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NABORS INDUSTRIES LTD (NBR)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 operating revenues were $0.833B (+13% q/q) with adjusted EBITDA of $0.248B; GAAP diluted EPS was -$2.71. Against S&P Global consensus, revenue missed ($0.845B est.), EPS missed (-$1.51 est., Primary EPS basis), and EBITDA slightly beat ($0.247B est.) *.
  • Segment performance: U.S. Drilling adj. EBITDA rose to $101.8M (+$9.1M q/q), International Drilling to $117.7M (+$2.2M q/q), and Drilling Solutions to $76.5M (+$35.6M q/q) on Parker integration; Rig Technologies was $5.2M (down q/q) .
  • Guidance reset: Full‑year capex lowered to $700–$710M (from $770–$780M prior); Q3 outlook calls for Lower‑48 margins ~$13.3k/day and 57–59 rigs, and International margins ~$17.9k/day with 87–88 rigs .
  • International growth catalyst: SANAD received a fourth tranche award for five newbuild rigs (deployments through 2027); Kuwait reactivations and Saudi newbuilds support margins and utilization into H2 2025 and 2026 .

What Went Well and What Went Wrong

What Went Well

  • International margin expansion and deployments: Daily adjusted gross margin rose to $17,534 (+$113 q/q) with two Saudi newbuilds and Kuwait reactivations; avg. rigs rose to 85.9 .
  • Parker integration accretive: “Parker Wellbore has exceeded our expectations… synergy capture post‑closing has exceeded our targets,” driving NDS to ~25% of segment EBITDA with 53% gross margin .
  • Petrello: “The SANAD newbuild program is a key element of our future value creation. The award of the fourth five‑rig tranche cements SANAD’s growth prospects into 2027.” .

What Went Wrong

  • Lower‑48 margin pressure: Daily adjusted gross margin fell to $13,902 (from $14,276), and management guided to ~$13,300 in Q3 as contracts reprice to leading-edge dayrates .
  • Mexico receivable collections lagged materially in Q2, prompting cautious FCF planning pending a government‑sponsored financing to clear vendor liabilities .
  • Rig Technologies EBITDA dipped to $5.2M on softer capital equipment deliveries (Middle East), highlighting variability in OEM activity .

Financial Results

MetricQ4 2024Q1 2025Q2 2025
Operating Revenues ($USD Millions)$729.8 $736.2 $832.8
Adjusted EBITDA ($USD Millions)$220.5 $206.3 $248.5
Diluted EPS ($USD)-$6.67 $2.18 -$2.71

Consensus vs Actual (Q2 2025)

MetricConsensusActual
Revenue ($USD Millions)$845.4*$832.8
Primary EPS ($USD)-$1.51*-$2.44*
EBITDA ($USD Millions)$247.3*$248.5

Note: Values marked with * retrieved from S&P Global.

Segment Breakdown

Segment Metric ($USD Millions)Q1 2025Q2 2025
U.S. Drilling Revenues$230.7 $255.4
International Drilling Revenues$381.7 $385.0
Drilling Solutions Revenues$93.2 $170.3
Rig Technologies Revenues$44.2 $36.5
U.S. Drilling Adjusted EBITDA$92.7 $101.8
International Drilling Adjusted EBITDA$115.5 $117.7
Drilling Solutions Adjusted EBITDA$40.9 $76.5
Rig Technologies Adjusted EBITDA$5.6 $5.2

KPI Trends

KPIQ1 2025Q2 2025
Lower‑48 Avg. Rigs Working60.6 62.4
International Avg. Rigs Working85.0 85.9
Lower‑48 Daily Rig Revenue ($)34,546 33,466
International Daily Rig Revenue ($)49,895 49,263
Lower‑48 Daily Adjusted Gross Margin ($)14,276 13,902
International Daily Adjusted Gross Margin ($)17,421 17,534

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Full‑Year Capex ($USD Millions)FY 2025$770–$780 $700–$710 Lowered
Q3 Capex ($USD Millions)Q3 2025N/A$200–$210 (incl. $110–$115 SANAD) New
Lower‑48 Avg. RigsQ2 vs Q363–64 (Q2 guide) 57–59 (Q3 guide) Lowered
Lower‑48 Daily Adj. Gross Margin ($)Q2 vs Q3~$14,100 (Q2 guide) ~$13,300 (Q3 guide) Lowered
International Avg. RigsQ2 vs Q385–86 (Q2 guide) 87–88 (Q3 guide) Raised
International Daily Adj. Gross Margin ($)Q2 vs Q3~$17,700 (Q2 guide) ~$17,900 (Q3 guide) Raised
Drilling Solutions Adj. EBITDA ($)Q2 vs Q3~$75 (Q2 guide) In line with Q2 Maintained
Rig Technologies Adj. EBITDA ($)Q2 vs Q3In line with Q1 Up ~$2–$3 from Q2 Raised
Adjusted Free Cash Flow ($USD Millions)FY 2025~80 (ex‑tariffs) Targeting ~$80 Maintained

