July 24 (Reuters) - Drilling rig contractor Nabors Industries Ltd said on Wednesday most of its clients were planning rig reductions in the second half of the year, after burning through their annual budgets too fast.
Greater efficiency in drilling operations led them to spend more than they anticipated on services in the first half of the year, Chief Executive Tony Petrello said.
“With the exception of just a minor portion of our customers, most are planning rate reductions in the second half,” he told analysts on a conference call. “So those are realities that we have to cope with.”
Petrello spoke with reporters after Nabors reported lower-than-expected second-quarter earnings on Tuesday.
The CEO of U.S. oilfield services leader Halliburton Co said earlier this week that he believed currently high oil prices made budget increases by clients more compelling.
U.S. oilfield services companies say the move toward multi-well drilling from one site has been faster than they expected, leading to an increase in wells drilled, which has caused spending by their clients to rise, despite a flat number of rigs this year.
While a natural gas drilling slump has left many U.S. rigs idle, those capable of drilling multiple wells from one site enjoy a utilization rate of 95 percent, Nabors said, and they make up a quarter of the Nabors global fleet of 472 land rigs.
Nabors, owner of the world’s largest land-rig fleet, also announced the signing of 11 long-term contracts for new or upgraded rigs. These include three for Iraq and Kazakhstan, and six headed to Argentina, where Chevron Corp just signed a deal for the huge Vaca Muerta shale.