Record International Drilling Margin. $75 Million in Adjusted Free Cash Flow. Nabors Reports Third Quarter 2026 Results.
HAMILTON, Bermuda, Oct. 27, 2026 /PRNewswire/ -- Nabors Industries Ltd. ("Nabors" or the "Company") (NYSE: NBR) today reported third quarter 2026 operating revenues of $872 million, up 7% sequentially. Net loss attributable to Nabors' shareholders was $11 million. Adjusted EBITDA was $246 million, up nearly 11% from the second quarter.
Record International Drilling daily adjusted gross margin, a larger Lower 48 working fleet, and growth in Drilling Solutions drove the sequential improvement. Higher profitability, lower capital spending and improved working capital contributed to $75 million in adjusted free cash flow.
Selected Financial Information | ||||||
(In millions, except rig activity) | ||||||
Three Months Ended | ||||||
September 30, | June 30, | September 30, | ||||
2026 | 2026 | 2025 | ||||
Operating revenues | $ 872.2 | $ 814.8 | $ 818.2 | |||
Adjusted EBITDA | $ 245.5 | $ 221.7 | $ 236.3 | |||
Adjusted operating income | $ 85.8 | $ 61.1 | $ 76.0 | |||
Adjusted free cash flow | $ 74.5 | $ 12.3 | $ 5.6 | |||
Average rigs working: | ||||||
Lower 48 | 72.8 | 67.8 | 59.2 | |||
International Drilling | 94.9 | 93.4 | 89.2 | |||
Average total rigs working | 177.1 | 171.2 | 158.4 | |||
The quarter ended September 30, 2025 includes revenue of $34 million, EBITDA of $20 million, and operating income of $14 million from Quail Tools, which was sold in August 2025.
3Q 2026 Highlights
- International Drilling daily adjusted gross margin reached a record $19,060, up $1,526, or 8.7%, sequentially. Strong field performance across multiple countries and high-margin rig deployments drove the increase.
- The SANAD land drilling joint venture successfully deployed its 17th newbuild rig in Saudi Arabia. One additional newbuild is scheduled for deployment in 2026 and two in the first quarter of 2027, bringing the total newbuild fleet to 20.
- Nabors signed a multiyear contract to deploy one rig in Venezuela in early 2027. The deployment will mark Nabors' return to drilling operations in the country.
- Nabors rigs helped two Lower 48 operators achieve new drilling records. A PACE®-B rig in North Dakota achieved an impressive drilling performance of more than 27,600 feet in 148 hours, with an average rate of penetration of nearly 187 feet per hour. A PACE®-X rig in South Texas achieved a record performance by drilling an 18,500-foot well in under six days, averaging more than 3,200 feet per day. The operator recorded its fastest drilling performance in the basin to date.
- Canrig secured commitments for four additional RZR™ rig floor automation modules, which will bring the total deployed to six. Strong client interest supports the outlook for additional awards.
Anthony G. Petrello, Nabors Chairman, CEO and President, commented, "We delivered higher earnings and $75 million in adjusted free cash flow. Each of our four reporting segments met or exceeded its targets.
"International Drilling achieved a record daily adjusted gross margin. Strong field performance and new rig deployments with attractive economics drove the increase. We expect further margin improvement in the fourth quarter, despite a lower SANAD rig count following the suspension of five rigs.
"Our Lower 48 rig count grew as expected, and daily adjusted gross margin again exceeded guidance. We remain constructive on this market. Advanced drilling technology and reliable field delivery position us to continue increasing both rig count and daily margin.
"Drilling Solutions' business delivered double-digit sequential adjusted EBITDA growth. Greater adoption of our Performance Software and Downhole Services on Nabors rigs in the Lower 48 drove the gains. International growth in Surface and Tubular services also contributed to the segment's improvement."
Segment Results
International Drilling adjusted EBITDA increased to $146 million from $131 million in the second quarter. Daily adjusted gross margin rose by more than $1,500 to $19,060, reflecting strong field performance and contributions from the recently deployed rig in Argentina and the SANAD newbuild.
U.S. Drilling adjusted EBITDA increased to $99 million from $94 million in the second quarter. A 7% increase in the average Lower 48 working fleet and higher daily adjusted gross margin drove the improvement.
Drilling Solutions adjusted EBITDA increased to $44 million from $40 million in the second quarter, driven primarily by growth on Nabors rigs in the Lower 48 and growth in international markets.
Rig Technologies adjusted EBITDA increased to $5 million from $3 million in the second quarter. Both aftermarket revenue and capital equipment sales increased sequentially.
Adjusted Free Cash Flow
Consolidated adjusted free cash flow was $75 million, up $62 million sequentially. Higher profitability, lower capital spending at SANAD and across the rest of Nabors, together with lower working capital drove the improvement, partially offset by higher cash interest payments.
Miguel Rodriguez, Nabors CFO, stated, "Third quarter adjusted free cash flow exceeded our expectations. SANAD newbuild spending was below forecast as certain construction milestones shifted to later periods. Outside SANAD, controlled capital spending and improved working capital supported the cash generation.
