Nabors Industries Ltd. (NYSE: NBR) is the largest land drilling contractor in the world. On revenues of $5.9 billion, the Company is expected to generate $2.1 billion in EBITDA in FY2011. Based on term contracts in hand, approximately 55% of FY2012 EBITDA is already locked in, and on forecasted sales of $6.4 billion, I expect NBR to generate ~ $2.2 billion in EBITDA in FY2012. At current prices, this enterprise trades at a 4.1x and 3.0x multiple of FY2011 and FY2012 estimated EBITDA. Two months ago, the stock traded at $30 per share and now is down below $15 per share while underlying fundamentals of the business have continued to improve. With a lifting of the moratorium in the U.S. Gulf of Mexico earlier this year, and 10 to 15 new rigs scheduled to start work in Saudi Arabia and Iraq, the offshore and international land divisions are poised for a strong recovery. Major E&P's and IOC's, who represent a majority of the Company's customer list, tend to take a longer view on commodity prices and are unlikely to suddenly halt their exploratory drilling programs.

Yet, with a dimmed view of the economy and its impact on oil demand and therefore drilling, the Street has appears to be pricing in a complete implosion of the business. NBR is a strong franchise that, in my view, is extremely well positioned to benefit from the growing global scarcity of cheap oil and gas. By my estimates, this Company should earn ~ $3.26 per share in FY2013 - the stock trades at less than a 5 multiple of this earnings estimate!

Due to charts and tables, I found it easier to provide my analysis in a separate document.  Here's the link.