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1. Company Snapshot

1.a. Company Description

Nabors Industries Ltd.provides drilling and drilling-related services for land-based and offshore oil and natural gas wells.The company operates through five segments: U.S. Drilling, Canada Drilling, International Drilling, Drilling Solutions, and Rig Technologies.


It provides tubular running, wellbore placement, directional drilling, measurement-while-drilling (MWD), equipment manufacturing, and rig instrumentation services; and logging-while-drilling systems and services, as well as drilling optimization software.The company also offers REVit, an automated real time stick-slip mitigation system; ROCKit, a directional steering control system; SmartNAV, a collaborative guidance and advisory platform; SmartSLIDE, an advanced directional steering control system; and RigCLOUD, which provides the tools and infrastructure to integrate applications to deliver real-time insight into operations across the rig fleet.In addition, it manufactures and sells top drives, catwalks, wrenches, drawworks, and other drilling related equipment, such as robotic systems and downhole tools; and provides aftermarket sales and services for the installed base of its equipment.


As of December 31, 2021, the company marketed approximately 301 rigs for land-based drilling operations in the United States, Canada, and in 20 other countries worldwide; and 29 rigs for offshore platform drilling operations in the United States and internationally.Nabors Industries Ltd.was founded in 1952 and is based in Hamilton, Bermuda.

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1.b. Last Insights on NBR

The recent 3-month performance of Nabors Industries Ltd. was negatively impacted by a wider-than-expected Q4 loss of $6.67 per share, surpassing the Zacks Consensus Estimate of a loss of $1.86. This compares to a loss of $3.84 per share in the same period last year. Additionally, the company's Q4 revenue matched estimates, but its capital expenditures are expected to range from $195-$205 million, with $80-$85 million earmarked for new builds in Saudi Arabia in the first quarter of 2025.

1.c. Company Highlights

2. Nabors Industries' Q3 2025 Earnings: A Strong Performance

Nabors Industries reported a consolidated revenue of $818.2 million for Q3 2025, a decrease of 1.8% sequentially, primarily due to the divestiture of Quail Tools. However, the company's adjusted EBITDA was $236.3 million, exceeding expectations, driven by improved performance in International Drilling and Drilling Solutions segments. The actual EPS came out at -$3.67, relative to estimates at -$2.37. The EBITDA margin was 28.9%, down 96 basis points sequentially.

Publication Date: Nov -21

📋 Highlights

Segment-wise Performance

The International Drilling segment reported revenue of $407.2 million, a growth of 5.8% sequentially, with EBITDA of $127.6 million, increasing 8.5% quarter-over-quarter. The U.S. Drilling segment revenue was $249.8 million, a 2.2% sequential decline, with EBITDA of $94.2 million and a 37.7% EBITDA margin. The Drilling Solutions segment revenue was $141.9 million, with EBITDA of $60.7 million and a 42.7% EBITDA margin.

Outlook and Guidance

Nabors expects total EBITDA to be essentially in line with Q3 2025 in the fourth quarter, excluding Quail. The company expects the average rig count in the Lower 48 to be in the range of 57 to 59 rigs, with daily adjusted gross margin averaging approximately $13,000. The International Drilling average rig count is projected to be approximately 91 rigs, with daily adjusted gross margin in the $18,100 to $18,200 range.

Debt Reduction and Cash Flow

The company announced the sale of Quail Tools for $625 million and plans to deploy the proceeds to reduce gross debt. Nabors' net debt leverage metric stands at 1.8x, the lowest in more than 10 years. The company expects to materially reduce annual cash interest payments, resulting in a boost to free cash flow. As Miguel Rodriguez mentioned, "our breakeven cash flow is around $70 million, with $300 million generated in 2025, or a 30% free cash flow conversion."

Valuation Metrics

With a 'P/E Ratio' of 3.16, 'P/S Ratio' of 0.22, and 'EV/EBITDA' of 1.98, the stock appears to be undervalued. The 'Net Debt / EBITDA' ratio is 1.47, indicating a manageable debt burden. Analysts estimate next year's revenue growth at 0.5%, which is relatively conservative. Tony Petrello's comment that "the industry's half-life is no longer 2030" and the company's capital thinking will start to change, suggests a potential revaluation of the company's terminal value multiples.

3. NewsRoom

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Nabors Comments on Upgrades to Credit Ratings

Nov -04

Source: prnewswire.com

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Nabors Prices $700 million in Senior Priority Guaranteed Notes

Nov -04

Source: prnewswire.com

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Nabors Announces Offering of $550 million Senior Priority Guaranteed Notes

Nov -04

Source: prnewswire.com

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Nabors Announces SANAD Drilling Joint Venture Receives Notices to Resume Work for Two Rigs

Nov -03

Source: prnewswire.com

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Ethic Inc. Purchases Shares of 7,895 Nabors Industries Ltd. $NBR

Oct -31

Source: defenseworld.net

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Nabors Q3 Loss Wider Than Expected, Revenues Increase Y/Y

Oct -30

Source: zacks.com

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Nabors Industries Ltd. (NBR) Q3 2025 Earnings Call Transcript

Oct -29

Source: seekingalpha.com

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Nabors Industries (NBR) Reports Q3 Loss, Misses Revenue Estimates

Oct -28

Source: zacks.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (4.43%)

6. Segments

International Drilling

Expected Growth: 4.5%

Nabors Industries Ltd.'s International Drilling segment growth of 4.5% is driven by increasing demand for oil and gas, expansion into new markets, and improved operational efficiency. Additionally, strategic partnerships, investments in technology, and a strong backlog of contracts contribute to the segment's growth.

