Company Actions - Nabors 宣布将其钻杆租赁业务 Quail Tools 出售给 Superior [1] - Nabors 的股票因此消息上涨，达到五个多月以来的最大涨幅 [1] Industry Dynamics - Nabors 是全球最大的陆地钻井设备供应商之一 [1]

Core Viewpoint - Nabors Industries has entered into a definitive agreement to sell its subsidiary Quail Tools for a total consideration of $600 million, which will significantly reduce its net debt by over 25% and enhance financial flexibility [1][5][6]. Financial Impact - The sale includes cash of $375 million and a seller note of $250 million, with expected cash taxes of approximately $5 million [1]. - Following the transaction, Nabors anticipates a reduction in net debt by $625 million, decreasing from $2.3 billion to approximately $1.675 billion [5][6]. - The transaction is expected to deliver annual interest savings exceeding $50 million [5]. Business Performance - Quail Tools is projected to generate adjusted EBITDA of around $150 million in 2025, excluding any synergies that may be realized by Superior Energy Services [3]. - The retained businesses from the Parker acquisition are expected to generate at least $55 million in adjusted EBITDA for the full year 2025 [6]. Strategic Rationale - The transaction is viewed as a win-win for both Nabors and Superior, with potential for significant synergies in the tubular rental space [4]. - The decision to sell Quail was challenging due to its strong performance and customer base, but the metrics of the transaction indicate substantial value creation for shareholders [6]. Market Position - Quail Tools is recognized as a leading provider of high-performance downhole tubulars in the U.S. oil and gas drilling market, while Superior also operates in both U.S. and international markets [2].

Summary of Key Points from the Conference Call Transcript Industry Overview - The focus is on the Energy Services & Equipment sector in North America, with particular attention to companies like GTLS (Chart Industries), NBR (Nabors Industries), NOV (National Oilwell Varco), and TS (Tenaris) [1][2][6]. Core Insights and Arguments - **Earnings Estimates Revision**: The 2025 and 2026 EBITDA estimates for GTLS, NBR, NOV, and TS have been lowered by 2% and 4% respectively, indicating a cautious outlook for these companies [4][19]. - **M&A Activity**: Baker Hughes (BKR) is reportedly preparing a bid to acquire GTLS, which would value GTLS at approximately $210 per share, a 22% premium over its recent closing price of $171.65. This acquisition could significantly impact GTLS's market position [5][19]. - **Market Sentiment**: The near-term outlook for GTLS and TS is constructive due to their exposure to gas and non-oil & gas sectors, while NBR is viewed cautiously due to declining activity in North America and Saudi Arabia [9][19]. - **Performance Metrics**: NOV's 2Q results showed a revenue increase of 2%, but EBITDA decreased by 4%, leading to expectations of a modestly negative market reaction. The guidance for 3Q indicates a revenue increase of 1% but a further EBITDA decline of 2% [9][13]. Additional Important Insights - **Tariff Impacts**: The potential impacts of tariffs on the companies' operations and pricing strategies are a key focus area, especially given the current geopolitical climate [9]. - **Capital Allocation**: Companies are expected to discuss their capital allocation plans, including updates on 2025 capex and shareholder returns, which are critical for investor confidence [9][13]. - **Market Conditions**: The overall market conditions for oilfield services (OFS) are soft, particularly in the US land, Saudi Arabia, Mexico, and offshore deepwater markets, which could affect pricing and activity levels [9][19]. - **Stock Ratings and Price Targets**: The current stock ratings and price targets for the companies are as follows: - GTLS: Overweight, PT $225.00 - NOV: Overweight, PT $15.00 - NBR: Overweight, PT $50.00 - TS: Underweight, PT $34.00 [10][19]. Conclusion - The Energy Services & Equipment sector is facing a mix of challenges and opportunities, with M&A activity potentially reshaping the landscape. Companies are navigating soft market conditions while focusing on strategic capital allocation and managing tariff impacts. The upcoming earnings reports will be critical in assessing the health and outlook of these firms.

