Nabors(US:NBR)2022-02-18 18:52Fleet and Operations - Nabors operates a fleet of 301 actively marketed rigs for land-based drilling and 29 for offshore drilling as of December 31, 2021[21]. - Nabors' international fleet consisted of 116 land-based drilling rigs across approximately 14 countries and 17 actively marketed platform rigs in international offshore markets as of December 31, 2021[30]. - The average rigs working in U.S. Drilling was 70.9 in 2021, compared to 67.9 in 2020 and 115.3 in 2019, indicating a decline in utilization[23]. - The company operates one of the world's largest land-based drilling rig fleets and provides offshore rigs in the U.S. and international markets[188]. - The company has transformed its fleet in the Lower 48 states, positioning it as one of the most capable and modern fleets in the market[38]. Financial Performance - Operating revenues for 2021 totaled $2.0 billion, a decrease of $116.5 million or 5.5% from 2020, primarily due to a 10% decline in average rigs working in the International Drilling segment[198]. - Net loss from continuing operations attributable to Nabors common shareholders was $572.9 million for 2021, a decrease of $247.3 million compared to a net loss of $820.3 million in 2020[199]. - U.S. Drilling segment operating revenues decreased by $43.4 million or 6% in 2021, with average rigs working increasing by 4%[206]. - Canada Drilling segment operating revenues decreased by $15.4 million or 28% in 2021, primarily due to the sale of Canada Drilling assets in July 2021[210]. - International Drilling segment operating revenues decreased by $88.5 million or 8% in 2021, with a 10% decrease in average rigs working[211]. - Drilling Solutions segment operating revenues increased by $22.6 million or 15% in 2021, driven by increased market activity and additional product offerings[212]. Customer and Market Dynamics - Saudi Aramco accounted for approximately 31% of Nabors' consolidated operating revenues in 2021, highlighting the significance of this customer[43]. - The demand for the company's services is driven by oil and gas companies' spending, which is influenced by cash flow and earnings largely dependent on oil and natural gas prices[189]. - The company faces significant competition in its U.S. Drilling segment from firms such as Helmerich & Payne Inc. and Patterson-UTI Energy Inc., as well as various smaller regional contractors[60]. - The company anticipates that fluctuations in oil and natural gas prices will continue to impact drilling activity and profitability, with potential adverse effects on cash flows and asset valuations[80][81]. Technology and Innovation - Nabors has developed advanced drilling technologies, including the PACE®-X800 rig, which enhances efficiency in multi-well pad drilling[26]. - The company focuses on enhancing its technology position and advancing drilling technology both on the rig and downhole[40]. - The company has a fast-growing portfolio of technologies aimed at driving energy efficiency and emissions reductions, including proprietary emissions reporting software and carbon capture technology[58]. - Development of new technologies is critical for maintaining competitiveness, with no assurance of future demand for these technologies[117]. Employment and Workforce - The company employed approximately 10,000 employees worldwide as of December 31, 2021, with about 7,000 employed internationally[44]. - General and administrative expenses increased by $10.0 million or 5% in 2021, totaling $213.6 million, reflecting a moderate increase in workforce as market conditions improved[201]. - Research and engineering expenses rose by $1.6 million or 5% in 2021, totaling $35.2 million, also due to a moderate increase in workforce[202]. Risks and Challenges - The company acknowledges risks related to geopolitical and economic factors, including potential impacts from global public health events like COVID-19[83]. - The company is subject to various legal and regulatory risks, including compliance with environmental regulations and potential changes in tax laws[75]. - The company faces risks related to technological advancements in the drilling industry, necessitating higher capital expenditures to maintain competitiveness[115]. - The company is exposed to legal and regulatory risks, including evolving regulations related to health and safety due to COVID-19, which could materially affect operations[124]. - The company must navigate the complexities of international business, including compliance with anti-corruption laws, which could pose additional risks[127]. Financial Obligations and Capital Structure - As of December 31, 2021, the company's total outstanding indebtedness was $3.3 billion, impacting its ability to service debt and financial obligations[111]. - The company is required to maintain an interest coverage ratio of no less than 1.75:1.00, increasing to a minimum of 2.75:1.00 by June 30, 2024[110]. - The company's access to capital markets may be limited due to factors such as oil and gas prices, credit ratings, and market perceptions, which could adversely affect its business[112]. - A downgrade in the company's credit rating could negatively impact its cost of capital and ability to access financing sources, affecting financial condition and results of operations[113]. Sustainability and Corporate Responsibility - The company is committed to sustainability and corporate responsibility, integrating these principles into its strategic plans and daily operations[65]. - The company anticipates that increased ESG reporting requirements may raise operational costs and affect financial condition[158]. - The company’s insurance coverage may not adequately cover certain risks, including pandemics, leading to potential financial losses[89]. Shareholder Information - The company has 32,000,000 authorized common shares, with 9,661,352 shares outstanding as of February 14, 2022[146]. - The company's common shares are publicly traded on the NYSE under the symbol "NBR" with a closing price of $123.22 on February 14, 2022[176]. - The company issued approximately 3.2 million warrants to shareholders, allowing them to purchase common shares at an initial exercise price of $166.67 per warrant[191][192]. - In November 2021, the company issued $700.0 million in 7.375% senior priority guaranteed notes, maturing on May 15, 2027, with proceeds available for general corporate purposes[196].