Nabors Industries (NBR) Q3 Earnings call transcript Oct 23, 2024

Nabors Industries, a leading provider of drilling and rig technology services, recently held its third-quarter 2024 earnings call, offering insights into the company's financial performance and strategic outlook. The call, led by Chairman, President, and Chief Executive Officer, Anthony Petrello, and Chief Financial Officer, William Restrepo, provided a detailed analysis of the company's operational and financial highlights, strategic initiatives, and market outlook.

Financial Performance

The call began with an overview of the company's financial performance, highlighting its resilience in a challenging market environment. The third quarter of 2024 saw adjusted EBITDA of $222 million, a figure that was in line with expectations. The company's international business continued to be a major contributor to its growth, with daily margins exceeding $17,000 and three more rigs expected to start deployments by the end of 2024. The U.S. market, particularly in the Lower 48, also showed promising signs, with daily margins remaining above the $15,000 mark.

Strategic Initiatives

One of the most notable aspects of the call was the announcement of Nabors' acquisition of Parker Wellbore, a move that is expected to accelerate the company's strategy, particularly in its Drilling Solutions segment. The acquisition is seen as a strategic fit, given Parker's portfolio of businesses and geographic footprint, which aligns with Nabors' existing operations. The deal is expected to add meaningfully to the company's EBITDA and provide opportunities for cost synergies and operational efficiencies.

Market Outlook and Challenges

The call also provided insights into the current market conditions and the company's outlook for the future. The international markets remain a significant growth area for Nabors, with a robust pipeline of rig awards and a positive outlook for future tenders. However, challenges remain, particularly in Saudi Arabia, where three rigs have been suspended for a year, and in the Lower 48 market, where activity has been flat. The company is cautiously optimistic about the future, with plans to add 9 rigs in 2025 and identify significant incremental opportunities.

Technology and Innovation

Another key topic of discussion was the company's focus on technology and innovation. Nabors' Drilling Solutions segment, which includes its advanced software and automation solutions, saw strong performance in the third quarter, with revenue and EBITDA both up sequentially. The company's strategy of increasing the proportion of CapEx-light segments is expected to continue, with these segments contributing 18.3% of the company's consolidated EBITDA.

Capital Structure and Sustainability

The call also touched upon the company's capital structure and sustainability initiatives. Nabors continues to focus on reducing its debt maturity profile, with a weighted average maturity of approximately 4.5 years. The company's energy transition portfolio, which includes solutions to improve operational performance and reduce emissions, also saw significant progress, with the PowerTAP module, which connects rigs to the grid, contributing to the results of the Rig Technologies segment.

Conclusion

In conclusion, Nabors Industries' third-quarter 2024 earnings call painted a picture of a company that is navigating a challenging market environment with resilience and strategic foresight. The acquisition of Parker Wellbore, coupled with the company's focus on technology and innovation, positions Nabors well for future growth. However, challenges remain, particularly in the Lower 48 market and in Saudi Arabia, where rig suspensions have impacted the company's operations. Nevertheless, with a strong financial position and a clear strategic direction, Nabors is well-positioned to capitalize on opportunities in the international markets and drive sustainable growth.