4Q 2025 Highlights
Nabors completed several transactions that materially reduced total debt and significantly strengthened its leverage metrics:
Related to the sale of Quail, Nabors collected the $250 million seller financing note in full.
The Company issued $700 million of notes due in 2032.
In turn, the Company redeemed the $546 million remaining balance of its notes due in 2027.
In January, the Company redeemed in full the remaining outstanding notes due in 2028.
These actions contributed to a reduction in Nabors' outstanding net debt by approximately $554 million since the end of 2024. The Company's next debt maturity is $250 million due in 2029.
The performance of the retained Parker Wellbore businesses improved. Adjusted EBITDA contribution from these operations increased by 11% sequentially, with stronger drilling activity in Canada and Indonesia. This growth also includes additional realization of cost synergies, reaching the $40 million synergy target for 2025.
The SANAD joint venture deployed one newbuild rig in the Kingdom. The number of newbuild deployments now totals 14. Five more are scheduled for 2026, followed by one more in early 2027.
In the fourth quarter, Nabors installed the first unit of its new Canrig® automated floor wrench on a Nabors rig working in the Haynesville Shale. This wrench represents a technological step-change for this critical rig floor component. Its field performance demonstrates a 30% reduction in cycle time and improved positioning. Available as a retrofit to Canrig wrenches deployed in the field, it is already generating significant customer interest.
Anthony G. Petrello, Nabors Chairman, CEO and President, commented, "2025 proved to be a transformational year for our capital structure. Including the redemption in January, we reduced our total debt by $388 million since the end of 2024. This represents significant progress on our path to delevering. As a result of this significant reduction in debt, our annual interest expense should decline by approximately $45 million, translating into a dollar-for-dollar improvement in adjusted free cash flow.
"Nabors' fourth quarter results improved compared to the third quarter, excluding the contribution from Quail. This sequential improvement was broad-based across all segments of our operations.
"In the Lower 48 business and International Drilling segment, our average rig counts in the fourth quarter exceeded both our expectations and those of the prior quarter. Our Lower 48 count increased in the latter portion of the quarter, highlighting our success executing on opportunities to add rigs. In our International Drilling segment, SANAD added a newbuild in Saudi Arabia, two rigs were redeployed in Argentina, and three platform rigs in Mexico continued to work throughout the quarter.
"The sequential increase in Drilling Solutions' ("NDS") adjusted EBITDA was particularly encouraging. The largest contributors to this increase include casing running, managed pressure drilling, and performance software in our international markets. In the Lower 48 market, NDS's revenue on third-party drilling contractors' rigs increased sequentially by more than 10%, even as that market's rig count grew by just 1%. This performance demonstrates the value of the NDS portfolio and our success targeting the third-party rig market."
Segment Results
International Drilling adjusted EBITDA totaled $131.3 million, compared to $127.6 million in the third quarter. Average rig count increased by more than four rigs, reflecting the recent startup of rigs in Argentina, Saudi Arabia and Colombia. Daily adjusted gross margin for the fourth quarter was $17,630, partially reflecting rig startup inefficiencies and activity interruptions in certain markets.
The U.S. Drilling segment reported fourth quarter adjusted EBITDA of $93.2 million, compared to $94.2 million in the previous quarter. Results in the Lower 48 operation improved on increases in average rig count and daily gross margin. These were mainly offset by a margin decline in Alaska and Offshore which was smaller than expected.
Drilling Solutions adjusted EBITDA was $41.3 million, compared to $60.7 million in the third quarter. The segment's third quarter results included the contribution from Quail through its disposition in August. Excluding the impact of Quail from the third quarter results, Drilling Solutions adjusted EBITDA grew 2.3%.
Rig Technologies adjusted EBITDA was $4.9 million, a 31% increase from $3.8 million in the prior quarter. Sales of capital equipment improved in the quarter.
Adjusted Free Cash Flow
Consolidated adjusted free cash flow was $132 million in the fourth quarter, a significant increase from $6 million in the third quarter. Several factors contributed to this performance. In addition to stronger EBITDA, collections in Mexico improved substantially. Capital spending in the fourth quarter was below expectations, both for the SANAD newbuild rig program and in the balance of the operation. The Company also received settlements from several outstanding claims.
Miguel Rodriguez, Nabors CFO, stated, "Our achievements over the past year demonstrate that we are delivering on our commitments. Our top priority is the reduction of debt. We intend to follow the recent progress with an additional decrease this year.
"In the fourth quarter, our adjusted EBITDA exceeded our expectations. The U.S. Drilling and Drilling Solutions segments contributed to this outperformance. All three of the U.S. Drilling operations were stronger than expected. In the Lower 48, the increase in rig count late in the quarter sets us up for a positive start to 2026. Drilling Solutions' strength was evident across multiple service lines, especially in its international markets.
"Adjusted free cash flow in the fourth quarter also exceeded our expectations. Going forward, our focus will remain strengthening our capital structure, while delivering durable growth and long-term value."
