10 December 2020 by jbchevrel
Nabors Industries Ltd. (NBR) is a land drilling contractor, and also performs well servicing and workovers. The Company conducts oil, gas, and geothermal land drilling operations. Nabors well-site services include oilfield management, well logging, and other support services. NBR CDS was a constituent of CDX IG from s17 to s28. It then switched to CDX HY where it is still now, among the distressed section of the index. We close the 5y contract tighter by -1.5 point on the day, at 54.5%. Today was a strong day for the industry as crude price rose about +4%, Brent symbolically made it above $50 for the first time since March. As a result, in cash space, the NBR 5.75 2025 rallied more than a point and the stock rose by roughly 10%. Other energy-related stocks such as APA are also up almost 10% on the day, in a move which looks like a short squeeze. However, in CDS space, given the levels we are at, stocks vol and oil vol, CDS notably under performed equities here. This trend upward in crude prices started early November, the biggest driver being the rollout of the vaccines. Negative developments regarding the vaccines could make this move look like the value-grabbing attempt which took place in early June. Back then, NBR stock went 12 to 86 in one month, before reverting down to 26 a month later. It is now 75. Noteworthy that crude prices are where they are, in great part thanks to the OPEC+ supply cuts [9.7mb/d in April, now eased to 7.7mb/d]. Today’s rise in crude [WTI +4%] and steep rise in energy shares [NBR +10%] is very interesting, because the most recent weekly report on US crude inventories showed a 15.2mb increase in stockpiles [as discussed in yesterday’s post]. This measure had been expected to drop. Stimulus talks in the US are proving more difficult than was expected this morning. We could see a retracement, here.