Nabors(US:NBR)2024-04-25 23:23Financial Data and Key Metrics Changes - Total adjusted EBITDA for the first quarter was $221 million, a decrease from $230 million in the previous quarter [2] - Revenue from operations increased to $734 million, up 1.1% from $726 million in the prior quarter [101] - Average daily rig margin in the Lower 48 was $16,011, a slight decrease of $229 from the previous quarter [4] Business Line Data and Key Metrics Changes - Revenue from Nabors Drilling Solutions declined by $1.5 million due to lower activity in the U.S. Lower 48 market, but NDS sales on Nabors' rigs grew by 3.6% [1] - Drilling Solutions adjusted EBITDA decreased by 7.9% to $31.8 million, while international NDS EBITDA grew by over 7% sequentially [9] - Rig Technologies generated EBITDA of $6.8 million, a decline of $2 million compared to the fourth quarter, but is expected to increase by approximately $2 million in the second quarter [10] Market Data and Key Metrics Changes - The average rig count in the Lower 48 increased to 71.9, reflecting an increase of nearly two rigs from the prior quarter [3] - International EBITDA decreased by $3 million or 2.9% to $102.5 million, despite an increase in average rig count from 79.6 to 81 [7] - The U.S. offshore and Alaska businesses combined EBITDA was $21.4 million, an increase of $2.7 million from the previous quarter [6] Company Strategy and Development Direction - The company is focusing on expanding its international footprint, with significant opportunities in Saudi Arabia and Argentina [66][68] - The strategy includes redeploying idle rigs from the U.S. to international markets, particularly in Argentina and the Middle East [72][105] - The company aims to maintain pricing discipline while supporting activity levels and delivering superior value to customers [85] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the international market, noting it is the strongest seen in a decade, with multiple high-return opportunities [65][67] - The company anticipates a modest decline in the Lower 48 rig count due to ongoing merger activities, but expects a recovery in the future [13][94] - Management highlighted the importance of free cash flow generation and reducing net debt as priorities moving forward [76][102] Other Important Information - The company expects free cash flow for 2024 to be between $100 million and $200 million, with a significant portion allocated to debt reduction [12] - The anticipated average daily rig gross margin for the second quarter is projected at approximately $15,500 [5] - The company is actively pursuing additional rig deployments in international markets, with a focus on high-return contracts [87][102] Q&A Session Summary Question: What is the outlook for free cash flow in 2024? - Management indicated that free cash flow is expected to be between $100 million and $200 million, with a focus on reducing net debt [12][114] Question: How is the company managing its capital expenditures? - The company anticipates capital expenditures of approximately $590 million for 2024, reflecting higher maintenance CapEx due to increased international rig count [99][107] Question: What is the impact of recent mergers on the rig count? - Management noted that the ongoing mergers have put pressure on the total rig count as operators absorb their acquisitions, leading to a projected decline in the Lower 48 rig count [13][93]