Nabors(US:NBR)2021-02-24 22:59Financial Data and Key Metrics Changes - The net loss from continuing operations for Q4 2020 was $112 million, representing a loss of $16.46 per share, compared to a loss of $161 million or $23.42 per share in Q3 2020 [26] - Revenue from operations for Q4 2020 was $443 million, a sequential gain of 1%, with adjusted EBITDA totaling $108 million, down from $114 million in Q3 2020 [27][30] - Free cash flow for Q4 2020 was $66 million, compared to approximately $9 million in the prior quarter, with net debt declining by $290 million to $2.49 billion [35] Business Line Data and Key Metrics Changes - In the Lower 48, drilling revenue increased by 7% to $103 million, with a rig count improvement of 11% [27] - International drilling revenue decreased by 1% to $245 million, primarily due to a reduction in rig count by almost nine rigs or 12% [28] - Drilling Solutions revenue increased by 9% to $32 million, reflecting strong increases in high-margin performance drilling offerings and RigCLOUD installations [29] Market Data and Key Metrics Changes - The Baker Hughes Lower 48 land rig count increased by 23% from Q3 to Q4 2020, with Nabors' working rig count increasing by a similar percentage [13] - Global oil demand continued to recover, with EIA reporting a consumption increase of more than 2% versus Q3 2020, contributing to a global inventory draw of over 200 million barrels [12] - The average daily rig margin in the Lower 48 was $9,541, exceeding guidance and remaining in line with Q3 [30] Company Strategy and Development Direction - Nabors' strategy focuses on operating premium assets in diversified geographies, expanding services at the well site, and leveraging technology for future growth [40] - The company aims to maintain financial discipline, having reduced overhead spending by 24% in 2020, and is positioned to capitalize on the market upturn [10][11] - The company is committed to ESG initiatives, including setting science-based GHG emissions targets and improving its carbon footprint [19][22] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the recovery in oil prices and the potential for increased rig activity, particularly among smaller operators [14][23] - The company anticipates a modest pickup in activity planned for 2021, with expectations for rig count increases each quarter [14][23] - Management noted that the current commodity price environment supports increased activity, with a focus on profitable growth rather than just market share [59] Other Important Information - The company completed debt exchange transactions that reduced outstanding debt obligations by $284 million [17] - Adjusted EBITDA in the Drilling Solutions segment increased sequentially by 44%, with a margin widening to 32% [17] - The company has introduced advanced energy management systems and is evaluating technologies for carbon capture and emissions minimization [21][22] Q&A Session Summary Question: Cash payment out of SANAD and future distributions - Management clarified that the cash distribution was driven by Saudi Aramco's assessment of excess cash and that significant distributions are not expected before 2023 due to ongoing rig construction [44][45] Question: Update on contract awards and expectations - Management indicated that the cadence for contract awards is pro forma five per year, with three contracts indicated so far, and emphasized the importance of these contracts being long-term and high-value [46][47] Question: Offshore activity and pricing concerns - Management confirmed confidence in increasing activity levels and stated that pricing is determined by contracts, with no major resets expected [48][49][51] Question: Strategies for addressing revolver draw and liquidity - Management highlighted that liquidity is manageable, with significant reductions in near-term maturities and plans to extend the revolver in 2022 [53][55] Question: Market share and pricing discipline in the Lower 48 - Management emphasized a focus on profitable growth rather than market share, noting that daily margins and revenue per rig are higher than peers [58][59]