Nabors(US:NBR)2022-10-26 23:21Financial Data and Key Metrics Changes - Adjusted EBITDA for Q3 2022 totaled $191 million, a 21% increase from the previous quarter [12] - Consolidated revenue increased by 10.2% sequentially, reaching $694 million compared to $631 million in Q2 2022 [41] - Net debt improved to $2.16 billion, with expectations for further reductions [13][56] - Adjusted free cash flow was $35 million, significantly better than forecasted [13][54] Business Line Data and Key Metrics Changes - U.S. Drilling revenue increased by 17% to $287 million, with Lower 48 revenue growing by over 19% [41] - Daily rig margins in the Lower 48 increased significantly, with average daily margin surpassing $11,000, reflecting a nearly $2,500 increase [15][46] - International segment revenue rose to $306 million, driven by higher revenue in Saudi Arabia and Latin America [43] - Drilling Solutions recorded EBITDA of $25.6 million, up approximately 13% from the previous quarter [51] Market Data and Key Metrics Changes - Global average rig count increased by 4 rigs, primarily driven by growth in the U.S. and Saudi Arabia markets [12] - Average daily revenue in the Lower 48 exceeded $29,000, with contracts approaching $40,000 [33][42] - Rig utilization in the Lower 48 reached 86%, with expectations to reach 90% by year-end [47] Company Strategy and Development Direction - The company aims to maintain a short contract duration while capturing strong leading-edge price momentum [16] - Focus on technology and innovation, particularly in automation and digitalization, is a key driver for performance [21][24] - Commitment to sustainability and reducing carbon intensity through various technological advancements [27][29] Management's Comments on Operating Environment and Future Outlook - The macro environment remains constructive despite potential recession risks, with confidence in continued drilling activity [30][31] - The company expects fourth-quarter results to materially improve over Q3, driven by strong pricing momentum and higher activity levels [40] - Anticipated EBITDA for 2023 is projected to exceed $1 billion, with free cash flow around $400 million [60] Other Important Information - The company has made significant progress in reducing net debt by over $700 million since the pandemic [65] - New builds in Saudi Arabia are expected to contribute to increased financial performance, with a focus on contract renewals [20][108] Q&A Session Summary Question: What type of term is the company targeting for contracts? - The company aims to return to a normal range of 20% to 30% term proportion by the end of the year, having previously maintained a short-term focus [71] Question: What are the mechanisms for gross debt reduction? - The company has convertible notes that can be paid at par and plans to reduce total gross debt in line with net debt [73] Question: What is the macro supply side outlook for U.S. and international markets? - The company estimates about 150 rigs could potentially return to the market, but significant CapEx may be required for reactivation [79] Question: How does the company view recession risks? - The company believes the impact on energy consumption during a recession may not be as dramatic as in the past, given the current supply-demand dynamics [85] Question: What factors could drive pricing higher in the market? - The company notes that high utilization rates and the need for additional rigs will support pricing increases, with a focus on capital discipline among customers [92][95] Question: What is the outlook for international rig count and margins? - The company anticipates a 10% increase in international rig count next year, with margins expected to average $16,000 to $17,000 per day [100][122]