"We anticipate delivering full-year 2026 adjusted EBITDA of approximately $930 million, reaching the upper end of our prior guidance. This outlook reflects the strength of the business, including the impact of rig suspensions in Saudi Arabia. We now expect full-year consolidated adjusted free cash flow of $100 to $110 million, including approximately $20 million of cash consumption at SANAD. This revised guidance is materially higher than our previous guidance.
"We now expect full-year consolidated capital spending of $710 to $720 million, including $295 to $305 million for SANAD's newbuild program.
"During the quarter, we redeemed $100 million of our 9.125% notes with cash on hand, continuing to deliver on our commitment to reduce gross debt. The redemption lowers cash interest expense, further strengthening our balance sheet."
Outlook
Nabors expects the following metrics for the fourth quarter of 2026:
U.S. Drilling
- Lower 48 average rig count of 75 rigs
- Lower 48 daily adjusted gross margin of $14,500 to $14,700
- Alaska and Gulf of America combined adjusted EBITDA of approximately $12 million
International
- Average rig count of 92 to 93 rigs
- Daily adjusted gross margin of approximately $19,500
Drilling Solutions
- Adjusted EBITDA of approximately $46 million
Rig Technologies
- Adjusted EBITDA of approximately $8 million
Capital Expenditures
- Capital expenditures of $250 to $260 million, including $140 to $150 million for SANAD newbuilds in Saudi Arabia
Adjusted Free Cash Flow
- Adjusted free cash flow of $60 to $70 million, including approximately $20 million of cash consumption at SANAD
Mr. Petrello concluded, "Our third quarter results demonstrate the earnings power of our diversified portfolio. We expect further sequential adjusted EBITDA growth in the fourth quarter, led by U.S. Drilling. We remain on track to achieve an annualized adjusted EBITDA run rate of approximately $1 billion heading into 2027."
About Nabors Industries
Nabors Industries (NYSE: NBR) is a leading provider of advanced technology for the energy industry. With operations in approximately 20 countries, Nabors has established a global network of people, technology and equipment to deploy solutions that deliver safe, efficient and responsible energy production. By leveraging its core competencies, particularly in drilling, engineering, automation, data science and manufacturing, Nabors aims to innovate the future of energy and enable the transition to a lower-carbon world. Learn more about Nabors and its energy technology leadership: www.nabors.com.
Forward-looking Statements
The information included in this press release includes forward-looking statements within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934. Such forward-looking statements are subject to a number of risks and uncertainties, as disclosed by Nabors from time to time in its filings with the Securities and Exchange Commission. As a result of these factors, Nabors' actual results may differ materially from those indicated or implied by such forward-looking statements. The forward-looking statements contained in this press release reflect management's estimates and beliefs as of the date of this press release. Nabors does not undertake to update these forward-looking statements.
Non-GAAP Disclaimer
This press release presents certain "non-GAAP" financial measures. The components of these non-GAAP measures are computed by using amounts that are determined in accordance with accounting principles generally accepted in the United States of America ("GAAP"). Adjusted operating income (loss) represents income (loss) before income taxes, interest expense, investment income (loss), gain on bargain purchase, and other, net. Adjusted EBITDA is computed similarly, but also excludes depreciation and amortization expenses. Adjusted gross margin represents adjusted operating income (loss) plus general and administrative costs, research and engineering costs and depreciation and amortization. In addition, adjusted EBITDA and adjusted operating income (loss) exclude certain cash expenses that the Company is obligated to make. Net debt is calculated as total debt minus the sum of cash, cash equivalents and short-term investments.
Adjusted free cash flow represents net cash provided by operating activities less cash used for capital expenditures, net of proceeds from sales of assets, and before cash paid for acquisition-related costs. Management believes that adjusted free cash flow is an important liquidity measure for the Company and that it is useful to investors and management as a measure of the Company's ability to generate cash flow, after reinvesting in the Company for future growth, that could be available for paying down debt or other financing cash flows, such as dividends to shareholders. Adjusted free cash flow does not represent the residual cash flow available for discretionary expenditures. Adjusted free cash flow is a non-GAAP financial measure that should be considered in addition to, not as a substitute for or superior to, cash flow from operations reported in accordance with GAAP.
Each of these non-GAAP measures has limitations and therefore should not be used in isolation or as a substitute for the amounts reported in accordance with GAAP. However, management evaluates the performance of its operating segments and the consolidated Company based on several criteria, including Adjusted EBITDA, adjusted operating income (loss), net debt, and adjusted free cash flow, because it believes that these financial measures accurately reflect the Company's ongoing profitability, performance and liquidity. Securities analysts and investors also use these measures as some of the metrics on which they analyze the Company's performance. Other companies in this industry may compute these measures differently. Reconciliations of consolidated adjusted EBITDA and adjusted operating income (loss) to income (loss) before income taxes, net debt to total debt, and adjusted free cash flow to net cash provided by operations, which are their nearest comparable GAAP financial measures, are included in the tables at the end of this press release. We do not provide a forward-looking reconciliation of our outlook for Segment Adjusted EBITDA, Segment Gross Margin or Adjusted Free Cash Flow, as the amount and significance of items required to develop meaningful comparable GAAP financial measures cannot be estimated at this time without unreasonable efforts. These special items could be meaningful.