Earnings Call Themes & Trends

TopicQ-2 (Q4 2024)Q-1 (Q1 2025)Current (Q2 2025)Trend
AI/Technology initiativesCanrig awarded U.S. upgrade package; pursuit of OEM projects Corva AI integrated into RigCLOUD to enhance analytics NDS gross margin 53%; portfolio scaling across geographies/products Scaling, margin‑accretive
Macro/tariffs/creditMexico collections shortfall; SANAD newbuild milestones accelerated Estimated tariff headwind $10–$20M FY CFO sees stabilizing macro and improving credit spreads, aiding refinancings Improving credit, tariff watch
Regional trends (Saudi/Kuwait/LatAm)SANAD newbuild expansion, natural gas focus Saudi newbuilds; startups planned across KSA/Kuwait/Argentina/Mexico/India Five‑rig SANAD tranche; Kuwait reactivations; incremental rigs identified across EH/LatAm Growth pipeline
Lower‑48 operationsLeading‑edge pricing steady; churn impacting utilization Rig count recovery post February trough; margin $14.3k/day Pricing resilient low‑$30k/day; margin guide ~$13.3k/day; rig count 57–59 in Q3 Near‑term pressure
Working capital/MexicoHalted payments affected FCF Collections ~ $20M; target slipped Expect ~$40M Q3 collections via gov’t financing for PEMEX vendors Resolution likely
Capital allocationFY25 FCF ~ breakeven (pre‑Parker) FY25 FCF target ~$80M (ex‑tariffs) FY25 capex cut to $700–$710; aim to match Q3 FCF to Q2 FCF upshift

Management Commentary

  • Petrello: “Recent deployments of high‑spec rigs in the Middle East… should drive growth in our International Drilling segment… The award of the fourth five‑rig tranche cements SANAD’s growth prospects into 2027.” .
  • CFO Restrepo: “Adjusted free cash flow… $41 million… we forecast similar adjusted free cash flow in the third quarter and anticipate reaching our $80 million target for the full year.” .
  • CFO Restrepo: “We now anticipate total 2025 capital expenditures to be between $700 and $710 million… Within that total… approximately $300 million [Saudi newbuilds].” .
  • Petrello on Lower‑48: “We see our rig count and leading‑edge pricing stabilizing in the third quarter and through the end of the year.” .
  • Petrello on Parker: “Parker Wellbore has exceeded our expectations… synergy capture post‑closing has exceeded our targets.” .

Q&A Highlights

  • SANAD pipeline and fleet flexibility: Management underscored five‑rig award and ability to redeploy high‑spec rigs across Middle East markets, supporting utilization and margin .
  • Lower‑48 margin inflection: CFO guided to ~$13,300/day in Q3 and expects sustaining above $13,000/day as pricing stabilizes around low‑$30k/day .
  • Mexico collections: Expect ~$40M Q3 collections as government financing addresses vendor arrears, supporting FCF trajectory .
  • 2026 capex build: SANAD milestones likely mid‑$300M in 2026 plus sustaining capex on a larger fleet; some milestone slippage from 2025 into 2026/2027 .
  • Portfolio scope: Open to production‑oriented, contiguous services over time; “unlikely we’ll get back into pressure pumping” .

Estimates Context

  • Q2 2025 comparison to S&P Global consensus: Revenue $832.8M vs $845.4M est. (miss), Primary EPS -$2.44 vs -$1.51 est. (miss), EBITDA $248.5M vs $247.3M est. (slight beat). Misses were driven by Lower‑48 margin pressure and international startup/downtime (Kuwait delays, Saudi downtime); Parker integration and Saudi/Kuwait deployments supported EBITDA resilience *.
  • Forward expectations: Q3 guide implies International margin lift and stable NDS EBITDA, partly offset by Lower‑48 pricing and rig count headwinds; estimate revisions likely to reflect capex cut and segment mix shift (NDS ~25% EBITDA) *.

Note: Values marked with * retrieved from S&P Global.

Key Takeaways for Investors

  • International margin and utilization are improving on Saudi/Kuwait deployments; Q3 guide to ~$17.9k/day and 87–88 rigs points to sequential EBITDA support in International .
  • Lower‑48 near‑term headwinds from repricing to leading‑edge rates drive margin guide to ~$13.3k/day; watch Q3 rig count (57–59) and pricing resilience in low‑$30k/day .
  • Capex cut ($700–$710M) de‑risks FCF and balance sheet in H2; management targets FY FCF ~$80M and aims to address 2027 maturities in 2025, aided by improving credit spreads .
  • Parker integration elevates NDS contribution (25% of segment EBITDA) with 53% gross margin; this higher‑margin, capex‑light mix is a medium‑term earnings quality tailwind .
  • SANAD five‑rig tranche award extends embedded growth through 2027; multi‑year contracts in Saudi plus Kuwait reactivations underpin visibility .
  • Mexico receivable collections are a swing factor for Q3 FCF; government financing program expected to expedite payments (~$40M) .
  • Governance and portfolio moves: Board expanded with David J. Tudor (Audit and Risk Oversight); subsequent to Q2, sale of Quail Tools for $600M reduces net debt >25% and adds preferred supplier agreement (post‑quarter but strategically relevant) .

Additional documents read for context: Q1 2025 earnings release , Q4 2024 earnings release , Q2 2025 8‑K including Exhibit 99.1 and 99.2 investor deck , Q2 2025 earnings call transcripts .