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Nabors Industries Q1 2025: Unpacking Key Contradictions on Debt, Tariffs, and Market Dynamics
Generated by AI AgentEarnings Decrypt
Friday, May 2, 2025 12:49 pm ET1min read
Debt reduction and free cash flow, tariff impact and supplier negotiations, SANAD newbuild program and market conditions, international market opportunities, and rig count and market demand are the key contradictions discussed in Nabors Industries' latest 2025Q1 earnings call.
SANAD Joint Venture Performance:
- Nabors' SANAD drilling joint venture in Saudi Arabia is expected to earn adjusted EBITDA of over $300 million this year.
- The SANAD business has significant scale, and the addition of newbuilds at a cadence of five per year will drive annual adjusted EBITDA higher.
- The Saudi Arabian market is shifting from oil to gas drilling, and Nabors' advanced technology and gas-capable rigs are well-positioned to benefit from this shift.
Challenges in Lower 48 Operations:
- Nabors' daily margin in the Lower 48 rig fleet declined more than expected, affecting operations with increased costs and churn.
- The company's rig count varied throughout the quarter, impacting operational efficiency and margins.
- The Lower 48 market has seen a shift in activity with smaller operators adding rigs and larger operators reducing activity.
International Market Dynamics:
- Nabors plans to add 10 rigs in international markets over the remaining three quarters of 2025, with six deployments expected in the second quarter.
- The company experienced a reduction in operations in Russia due to expanded sanctions, resulting in the suspension of three rigs.
- In Kuwait and Saudi Arabia, Nabors has secured contracts for new rigs, with a focus on high-performance drilling and gas-focused basins.
Financial Integration and Synergies Post-Acquisition:
- Nabors completed the acquisition of Parker Wellbore, with the first quarter including 20 days of its operations.
- The acquisition has contributed $7.8 million to the first quarter's EBITDA, with expectations to exceed $40 million in 2025 synergies.
- The integration is progressing well, with plans to achieve $40 million in synergies for 2025, driving cost efficiency and profitability.
SANAD Joint Venture Performance:
- Nabors' SANAD drilling joint venture in Saudi Arabia is expected to earn adjusted EBITDA of over $300 million this year.
- The SANAD business has significant scale, and the addition of newbuilds at a cadence of five per year will drive annual adjusted EBITDA higher.
- The Saudi Arabian market is shifting from oil to gas drilling, and Nabors' advanced technology and gas-capable rigs are well-positioned to benefit from this shift.
Challenges in Lower 48 Operations:
- Nabors' daily margin in the Lower 48 rig fleet declined more than expected, affecting operations with increased costs and churn.
- The company's rig count varied throughout the quarter, impacting operational efficiency and margins.
- The Lower 48 market has seen a shift in activity with smaller operators adding rigs and larger operators reducing activity.
International Market Dynamics:
- Nabors plans to add 10 rigs in international markets over the remaining three quarters of 2025, with six deployments expected in the second quarter.
- The company experienced a reduction in operations in Russia due to expanded sanctions, resulting in the suspension of three rigs.
- In Kuwait and Saudi Arabia, Nabors has secured contracts for new rigs, with a focus on high-performance drilling and gas-focused basins.
Financial Integration and Synergies Post-Acquisition:
- Nabors completed the acquisition of Parker Wellbore, with the first quarter including 20 days of its operations.
- The acquisition has contributed $7.8 million to the first quarter's EBITDA, with expectations to exceed $40 million in 2025 synergies.
- The integration is progressing well, with plans to achieve $40 million in synergies for 2025, driving cost efficiency and profitability.
Earnings Decrypt
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