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Nabors(NBR) - 2025 Q2 - Quarterly Report

PART I FINANCIAL INFORMATION Item 1. Financial Statements 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 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 - 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 closing3435 - 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 results39 Note 6: Debt 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 agreement56 - 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 Agreement60 Note 12: Segment Information 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 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 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 uncertainties124 - U.S. drilling activity slowed in response to market conditions, but this trend is expected to shift with anticipated higher natural gas demand125 - International markets are generally expected to see an expansion of production capacity and increased oilfield activity130 Results of Operations 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 acquisition145 - 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 inflation134146 Liquidity and Capital Resources 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 million157 - 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 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 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, 2025184 Item 4. Controls and Procedures 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, 2025188 - No material changes to internal control over financial reporting were identified during the quarter ended June 30, 2025189 PART II OTHER INFORMATION Item 1. Legal Proceedings 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 accrued80 Item 1A. Risk Factors 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' influence193 - 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 operations194195 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 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 program199 - No shares were repurchased under the publicly announced program during the three months ended June 30, 2025203 Item 5. Other Information 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 arrangement204 Item 6. Exhibits 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