrello said on a conference call to discuss first-quarter earnings. Pressure pumping is used in the hydraulic fracturing process that releases oil and gas by cracking open shale rock. Contracts in place meant the Nabors pressure pumping unit would have a "respectable" 2012, he added. Nabors shares rose 5 percent on Wednesday after its quarterly profit came in ahead of expectations. The Bermuda-based company, which is slimming down from its current form as an international oil drilling conglomerate, is reassessing the value of its eight international shallow-water rigs and whether to keep them in its core portfolio as it sells off other offshore assets. Petrello explained that its participation in the international jackup market was because of some important relationships with national oil companies. "So we haven't shut the door on it," he said. "We're just being a little careful." Having completed the sale of some remaining oil and gas properties, Petrello said it was still looking at all options for disposing of NFR Energy, its exploration and production joint venture with private equity firm First Reserve. Link this Share this Digg this Email Reprints

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