NEW YORK (Bloomberg) - Bermuda-based Nabors Industries Ltd., the world's largest onshore oil and natural-gas driller, said second-quarter results were cut as lower gas prices reduced demand for its services.

Write-downs of rigs, oil and gas assets and other holdings total non-cash $178 million pretax, Nabors said yesterday in a statement. The company also is recording $62 million in costs to expense stock grants to two executives after trimming performance targets.

The value of rigs idled or under construction is being written down on the lack of "a market upturn of sufficient magnitude to justify placing these assets in service in the forseeable future", the company said.

Operating cash flow and earnings before interest, taxes and depreciation and amortization, or EBITDA, will exceed $1.3 billion, less than expected, the company said.

"You are looking at 55 cents of impact on the quarter," Roger Read, a Houston-based analyst for Natixis Bleichroeder, said in a telephone interview. "That they are writing down underperforming assets in this market shouldn't be a surprise to anyone. I don't see a major hit to the stock."

Oil and gas rigs operating in the US and Canada, where Nabors has the most equipment, has fallen by more than half to 1,094 from a peak of 2,467 last August on lower fuel prices, according to Baker Hughes Inc.

Natural-gas futures on the New York Mercantile Exchange fell 12.9 cents to $3.244 a million British thermal units at 9.58 a.m. yesterday, extending a 71 percent drop in the past 12 months and a 47 percent decline this year.

Nabors reported EBITDA of $1.92 billion and cash flow from operations of $1.45 billion in 2008, according to Bloomberg data. The expectation for EBITDA this year was $1.47 billion, the average of 20 analyst estimates compiled by Bloomberg.

Nabors had expected about $1.5 billion of EBITDA and operating cash flow this year, based on a forecast of $300 million to $500 million in free cash flow.