[PART I FINANCIAL INFORMATION](index=3&type=section&id=PART%20I%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements for June 30, 2025, and 2024, detailing financial position, performance, and cash flows, significantly influenced by the Parker acquisition Condensed Consolidated Balance Sheet Highlights (Unaudited) | (In thousands) | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Total current assets** | $1,196,891 | $999,537 | | **Total assets** | $5,038,663 | $4,504,301 | | **Total current liabilities** | $669,445 | $571,917 | | **Long-term debt** | $2,672,820 | $2,505,217 | | **Total liabilities** | $3,591,993 | $3,297,963 | | **Total equity** | $640,328 | $421,247 | Condensed Consolidated Statements of Income (Loss) Highlights (Unaudited) | (In thousands, except per share) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | **Operating revenues** | $832,788 | $734,798 | $1,568,974 | $1,468,502 | | **Net income (loss)** | $(2,205) | $(13,029) | $54,974 | $(22,031) | | **Net income (loss) attributable to Nabors** | $(30,910) | $(32,255) | $2,078 | $(66,588) | | **Diluted EPS** | $(2.71) | $(4.29) | $(1.01) | $(8.83) | Condensed Consolidated Statements of Cash Flows Highlights (Unaudited) | (In thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | **Net cash provided by operating activities** | $239,545 | $288,898 | | **Net cash used for investing activities** | $(210,863) | $(227,098) | | **Net cash used for financing activities** | $(21,348) | $(636,339) | [Note 3: Parker Acquisition](index=15&type=section&id=Note%203%3A%20Parker%20Acquisition) Nabors acquired Parker Drilling Company for **$180.6 million** on March 11, 2025, resulting in a **$116.5 million** bargain purchase gain and significant post-acquisition revenue and net income contributions - The acquisition of Parker Drilling Company was completed on March 11, 2025, for total consideration of **$180.6 million** (**$0.6 million** cash and **4.8 million** shares)[33](index=33&type=chunk) - A bargain purchase gain of **$116.5 million** was recorded, resulting from the excess fair value of net assets acquired (**$297.1 million**) over the purchase price, primarily due to a decrease in Nabors' stock price from **$77.52** at signing to **$37.50** at closing[34](index=34&type=chunk)[35](index=35&type=chunk) - From the closing date through June 30, 2025, Parker contributed approximately **$177.4 million** in revenue and **$22.5 million** in net income to Nabors' consolidated results[39](index=39&type=chunk) [Note 6: Debt](index=21&type=section&id=Note%206%3A%20Debt) Total long-term debt increased to **$2.67 billion** by June 30, 2025, reflecting various senior notes and credit facility borrowings, alongside note repurchases and the repayment of the Parker Term Loan Debt Composition | (In thousands) | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Senior notes (various) | $2,525,196 | $2,539,609 | | 2024 Credit Agreement | $178,000 | $0 | | **Total Debt** | **$2,703,196** | **$2,539,609** | | Less: deferred financing costs | $30,376 | $34,392 | | **Long-term debt, net** | **$2,672,820** | **$2,505,217** | - Following the Parker acquisition, the outstanding balance of the Parker Term Loan (**$177.8 million**) was repaid on March 25, 2025, utilizing the company's credit agreement[56](index=56&type=chunk) - As of June 30, 2025, the company had borrowings of **$178.0 million** and **$78.8 million** of letters of credit outstanding under its 2024 Credit Agreement[60](index=60&type=chunk) [Note 12: Segment Information](index=34&type=section&id=Note%2012%3A%20Segment%20Information) The company operates four segments, with International Drilling leading in Q2 2025 revenue (**$385.0 million**) and Drilling Solutions in adjusted operating income (**$50.4 million**), significantly impacted by Parker's operations Segment Performance - Three Months Ended June 30, 2025 vs 2024 | Segment (In thousands) | Operating Revenues (Q2 2025) | Adjusted Operating Income (Q2 2025) | Operating Revenues (Q2 2024) | Adjusted Operating Income (Q2 2024) | | :--- | :--- | :--- | :--- | :--- | | U.S. Drilling | $255,438 | $39,788 | $259,723 | $45,085 | | International Drilling | $384,970 | $36,051 | $356,733 | $23,672 | | Drilling Solutions | $170,283 | $50,365 | $82,961 | $27,319 | | Rig Technologies | $36,527 | $1,721 | $49,546 | $4,860 | Total Segment Assets | Segment (In thousands) | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | U.S. Drilling | $1,070,216 | $1,049,650 | | International Drilling | $2,471,483 | $2,348,590 | | Drilling Solutions | $444,153 | $79,065 | | Rig Technologies | $180,229 | $215,225 | | **Total reportable segments** | **$4,166,081** | **$3,692,530** | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=43&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses Q2 2025 financial performance, noting a **$98.0 million** revenue increase driven by the Parker acquisition, cautious outlook, adequate liquidity of **$387.4 million**, and decreased operating cash flow [Outlook](index=47&type=section&id=Outlook) The market outlook remains volatile due to geopolitical