On October 22, 2024, Nabors Industries Ltd (NBR, Financial) released its 8-K filing detailing its third-quarter 2024 financial results. Nabors Industries Ltd, a leading provider of land-based and offshore drilling rigs, reported operating revenues of $732 million, slightly below the analyst estimate of $751.01 million. The company also reported a net loss of $56 million, translating to a loss of $6.86 per diluted share, which was significantly above the analyst estimate of -$2.34 per share.
Company Overview
Nabors Industries Ltd owns and operates one of the world's largest 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 for offshore platform drilling operations. The company operates through five segments: U.S. Drilling, Canada Drilling, International Drilling, Drilling Solutions, and Rig Technologies, with key revenue generated from International Drilling.
Performance and Challenges
The third quarter results reflect a challenging environment for Nabors Industries Ltd. Despite a slight increase in adjusted EBITDA to $222 million from $218 million in the previous quarter, the company faced a net loss due to charges totaling approximately $25 million. These charges were primarily related to the redemption premium on the 2026 notes and market adjustments on investments. The company's performance is crucial as it indicates the health of the oil and gas drilling sector, which is sensitive to fluctuations in oil prices and geopolitical factors.
Financial Achievements
Nabors Industries Ltd achieved significant milestones in its International Drilling segment, with daily margins exceeding $17,000, demonstrating the earnings power of this segment. The company also reported growth in its Drilling Solutions segment, driven by higher revenue in international markets and increased penetration of performance software on U.S. rigs. These achievements are vital as they highlight the company's ability to leverage its international presence and technological advancements to drive growth.
Financial Statements and Key Metrics
The company's income statement revealed total revenues and other income of $743.3 million, with direct costs amounting to $431.7 million. The balance sheet showed total assets of $4.55 billion, with cash and short-term investments at $459.3 million. The company's adjusted free cash flow was $18 million, down from $57 million in the previous quarter, reflecting higher capital expenditures and interest payments.
| Segment | Adjusted EBITDA (Q3 2024) | Adjusted EBITDA (Q2 2024) |
|---|---|---|
| U.S. Drilling | $108.7 million | $114.0 million |
| International Drilling | $116.0 million | $106.4 million |
| Drilling Solutions | $34.3 million | $32.5 million |
| Rig Technologies | $6.1 million | $7.3 million |
Analysis and Commentary
Anthony G. Petrello, Nabors Chairman, CEO, and President, commented on the company's strategic acquisition of Parker Wellbore, stating,
We are excited as we move forward with our announced acquisition of Parker Wellbore. Our companies’ portfolios are highly complementary... The transaction increases our scale, provides incremental growth and improves our leverage metrics."This acquisition is expected to enhance Nabors' capabilities and expand its market reach, particularly in the international arena.
William Restrepo, Nabors CFO, added,
Nabors’ third quarter results met our outlook. Daily adjusted gross margin in our International Drilling segment expanded by more than $1,000... We have three rigs scheduled to deploy in the fourth quarter, each with attractive economics."This outlook suggests potential growth opportunities in the coming quarters, driven by strategic deployments and market expansion.
Overall, while Nabors Industries Ltd faces challenges, particularly in the U.S. market, its international operations and strategic acquisitions position it for potential future growth. Investors will be keen to see how these strategies unfold in the coming quarters.
Explore the complete 8-K earnings release (here) from Nabors Industries Ltd for further details.
