HOUSTON (Bloomberg) - Nabors Industries Ltd., the world's largest onshore oil and natural-gas driller, said third-quarter profit fell 85 percent after a drop in fuel prices forced producers to cut spending.

Net income dropped to $29.5 million, or 10 cents a share, from $193 million, or 67 cents, a year earlier, Nabors said yesterday in a statement on PR Newswire. The Hamilton, Bermuda-based company was expected to earn 16 cents a share, the average of ten analyst estimates compiled by Bloomberg.

Natural-gas futures averaged $3.441 per million British thermal units in the third quarter, down 62 percent from a year earlier. Producers around the world are expected to slash capital budgets by 15 percent this year to $387 billion, according to a June 19 report by Barclays Capital in New York.

"I don't think they did too well," said Lewis Kreps, an analyst at Jesup & Lamont Securities in Dallas who rates the shares a "sell" and owns none. Rental prices and the average utilisation of Nabors' rigs have gone down over the past year, he added.

The number of oil and natural-gas rigs active in the US tumbled 51 percent in the third quarter to an average of 970, according to Baker Hughes Inc., which tracks rig use around the world.

"I don't see much improvement for the fourth quarter," Mr. Kreps said of prices for natural gas, a fuel used for running power plants and heating homes. "If we don't have a winter, we're going to have a problem come first quarter and second quarter next year."

The earnings statement was released after the closing of regular trading on US markets. Nabors fell 50 cents to $22.41 in New York Stock Exchange composite trading. The shares, which have 10 buy ratings from analysts, 13 holds and four sells, climbed 34 percent during the third quarter.