Nabors: Q4 Earnings Snapshot - A Mixed Bag of Results

Nabors Industries Ltd. (NBR) recently reported its fourth quarter 2024 earnings, providing investors with a snapshot of the company's performance during the period. The results were a mixed bag, with some positive developments and challenges that the company faced. Let's dive into the key takeaways from the earnings report and analyze how these factors may impact Nabors' future prospects.

Operating Revenues and Net Loss
Nabors reported operating revenues of $730 million for the fourth quarter, compared to $732 million in the third quarter. The net loss attributable to Nabors shareholders for the quarter was $54 million, compared to a net loss of $56 million in the third quarter. This equates to a loss of $6.67 per diluted share, compared to a loss per diluted share of $6.86 in the third quarter. Fourth quarter adjusted EBITDA was $221 million, compared to $222 million in the previous quarter.

Highlights and Challenges
Nabors shareholders approved the issuance of shares to Parker Wellbore ("Parker") stockholders in connection with the merger between Parker and Nabors. Parker shareholders also approved the merger, which is expected to close during the first quarter of 2025, pending certain international regulatory approvals. This acquisition is anticipated to advance Nabors' strategic objectives and create value for stakeholders.

Nabors received awards for three rigs in Argentina, two of which will be transferred from the U.S. on five-year contracts. The third rig is currently working in country and is scheduled to start its new contract before the end of the year. In addition, the Company received another award for an idle rig in Colombia. These reactivations are capital-efficient opportunities to support growth while improving Nabors' asset utilization.

In the fourth quarter, SANAD deployed its ninth newbuild rig and is expected to start up two more in the first quarter of 2025. As Saudi Aramco continues to grow its natural gas activity, Nabors continues to participate in its customer's expansion plans with commitments to add rigs built in the Kingdom over the coming years and its leading portfolio of drilling-related services.

In Rig Technologies, Canrig was awarded a comprehensive rig upgrade package by a third-party drilling contractor in the U.S. Canrig is currently pursuing a number of upgrade opportunities, both domestically and internationally. These projects demonstrate Canrig's advanced technology suite, which enables contractors to remain competitive as the drilling market becomes increasingly demanding.

Anthony G. Petrello, Nabors Chairman, CEO and President, commented, "We are looking forward to adding Parker to the Nabors portfolio. Our integration planning reinforces the Parker attributes that we identified earlier. We are confident that this acquisition will advance our strategic objectives while creating value for our stakeholders."

The market environment in the fourth quarter provided Nabors with some challenges in the U.S., as operators continued to modulate their activity levels in oil basins, mainly driven by recent mergers. Leading edge pricing in this market remained steady, supporting Nabors' daily margins at relatively high levels. For 2025, Nabors is planning for stable market activity through the early part of the year. Given this activity level, Nabors is responding with actions to improve efficiency and align its cost structure.

Nabors' international businesses continued to expand in multiple markets, including Saudi Arabia and Argentina. Although the company's international success places pressure on capital expenditures, these are attractive growth opportunities for multiyear contracts with high returns. In 2025, Nabors has startups planned in the Kingdom, Argentina, Colombia, and Kuwait. Nabors projects these deployments will drive this segment's margins higher through the year.

SANAD, Nabors' 50/50 joint venture with Saudi Aramco, is progressively adding 50 rigs over approximately 10 years. Through 2024, SANAD has deployed nine of these units. The rigs work under six-year initial contracts that are structured to recover the invested capital over five years. This term is followed by a four-year renewal mechanism, providing at least 10 years of utilization.



Looking Ahead
Nabors' Q4 earnings report provided a mixed bag of results, with some positive developments and challenges that the company faced. The acquisition of Parker Wellbore is expected to advance Nabors' strategic objectives and create value for stakeholders. Nabors' international businesses continued to expand in multiple markets, providing attractive growth opportunities for multiyear contracts with high returns. However, the company faced challenges in the U.S. market, and investors should monitor Nabors' progress in addressing these issues.

As Nabors looks ahead to 2025, investors should keep an eye on the company's progress in integrating Parker Wellbore, expanding its international presence, and improving its cost structure. Nabors' ability to navigate the challenges in the U.S. market and capitalize on growth opportunities will be crucial in determining the company's future prospects.