Investor Contacts: William C. Conroy, CFA, Vice President of Corporate Development & Investor Relations, via email [email protected], or Kara K. Peak, Director of Corporate Development & Investor Relations, via email [email protected]. To request investor materials, contact Nabors' corporate headquarters in Hamilton, Bermuda via email [email protected]
NABORS INDUSTRIES LTD. AND SUBSIDIARIES | ||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS) | ||||||||||
(Unaudited) | ||||||||||
Three Months Ended | Nine Months Ended | |||||||||
September 30, | June 30, | September 30, | ||||||||
(In thousands, except per share amounts) | 2026 | 2025 | 2026 | 2026 | 2025 | |||||
Revenues and other income: | ||||||||||
Operating revenues | $ 872,194 | $ 818,190 | $ 814,795 | $ 2,470,537 | $ 2,387,164 | |||||
Investment income (loss) | 4,143 | 7,323 | 2,131 | 9,161 | 20,048 | |||||
Total revenues and other income | 876,337 | 825,513 | 816,926 | 2,479,698 | 2,407,212 | |||||
Costs and other deductions: | ||||||||||
Direct costs | 536,577 | 491,828 | 507,551 | 1,537,597 | 1,428,009 | |||||
General and administrative expenses | 76,733 | 77,076 | 71,375 | 219,868 | 228,308 | |||||
Research and engineering | 13,341 | 12,978 | 14,209 | 41,056 | 39,735 | |||||
Depreciation and amortization | 159,744 | 160,347 | 160,549 | 476,479 | 490,046 | |||||
Interest expense | 42,087 | 54,334 | 42,678 | 128,526 | 164,741 | |||||
Gain on disposition of Quail Tools | - | (415,557) | - | - | (415,557) | |||||
Gain on bargain purchase | - | - | - | - | (116,499) | |||||
Other, net | 11,428 | 24,470 | 5,682 | 3,717 | 75,334 | |||||
Total costs and other deductions | 839,910 | 405,476 | 802,044 | 2,407,243 | 1,894,117 | |||||
Income (loss) before income taxes | 36,427 | 420,037 | 14,882 | 72,455 | 513,095 | |||||
Income tax expense (benefit) | 20,443 | 117,571 | 16,405 | 53,732 | 155,655 | |||||
Net income (loss) | 15,984 | 302,466 | (1,523) | 18,723 | 357,440 | |||||
Less: Net (income) loss attributable to noncontrolling interest | (27,149) | (28,268) | (20,807) | (67,384) | (81,164) | |||||
Net income (loss) attributable to Nabors | $ (11,165) | $ 274,198 | $ (22,330) | $ (48,661) | $ 276,276 | |||||
Earnings (losses) per share: | ||||||||||
Basic | $ (1.24) | $ 18.25 | $ (2.04) | $ (4.81) | $ 18.99 | |||||
Diluted | $ (1.24) | $ 16.85 | $ (2.04) | $ (4.81) | $ 17.54 | |||||
Weighted-average number of common shares outstanding: | ||||||||||
Basic | 14,503 | 14,098 | 14,273 | 14,330 | 12,880 | |||||
Diluted | 14,503 | 15,321 | 14,273 | 14,330 | 14,092 | |||||
Adjusted EBITDA | $ 245,543 | $ 236,308 | $ 221,660 | $ 672,016 | $ 691,112 | |||||
Adjusted operating income (loss) | $ 85,799 | $ 75,961 | $ 61,111 | $ 195,537 | $ 201,066 | |||||
NABORS INDUSTRIES LTD. AND SUBSIDIARIES | ||||||
CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||
(Unaudited) | ||||||
September 30, | June 30, | December 31, | ||||
(In thousands) | 2026 | 2026 | 2025 | |||
ASSETS | ||||||
Current assets: | ||||||
Cash and short-term investments | $ 475,145 | $ 509,833 | $ 940,738 | |||
Accounts receivable, net | 511,663 | 443,417 | 391,705 | |||
Other current assets | 218,306 | 243,929 | 219,130 | |||
Total current assets | 1,205,114 | 1,197,179 | 1,551,573 | |||
Property, plant and equipment, net | 2,884,274 | 2,908,061 | 2,920,019 | |||
Other long-term assets | 353,929 | 314,705 | 318,065 | |||
Total assets | $ 4,443,317 | $ 4,419,945 | $ 4,789,657 | |||
LIABILITIES AND EQUITY | ||||||
Current liabilities: | ||||||
Current debt | $ - | $ - | $ 377,492 | |||
Trade accounts payable | 370,483 | 365,472 | 300,467 | |||
Other current liabilities | 309,510 | 268,167 | 315,042 | |||
Total current liabilities | 679,993 | 633,639 | 993,001 | |||
Long-term debt | 2,022,758 | 2,120,276 | 2,117,187 | |||
Other long-term liabilities | 245,298 | 224,152 | 241,826 | |||
Total liabilities | 2,948,049 | 2,978,067 | 3,352,014 | |||
Redeemable noncontrolling interest in subsidiary | 502,718 | 495,886 | 482,446 | |||
Equity: | ||||||
Shareholders' equity | 565,912 | 544,128 | 590,727 | |||
Noncontrolling interest | 426,638 | 401,864 | 364,470 | |||
Total equity | 992,550 | 945,992 | 955,197 | |||
Total liabilities and equity | $ 4,443,317 | $ 4,419,945 | $ 4,789,657 | |||
