Nabors Industries' Q2 2025: Unraveling Tariff Challenges, Mexico Payment Issues, and Contradictory Cash Flow Guidance

Tariff impact and management, Mexico collections and payment issues, SANAD new build rig awards, free cash flow guidance, and Lower 48 drilling margins are the key contradictions discussed in Nabors Industries' latest 2025Q2 earnings call.



Strong Financial Performance:
- Nabors Industries reported adjusted EBITDA totaling $248 million for Q2 2025, in line with their expectations.
- The performance included a full quarter contribution from the Parker operations and improved results in the U.S. Drilling business.
- The growth was driven by operational efficiencies and strategic acquisitions like the Parker Wellbore business.

Natural Gas Market Recovery:
- Nabors' average rig count in the U.S. Lower 48 increased by nearly 2 rigs, reaching 62.4 rigs in Q2 2025.
- Activity in natural gas basins continued to improve, with the Lower 48 rig count holding between 63-64 rigs until mid-June.
- The recovery was attributed to increasing natural gas demand and LNG exports, supported by the company's strategic focus on gas-directed drilling.

Saudi Arabia Market Expansion:
- Nabors' SANAD joint venture deployed 2 newbuild rigs in the second quarter, with another 2 planned for 2025.
- The company received awards for 5 more rigs in Saudi Arabia, with deployments scheduled through 2027.
- The expansion is driven by Saudi Arabia's shift from oil to natural gas drilling and the associated demand for new-build rigs.

Capital Expenditure Reduction and Debt Management:
- Nabors announced a reduction in 2025 total capital expenditures to between $700 million and $710 million, from previously expected $770 million.
- The reduction is attributed to delays in milestone payments for SANAD newbuilds and improved cost discipline across other segments.
- The company is focused on generating free cash flow to address debt reduction and capital expenditure refinements.