Outlook
Nabors expects the following metrics for the first quarter of 2026:
U.S. Drilling
Lower 48 average rig count of 64 - 65 rigs
Lower 48 daily adjusted gross margin of approximately $13,200
Alaska and Gulf of America combined adjusted EBITDA of $16 - $17 million
International
Average rig count of 91 - 92 rigs
Daily adjusted gross margin of approximately $17,500 - $17,600
Drilling Solutions
Adjusted EBITDA of approximately $39 million
Rig Technologies
Adjusted EBITDA of approximately $2 million
Capital Expenditures
Capital expenditures of $170 - $180 million, including approximately $85 million for newbuilds in Saudi Arabia
Adjusted Free Cash Flow
First quarter adjusted free cash consumption of $80 - $90 million, including free cash consumption at SANAD of $50 - $60 million
Nabors expects the following metrics for full-year 2026:
U.S. Drilling
Lower 48 average rig count of 61 - 64 rigs
Lower 48 daily adjusted gross margin of $13,000 - $13,400
Alaska and Gulf of America combined adjusted EBITDA of $55 - $60 million
International
Average rig count of 96 - 98 rigs
Daily adjusted gross margin of approximately $18,500
Drilling Solutions
Adjusted EBITDA of $160 - $170 million
Rig Technologies
Adjusted EBITDA of $22 - $25 million
Capital Expenditures
Capital expenditures of approximately $730 - $760 million, with $360 - $380 million for SANAD newbuilds
Adjusted Free Cash Flow
Adjusted free cash flow excluding SANAD of $80 - $90 million, with SANAD consuming $100 - $120 million
Mr. Petrello concluded, "The steps we have taken over the past year have significantly reduced our debt, improved our leverage metrics, and lowered our interest payments. In addition, we retain a business portfolio from Parker that contributes materially to EBITDA and free cash flow.
"Looking forward, the Lower 48 market appears to be stabilizing. At the same time, the opportunity set in our international markets looks attractive. Our diversified business portfolio is designed to capitalize on this environment."
About Nabors Industries
Nabors Industries (NYSE:NBR) is a leading provider of advanced technology for the energy industry. With presence in more than 20 countries, Nabors has established a global network of people, technology and equipment to deploy solutions that deliver safe, efficient and responsible energy production. By leveraging its core competencies, particularly in drilling, engineering, automation, data science and manufacturing, Nabors aims to innovate the future of energy and enable the transition to a lower-carbon world. Learn more about Nabors and its energy technology leadership: www.nabors.com.
Forward-looking Statements
The information included in this press release includes forward-looking statements within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934. Such forward-looking statements are subject to a number of risks and uncertainties, as disclosed by Nabors from time to time in its filings with the Securities and Exchange Commission. As a result of these factors, Nabors' actual results may differ materially from those indicated or implied by such forward-looking statements. The forward-looking statements contained in this press release reflect management's estimates and beliefs as of the date of this press release. Nabors does not undertake to update these forward-looking statements.
Non-GAAP Disclaimer
This press release presents certain "non-GAAP" financial measures. The components of these non-GAAP measures are computed by using amounts that are determined in accordance with accounting principles generally accepted in the United States of America ("GAAP"). Adjusted operating income (loss) represents income (loss) before income taxes, interest expense, investment income (loss), gain on disposition of Quail Tools, gain on bargain purchase, and other, net. Adjusted EBITDA is computed similarly, but also excludes depreciation and amortization expenses. In addition, adjusted EBITDA and adjusted operating income (loss) exclude certain cash expenses that the Company is obligated to make. Net debt is calculated as total debt minus the sum of cash, cash equivalents and short-term investments.
Adjusted free cash flow represents net cash provided by operating activities less cash used for capital expenditures, net of proceeds from sales of assets, and before cash paid for acquisition-related costs. Management believes that adjusted free cash flow is an important liquidity measure for the company and that it is useful to investors and management as a measure of the company's ability to generate cash flow, after reinvesting in the company for future growth, that could be available for paying down debt or other financing cash flows, such as dividends to shareholders. Adjusted free cash flow does not represent the residual cash flow available for discretionary expenditures. Adjusted free cash flow is a non-GAAP financial measure that should be considered in addition to, not as a substitute for or superior to, cash flow from operations reported in accordance with GAAP.
Each of these non-GAAP measures has limitations and therefore should not be used in isolation or as a substitute for the amounts reported in accordance with GAAP. However, management evaluates the performance of its operating segments and the consolidated Company based on several criteria, including Adjusted EBITDA, adjusted operating income (loss), net debt, and adjusted free cash flow, because it believes that these financial measures accurately reflect the Company's ongoing profitability, performance and liquidity. Securities analysts and investors also use these measures as some of the metrics on which they analyze the Company's performance. Other companies in this industry may compute these measures differently. Reconciliations of consolidated adjusted EBITDA and adjusted operating income (loss) to income (loss) from continuing operations before income taxes, net debt to total debt, and adjusted free cash flow to net cash provided by operations, which are their nearest comparable GAAP financial measures, are included in the tables at the end of this press release. We do not provide a forward-looking reconciliation of our outlook for Segment Adjusted EBITDA, Segment Gross Margin or Adjusted Free Cash Flow, as the amount and significance of items required to develop meaningful comparable GAAP financial measures cannot be estimated at this time without unreasonable efforts. These special items could be meaningful.