NABORS INDUSTRIES LTD. AND SUBSIDIARIES | |||||||||||
SEGMENT REPORTING | |||||||||||
(Unaudited) | |||||||||||
The following tables set forth certain information with respect to our reportable segments and rig activity: | |||||||||||
Three Months Ended | Nine Months Ended | ||||||||||
September 30, | June 30, | September 30, | |||||||||
(In thousands, except rig activity) | 2026 | 2025 | 2026 | 2026 | 2025 | ||||||
Operating revenues: | |||||||||||
U.S. Drilling | $ 274,925 | $ 249,836 | $ 252,459 | $ 768,528 | $ 736,020 | ||||||
International Drilling | 458,544 | 407,235 | 432,497 | 1,310,537 | 1,173,923 | ||||||
Drilling Solutions | 116,065 | 141,942 | 110,640 | 332,927 | 405,404 | ||||||
Rig Technologies (1) | 41,747 | 35,597 | 37,485 | 106,454 | 116,289 | ||||||
Other reconciling items (2) | (19,087) | (16,420) | (18,286) | (47,909) | (44,472) | ||||||
Total operating revenues | $ 872,194 | $ 818,190 | $ 814,795 | $ 2,470,537 | $ 2,387,164 | ||||||
Adjusted EBITDA: (3) | |||||||||||
U.S. Drilling | $ 99,391 | $ 94,161 | $ 94,081 | $ 281,537 | $ 288,693 | ||||||
International Drilling | 145,718 | 127,551 | 130,533 | 397,532 | 360,695 | ||||||
Drilling Solutions | 43,913 | 60,666 | 40,013 | 122,588 | 178,020 | ||||||
Rig Technologies (1) | 4,987 | 3,770 | 3,180 | 8,672 | 14,507 | ||||||
Other reconciling items (4) | (48,466) | (49,840) | (46,147) | (138,313) | (150,803) | ||||||
Total adjusted EBITDA | $ 245,543 | $ 236,308 | $ 221,660 | $ 672,016 | $ 691,112 | ||||||
Adjusted operating income (loss): (5) | |||||||||||
U.S. Drilling | $ 33,385 | $ 31,429 | $ 30,961 | $ 88,970 | $ 102,816 | ||||||
International Drilling | 64,275 | 45,476 | 45,860 | 150,892 | 114,485 | ||||||
Drilling Solutions | 36,150 | 49,982 | 32,125 | 100,147 | 133,260 | ||||||
Rig Technologies (1) | 3,037 | 877 | 1,497 | 2,646 | 6,933 | ||||||
Other reconciling items (4) | (51,048) | (51,803) | (49,332) | (147,118) | (156,428) | ||||||
Total adjusted operating income (loss) | $ 85,799 | $ 75,961 | $ 61,111 | $ 195,537 | $ 201,066 | ||||||
Rig activity: | |||||||||||
Average Rigs Working: (7) | |||||||||||
Lower 48 | 72.8 | 59.2 | 67.8 | 68.7 | 60.7 | ||||||
Other US | 9.4 | 10.0 | 10.0 | 9.8 | 9.2 | ||||||
U.S. Drilling | 82.2 | 69.2 | 77.8 | 78.5 | 69.9 | ||||||
International Drilling | 94.9 | 89.2 | 93.4 | 93.6 | 86.7 | ||||||
Total average rigs working | 177.1 | 158.4 | 171.2 | 172.1 | 156.6 | ||||||
Daily Rig Revenue: (6),(8) | |||||||||||
Lower 48 | $ 34,764 | $ 34,017 | $ 33,555 | $ 33,704 | $ 34,002 | ||||||
Other US | 48,612 | 70,035 | 50,073 | 51,141 | 68,302 | ||||||
U.S. Drilling (10) | 36,343 | 39,219 | 35,680 | 35,880 | 38,527 | ||||||
International Drilling | 52,524 | 49,596 | 50,860 | 51,262 | 49,583 | ||||||
Daily Adjusted Gross Margin: (6),(9) | |||||||||||
Lower 48 | $ 14,016 | $ 13,151 | $ 13,784 | $ 13,677 | $ 13,778 | ||||||
Other US | 14,203 | 31,527 | 17,318 | 17,067 | 31,408 | ||||||
U.S. Drilling (10) | 14,037 | 15,805 | 14,238 | 14,100 | 16,104 | ||||||
International Drilling | 19,060 | 17,931 | 17,534 | 17,842 | 17,635 | ||||||
(1) | Includes our oilfield equipment manufacturing activities. | ||||||||||
(2) | Represents the elimination of inter-segment transactions related to our Rig Technologies operating segment. | ||||||||||
(3) | Adjusted EBITDA represents net income (loss) before income tax expense (benefit), investment income (loss), interest expense, gain on disposition of Quail Tools, gain on bargain purchase, other, net and depreciation and amortization. Adjusted EBITDA is a non-GAAP financial measure and should not be used in isolation or as a substitute for the amounts reported in accordance with GAAP. In addition, adjusted EBITDA excludes certain cash expenses that the Company is obligated to make. However, management evaluates the performance of its operating segments and the consolidated Company based on several criteria, including adjusted EBITDA and adjusted operating income (loss), because it believes that these financial measures accurately reflect the Company's ongoing profitability and performance. Securities analysts and investors use this measure as one of the metrics on which they analyze the Company's performance. Other companies in this industry may compute these measures differently. A reconciliation of this non-GAAP measure to net income (loss), which is the most closely comparable GAAP measure, is provided in the table set forth immediately following the heading "Reconciliation of Non-GAAP Financial Measures to Net Income (Loss)". | ||||||||||