factors, with cautious U.S. drilling activity expected to improve, while international markets anticipate expanded production capacity and increased oilfield activity - Demand is tied to volatile oil and gas prices, which are sensitive to supply/demand cycles and geopolitical uncertainties[124](index=124&type=chunk) - U.S. drilling activity slowed in response to market conditions, but this trend is expected to shift with anticipated higher natural gas demand[125](index=125&type=chunk) - International markets are generally expected to see an expansion of production capacity and increased oilfield activity[130](index=130&type=chunk) [Results of Operations](index=49&type=section&id=Results%20of%20Operations) Q2 2025 operating revenues increased by **$98.0 million** to **$832.8 million**, primarily due to the Parker acquisition, which also drove a significant improvement in H1 2025 net income to **$2.1 million** from a prior-year loss Segment Revenue and Operating Income Changes (Q2 2025 vs Q2 2024) | Segment | Revenue Change (in millions) | % Change | Adj. Op. Income Change (in millions) | % Change | | :--- | :--- | :--- | :--- | :--- | | U.S. Drilling | ($4.3) | (2)% | ($5.3) | (12)% | | International Drilling | $28.2 | 8% | $12.4 | 52% | | Drilling Solutions | $87.3 | 105% | $23.0 | 84% | | Rig Technologies | ($13.0) | (26)% | ($3.1) | (65)% | - For the six months ended June 30, 2025, net income attributable to Nabors was **$2.1 million**, compared to a net loss of **$66.6 million** for the same period in 2024, primarily driven by a **$116.5 million** gain on bargain purchase from the Parker acquisition[145](index=145&type=chunk) - General and administrative expenses increased by **33%** in Q2 2025 and **22%** in H1 2025 year-over-year, reflecting costs from the Parker acquisition and inflation[134](index=134&type=chunk)[146](index=146&type=chunk) [Liquidity and Capital Resources](index=55&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains adequate liquidity from cash, credit facilities, and operating cash flow, with **$387.4 million** in cash and investments, compliance with debt covenants, and a decrease in operating cash flow to **$239.5 million** in H1 2025 - As of June 30, 2025, the company had cash and short-term investments of **$387.4 million** and working capital of **$527.4 million**[157](index=157&type=chunk) - The company was in compliance with all covenants under the 2024 Credit Agreement as of the report date, with an interest coverage ratio of **4.30:1.00** (requirement is **2.75:1.00**)[162](index=162&type=chunk) Cash Flow Summary (Six Months Ended June 30) | (In millions) | 2025 | 2024 | | :--- | :--- | :--- | | **Net cash from operating activities** | $239.5 | $288.9 | | **Net cash from investing activities** | $(210.9) | $(227.1) | | **Net cash from financing activities** | $(21.3) | $(636.3) | [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=61&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company reported no material changes in its exposure to market risks during the six months ended June 30, 2025, compared to its 2024 Annual Report disclosures - There were no material changes in the company's exposure to market risk during the six months ended June 30, 2025[184](index=184&type=chunk) [Item 4. Controls and Procedures](index=61&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of June 30, 2025, with no material changes to internal control over financial reporting during the quarter - Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of June 30, 2025[188](index=188&type=chunk) - No material changes to internal control over financial reporting were identified during the quarter ended June 30, 2025[189](index=189&type=chunk) [PART II OTHER INFORMATION](index=63&type=section&id=PART%20II%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=63&type=section&id=Item%201.%20Legal%20Proceedings) This section refers to Note 9 for legal matters, highlighting a significant long-standing dispute in Algeria concerning foreign currency exchange controls with a potential loss of up to **$13.8 million** - The company is involved in a lawsuit in Algeria related to alleged violations of foreign currency exchange controls, with a potential loss of up to **$13.8 million** in excess of amounts already accrued[80](index=80&type=chunk) [Item 1A. Risk Factors](index=63&type=section&id=Item%201A.%20Risk%20Factors) This section highlights new risk factors since the 2024 Annual Report, including potential limitations on shareholder influence due to Voting & Lock-Up Agreements and adverse impacts from evolving U.S. and international trade policies - A new risk factor relates to Voting & Lock-Up Agreements with certain former Parker shareholders, which require them to vote in favor of board-recommended director candidates and proposals, potentially limiting other shareholders' influence[193](index=193&type=chunk) - The company faces risks from significant changes in U.S. or other national trade policies, including tariffs and retaliatory measures, which could increase supply chain costs and adversely affect business operations[194](index=194&type=chunk)[195](index=195&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=65&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company reports **$278.9 million** remaining authorized under its share repurchase program as of June 30, 2025, with no shares repurchased under the public program during the quarter - As of June 30, 2025, the company had **$278.9 million** remaining available under its authorized share repurchase program[199](index=199&type=chunk) - No shares were repurchased under the publicly announced program during the three months ended June 30, 2025[203](index=203&type=chunk) [Item 5. Other Information](index=65&type=section&id=Item%205.