NBR — Nabors Industries Ltd.

Summary of Nabors Industries Q3 2025 Earnings Call

1. Key Financial Results and Metrics

• Revenue: $818.2 million, down 1.8% sequentially, primarily due to the divestiture of Quail Tools.
• Adjusted EBITDA: $236.3 million, with an EBITDA margin of 28.9%, down 96 basis points sequentially.
• International Drilling Segment: Revenue of $407.2 million, up 5.8% sequentially; EBITDA of $127.6 million, up 8.5%.
• U.S. Drilling Segment: Revenue of $249.8 million, down 2.2%; EBITDA of $94.2 million, down 7.5%.
• Net Debt: Reduced to approximately $1.7 billion, the lowest in over 10 years, with a pro forma net debt leverage of 1.8x.
• Adjusted Free Cash Flow: Generated $6 million in Q3; expected to be approximately $10 million in Q4.

2. Strategic Updates and Business Highlights

• Quail Tools Sale: Completed for $625 million, significantly improving capital structure and enabling debt reduction.
• Parker Wellbore Integration: Progressing as planned, expected to generate approximately $55 million of EBITDA in 2025 post-acquisition.
• International Expansion: Continued growth in the International Drilling segment, particularly in Saudi Arabia and Kuwait, with new rig deployments.
• Technology Deployment: Introduction of the PACE-X Ultra rig, enhancing drilling capabilities with advanced technology.

3. Forward Guidance and Outlook

• Q4 Expectations: Anticipated adjusted EBITDA to be in line with Q3 levels, with U.S. Lower 48 rig count expected to stabilize between 57 to 59 rigs.
• International Rig Count: Projected average rig count of approximately 91 rigs, with continued growth in Saudi Arabia and Argentina.
• Cost Management: Expected daily adjusted gross margins in the U.S. to average around $13,000, with a slight decline in average daily revenue anticipated.

4. Bad News, Challenges, or Points of Concern

• U.S. Market Pressure: Declining activity in oil-directed operations, particularly in the Permian Basin, with a noted decrease in average rig count.
• PEMEX Collections: Shortfall in expected collections from PEMEX, impacting cash flow; ongoing delays in resolving outstanding services from 2024.
• Market Uncertainty: Mixed signals in global oil prices and potential oversupply concerns could affect drilling activity and pricing.

5. Notable Q&A Insights

• Saudi Arabia Activity: Discussion on the potential return of suspended rigs, with expectations that Aramco may reinstate about 50% of these rigs, indicating proactive measures to enhance gas production.
• Long-Term Strategy: Emphasis on the importance of natural gas in future energy needs, with Nabors well-positioned for growth in this sector.
• Debt Reduction Plans: Management's commitment to further reduce gross debt, targeting a net debt level around $1.1 billion to $1.2 billion in the near future.

This summary encapsulates the essential financial metrics, strategic initiatives, and outlook for Nabors Industries, along with the challenges faced and key insights from the Q&A session.