(4) | Represents the elimination of inter-segment transactions and unallocated corporate expenses. | ||||||||||
(5) | Adjusted operating income (loss) represents net income (loss) before income tax expense (benefit), investment income (loss), interest expense, gain on disposition of Quail Tools, gain on bargain purchase and other, net. Adjusted operating income (loss) is a non-GAAP financial measure and should not be used in isolation or as a substitute for the amounts reported in accordance with GAAP. In addition, adjusted operating income (loss) excludes certain cash expenses that the Company is obligated to make. However, management evaluates the performance of its operating segments and the consolidated Company based on several criteria, including adjusted EBITDA and adjusted operating income (loss), because it believes that these financial measures accurately reflect the Company's ongoing profitability and performance. Securities analysts and investors use this measure as one of the metrics on which they analyze the Company's performance. Other companies in this industry may compute these measures differently. A reconciliation of this non-GAAP measure to net income (loss), which is the most closely comparable GAAP measure, is provided in the table set forth immediately following the heading "Reconciliation of Non-GAAP Financial Measures to Net Income (Loss)". | ||||||||||
(6) | Rig revenue days represents the number of days the Company's rigs are contracted and performing under a contract during the period. These would typically include days in which operating, standby and move revenue is earned. | ||||||||||
(7) | Average rigs working represents a measure of the average number of rigs operating during a given period. For example, one rig operating 45 days during a quarter represents approximately 0.5 average rigs working for the quarter. On an annual period, one rig operating 182.5 days represents approximately 0.5 average rigs working for the year. Average rigs working can also be calculated as rig revenue days during the period divided by the number of calendar days in the period. | ||||||||||
(8) | Daily rig revenue represents operating revenue, divided by the total number of revenue days during the quarter. | ||||||||||
(9) | Daily adjusted gross margin represents operating revenue less direct costs, divided by the total number of rig revenue days during the quarter. | ||||||||||
(10) | The U.S. Drilling segment includes the Lower 48, Alaska, and Gulf of Mexico operating areas. | ||||||||||
NABORS INDUSTRIES LTD. AND SUBSIDIARIES | |||||||||||||||
Reconciliation of Earnings per Share | |||||||||||||||
(Unaudited) | |||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||
September 30, | June 30, | September 30, | |||||||||||||
(in thousands, except per share amounts) | 2026 | 2025 | 2026 | 2026 | 2025 | ||||||||||
BASIC EPS: | |||||||||||||||
Net income (loss) (numerator): | |||||||||||||||
Income (loss), net of tax | $ | 15,984 | $ | 302,466 | $ | (1,523) | $ | 18,723 | $ | 357,440 | |||||
Less: net (income) loss attributable to noncontrolling interest | (27,149) | (28,268) | (20,807) | (67,384) | (81,164) | ||||||||||
Less: deemed dividends to SPAC public shareholders | — | (750) | — | — | (750) | ||||||||||
Less: distributed and undistributed earnings allocated to unvested shareholders | — | (8,828) | — | — | (9,106) | ||||||||||
Less: accrued distribution on redeemable noncontrolling interest in subsidiary | (6,832) | (7,344) | (6,757) | (20,272) | (21,792) | ||||||||||
Numerator for basic earnings per share: | |||||||||||||||
Adjusted income (loss), net of tax - basic | $ | (17,997) | $ | 257,276 | $ | (29,087) | $ | (68,933) | $ | 244,628 | |||||
Weighted-average number of shares outstanding - basic | 14,503 | 14,098 | 14,273 | 14,330 | 12,880 | ||||||||||
Earnings (losses) per share: | |||||||||||||||
Total Basic | $ | (1.24) | $ | 18.25 | $ | (2.04) | $ | (4.81) | $ | 18.99 | |||||