%20Other%20Information) The company confirms no directors or officers adopted or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the quarter ended June 30, 2025 - During the quarter ended June 30, 2025, no directors or officers adopted or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement[204](index=204&type=chunk) [Item 6. Exhibits](index=67&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Form 10-Q, including CEO and CFO certifications required by Sarbanes-Oxley Act and Inline XBRL data files for financial reporting - The filing includes required certifications from the CEO and CFO (Exhibits 31.1, 31.2, 32.1) and Inline XBRL documents (Exhibit 101 series)[211](index=211&type=chunk)

Core Insights - Nabors Industries Ltd. (NBR) reported a second-quarter 2025 adjusted loss of $2.71 per share, which was wider than the Zacks Consensus Estimate of a loss of $2.05, but narrower than the prior-year loss of $4.29 per share [2][8] - The company's operating revenues reached $832.8 million, slightly exceeding the Zacks Consensus Estimate of $831 million and up from $734.8 million in the previous year [3][8] - Adjusted EBITDA increased to $248.5 million from $218.1 million year-over-year, although it fell short of the model estimate of $306.5 million [3] Segment Performance - U.S. Drilling generated operating revenues of $255.4 million, down 1.6% from $259.7 million a year ago, and missed the estimated $312.7 million [4] - International Drilling's operational revenues rose to $385 million from $356.7 million year-over-year, but also missed the estimate of $394.8 million [5] - Revenues from the Drilling Solutions segment surged 105.3% to $170.3 million from $83 million in the prior-year quarter, exceeding the estimate of $91.1 million [5] Financial Position - Total costs and expenses increased to $818 million from $740.5 million in the previous year, slightly above the prediction of $816.1 million [7] - As of June 30, 2025, the company had $387.4 million in cash and short-term investments, with long-term debt around $2.7 billion and a total debt-to-total capital ratio of 80.7% [9] Guidance - For Q3 2025, NBR anticipates a lower average rig count in U.S. Drilling, ranging between 57 and 59 rigs, with a daily adjusted gross margin of approximately $13,300 [10] - The company expects an average rig count of 87 to 88 rigs in its International operations, with a daily adjusted gross margin estimated at approximately $17,900 [11] - Capital expenditures for Q3 are projected to be between $200 million and $210 million, with a total expected for the year ranging from $700 million to $710 million [12]

Financial Data and Key Metrics Changes - Adjusted EBITDA for the second quarter totaled $248 million, reflecting a sequential increase driven by the Parker operations and improved U.S. drilling results [5][51] - Revenue from operations increased to $833 million, up 13% from the previous quarter, primarily due to the full quarter impact of the Parker acquisition [46] - Adjusted free cash flow improved to $41 million from a negative $61 million in the first quarter, driven by lower cash interest paid and contributions from Parker [60] Business Line Data and Key Metrics Changes - U.S. drilling revenue was $255 million, an 11% increase sequentially, supported by stronger organic activity and contributions from Parker [47] - International drilling segment revenue increased by 1% to $385 million, primarily due to Parker's contribution, despite rig count reductions in legacy operations [50] - Drilling Solutions revenue surged by 82.7% to $170.3 million, largely attributed to the full quarter impact of Parker Wellbore [50] Market Data and Key Metrics Changes - The Lower 48 average rig count increased by nearly two rigs to 62.4, with a current count of 60 rigs operating [48][54] - The international rig count increased slightly from 85 to 85.9 rigs, driven by new builds in Saudi Arabia and reactivated rigs in Kuwait [50][43] - The Baker Hughes weekly Lower 48 rig count declined by 7% from March to June, indicating a shift towards larger operators [20] Company Strategy and Development Direction - The company is focused on integrating Parker Wellbore to unlock additional benefits and achieve $40 million in cost synergies by the end of 2025 [44][5] - The strategic shift in Saudi Arabia from oil to natural gas drilling is noted, with a significant number of land rigs idled and new