On July 23, 2024, Nabors Industries Ltd (NBR, Financial) released its 8-K filing for the second quarter of 2024. Nabors Industries Ltd, a leading provider of land-based and offshore drilling rigs, reported operating revenues of $735 million, slightly below the analyst estimate of $739.25 million. The net loss attributable to Nabors shareholders was $32 million, translating to a loss of $4.29 per diluted share, which is a narrower loss compared to the previous quarter's $4.54 per diluted share.
Company Overview
Nabors Industries Ltd owns and operates land-based drilling rig fleets and provides offshore platform rigs in the United States and international markets. The company also offers performance tools, directional drilling services, tubular running services, and innovative technologies. With operations in over 15 countries, Nabors has 291 actively marketed rigs for land-based drilling operations and 28 actively marketed rigs for offshore platform drilling operations. The company operates through five reportable segments: U.S. Drilling, Canada Drilling, International Drilling, Drilling Solutions, and Rig Technologies. The key revenue driver for the company is its International Drilling segment.
Performance and Challenges
Despite the slight revenue miss, Nabors Industries Ltd showed resilience with a marginal increase in operating revenues from $734 million in the first quarter to $735 million in the second quarter. The company's net loss narrowed from $34 million in Q1 to $32 million in Q2. This performance was driven by growth and higher average daily margins in the International Drilling segment, as well as stronger performance in the Drilling Solutions and Rig Technologies segments.
"Our second quarter operating results were better than we expected. This performance was driven by growth and higher average daily margins in our International Drilling segment, as well as stronger performance in our Drilling Solutions and Rig Technologies segments," commented Anthony G. Petrello, Nabors Chairman, CEO, and President.
Financial Achievements
Nabors Industries Ltd reported an adjusted EBITDA of $218 million for the second quarter, compared to $221 million in the previous quarter. The company's International Drilling segment saw an increase in adjusted EBITDA to $106.4 million from $102.5 million in Q1, driven by rig additions in Algeria and Saudi Arabia. The Drilling Solutions segment also reported an increase in adjusted EBITDA to $32.5 million, reflecting growth in international markets and on third-party rigs in the U.S.
Key Financial Metrics
| Metric | Q2 2024 | Q1 2024 |
|---|---|---|
| Operating Revenues | $735 million | $734 million |
| Net Loss | $32 million | $34 million |
| Adjusted EBITDA | $218 million | $221 million |
| Adjusted Free Cash Flow | $57 million | $8 million |
Income Statement Highlights
For the second quarter, Nabors Industries Ltd reported total revenues and other income of $743 million, with direct costs amounting to $440 million. General and administrative expenses were $62 million, and depreciation and amortization expenses totaled $160 million. The company also incurred an interest expense of $51 million. The net loss for the quarter was $13 million, with a net loss attributable to Nabors shareholders of $32 million.
Balance Sheet and Cash Flow
As of June 30, 2024, Nabors Industries Ltd reported total assets of $4.6 billion, with total liabilities of $3.4 billion. The company's cash and short-term investments stood at $474 million. Adjusted free cash flow for the second quarter was $57 million, with capital expenditures totaling $138 million, including $56 million supporting new builds in Saudi Arabia.
Analysis and Outlook
Nabors Industries Ltd's performance in the second quarter of 2024 highlights the company's ability to navigate challenging market conditions. The growth in the International Drilling segment and the stable performance in the Drilling Solutions and Rig Technologies segments are positive indicators for the company's future prospects. However, the company continues to face challenges in the U.S. Drilling segment, with a decrease in the average rig count and daily adjusted gross margin.
"Our overall results exceeded outlook. The emerging international market strength we saw last year is now manifesting in rig additions for our International drilling segment," stated William Restrepo, Nabors CFO.
Looking ahead, Nabors Industries Ltd expects continued growth in its International Drilling segment, with scheduled deployments and additional opportunities in the Middle East and Latin America. The company's disciplined approach to capital expenditures and focus on free cash flow generation will be crucial in maintaining financial stability and supporting future growth.
Explore the complete 8-K earnings release (here) from Nabors Industries Ltd for further details.
