NBR — Nabors Industries Ltd.

Summary of Nabors Industries Limited Q1 2026 Earnings Call

1. Key Financial Results and Metrics

• Consolidated Revenue: $784 million, a sequential decline primarily due to seasonal factors and logistics disruptions in the Middle East.
• Adjusted EBITDA: $205 million, representing a margin of 26.1%, consistent with prior expectations but down 164 basis points sequentially.
• International Drilling Revenue: $419 million, with EBITDA of $121 million (28.9% margin), affected by labor costs and operational disruptions.
• U.S. Drilling Revenue: $241 million, with EBITDA of $88 million (36.5% margin), showing a 5.9% sequential increase due to higher activity.
• Average Rig Count: Increased to 66 in the Lower 48, with expectations to reach 69 by the end of Q2 2026.
• Free Cash Flow: Consumed $48 million in Q1, but outperformed expectations, particularly outside SANAD, which is expected to generate approximately $10 million in Q2.

2. Strategic Updates and Business Highlights

• Middle East Operations: Maintained operational tempo with 53 rigs in Saudi Arabia, 4 in Oman, and 3 in Kuwait despite regional conflict.
• Rig Additions: Added 4 rigs in Q1, with a total of 8 rigs added since November 2025, primarily from public operators.
• SANAD Joint Venture: Continued expansion with the deployment of newbuild rigs and discussions for additional new rigs.
• Technology Deployment: Continued focus on high-spec rigs and advanced technology, including the PACE-X Ultra, which is expected to enhance performance and returns.

3. Forward Guidance and Outlook

• Q2 Expectations: Anticipate average rig count in International Drilling to range from 93 to 95 rigs, with improved average daily gross margin expected between $17,400 to $17,500.
• U.S. Drilling Outlook: Expect to maintain a rig count of approximately 69 through the remainder of the year, with pricing expected to trend higher into the mid-$30,000 range.
• Full-Year Guidance: Confident in exceeding full-year free cash flow guidance due to improved activity and disciplined capital management.

4. Bad News, Challenges, or Points of Concern

• Operational Inefficiencies: The ongoing conflict in the Middle East has led to logistics and supply chain challenges, impacting operational efficiency and costs.
• Market Volatility: Oil price fluctuations and backwardation in futures pricing are tempering near-term activity expectations in the Lower 48.
• Rig Count Stability: While there is potential for increased rig count, management remains cautious about overextending in a volatile market environment.

5. Notable Q&A Insights

• Rig Reactivation Costs: Management discussed the costs associated with reactivating rigs, indicating a cautious approach to adding beyond the planned 69 rigs.
• Long-Term Leverage Goals: Aiming for net leverage around 1x in the medium to long term, with a focus on debt reduction before considering shareholder returns.
• Saudi Arabia's Rig Market: Discussion on the potential for additional rig activity post-conflict, with a focus on gas-directed drilling, indicating a strategic pivot in response to market demands.

This summary encapsulates the key financial metrics, strategic initiatives, outlook, challenges, and insights from the Q1 2026 earnings call for Nabors Industries Limited.