Nabors Industries Ltd (NBR.N), owner of the world's largest land-drilling rig fleet, reported on Tuesday a higher-than-expected quarterly profit, helped by a lower tax rate, and forecast some relief next year from a stifling decline in U.S. drilling.
A Nabors measure of its own rig activity in the lower 48 U.S. states fell by 11 percent over the third quarter alone. But Chief Executive Tony Petrello said the market looked like it would start improving after an especially tough fourth quarter.
"The quarterly exit rates in US land drilling activity, along with the seasonal slowdown in well servicing and pressure pumping utilization, signal a significantly weaker fourth quarter followed by a modest uptick in the first quarter with the seasonal improvement in Alaska and Canada," he said in a statement.
"Looking forward, our customers are indicating a resumption of more normal activity as they initiate their 2013 budgets."
Its third-quarter net profit rose to $75.7 million, or 26 cents per share, from $74.3 million, or 25 cents per share a year ago. Total revenue rose 2 percent to $1.67 billion.
Excluding items such as a 20-cent loss related to the markdown of natural gas-producing assets, Nabors reported a profit of 42 cents per share, which was better than the 36 cents expected on average by analysts on Thomson Reuters I/B/E/S.
Petrello said its net income benefitted from a "meaningful" reduction in its tax rate, which it expects to be ongoing.
Its average rig count for the lower 48 states in the third quarter was 193.8, down from 217.9 in the second quarter and 201.8 in the third quarter of 2011. But Petrello said this was partially offset by a slight increase in rig margins.
(Reporting by Braden Reddall in San Francisco; Editing by Bob Burgdorfer)