Core Viewpoint - Nabors Industries reported a wider-than-expected loss in Q2 2025, but operating revenues increased year-over-year, indicating mixed performance across its segments [2][3]. Financial Performance - The adjusted loss for Q2 2025 was $2.71 per share, exceeding the consensus estimate of a loss of $2.05, but improved from a loss of $4.29 per share in the prior year [2]. - Operating revenues reached $832.8 million, slightly above the consensus estimate of $831 million and up from $734.8 million a year ago [3]. - Adjusted EBITDA was $248.5 million, an increase from $218.1 million year-over-year, but below the model estimate of $306.5 million [3]. Segmental Performances - U.S. Drilling revenues were $255.4 million, down 1.6% from $259.7 million a year ago, missing the estimate of $312.7 million [4]. - International Drilling revenues increased to $385 million from $356.7 million year-over-year, but fell short of the estimate of $394.8 million [5]. - The Drilling Solutions segment saw revenues of $170.3 million, a 105.3% increase from $83 million in the prior year, exceeding the estimate of $91.1 million [5]. Financial Position - Total costs and expenses rose to $818 million from $740.5 million year-over-year, slightly above the prediction of $816.1 million [7]. - As of June 30, 2025, cash and short-term investments totaled $387.4 million, with long-term debt at approximately $2.7 billion [7]. Guidance - For Q3 2025, U.S. Drilling operations are expected to have an average rig count of 57 to 59 rigs and a daily adjusted gross margin of about $13,300 [8]. - International operations are projected to have an average rig count of 87 to 88 rigs, with a daily adjusted gross margin of approximately $17,900 [9]. - Capital expenditures for Q3 2025 are planned between $200 million and $210 million, with a total expected for the year ranging from $700 million to $710 million [10]. Cash Flow and Outlook - The company anticipates adjusted free cash flow for Q3 2025 to be consistent with Q2 levels, aiming for a full-year target of $80 million [11]. - Estimates for the stock have been trending upward, with a Zacks Rank of 3 (Hold), indicating an expectation of in-line returns in the coming months [14].

Investment Rating - The report assigns an "Outperform" rating to the company, indicating an expected relative return exceeding the benchmark index by more than 10% over the next 12-18 months [25]. Core Insights - The company is positioned as a unique drilling and energy service provider in Abu Dhabi, being the sole drilling service provider for the Abu Dhabi National Oil Company (ADNOC) [2]. - The company aims for a compound annual growth rate of at least 10% in dividends from FY2024 to FY2028, with dividends expected to reach at least $867 million by FY2025 [3][4]. - The company has a strong profit margin, with an EBITDA margin of approximately 50%, significantly higher than the industry average of around 18% [3]. Summary by Sections Company Overview - The company is focused on supporting ADNOC's goal of achieving a production capacity of 5 million barrels per day by 2027 and increasing natural gas capacity by over 13 billion cubic feet per day by 2030 [2]. - The company has implemented sustainable operations, including hybrid land drilling rigs equipped with battery storage systems to enhance efficiency and reduce fuel consumption [2]. Financial Performance - The company has the highest profit margin in the global oil service sector, with a minimum unlevered internal rate of return of 11-13% for offshore rigs and 10-12% for onshore rigs [3]. - The progressive dividend policy is expected to enhance the company's yield, which is currently competitive at around 4-5% [3]. Project Updates - The company has eight unconventional drilling rigs currently in operation, with plans for further expansion based on project efficiency [4]. - The final investment decision for the second phase of unconventional projects is anticipated by the end of FY2025 or early FY2026 [4]. Growth Strategy - The company plans to increase its rig count from 142 at the end of FY2024 to over 151 by FY2028, supporting its growth trajectory [5].