DILUTED EPS: | |||||||||||||||
Adjusted income (loss), net of tax - basic | $ | (17,997) | $ | 257,276 | $ | (29,087) | $ | (68,933) | $ | 244,628 | |||||
Add: after tax interest expense of convertible notes | — | 848 | — | — | 2,544 | ||||||||||
Add: effect of reallocating undistributed earnings of unvested shareholders | — | 28 | — | — | 24 | ||||||||||
Adjusted income (loss), net of tax - diluted | $ | (17,997) | $ | 258,152 | $ | (29,087) | $ | (68,933) | $ | 247,196 | |||||
Weighted-average number of shares outstanding - basic | 14,503 | 14,098 | 14,273 | 14,330 | 12,880 | ||||||||||
Add: if converted dilutive effect of convertible notes | — | 1,176 | — | — | 1,176 | ||||||||||
Add: dilutive effect of potential common shares | — | 47 | — | — | 36 | ||||||||||
Weighted-average number of shares outstanding - diluted | 14,503 | 15,321 | 14,273 | 14,330 | 14,092 | ||||||||||
Earnings (losses) per share: | |||||||||||||||
Total Diluted | $ | (1.24) | $ | 16.85 | $ | (2.04) | $ | (4.81) | $ | 17.54 | |||||
NABORS INDUSTRIES LTD. AND SUBSIDIARIES | ||||||||||||
NON-GAAP FINANCIAL MEASURES | ||||||||||||
RECONCILIATION OF ADJUSTED EBITDA BY SEGMENT TO ADJUSTED OPERATING INCOME (LOSS) BY SEGMENT | ||||||||||||
(Unaudited) | ||||||||||||
(In thousands) | ||||||||||||
Three Months Ended September 30, 2026 | ||||||||||||
U.S. Drilling | International Drilling | Drilling Solutions | Rig Technologies | Other reconciling items | Total | |||||||
Adjusted operating income (loss) | $ 33,385 | $ 64,275 | $ 36,150 | $ 3,037 | $ (51,048) | $ 85,799 | ||||||
Depreciation and amortization | 66,006 | 81,443 | 7,763 | 1,950 | 2,582 | 159,744 | ||||||
Adjusted EBITDA | $ 99,391 | $ 145,718 | $ 43,913 | $ 4,987 | $ (48,466) | $ 245,543 | ||||||
Three Months Ended September 30, 2025 | ||||||||||||
U.S. Drilling | International Drilling | Drilling Solutions | Rig Technologies | Other reconciling items | Total | |||||||
Adjusted operating income (loss) | $ 31,429 | $ 45,476 | $ 49,982 | $ 877 | $ (51,803) | $ 75,961 | ||||||
Depreciation and amortization | 62,732 | 82,075 | 10,684 | 2,893 | 1,963 | 160,347 | ||||||
Adjusted EBITDA | $ 94,161 | $ 127,551 | $ 60,666 | $ 3,770 | $ (49,840) | $ 236,308 | ||||||
Three Months Ended June 30, 2026 | ||||||||||||
U.S. Drilling | International Drilling | Drilling Solutions | Rig Technologies | Other reconciling items | Total | |||||||
Adjusted operating income (loss) | $ 30,961 | $ 45,860 | $ 32,125 | $ 1,497 | $ (49,332) | $ 61,111 | ||||||
Depreciation and amortization | 63,120 | 84,673 | 7,888 | 1,683 | 3,185 | 160,549 | ||||||
Adjusted EBITDA | $ 94,081 | $ 130,533 | $ 40,013 | $ 3,180 | $ (46,147) | $ 221,660 | ||||||
Nine Months Ended September 30, 2026 | ||||||||||||
U.S. Drilling | International Drilling | Drilling Solutions | Rig Technologies | Other reconciling items | Total | |||||||
Adjusted operating income (loss) | $ 88,970 | $ 150,892 | $ 100,147 | $ 2,646 | $ (147,118) | $ 195,537 | ||||||
Depreciation and amortization | 192,567 | 246,640 | 22,441 | 6,026 | 8,805 | 476,479 | ||||||
Adjusted EBITDA | $ 281,537 | $ 397,532 | $ 122,588 | $ 8,672 | $ (138,313) | $ 672,016 | ||||||
Nine Months Ended September 30, 2025 | ||||||||||||
U.S. Drilling | International Drilling | Drilling Solutions | Rig Technologies | Other reconciling items | Total | |||||||
Adjusted operating income (loss) | $ 102,816 | $ 114,485 | $ 133,260 | $ 6,933 | $ (156,428) | $ 201,066 | ||||||
Depreciation and amortization | 185,877 | 246,210 | 44,760 | 7,574 | 5,625 | 490,046 | ||||||
Adjusted EBITDA | $ 288,693 | $ 360,695 | $ 178,020 | $ 14,507 | $ (150,803) | $ 691,112 | ||||||
NABORS INDUSTRIES LTD. AND SUBSIDIARIES | |||||||||||
NON-GAAP FINANCIAL MEASURES | |||||||||||
RECONCILIATION OF ADJUSTED GROSS MARGIN BY SEGMENT TO ADJUSTED OPERATING INCOME (LOSS) BY SEGMENT | |||||||||||
(Unaudited) | |||||||||||
Three Months Ended | Nine Months Ended | ||||||||||
September 30, | June 30, | September 30, | |||||||||
(In thousands) | 2026 | 2025 | 2026 | 2026 | 2025 | ||||||
Lower 48 - U.S. Drilling | |||||||||||
Adjusted operating income (loss) | $ 31,434 | $ 13,689 | $ 24,722 | $ 73,561 | $ 54,199 | ||||||
Plus: General and administrative costs | 5,018 | 4,745 | 4,974 | 15,316 | 14,043 | ||||||
