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01/11 11:51
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call summary presents mixed signals. While there are positive aspects like the Parker acquisition's contribution and synergy gains, several negative factors are present, such as decreased US drilling revenue and EBITDA, and declining margins. The Q&A session does not alleviate concerns, with uncertainties around rig releases and tariffs. Despite some positive surprises in survey responses, the overall sentiment remains cautious. Given these mixed factors and the lack of market cap data, a neutral stock price movement prediction is appropriate.
Revenue from operations $736 million, an increase of $6 million or 1% year-over-year, driven by incremental revenue from the International segment and the Parker acquisition.
US drilling revenue $231 million, a decrease of $11 million or 4.5% year-over-year, due to a reduction in activity in the Lower 48.
International Drilling segment revenue $382 million, an increase of $10.3 million or 3% year-over-year, driven by sales increases in key markets and Parker's contribution.
Drilling Solutions revenue $93.2 million, an increase of $17.2 million or 22.6% year-over-year, primarily due to Parker's contribution.
Rig Technologies revenue $44.2 million, a decrease of $12 million year-over-year, driven by lower capital equipment deliveries and a decrease in parts sales.
Total adjusted EBITDA $206.3 million, a decrease of $14 million year-over-year, mainly due to lower rig count and higher operational expenses.
US drilling EBITDA $92.7 million, a decrease of $13 million or 12.3% year-over-year, reflecting a reduction in rig count and erosion in daily margins.
Average daily rig margins (Lower 48) $14,276, a decrease of $660 or 4% year-over-year, driven by increased churn in the rig count.
International segment EBITDA $115.5 million, an increase of $3.5 million or 3.1% year-over-year, due to improved average rig count and operational performance.
Adjusted free cash flow Approximately $61 million consumed, better than the expected $80 million to $90 million consumption.
Capital expenditures (CapEx) $144 million, a decrease from $241 million in the prior quarter, including $47.5 million for the SANAD newbuild program.
Parker Wellbore contribution to EBITDA Approximately $7.8 million in the first quarter, contributing to overall financial performance.
Debt from Parker acquisition $178 million gross debt taken on, which has since been retired, resulting in immediate interest savings.
Synergy gains from Parker acquisition Expected to capture approximately $40 million in synergy gains in 2025.
Parker Wellbore Acquisition: Nabors completed the acquisition of Parker Wellbore on March 11, 2025, and is on track to achieve $40 million in cost synergies for 2025.
New Rigs in Saudi Arabia: Nabors started up its 10th new build in Saudi Arabia on an initial six-year term contract.
NDS Business Growth: The acquisition of Parker Wellbore is expected to significantly enhance the contribution from Nabors' NDS business.
International Market Expansion: Nabors expects to add 10 rigs over the remaining three quarters of 2025, with deployments in Saudi Arabia and Kuwait.
US Market Trends: The Lower 48 market remains stable, but smaller operators are adding rigs while larger ones are reducing activity.
Operational Efficiencies: Nabors is focused on reducing costs and aligning operational expenses with current activity levels.
Free Cash Flow: Free cash flow in Q1 benefited from lower-than-expected CapEx on SANAD Newbuilds.
Strategic Shift in Rig Count: Nabors' rig count in the Lower 48 averaged 61 rigs, with a slight increase expected in Q2.
Focus on Natural Gas: Nabors is prepared to bring back rigs in gas-focused basins as natural gas activity is expected to recover.
Market Environment Risks: Several factors currently weigh on the oil market, including OPEC+ plans to unwind output reductions, potential impacts of higher tariffs on the global economy, and high production from US shale.
Operational Challenges: High levels of churn in the rig count caused inefficiencies and increased operational expenses, affecting daily margins.
Regulatory Risks: Expansion of US sanctions led to the suspension of operations in Russia, with no expectation to restart activities in that market.
Customer Spending Cuts: In Mexico, customers are cutting spending, which may impact future rig counts.
Political Risks: The current political situation in Colombia could impact rig counts going forward.
Financial Market Volatility: Significant disarray in equity and debt markets is expected to continue, affecting overall financial performance.
Rig Count Volatility: The Lower 48 market is experiencing a shift with smaller operators adding rigs while larger ones reduce activity, leading to volatility in rig counts.
Economic Factors: The overall economic environment remains uncertain, with potential impacts on drilling activity and customer spending.
Parker Wellbore Acquisition: Completed on March 11, 2025, with performance in line with expectations and a target of $40 million in cost synergies for 2025.
International Drilling Growth: Expect to add 10 rigs over the remaining three quarters of 2025, with deployments in Saudi Arabia and Kuwait.
SANAD Joint Venture: Forecasted to earn adjusted EBITDA of over $300 million in 2025, with plans for five new builds per year.
Debt Reduction: Prioritizing debt reduction with plans to refinance high-interest obligations from the Parker acquisition.
Q2 2025 Rig Count: Expect a slight increase in average rig count to between 63 and 64 rigs in the Lower 48.
Q2 2025 EBITDA: Forecasted EBITDA for Lower 48 at approximately $14,100 per day, with an expected increase in international EBITDA to $115.5 million.
2025 Capital Expenditures: Targeting capital expenditures between $710 million and $720 million, with $360 million for SANAD new builds.
Parker EBITDA Contribution: Expect Parker to generate approximately $150 million of EBITDA for 2025, with $130 million included in consolidated results.
Synergy Gains: Expect to capture approximately $40 million in synergy gains in 2025, with targeted savings of $60 million for 2026.
Share Repurchase: In the first quarter, Nabors repurchased $11.4 million face value of notes at a significant discount.
Synergy Gains: Nabors expects to capture approximately $40 million of synergy gains in 2025 from the Parker acquisition.
Parker EBITDA Contribution: Parker is expected to generate approximately $150 million of EBITDA during the full year of 2025, with $130 million included in Nabors consolidated results.
The earnings call indicates a positive outlook with improved net earnings, strong free cash flow, and reduced capital expenditures. The company is strategically positioned for growth in the natural gas sector and international markets, which can drive stock price upward. Additionally, management’s cautious optimism and strategic investments in technology and logistics further support a positive sentiment. However, some uncertainties remain, such as pricing unpredictability and lack of specific contract details, but these do not outweigh the overall positive indicators.
The earnings call reveals mixed signals. While the company reports improved EBITDA, debt reduction, and strategic international growth, challenges persist with increased operational costs, pricing erosion, and regulatory risks. The Q&A section highlights stable revenues but lacks clarity on tendering outcomes and specific growth projections. The strategic plan outlines potential rig deployment and cost discipline, yet operational inefficiencies and geopolitical risks temper optimism. Given these factors, the stock price reaction is likely to be neutral, with no significant catalysts for a strong movement in either direction.
The earnings call summary presents mixed signals. While there are positive aspects like the Parker acquisition's contribution and synergy gains, several negative factors are present, such as decreased US drilling revenue and EBITDA, and declining margins. The Q&A session does not alleviate concerns, with uncertainties around rig releases and tariffs. Despite some positive surprises in survey responses, the overall sentiment remains cautious. Given these mixed factors and the lack of market cap data, a neutral stock price movement prediction is appropriate.
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