Nabors Industries Ltd. (NYSE:NBR) is a leading provider of advanced technology for the energy industry, with operations in over 15 countries. The company has established a global network of people, technology, and equipment to deliver safe, efficient, and sustainable energy production. By leveraging its core competencies in drilling, engineering, automation, data science, and manufacturing, Nabors aims to innovate the future of energy and enable the transition to a lower carbon world.
Financials
In the fiscal year 2023, Nabors reported annual revenue of $3,005,981,000 and a net loss of $50,246,000. The company's annual operating cash flow was $637,862,000, and its annual free cash flow was $97,011,000. These financial results reflect the challenges and opportunities the company has faced in the dynamic oilfield services industry.
During the second quarter of 2024, Nabors reported revenue of $734,798,000, a decrease of 4% compared to the same period in the prior year. The company's net loss for the quarter was $32,255,000, or $4.29 per diluted share, compared to a net income of $4,611,000, or $0.31 per diluted share, in the second quarter of 2023. The decrease in net income was primarily attributable to a decline in the company's U.S. Drilling and Rig Technologies segments, as well as higher costs and expenses.
Segment Performance
Nabors' U.S. Drilling segment reported a 18% decrease in operating revenues during the second quarter, driven by a 15% decline in the average number of rigs working. The company's International Drilling segment, on the other hand, saw a 6% increase in operating revenues, primarily due to a 9% increase in the average number of rigs working.
The Drilling Solutions segment, which provides advanced technology services, reported an 8% increase in operating revenues during the second quarter. This growth was driven by increased demand for the company's wellbore placement, casing running, and managed pressure drilling solutions, particularly in international markets. The Rig Technologies segment, which manufactures and services drilling equipment, saw a 22% decrease in operating revenues due to the overall decline in activity in the U.S. market.
Outlook
Looking ahead, Nabors expects to deploy five additional rigs in its international markets over the remainder of 2024, with a total of 10 more deployments scheduled for 2025 and 2026. These international rig additions are expected to generate attractive financial returns and contribute to the company's growth in free cash flow.
In the U.S. market, Nabors anticipates a modest increase in its rig count during the third quarter of 2024, with an average of approximately 70 rigs working. The company expects its Lower 48 daily margins to range between $15,100 and $15,200, slightly lower than the second quarter's average of $15,600 per day.
Nabors' international operations are expected to continue their strong performance, with the company projecting an increase in the average rig count by one rig in the third quarter. The company expects its international daily margins to improve, ranging between $16,200 and $16,300 per day, compared to $16,050 per day in the second quarter.
The company's Drilling Solutions segment is also expected to contribute to its financial performance, with a projected 6% sequential increase in EBITDA for the third quarter. The Rig Technologies segment is also expected to see an improvement of approximately $1.5 million in EBITDA during the same period.
Liquidity
Nabors' liquidity position remains strong, with $473.6 million in cash and short-term investments as of June 30, 2024. The company recently amended and restated its credit agreement, expanding the facility and extending its maturity by five years. Additionally, Nabors issued $550 million in 8.875% senior guaranteed notes due 2031, which will be used to retire the company's existing 7.25% senior guaranteed notes due 2026.
Risks and Challenges
The oilfield services industry, in which Nabors operates, is subject to various risks and uncertainties, including fluctuations in oil and gas prices, changes in exploration and production activities, and competitive and technological advancements. Nabors' ability to navigate these challenges and capitalize on the opportunities in the market will be crucial to its long-term success.
Conclusion
Nabors Industries Ltd. is a well-positioned player in the oilfield services sector, with a focus on advanced technology and international expansion. The company's financial performance in the second quarter of 2024 was impacted by challenges in its U.S. Drilling and Rig Technologies segments, but its International Drilling and Drilling Solutions businesses continue to demonstrate growth and resilience. Nabors' outlook for the remainder of 2024 and into 2025 and 2026 is cautiously optimistic, with the company expecting to capitalize on its international opportunities and maintain its pricing discipline in the U.S. market. As the energy industry navigates the transition towards a lower carbon future, Nabors' commitment to innovation and sustainability will be crucial in shaping its long-term success.