Investor Contacts: William C. Conroy, CFA, Vice President of Corporate Development & Investor Relations, +1 281-775-2423 or via e-mail [email protected] or Kara K. Peak, Director of Corporate Development & Investor Relations, +1 281-775-4954 or via email [email protected]. To request investor materials, contact Nabors' corporate headquarters in Hamilton, Bermuda at +441-292-1510 or via e-mail [email protected]
NABORS INDUSTRIES LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS)
(Unaudited)
Three Months Ended
Year Ended
December 31,
September 30,
December 31,
(In thousands, except per share amounts)
2025
2024
2025
2025
2024
Revenues and other income:
Operating revenues
$ 797,529
$ 729,819
$ 818,190
$ 3,184,693
$ 2,930,126
Investment income (loss)
7,600
8,828
7,323
27,648
38,713
Total revenues and other income
805,129
738,647
825,513
3,212,341
2,968,839
Costs and other deductions:
Direct costs
486,367
433,404
491,828
1,914,376
1,742,411
General and administrative expenses
76,279
61,436
77,076
304,587
249,317
Research and engineering
13,328
14,434
12,978
53,063
57,063
Depreciation and amortization
159,188
156,348
160,347
649,234
633,408
Interest expense
50,625
53,642
54,334
215,366
210,864
Gain on disposition of Quail Tools
1,595
-
(415,557)
(413,962)
-
Gain on bargain purchase
2,846
-
-
(113,653)
-
Other, net
(9,532)
37,021
24,470
65,802
106,816
Total costs and other deductions
780,696
756,285
405,476
2,674,813
2,999,879
Income (loss) before income taxes
24,433
(17,638)
420,037
537,528
(31,040)
Income tax expense (benefit)
7,440
15,231
117,571
163,095
56,947
Net income (loss)
16,993
(32,869)
302,466
374,433
(87,987)
Less: Net (income) loss attributable to noncontrolling interest
(6,645)
(20,802)
(28,268)
(87,809)
(88,097)
Net income (loss) attributable to Nabors
$ 10,348
$ (53,671)
$ 274,198
$ 286,624
$ (176,084)
Earnings (losses) per share:
Basic
$ 0.17
$ (6.67)
$ 18.25
$ 18.75
$ (22.37)
Diluted
$ 0.17
$ (6.67)
$ 16.85
$ 17.39
$ (22.37)
Weighted-average number of common shares outstanding:
Basic
14,131
9,213
14,098
13,193
9,202
Diluted
14,210
9,213
15,321
14,416
9,202
Adjusted EBITDA
$ 221,555
$ 220,545
$ 236,308
$ 912,667
$ 881,335
Adjusted operating income (loss)
$ 62,367
$ 64,197
$ 75,961
$ 263,433
$ 247,927
NABORS INDUSTRIES LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
December 31,
September 30,
December 31,
(In thousands)
2025
2025
2024
ASSETS
Current assets:
Cash and short-term investments
$ 940,738
$ 428,079
$ 397,299
Notes receivable
-
250,035
-
Accounts receivable, net
391,705
487,062
387,970
Other current assets
219,130
259,251
214,268
Total current assets
1,551,573
1,424,427
999,537
Property, plant and equipment, net
2,920,019
2,931,290
2,830,957
Other long-term assets
318,065
477,787
673,807
Total assets
$ 4,789,657
$ 4,833,504
$ 4,504,301
LIABILITIES AND EQUITY
Current liabilities:
Current debt, net
$ 377,492
$ -
$ -
Trade accounts payable
300,467
352,415
321,030
Other current liabilities
315,042
327,799
250,887
Total current liabilities
993,001
680,214
571,917
Long-term debt, net
2,117,187
2,347,984
2,505,217
Other long-term liabilities
241,826
237,136
220,829
Total liabilities
3,352,014
3,265,334
3,297,963
Redeemable noncontrolling interest in subsidiary
482,446
629,261
785,091
Equity:
Shareholders' equity
590,727
579,776
134,996
Noncontrolling interest
364,470
359,133
286,251
Total equity
955,197
938,909
421,247
Total liabilities and equity
$ 4,789,657
$ 4,833,504
$ 4,504,301
NABORS INDUSTRIES LTD. AND SUBSIDIARIES
SEGMENT REPORTING
(Unaudited)
The following tables set forth certain information with respect to our reportable segments and rig activity:
Three Months Ended
Year Ended
December 31,
September 30,
December 31,
(In thousands, except rig activity)
2025
2024
2025
2025
2024
Operating revenues:
U.S. Drilling
$ 240,624
$ 241,637
$ 249,836
$ 976,644
$ 1,028,122
