- NBR’s US drilling rig count declined in Q1 as its US performance softened
- International rig margin improved in Q1.
- International newbuild startups and a recovery of US operations are expected in Q2.
Key Developments And Outlook: In Q1, Nabors acquired Parker Wellbore, which strengthened its tubular rental franchise and casing business in Saudi Arabia and the United Arab Emirates. It also deployed its tenth newbuild rig in the SANAD JV in Saudi Arabia. The company extended its AI collaboration with Corva AI into Nabors’ RigCLOUD platform.
NBR plans to start the eleventh newbuild rig in the SANAD JV in Q2 and three more for the rest of 2025. It also has a pipeline of startups in Saudi Arabia, Kuwait, Argentina, Mexico, and India, which will drive its performance in Q2. It also expects the rig count to recover in the US after it “ troughed in February.”
Key Drivers In Q1: Quarter-over-quarter, revenues in the company’s International Drilling operating segment witnessed a 3% rise in Q1, while the topline in the U.S. Drilling segment declined by 5%. Rig Technologies witnessed a sequential revenue rise of 23%. Rig margins in U.S. Drilling declined by 4%, while it improved by 4% in International Drilling during this period. The company’s net loss turned in Q4 to $33 million of net income in Q1.
Rig startups in Saudi Arabia and improved gross margin in its international operations resulted in performance improvement in international operations. In U.S. Drilling, the company’s margin faced pressure due to lower rig utilization and higher operating expenses.
FCF Remained Negative and Leverage High: NBR’s cash flow from operations declined (41% down) in Q1 2025 compared to the previous quarter. Although capex decreased, its FCF turned further south in the negative territory in Q1. Its debt-to-equity (4.1x) is high, primarily due to low shareholders’ equity and high long-term debt.
Thanks for reading the NBR Take Three, designed to give you three critical takeaways from NBR’s earnings report. Soon, we will present a second update on NBR’s earnings, highlighting its current strategy, news, and notes we extracted from our deeper dive.
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