Plus: Research and engineering | 1,253 | 1,121 | 1,198 | 3,594 | 2,832 | ||||||
GAAP Gross Margin | 37,705 | 19,555 | 30,894 | 92,471 | 71,074 | ||||||
Plus: Depreciation and amortization | 56,230 | 52,120 | 54,093 | 163,918 | 157,425 | ||||||
Adjusted gross margin | $ 93,935 | $ 71,675 | $ 84,987 | $ 256,389 | $ 228,499 | ||||||
Other - U.S. Drilling | |||||||||||
Adjusted operating income (loss) | $ 1,951 | $ 17,740 | $ 6,239 | $ 15,409 | $ 48,617 | ||||||
Plus: General and administrative costs | 411 | 568 | 407 | 1,276 | 1,869 | ||||||
Plus: Research and engineering | 115 | 85 | 86 | 281 | 211 | ||||||
GAAP Gross Margin | 2,477 | 18,393 | 6,732 | 16,966 | 50,697 | ||||||
Plus: Depreciation and amortization | 9,776 | 10,612 | 9,027 | 28,649 | 28,452 | ||||||
Adjusted gross margin | $ 12,253 | $ 29,005 | $ 15,759 | $ 45,615 | $ 79,149 | ||||||
U.S. Drilling | |||||||||||
Adjusted operating income (loss) | $ 33,385 | $ 31,429 | $ 30,961 | $ 88,970 | $ 102,816 | ||||||
Plus: General and administrative costs | 5,429 | 5,313 | 5,381 | 16,592 | 15,912 | ||||||
Plus: Research and engineering | 1,368 | 1,206 | 1,284 | 3,875 | 3,043 | ||||||
GAAP Gross Margin | 40,182 | 37,948 | 37,626 | 109,437 | 121,771 | ||||||
Plus: Depreciation and amortization | 66,006 | 62,732 | 63,120 | 192,567 | 185,877 | ||||||
Adjusted gross margin | $ 106,188 | $ 100,680 | $ 100,746 | $ 302,004 | $ 307,648 | ||||||
International Drilling | |||||||||||
Adjusted operating income (loss) | $ 64,275 | $ 45,476 | $ 45,860 | $ 150,892 | $ 114,485 | ||||||
Plus: General and administrative costs | 18,855 | 18,015 | 16,748 | 53,212 | 52,260 | ||||||
Plus: Research and engineering | 1,824 | 1,665 | 1,826 | 5,399 | 4,578 | ||||||
GAAP Gross Margin | 84,954 | 65,156 | 64,434 | 209,503 | 171,323 | ||||||
Plus: Depreciation and amortization | 81,443 | 82,075 | 84,673 | 246,640 | 246,210 | ||||||
Adjusted gross margin | $ 166,397 | $ 147,231 | $ 149,107 | $ 456,143 | $ 417,533 | ||||||
Adjusted gross margin by segment represents adjusted operating income (loss) plus general and administrative | |||||||||||
costs, research and engineering costs and depreciation and amortization. | |||||||||||
NABORS INDUSTRIES LTD. AND SUBSIDIARIES | ||||||||||
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO NET INCOME (LOSS) | ||||||||||
(Unaudited) | ||||||||||
Three Months Ended | Nine Months Ended | |||||||||
September 30, | June 30, | September 30, | ||||||||
(In thousands) | 2026 | 2025 | 2026 | 2026 | 2025 | |||||
Net income (loss) | $ 15,984 | $ 302,466 | $ (1,523) | $ 18,723 | $ 357,440 | |||||
Income tax expense (benefit) | 20,443 | 117,571 | 16,405 | 53,732 | 155,655 | |||||
Income (loss) before income taxes | 36,427 | 420,037 | 14,882 | 72,455 | 513,095 | |||||
Investment (income) loss | (4,143) | (7,323) | (2,131) | (9,161) | (20,048) | |||||
Interest expense | 42,087 | 54,334 | 42,678 | 128,526 | 164,741 | |||||
Gain on disposition of Quail Tools | - | (415,557) | - | - | (415,557) | |||||
Gain on bargain purchase | - | - | - | - | (116,499) | |||||
Other, net | 11,428 | 24,470 | 5,682 | 3,717 | 75,334 | |||||
Adjusted operating income (loss) (1) | 85,799 | 75,961 | 61,111 | 195,537 | 201,066 | |||||
Depreciation and amortization | 159,744 | 160,347 | 160,549 | 476,479 | 490,046 | |||||
Adjusted EBITDA (2) | $ 245,543 | $ 236,308 | $ 221,660 | $ 672,016 | $ 691,112 | |||||
(1) Adjusted operating income (loss) represents net income (loss) before income tax expense (benefit), investment income (loss), interest expense, gain on disposition of Quail Tools, gain on bargain purchase and other, net. Adjusted operating income (loss) is a non-GAAP financial measure and should not be used in isolation or as a substitute for the amounts reported in accordance with GAAP. In addition, adjusted operating income (loss) excludes certain cash expenses that the Company is obligated to make. However, management evaluates the performance of its operating segments and the consolidated Company based on several criteria, including adjusted EBITDA and adjusted operating income (loss), because it believes that these financial measures accurately reflect the Company's ongoing profitability and performance. Securities analysts and investors use this measure as one of the metrics on which they analyze the Company's performance. Other companies in this industry may compute these measures differently. | ||||||||||