builds focused on gas basins [13][14] - The company aims to maintain operational expense control and align capital expenditures with activity levels in response to market conditions [32][62] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the stability of the global oil market and the resilience of natural gas demand, particularly driven by LNG exports [7][8] - The outlook for the third quarter indicates some pressure on pricing, with expectations for Lower 48 daily margins to decline to approximately $13,300 [55] - Management remains cautious about the U.S. Lower 48 drilling activity, particularly in oil basins, while anticipating continued recovery in natural gas drilling [41][42] Other Important Information - The company repurchased approximately $14 million in notes at a significant discount during the second quarter, emphasizing a priority on debt reduction [36] - Capital expenditures for the second quarter totaled $199 million, with expectations for 2025 capital expenditures to be between $700 million and $710 million, lower than previously communicated [62] - The transition of CFO William Restrepo is noted, with Miguel Rodriguez set to take over, highlighting the leadership continuity within the company [66] Q&A Session Summary Question: Growth prospects of new build rigs in Saudi Arabia - Management indicated that the fleet is well-suited for opportunities in the region, with potential for redeployment to other Middle Eastern countries if needed [76][78] Question: Clarification on adjusted free cash flow guidance - Management explained that while there are reductions in CapEx, the overall impact on cash flow is about $50 million, with adjustments made for various market uncertainties [79][80] Question: Risks to Nabors' legacy rigs in Saudi Arabia - Management noted that while some rigs have been idled, the company is well-positioned due to its relationship with Aramco and the focus on gas drilling [86][88] Question: Future of Lower 48 daily drilling costs - Management is focused on optimizing operations and believes there is stability in costs, with no significant inflation expected [112][114] Question: Collections in Mexico - Management highlighted ongoing negotiations with Pemex and the expectation of substantial collections in the third quarter due to government initiatives [106][107]

Financial Performance & Acquisition - Nabors reported adjusted EBITDA of $248.459 million for the three months ended June 30, 2025[86] - Nabors Drilling Solutions contributed 25% of total adjusted EBITDA from operations in 2Q[24] - Parker Wellbore acquisition is on track to deliver $40 million of synergies in 2025 and $60 million run-rate in 2026[18] - Parker Wellbore is expected to generate run-rate adjusted EBITDA plus synergies of $200 million, up from $190 million[18] - Adjusted EBITDA less CAPEX of $125 million is expected from Parker Wellbore, up from $110 million[19] Segment Performance - International Drilling daily adjusted gross margin was greater than $17,500 in 2Q[24] - Lower 48 rigs generated daily adjusted gross margin of approximately $13,900[24] - Nabors Drilling Solutions adjusted gross margin was approximately 53% in 2Q[24] International Expansion - Nabors has 52 active rigs in KSA (Kingdom of Saudi Arabia) operated by SANAD, a JV with Saudi Aramco[20] - The company deployed 2 rigs in Saudi Arabia and 2 rigs in Kuwait in 2Q, with additional deployments planned in 3Q in Saudi Arabia, Kuwait, and India, plus a restart in Colombia[24] - Nabors is actively pursuing multiple opportunities for additional international rigs through YE 2025[38] Rig Count & Utilization - As of June 30, 2025, Nabors had a total rig fleet of 310, with 159 rigs on revenue, resulting in a 51% utilization rate[84] - In the U S Lower-48, Nabors had 110 high-spec rigs, with 60 on revenue, resulting in a 55% utilization rate[84]

Core Viewpoint - Nabors Industries reported a quarterly loss of $2.71 per share, which was worse than the Zacks Consensus Estimate of a loss of $2.05, but an improvement from a loss of $4.29 per share a year ago [1] Financial Performance - The company posted revenues of $832.79 million for the quarter ended June 2025, exceeding the Zacks Consensus Estimate by 0.18% and showing an increase from $734.8 million in the same quarter last year [2] - Over the last four quarters, Nabors has not surpassed consensus EPS estimates, indicating ongoing challenges in meeting market expectations [2] Stock Performance - Nabors shares have declined approximately 38.3% since the beginning of the year, contrasting with the S&P 500's gain of 8.6% [3] - The stock currently holds a Zacks Rank 5 (Strong Sell), suggesting it is expected to underperform the market in the near future [6] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is -$2.00 on revenues of $845.35 million, and for the current fiscal year, it is -$3.53 on revenues of $3.27 billion [7] - The trend of estimate revisions for Nabors has been unfavorable leading up to the earnings release, which may impact future stock performance [6] Industry Context - The Oil and Gas - Drilling industry, to which Nabors belongs, is currently ranked in the bottom 5% of over 250 Zacks industries, indicating a challenging environment for companies in this sector [8]

