Nabors(NBR) - 2025 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Full year 2025 revenue was $3.2 billion, reflecting growth of 8.7% year-over-year, driven primarily by the acquisition of Parker and strong international expansion [21] - Adjusted EBITDA for the full year was $913 million, $31 million higher than the prior year [21] - Fourth quarter consolidated revenue was $798 million, a decrease of $21 million or 2.5% sequentially, primarily due to the divestiture of Quail Tools [21][22] - Adjusted EBITDA for the fourth quarter totaled $222 million, representing an EBITDA margin of 27.8%, down 110 basis points sequentially [22] Business Line Data and Key Metrics Changes - International drilling revenue was $424 million, growth of $17 million or 4.1% sequentially, with EBITDA for the segment increasing to $131 million [23][24] - U.S. drilling revenue for the fourth quarter was $241 million, reflecting a 3.7% sequential decline, while EBITDA totaled $93 million, a decrease of 1% [25] - The drilling solutions segment generated revenue of $108 million in the fourth quarter, with EBITDA of $41 million, resulting in an EBITDA margin of 38.3% [28] Market Data and Key Metrics Changes - The average daily rig margin for international drilling was $17,630, which decreased sequentially by $301 [24] - The gas-directed industry rig count in the Lower 48 increased by more than 20% in 2025, with Nabors' gas rig count increasing by 50% [10] - The average rig count in international drilling increased by 4 rigs to 93.3, exceeding expectations [24] Company Strategy and Development Direction - The company aims to focus on performance excellence in the Lower 48 rig market and expand in the international drilling market [6][7] - The commitment to innovative technology and multi-year contracts is expected to enhance operational efficiencies and capabilities [7] - The integration of Parker Wellbore is progressing well, with expectations to generate at least $70 million of EBITDA in 2026 from retained Parker businesses [36] Management's Comments on Operating Environment and Future Outlook - Management noted that oil prices were in a downward trend in the second half of 2025, but recent events could lead to price increases [8] - The outlook for natural gas remains positive, with expectations for increased LNG exports and domestic consumption [10] - Management expressed confidence in the company's ability to maintain momentum despite market uncertainties, particularly in the Lower 48 [51] Other Important Information - The company reduced net debt by $554 million, significantly de-risking its capital structure and reducing annualized cash interest expense by approximately $45 million [5] - Adjusted free cash flow for the fourth quarter was $132 million, driving full-year adjusted free cash flow to approximately $117 million [39] - The company expects to generate free cash flow outside SANAD and is committed to further debt reduction [18] Q&A Session Summary Question: Lower 48 outlook and rig count increase - Management indicated that the rig count is currently at 66, with a focus on public operators and longer laterals, which are well-suited for Nabors' PACE-X rigs [48][50] Question: Updates on Saudi Arabia operations - Management expressed confidence in the timelines for reactivating rigs and new builds in Saudi Arabia, noting a positive signal from Aramco's actions [58][60] Question: Activity in Mexico and additional rigs - Management confirmed discussions about additional rigs in Mexico, focusing on making existing rigs profitable first [65] Question: Capital expenditures and SANAD program - Management clarified that the expected capital expenditures for SANAD new builds would be around $360 million to $380 million for 2026, with a focus on maintaining cash flow [66][67]