(2) Adjusted EBITDA represents net income (loss) before income tax expense (benefit), investment income (loss), interest expense, gain on disposition of Quail Tools, gain on bargain purchase, other, net and depreciation and amortization. Adjusted EBITDA is a non-GAAP financial measure and should not be used in isolation or as a substitute for the amounts reported in accordance with GAAP. In addition, adjusted EBITDA excludes certain cash expenses that the Company is obligated to make. However, management evaluates the performance of its operating segments and the consolidated Company based on several criteria, including adjusted EBITDA and adjusted operating income (loss), because it believes that these financial measures accurately reflect the Company's ongoing profitability and performance. Securities analysts and investors use this measure as one of the metrics on which they analyze the Company's performance. Other companies in this industry may compute these measures differently. | ||||||||||
NABORS INDUSTRIES LTD. AND SUBSIDIARIES | ||||||
RECONCILIATION OF NET DEBT TO TOTAL DEBT | ||||||
(Unaudited) | ||||||
September 30, | June 30, | December 31, | ||||
(In thousands) | 2026 | 2026 | 2025 | |||
Current debt | $ - | $ - | $ 377,492 | |||
Long-term debt | 2,022,758 | 2,120,276 | 2,117,187 | |||
Total Debt | 2,022,758 | 2,120,276 | 2,494,679 | |||
Less: Cash and short-term investments | 475,145 | 509,833 | 940,738 | |||
Net Debt | $ 1,547,613 | $ 1,610,443 | $ 1,553,941 | |||
NABORS INDUSTRIES LTD. AND SUBSIDIARIES | ||||||||||
RECONCILIATION OF ADJUSTED FREE CASH FLOW TO | ||||||||||
NET CASH PROVIDED BY OPERATING ACTIVITIES | ||||||||||
(Unaudited) | ||||||||||
Three Months Ended | Nine Months Ended | |||||||||
September 30, | June 30, | September 30, | ||||||||
(In thousands) | 2026 | 2025 | 2026 | 2026 | 2025 | |||||
Net cash provided by operating activities | $ 238,893 | $ 207,880 | $ 135,242 | $ 487,474 | $ 447,425 | |||||
Add: Capital expenditures, net of proceeds from sales of assets | (164,370) | (202,267) | (122,900) | (448,828) | (503,277) | |||||
Free cash flow | $ 74,523 | $ 5,613 | $ 12,342 | $ 38,646 | $ (55,852) | |||||
Cash paid for acquisition related costs (1) | - | - | - | - | 40,816 | |||||
Adjusted free cash flow | $ 74,523 | $ 5,613 | $ 12,342 | $ 38,646 | $ (15,036) | |||||
(1) Cash paid related to the Parker Drilling acquisition | ||||||||||
Adjusted free cash flow represents net cash provided by operating activities less cash used for capital expenditures, net of proceeds from sales of assets, and before cash paid for acquisition related costs. Management believes that adjusted free cash flow is an important liquidity measure for the company and that it is useful to investors and management as a measure of the company's ability to generate cash flow, after reinvesting in the company for future growth, that could be available for paying down debt or other financing cash flows, such as dividends to shareholders. Adjusted free cash flow does not represent the residual cash flow available for discretionary expenditures. Adjusted free cash flow is a non-GAAP financial measure that should be considered in addition to, not as a substitute for or superior to, cash flow from operations reported in accordance with GAAP. | ||||||||||
NABORS INDUSTRIES LTD. AND SUBSIDIARIES | ||||
NON-GAAP FINANCIAL MEASURES | ||||
RECONCILIATION OF QUAIL TOOLS FINANCIAL MEASURES | ||||
(Unaudited) | ||||
Three months ended | ||||
September 30, | ||||
(In thousands) | 2025 | |||
Drilling Solutions operating revenues | $ 141,942 | |||
Less: remaining Drilling Solutions business | (107,744) | |||
Quail Tools operating revenues | $ 34,198 | |||
Drilling Solutions adjusted operating income (loss) | $ 49,982 | |||
Less: remaining Drilling Solutions business | (35,720) | |||
Quail Tools adjusted operating income (loss) | $ 14,262 | |||
Quail Tools depreciation and amortization | 6,043 | |||
Quail Tools adjusted EBITDA | $ 20,305 | |||
SOURCE Nabors Industries Ltd.
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