Nabors(US:NBR)2024-07-24 19:37Financial Data and Key Metrics Changes - Total adjusted EBITDA for Q2 2024 reached $218 million, slightly down from $221 million in Q1 2024 [42][30] - Revenue from operations was $735 million, a marginal increase from $734 million in the previous quarter [40] - Free cash flow totaled $57 million in Q2 2024, significantly up from $8 million in Q1 2024 [47] Business Line Data and Key Metrics Changes - U.S. drilling segment revenue decreased by $12.3 million or 4.5% due to rig count reductions in the Lower 48 market [40] - Drilling Solutions segment revenue grew by $7.4 million or 10%, driven by wellbore placement in the U.S. and international growth [41] - International drilling segment delivered EBITDA of $106.4 million, an increase of almost $4 million, with an average rig count growing by 3.4 rigs [44] Market Data and Key Metrics Changes - The Lower 48 industry land rig count declined by 37 rigs or 6% during Q2 2024, with an average rig count decrease of approximately 4% [11] - International markets are expected to see an increase in rig count, with visibility for additional near-term rig awards across Asia, MENA, and Latin America [18][19] - Daily rig margins in the Lower 48 averaged approximately $15,600, down $400 from Q1 but higher than forecasts [43] Company Strategy and Development Direction - The company is targeting high return opportunities that meet or exceed free cash flow objectives, with plans to deploy five more incremental rigs over the remainder of 2024 [13] - The focus remains on operational excellence and maintaining pricing discipline, particularly in the U.S. market [15][36] - The company is well-positioned to capitalize on increasing demand in Kuwait and has received formal awards for three rigs there, with operations expected to start in 2025 [14] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the international market, noting it is the strongest seen in 10 years, with substantial pending opportunities [31] - The company anticipates a modest increase in U.S. rig count, driven by larger operators and private clients providing stability [94] - Management highlighted the importance of advanced technology solutions in driving performance and capturing market share [34][75] Other Important Information - The company amended its credit facility, expanding it and extending its maturity by five years, while also issuing $550 million in seven-year notes to retire existing debt [35][74] - The energy transition portfolio is contributing positively to operational performance and reducing emissions, with notable initiatives like the PowerTAP module [17] Q&A Session Summary Question: What are the dynamics driving the demand for rigs relative to the overall market? - Management indicated that they are focusing on operational excellence and following customer needs, which has led to a modest increase in rig count expectations [80][81] Question: Can you provide more detail on the rig additions expected in the second half of the year? - Management confirmed that five rigs are expected to be deployed in the second half, with four in the fourth quarter, indicating a ramp-up in international activity [85] Question: What are the trends regarding contract durations? - Management noted that the market is becoming more amenable to multi-year contracts as consolidations occur, which is a positive development [95] Question: When do you expect U.S. drilling margins to bottom out? - Management suggested that while there is still room for margins to fall, stability in pricing and rig count gives hope for maintaining leading edge pricing [100] Question: What is the outlook for total debt reduction? - Management reaffirmed intentions to use free cash flow to reduce total debt, expecting a reduction of around $100 million by year-end [120]