[Financial & Operational Highlights](index=1&type=section&id=Financial%20%26%20Operational%20Highlights) [Q2 2025 Financial Performance](index=1&type=section&id=Q2%202025%20Financial%20Performance) Nabors reported a significant sequential increase in operating revenues to $833 million for the second quarter of 2025, recording a net loss of $31 million, in contrast to the prior quarter's net income inflated by a one-time gain from the Parker transaction, while Adjusted EBITDA showed strong sequential growth to $248 million Q2 2025 Key Financial Metrics | Metric | Q2 2025 | Q1 2025 | | :--- | :--- | :--- | | Operating Revenues | $833 million | $736 million | | Net Income (Loss) Attributable to Nabors | ($31 million) | $33 million | | Loss (Earnings) per Diluted Share | ($2.71) | $2.18 | | Adjusted EBITDA | $248 million | $206 million | - The first quarter's net income included a one-time, non-cash net gain of **$113.0 million**, or **$9.68 per diluted share**, from the Parker transaction, which explains the significant difference in net income between Q1 and Q2[2](index=2&type=chunk) [Q2 2025 Operational Highlights](index=1&type=section&id=Q2%202025%20Operational%20Highlights) The second quarter was marked by the successful integration of Parker Wellbore, which materially contributed to financial results and achieved targeted cost synergies, alongside the SANAD joint venture's expansion, new rig deployments, and several drilling records in major U.S. basins - Key operational achievements in Q2 2025 include: - **SANAD JV Expansion:** Deployed two newbuild rigs in Saudi Arabia, bringing the total to **twelve**, and received an award for **five** more newbuilds - **Kuwait Reactivations:** Commenced operations for **three** high-specification rigs under multiyear contracts - **Drilling Records:** Set multiple records for lateral wellbore lengths with PACE® series SmartRigs® in the Bakken, Haynesville, and Eagle Ford basins - **Parker Wellbore Integration:** Made significant progress integrating the acquired businesses, which contributed materially to financial results and supported the **$40 million** cost synergy target for 2025[4](index=4&type=chunk)[5](index=5&type=chunk) [Segment Performance](index=2&type=section&id=Segment%20Performance) Adjusted EBITDA grew sequentially across most segments, significantly boosted by the full-quarter contribution from the acquired Parker operations, with International Drilling seeing modest growth, U.S. Drilling improving due to a higher rig count, Drilling Solutions experiencing a substantial increase, and Rig Technologies seeing a slight decline Adjusted EBITDA by Segment (Q2 2025 vs. Q1 2025) | Segment | Q2 2025 Adjusted EBITDA | Q1 2025 Adjusted EBITDA | Change | | :--- | :--- | :--- | :--- | | International Drilling | $117.7 million | $115.5 million | +$2.2M | | U.S. Drilling | $101.8 million | $92.7 million | +$9.1M | | Drilling Solutions | $76.5 million | $40.9 million | +$35.6M | | Rig Technologies | $5.2 million | $5.6 million | -$0.4M | - The addition of Parker's operations was a primary driver of growth, especially in the Drilling Solutions segment, which now comprises over **25%** of adjusted EBITDA from operating segments[9](index=9&type=chunk)[11](index=11&type=chunk) [Cash Flow Analysis](index=3&type=section&id=Adjusted%20Free%20Cash%20Flow) The company generated $41 million in adjusted free cash flow, a significant turnaround from a $61 million consumption in the prior quarter, driven by lower quarterly cash interest payments and improved customer collections, offsetting an increase in capital expenditures, and remaining on track to meet its full-year adjusted free cash flow target of $80 million Adjusted Free Cash Flow | Period | Adjusted Free Cash Flow | | :--- | :--- | | Q2 2025 | $41 million | | Q1 2025 | ($61 million) | - The improvement was achieved despite significantly lower-than-expected collections from the main customer in Mexico, as this was offset by higher payments from other clients[12](index=12&type=chunk) - The company forecasts similar adjusted free cash flow in Q3 and anticipates reaching its **$80 million** target for the full year, assuming expected collections from Mexico materialize[16](index=16&type=chunk) [Q3 2025 Outlook](index=4&type=section&id=Outlook) Nabors anticipates its Lower 48 rig count and pricing to stabilize in the second half of the year, with Q3 U.S. Drilling adjusted EBITDA expected to be in line with Q2, International segment's daily gross margin projected to increase, and full-year 2025 capital expenditures forecasted between $700-$710 million, including significant investment in SANAD newbuilds Q3 2025 Guidance | Segment/Metric | Q3 2025 Outlook | | :--- | :--- | | **U.S. Drilling** | | | Lower 48 Average Rig Count | 57 - 59 rigs | | Lower 48 Daily Adjusted Gross Margin | ~$13,300 | | Alaska & GoM Combined Adj. EBITDA | ~$26 million | | **International** | | | Average Rig Count | 87 - 88 rigs | | Daily Adjusted Gross Margin | ~$17,900 | | **Drilling Solutions** | Adj. EBITDA approx. in line with Q2 | | **Rig Technologies** | Adj. EBITDA up ~$2 - $3 million from Q2 | Capital Expenditures and Free Cash Flow Outlook | Metric | Outlook | | :--- | :--- | | Q3 2025 Capital Expenditures | $200 - $210 million | | Full-Year 2025 Capital Expenditures | $700 - $710 million | | Q3 2025 Adjusted Free Cash Flow | In line with Q2 | [Financial Statements](index=7&type=section&id=Financial%20Statements) [Condensed Consolidated Statements of Income (Loss)](index=7&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20INCOME%20(LOSS)) For the second quarter of 2025, Nabors reported operating revenues of $832.8 million and a net loss attributable to shareholders of $30.9 million, or ($2.71) per diluted share, compared to a net income of $33.0 million in Q1 2025, which was influenced by a significant non-cash gain on bargain purchase related to the Parker acquisition Income Statement Highlights (Three Months Ended June 30, 2025) | Metric | Q2 2025 (In thousands) | Q1 2025 (In thousands) | | :--- | :--- | :--- | | Operating revenues | $832,788 | $736,186 | | Income (loss) before income taxes | $20,872 | $72,186 | | Net income (loss) attributable to Nabors | $(30,910) | $32,988 | | Diluted earnings (losses) per share | $(2.71) | $2.18 | | Adjusted EBITDA | $248,459 | $206,345 | [Condensed Consolidated Balance Sheets](index=8&type=section&id=CONDENSED%20CONSOLIDATED%20BALANCE%20SHEETS) As of June 30, 2025, the company's balance sheet showed total assets of $5.04 billion, slightly down from the previous quarter, with cash and short-term investments at $387.4 million, long-term debt stable at $2.67 billion, and total equity at $640.3 million Balance Sheet Highlights (In thousands) | Metric | June 30, 2025 (In thousands) | March 31, 2025 (In thousands) | | :--- | :--- | :--- | | Cash and short-term investments | $387,355 | $404,109 | | Total current assets | $1,196,891 | $1,198,818 | | Total assets | $5,038,663 | $5,049,684 | | Long-term debt | $2,672,820 | $2,685,169 | | Total liabilities | $3,591,993 | $3,604,307 | | Total equity | $640,328 | $649,734 | [Segment Reporting](index=9&type=section&id=SEGMENT%20REPORTING) In Q2 2025, the International Drilling segment was the largest contributor to both operating revenues ($385.0 million) and adjusted EBITDA ($117.7 million), while the Drilling Solutions segment saw its revenue more than double sequentially to $170.3 million due to the Parker acquisition, and the average number of working rigs increased to 158.3 globally Q2 2025 Operating Revenues by Segment (In thousands) | Segment | Q2 2025 (In thousands) | Q1 2025 (In thousands) | | :--- | :--- | :--- | | U.S. Drilling | $255,438 | $230,746 | | International Drilling | $384,970 | $381,718 | | Drilling Solutions | $170,283 | $93,179 | | Rig Technologies | $36,527 | $44,165 | Q2 2025 Adjusted EBITDA by Segment (In thousands) | Segment | Q2 2025 (In thousands) | Q1 2025 (In thousands) | | :--- | :--- | :--- | | U.S. Drilling | $101,821 | $92,711 | | International Drilling | $117,658 | $115,486 | | Drilling Solutions | $76,501 | $40,853 | | Rig Technologies | $5,174 | $5,563 | Q2 2025 Average Rigs Working | Segment | Q2 2025 | Q1 2025 | | :--- | :--- | :--- | | U.S. Drilling | 72.4 | 68.2 | | International Drilling | 85.9 | 85.0 | | **Total** | **158.3** | **153.2** | [Reconciliation of Non-GAAP Financial Measures](index=11&type=section&id=Reconciliation%20of%20Non-GAAP%20Financial%20Measures) [Reconciliation of Earnings per Share](index=11&type=section&id=Reconciliation%20of%20Earnings%20per%20Share) This section details the calculation of basic and diluted earnings per share (EPS), where for Q2 2025, the net loss attributable to Nabors of $30.9 million, after adjustments, resulted in a basic and diluted loss per share of ($2.71) based on 14,083 weighted-average shares outstanding - Due to the net loss position in Q2 2025, there was no dilutive effect from convertible notes or potential common shares, resulting in basic and diluted EPS being identical[37](index=37&type=chunk) [Reconciliation of Segment EBITDA and Operating Income](index=12&type=section&id=RECONCILIATION%20OF%20ADJUSTED%20EBITDA%20BY%20SEGMENT%20TO%20ADJUSTED%20OPERATING%20INCOME%20(LOSS)%20BY%20SEGMENT) This table reconciles adjusted operating income to adjusted EBITDA for each business segment by adding back depreciation and amortization, showing that for Q2 2025, total adjusted EBITDA was $248.5 million, derived from $73.4 million in total adjusted operating income and $175.1 million in total depreciation and amortization Total Company Reconciliation for Q2 2025 (In thousands) | Metric | Amount (In thousands) | | :--- | :--- | | Adjusted operating income (loss) | $73,398 | | Depreciation and amortization | $175,061 | | **Adjusted EBITDA** | **$248,459** | [Reconciliation of Segment Gross Margin and Operating Income](index=13&type=section&id=RECONCILIATION%20OF%20ADJUSTED%20GROSS%20MARGIN%20BY%20SEGMENT%20TO%20ADJUSTED%20OPERATING%20INCOME%20(LOSS)%20BY%20SEGMENT) This section