Citi analyst Scott Gruber downgraded Nabors Industries (NBR) to Neutral from Buy and cut his price target for the shares to $4.00 from $6.70. The analyst coupled the downgrade with an upgrade of Forum Energy (FET) to Buy from Neutral. Nabors' free cash flow outlook is weighted towards the second half of 2019, with Q1 likely to be a cash burn of $40M-plus, Gruber tells investors in a research note. He believes the magnitude of the cash burn in Q1 will lead to investors questioning if the company can reach its $200M-$250M free cash flow target for the year. With the shares up 70% year-to-date, Gruber expects a "pause" into Nabors' Q1 results. The analyst's top three picks in U.S. Oil Services are Patterson-UTI (PTEN), Keane Group (FRAC) and Forum Energy.

Reports Q1 revenue $734M, consensus $728.89M. The first quarter results included a gain, related to mark-to-market treatment of Nabors warrants, of $6M, or 62c per diluted share. Anthony Petrello, Nabors Chairman, CEO and President, commented, "Our first quarter operating results were stronger than we expected, driven by resilient pricing and lower costs in our Lower 48 drilling operations, as well as higher than forecast OEM repair revenue and energy transition revenue in our Rig Technologies segment. Rig count increased in our International segment, driven by rig startups in Saudi Arabia and Algeria, as part of our commitment to deploy seven rigs in these two countries during 2024. We have also received recent awards in Argentina for three more rigs. I believe we are in the midst of the largest opportunity that we've seen in the last decade to strengthen our international business. Pricing in the Lower 48 market remained firm, as utilization of our highest specification rigs stayed strong across several important markets. Average rig count increased compared to the prior quarter, but was slightly below our estimates, mainly reflecting activity reductions in natural gas basins. Results in our Drilling Solutions segment reflected reduced activity in the Lower 48, partially offset by better growth from international markets."