Nabors(US:NBR)2020-07-29 23:42Financial Data and Key Metrics Changes - Revenue from operations for Q2 2020 was $534 million, a sequential reduction of 26% [36] - Total adjusted EBITDA was $154 million, down from $188 million in Q1 2020 [41] - Net debt decreased by $117 million to $2.78 billion [51] Business Line Data and Key Metrics Changes - U.S. drilling revenue was $174 million, a decrease of 37% due to a 34% decline in average rig count [37] - International drilling revenue was $301 million, down 11% primarily due to a 5% reduction in rig count and pricing concessions [38] - Rig technologies segment reported revenue of $33.6 million, a decrease of 20% [40] Market Data and Key Metrics Changes - The global rig count totaled 148 rigs, a 26% decline from Q1 2020 [22] - The Lower 48 land rig count stood at 236, down 66% since the end of Q1 2020 [29] - In Saudi Arabia, the rig count is expected to be impacted by the suspension of six rigs [84] Company Strategy and Development Direction - The company is focusing on cost reductions, targeting approximately $96 million in fixed cost savings [13] - Emphasis on technology leadership with the introduction of RigCloud for digital operations [26] - The company aims to capitalize on emerging themes in the industry, including integration of services and digitalization [57] Management's Comments on Operating Environment and Future Outlook - Management noted that global oil demand has increased from the low point in Q2, indicating a potential recovery [20] - The company expects E&P industry spending to increase in 2021, leading to additional rig activity [31] - Management highlighted the importance of maintaining operational excellence and safety performance during the downturn [10] Other Important Information - The company suspended its common dividend as part of its cost-saving measures [13] - Free cash flow for Q2 2020 totaled $101 million, a significant improvement from $8 million in the prior quarter [51] - The company has ample liquidity with cash balances of $484 million and availability on its credit facility of $440 million [54] Q&A Session Summary Question: Pricing pressure in international markets - Management indicated that pricing pressure was primarily related to COVID lockdowns, estimating a 12% hit in revenue due to significant reductions in Latin America [72][73] Question: Covenant management and maturity plans - Management is in discussions with banks for an amendment to avoid covenant issues through October 2023 and plans to use cash generation to pay down near-term maturities [76][77] Question: Rig suspensions in Saudi Arabia - Six rigs are expected to be suspended in Saudi Arabia, but management believes they will not be impacted as severely as others [84] Question: Working capital improvements - Management expects to recover working capital slowdowns in Q3, with collections improving as negotiations finalize [86] Question: Geographic distribution of working rigs - The largest portion of working rigs is in Saudi Arabia, followed by Latin America, with a total of 74 rigs operating internationally [88] Question: Margin expectations for international operations - Management stated that while they expect some recovery in margins, the impact of fewer operating rigs and ongoing pricing pressures remains uncertain [102] Question: Recovery process and contract renewals - Management noted that existing contracts may be extended or renewed, and new contracts would be negotiated as demand increases [134][135]