reconciles adjusted operating income to adjusted gross margin for the U.S. and International Drilling segments by adding back G&A, R&E, and depreciation & amortization costs, with Q2 2025 showing the U.S. Drilling segment's adjusted gross margin at $108.2 million and the International Drilling segment's at $137.0 million - Adjusted gross margin, a key performance metric for drilling segments, is calculated by adding back general and administrative costs, research and engineering costs, and depreciation and amortization to the segment's adjusted operating income[39](index=39&type=chunk) [Reconciliation to Net Income (Loss)](index=14&type=section&id=RECONCILIATION%20OF%20NON-GAAP%20FINANCIAL%20MEASURES%20TO%20NET%20INCOME%20(LOSS)) This table provides a clear reconciliation from the GAAP measure of Net Income (Loss) to the non-GAAP measures of Adjusted Operating Income and Adjusted EBITDA, where for Q2 2025, a net loss of $2.2 million was adjusted for various items to arrive at an Adjusted EBITDA of $248.5 million Reconciliation from Net Income to Adjusted EBITDA for Q2 2025 (In thousands) | Metric | Amount (In thousands) | | :--- | :--- | | Net income (loss) | $(2,205) | | Adjustments (Taxes, Interest, etc.) | $81,714 | | Adjusted operating income (loss) | $73,398 | | Depreciation and amortization | $175,061 | | **Adjusted EBITDA** | **$248,459** | [Reconciliation of Net Debt](index=15&type=section&id=RECONCILIATION%20OF%20NET%20DEBT%20TO%20TOTAL%20DEBT) Net debt is calculated as total long-term debt less cash and short-term investments, with Nabors' net debt as of June 30, 2025, being approximately $2.29 billion, remaining relatively stable compared to the previous quarter Net Debt Calculation (In thousands) | Metric | June 30, 2025 (In thousands) | March 31, 2025 (In thousands) | | :--- | :--- | :--- | | Long-term debt | $2,672,820 | $2,685,169 | | Less: Cash and short-term investments | $(387,355) | $(404,109) | | **Net Debt** | **$2,285,465** | **$2,281,060** | [Reconciliation of Adjusted Free Cash Flow](index=16&type=section&id=RECONCILIATION%20OF%20ADJUSTED%20FREE%20CASH%20FLOW%20TO%20NET%20CASH%20PROVIDED%20BY%20OPERATING%20ACTIVITIES) This table reconciles net cash from operating activities to adjusted free cash flow, showing that for Q2 2025, net cash from operations was $151.8 million, and after subtracting net capital expenditures and adding back cash paid for acquisition-related costs, the adjusted free cash flow was $40.6 million Adjusted Free Cash Flow Reconciliation for Q2 2025 (In thousands) | Metric | Amount (In thousands) | | :--- | :--- | | Net cash provided by operating activities | $151,810 | | Less: Capital expenditures, net | $(141,849) | | Free cash flow | $9,961 | | Add: Cash paid for acquisition related costs | $30,635 | | **Adjusted free cash flow** | **$40,596** |

Core Insights - Nabors Industries reported second quarter 2025 operating revenues of $833 million, an increase from $736 million in the first quarter, but incurred a net loss of $31 million compared to a net income of $33 million in the previous quarter [1][2][3] - The adjusted EBITDA for the second quarter was $248 million, up from $206 million in the first quarter, indicating improved operational performance [1][2][3] Financial Performance - The company experienced a loss per diluted share of $2.71 in the second quarter, contrasting with earnings per diluted share of $2.18 in the first quarter, which included a one-time gain from the Parker transaction [1][3] - Adjusted free cash flow improved to $41 million in the second quarter from a cash consumption of $61 million in the prior quarter, aided by lower cash interest payments and better customer collections [10][15] Segment Performance - International Drilling adjusted EBITDA rose to $117.7 million from $115.5 million in the previous quarter, with an average rig count increase driven by newbuild rigs in Saudi Arabia and Kuwait [7][8] - The U.S. Drilling segment reported adjusted EBITDA of $101.8 million, up from $92.7 million, with contributions from all three operations, despite a flat to declining rig market in oil-focused basins [8][9] - Drilling Solutions adjusted EBITDA significantly increased to $76.5 million, primarily due to the addition of Parker's operations, while Rig Technologies saw a slight decline to $5.2 million [9][10] Strategic Developments - The acquisition of Parker Wellbore is contributing positively to Nabors' financial results, with expectations of achieving $40 million in cost synergies for 2025 [3][12][13] - Recent deployments of high-spec rigs in the Middle East and the SANAD newbuild program are expected to drive growth in the International Drilling segment [4][13] Outlook - The company anticipates that adjusted EBITDA for the third quarter will be approximately in line with the second quarter, with expectations for stable rig counts in the Lower 48 and continued strength in natural gas drilling [16][18] - Capital expenditures are projected to be between $200 million and $210 million for the quarter, with a full-year estimate of $700 million to $710 million [24][18]