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The Hamilton, Bermuda-based company posted net income of $29.5 million or $0.10 per share for the third quarter, compared to $194.0 million or $0.67 per share in the prior year quarter.
Excluding certain non-cash charges, adjusted net income was $42.5 million or $0.15 per share for the latest quarter.
On average, 27 analysts polled by Thomson Reuters expected the company to report earnings of $0.16 per share for the third quarter. Analysts' estimates typically exclude special items.
Nabors said, "The principal reasons for the net income shortfall were foreign exchange losses of $0.03 and a $0.01 decline in the value of our holdings in the Chinese rig manufacturer Honghua Group."
Total revenues and other income for the third quarter declined to $803.57 million from $1.44 billion in the same quarter last year. Seventeen analysts had a consensus revenue estimate of $820.35 million for the third quarter.
Contract drilling revenues fell 44% to $738.26 million, oil and gas revenue slipped 66% to $10.09 million, and revenues from other operating segments decreased to $89.77 million over a year earlier.
Nabors said that its US Offshore business posted its first ever loss, due to continuation of the slow down in activity that started in the second quarter in response to a drop in oil prices.
The company's international results were lower than expected as a large number of maturing contracts were suspended rather than renewed, in contrast to previous indications from customers.
Total costs and other deductions for the quarter eased to $770.48 million from $1.16 billion in the prior year quarter.
For the nine-month period of 2009, Nabors reported a net loss of $38.3 million or $0.14 per share, compared to net income of $582.4 million or $2.01 per share in the previous year period.
Adjusted net income was $317.9 million or $1.12 per share in the first nine months of 2009.
Total revenues and other income decreased to $2.82 billion from $4.07 billion in the prior year period.
Looking ahead, Nabors said it has witnessed modest rate increases on high efficiency rigs in selected markets. The company also said it is receiving an increasing number of inquiries regarding incremental first quarter start-ups.
Gene Isenberg, Nabors' Chairman and CEO, said, "We believe the pace of the quarterly improvement in our results will be moderate for several quarters since the timing of significant increases in activity is not yet known. Nonetheless we are confident the upturn will soon be felt. One reason for our optimism is the higher forward prices for crude and gas which currently are over $85 and $7 respectively in 2011."
Nabors closed Tuesday's regular trading session at $22.41, down 50 cents or 2.18% on a volume of 6.07 million shares.
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