United States Drilling

Expected Growth: 4.2%

The 4.2% growth in United States Drilling from Nabors Industries Ltd. is driven by increasing oil prices, rising demand for energy, and improved drilling efficiencies. Additionally, the ongoing shale revolution and investments in infrastructure development have contributed to the growth. Furthermore, Nabors' strategic acquisitions and cost-saving initiatives have enhanced its competitiveness, supporting the segment's expansion.

Drilling Solutions

Expected Growth: 4.8%

Nabors Industries' Drilling Solutions segment growth of 4.8% is driven by increasing demand for oil and gas, improved drilling efficiency, and expansion into new markets. Additionally, the company's investments in digitalization and automation, such as its RigSphere platform, have enhanced operational performance and reduced costs, contributing to the segment's growth.

Rig Technologies

Expected Growth: 4.9%

Rig Technologies from Nabors Industries Ltd. growth of 4.9% driven by increasing demand for drilling services, rising oil prices, and growing adoption of digital technologies in oil and gas operations, leading to higher revenue from equipment sales and services.

Other Reconciling Items

Expected Growth: 4.1%

Nabors Industries Ltd.'s 4.1% growth in Other Reconciling Items is driven by increased drilling activity, improved operational efficiency, and favorable foreign exchange rates. Additionally, the company's cost-saving initiatives and strategic investments in digital technologies have contributed to this growth.

7. Detailed Products

Drilling Rigs

Nabors Industries Ltd. offers a range of drilling rigs, including land-based and offshore rigs, designed for efficient and safe drilling operations.

Directional Drilling Services

Nabors provides directional drilling services, including measurement-while-drilling (MWD) and logging-while-drilling (LWD) services, to optimize wellbore placement and improve drilling efficiency.

Well Intervention Services

Nabors offers well intervention services, including coiled tubing, wireline, and hydraulic workover services, to optimize well performance and extend well life.

Drilling Technologies

Nabors develops and provides advanced drilling technologies, including automated drilling systems and drilling optimization software, to improve drilling efficiency and reduce costs.

Rig Equipment and Components

Nabors designs, manufactures, and supplies rig equipment and components, including drilling motors, pumps, and other equipment, to support drilling operations.

Project Management and Consulting Services

Nabors provides project management and consulting services to support drilling operations, including well planning, drilling engineering, and operations management.

8. Nabors Industries Ltd.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Nabors Industries Ltd. operates in a niche market with limited substitutes, but the threat of substitutes is still present due to the availability of alternative drilling technologies.

Bargaining Power Of Customers

Nabors Industries Ltd. has a diverse customer base, which reduces the bargaining power of individual customers. Additionally, the company's strong brand reputation and high-quality services reduce the likelihood of customers switching to competitors.

Bargaining Power Of Suppliers

Nabors Industries Ltd. relies on a few key suppliers for critical components, which gives them some bargaining power. However, the company's large scale of operations and long-term contracts mitigate this risk.

Threat Of New Entrants

The drilling and oilfield services industry has high barriers to entry, including significant capital requirements and regulatory hurdles. This limits the threat of new entrants and allows Nabors Industries Ltd. to maintain its market position.

Intensity Of Rivalry

The drilling and oilfield services industry is highly competitive, with several large players competing for market share. Nabors Industries Ltd. faces intense competition from companies like Schlumberger, Halliburton, and Baker Hughes.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 90.60%
Debt Cost 15.24%
Equity Weight 9.40%
Equity Cost 15.77%
WACC 15.29%
Leverage 963.39%

11. Quality Control: Nabors Industries Ltd. passed 1 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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PHX Energy

A-Score: 7.0/10

Value: 8.7

Growth: 7.2

Quality: 5.9

Yield: 10.0

Momentum: 2.5

Volatility: 7.3

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Precision Drilling

A-Score: 5.0/10

Value: 8.5

Growth: 6.6

Quality: 5.6

Yield: 0.0

Momentum: 4.0

Volatility: 5.3

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Borr Drilling

A-Score: 4.4/10

Value: 8.6

Growth: 8.2

Quality: 4.6

Yield: 2.0

Momentum: 1.0

Volatility: 2.0

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Ensign Energy Services

A-Score: 4.2/10

Value: 9.3

Growth: 4.9

Quality: 3.0

Yield: 0.0

Momentum: 3.5

Volatility: 4.3

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Independence Contract Drilling

A-Score: 3.7/10

Value: 10.0

Growth: 3.8

Quality: 2.4

Yield: 0.0

Momentum: 5.0

Volatility: 1.0

1-Year Total Return ->

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Nabors

A-Score: 3.4/10

Value: 9.3

Growth: 3.8

Quality: 5.1

Yield: 0.0

Momentum: 0.5

Volatility: 2.0

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

57.62$

Current Price

57.62$

Potential

-0.00%

Expected Cash-Flows