Core Viewpoint - Nabors Industries Ltd. reported a wider-than-expected adjusted loss in Q1 2025, primarily due to lower operating income from its U.S. Drilling segment, despite beating revenue estimates driven by international operations [1][2]. Financial Performance - The adjusted loss per share was $7.5, compared to the Zacks Consensus Estimate of a loss of $2.64 and a loss of $5.16 in the same quarter last year [1]. - Operating revenues were $736.2 million, exceeding the estimate of $718 million but down from $743.9 million year-over-year [1]. - Adjusted EBITDA decreased to $206.3 million from $221 million a year ago, missing the model estimate of $221.6 million [2]. Segmental Performance - U.S. Drilling revenues were $230.7 million, down 15.2% from $272 million year-ago, but above the estimate of $221.6 million. Operating profit was $31.6 million, down from $50.5 million [7]. - International Drilling revenues increased to $381.7 million from $349.4 million year-ago, beating the estimate of $357.1 million. Operating profit rose to $33 million from $22.5 million [8]. - Drilling Solutions segment revenues totaled $93.2 million, up 23.3% from $75.6 million year-ago, exceeding the estimate of $78.7 million. Operating income increased to $32.9 million from $26.9 million [9]. - Rig Technologies revenues were $44.2 million, down 11.9% from $50.2 million year-ago, missing the estimate of $47.6 million. Operating profit was $4.3 million, slightly up from $4.2 million [10]. Strategic Developments - Nabors finalized the acquisition of Parker Wellbore, enhancing its portfolio with complementary assets and expected to be accretive to free cash flow in 2025 [3]. - The SANAD joint venture deployed new rigs, expected to significantly boost adjusted EBITDA and support natural gas development [4]. - A strategic alliance with Corva AI was expanded to integrate AI-driven analytics into Nabors' RigCLOUD platform, enhancing operational performance [5]. Financial Position - Total costs and expenses decreased to $670.6 million from $736.9 million year-ago, below the prediction of $711.4 million [12]. - As of March 31, 2025, Nabors had $404.1 million in cash and short-term investments, with long-term debt of approximately $2.7 billion [12]. Guidance and Outlook - For Q2 2025, Nabors expects U.S. Drilling rig count to range from 63-64 rigs with a daily adjusted gross margin of about $14,100 [14]. - International rig count is anticipated to be 85-86 rigs, with a daily adjusted gross margin of approximately $17,700 [15]. - Capital expenditures for Q2 2025 are projected to be between $220 million and $230 million, with full-year expectations of $770-$780 million [17]. - Adjusted free cash flow for the full year is expected to be around $80 million, with SANAD consuming about $150 million [18]. - The SANAD Joint Venture's 2025 EBITDA is expected to exceed $300 million, with plans for an IPO under review [19].

Financial Data and Key Metrics Changes - Revenue from operations for Q1 2025 was $736 million, a slight increase of $6 million or 1% from the previous quarter [40] - Total adjusted EBITDA for the quarter was $206.3 million, down from $220.5 million in the fourth quarter, reflecting a decline of $14 million [45][46] - U.S. drilling revenue decreased by $11 million or 4.5% sequentially to $231 million [41] - Average daily rig margins in the Lower 48 came in just under $14,300, down $660 or 4% from the fourth quarter [47] Business Line Data and Key Metrics Changes - The international drilling segment generated revenue of $382 million, an increase of $10.3 million or 3% from the prior quarter, driven by activity increases in key markets [44] - Drilling Solutions revenue increased by $17.2 million or 22.6% to $93.2 million, benefiting from the addition of Parker operations [44][52] - Rig Technologies segment revenue declined by $12 million sequentially to $44.2 million, primarily due to lower capital equipment deliveries in the Middle East [45] Market Data and Key Metrics Changes - The Lower 48 market average quarterly rig count remained stable, with Nabors exiting Q1 with 62 rigs operating [41][39] - The international rig count increased slightly from 84.8 to 85 rigs during the quarter, aided by Parker's contribution [44] - The survey of 14 operators indicated a projected 4% reduction in rig count from the end of Q1 through the end of 2025 [29] Company Strategy and Development Direction - The company is focused on achieving $40 million in cost synergies from the Parker acquisition during 2025 [6][31] - There is a strategic emphasis on international markets, particularly in Saudi Arabia and Kuwait, where new rigs are expected to contribute positively to earnings [19][50] - The company aims to reduce debt and improve free cash flow, with a target of generating free cash in 2025 despite cash consumption [28][54] Management's Comments on Operating Environment and Future Outlook - Management noted that the macro environment is challenging due to OPEC+ output adjustments and high U.S. shale production, but there are signs of recovery in natural gas activity [7][8] - The company expects a slight increase in rig count in Q2, driven by deployments in Saudi Arabia and Kuwait [39] - Management expressed confidence in the company's ability to navigate through short-term disruptions while positioning for future growth [59] Other Important Information - The company suspended operations in Russia due to U.S. sanctions and does not expect to resume activities there [11][38] - The company has made significant progress in capturing planned synergies from the Parker acquisition, with a focus on corporate cost reductions [57][80] Q&A Session Summary Question: Has the company started accruing any debt in the SANAD joint venture? - Management confirmed that there is no current plan to accrue debt in the SANAD joint venture [64] Question: Is Saudi Aramco finished with rig releases, or are more expected this quarter? - Management provided details on rig suspensions and additions, indicating a wait-and-see approach regarding future releases [65][66] Question: Which business segment is most affected by tariffs? - Management indicated that the impact of tariffs is more significant on spare parts and pumps rather than drill pipe, with mitigation strategies in place [72] Question: How does the company view the potential for an IPO of SANAD? - Management acknowledged that an IPO is a potential path for value realization, especially given the attractive valuations in the Middle East [77] Question: What is the expected corporate run rate for the second quarter with Parker's full contribution? - Management indicated that Parker's contribution should be in the mid-40s for the second quarter, with ongoing synergy capture [90]