Nabors(US:NBR)2024-02-07 20:45Financial Data and Key Metrics Changes - Full year 2023 EBITDA reached $915 million, increasing by 29% from $709 million in 2022, driven by significant daily margin expansion and rig count growth in international markets [7] - For the fourth quarter, total adjusted EBITDA was $230 million, a $20 million increase from the third quarter, reflecting a 9.6% improvement [7][11] - Free cash flow totaled $52 million for the fourth quarter, with capital expenditures of $124.5 million, which was significantly higher than projected [18][43] Business Line Data and Key Metrics Changes - NDS (Nabors Drilling Solutions) EBITDA increased by 13%, marking the highest sequential quarterly progress in all of 2023, with significant contributions from casing running and performance software [4][17] - Rig Technologies generated EBITDA of $8.8 million, a 22% increase compared to the third quarter, driven by high-margin capital equipment shipments and rentals [17] - Daily gross margin for NDS in the Lower 48 was $3,912, up 15% from the prior quarter, contributing to a combined drilling rig and solutions daily gross margin of $20,151, a 4.7% improvement [17][42] Market Data and Key Metrics Changes - The international business recorded the strongest growth with revenue up 13% sequentially, while the average daily gross margin in international markets improved by almost $900 from the third quarter [4][16] - The average rig count in the Lower 48 declined by 4.6% to 70.3, while the international average rig count increased by 2.4 to 79.6 rigs [16][41] - The pricing environment in the Lower 48 remained stable, with leading edge market prices holding steady, contributing to improved daily rig margins [5][40] Company Strategy and Development Direction - The company plans to enhance its international rig count by almost 10% by the end of 2024, with a focus on maximizing free cash flow and exploring additional rig deployments in the Eastern Hemisphere and Latin America [5][19] - The company is committed to leveraging its geographical position to capitalize on favorable market opportunities, particularly in international markets [19][22] - The energy transition initiatives are aimed at improving operational efficiency and reducing emissions intensity, with technology solutions contributing to Rig Technologies' margins [38] Management's Comments on Operating Environment and Future Outlook - Management expressed a bullish outlook for the international market, anticipating continued growth in rig count and EBITDA margins [5][19] - The company acknowledged the cautious approach of operators due to commodity price volatility, which may impact overall drilling activity in the Lower 48 [5][13] - Management highlighted the importance of technology and service upgrades as key drivers for capturing market share amid industry consolidation [22][52] Other Important Information - The company successfully deployed three rigs in international markets during the fourth quarter, including a new build in Saudi Arabia [11][37] - The company is currently evaluating eight additional international tenders, with a focus on Algeria, Kuwait, and Argentina [19][38] - The company has committed orders for seven more rigs in Saudi Arabia for 2025 and 2026, totaling 15 incremental opportunities [19][37] Q&A Session Summary Question: What are the expectations for rig deployments in 2024? - Management confirmed the addition of seven rigs in 2024, with three for Saudi Arabia and four for Algeria, indicating confidence in the ability to execute these deployments [46] Question: Will recent announcements in Saudi Arabia affect rig deployments? - Management stated that there is no expected impact on the cadence of rig deployments, emphasizing strong domestic consumption and export market growth as supportive factors [50][51] Question: What is the outlook for free cash flow in 2024? - Management refrained from providing specific guidance for free cash flow, citing uncertainties related to contract wins and capital expenditures, particularly in Saudi Arabia [54][56]