Nabors Announces First Quarter 2024 Results

International Drilling adjusted EBITDA totaled $102.5 million, compared to $105.5 million in the fourth quarter. Rig count averaged 81, up from 80 in the previous quarter, driven by rig startups in Algeria and the prior start of a newbuild in Saudi Arabia. The impact of this higher rig count was offset by downtime related to rig certification requirements following recent contract renewals in Saudi Arabia, as well as labor unrest on several rigs in Colombia. Daily adjusted gross margin for the fourth quarter averaged $16,061. International Drilling segment revenue of $349 million increased by 9% compared to the first quarter of 2023, as average rig count increased by nearly five rigs.

Drilling Solutions adjusted EBITDA was $31.8 million, compared to $34.5 million in the fourth quarter. Revenue on Nabors rigs operating in the Lower 48 and international markets increased sequentially.

In Rig Technologies, adjusted EBITDA reached $6.8 million, versus $8.8 million in the fourth quarter. OEM rental and repair EBITDA increased sequentially, while other aftermarket, capital equipment, and energy transition EBITDA declined following seasonally strong year end deliveries.

Adjusted Free Cash Flow

Adjusted free cash flow was $8 million in the first quarter. Capital expenditures totaled $112 million, which included $35 million supporting the newbuilds in Saudi Arabia. This compares to $124 million in the fourth quarter, including $43 million supporting the newbuilds.

William Restrepo, Nabors CFO, stated, "Results across our operations were higher than we forecast. The strength of the international drilling markets continues to surprise us to the upside with the recent awards in Argentina and the notification on a tender in another Middle East market, on top of the material ongoing deployments in Saudi Arabia and Algeria. We restarted two rigs in Algeria during the first quarter, and a third in early April. Algeria has historically been an important market for Nabors, and the recommencement of operations with existing rigs marks a key development for us. Looking to the second quarter, we expect our international rig count to increase with a newbuild in Saudi Arabia and the fourth rig in Algeria. We expect the ongoing deployments and the more recent awards, as well as several open opportunities, to generate a material increase in our International EBITDA over the already targeted increase for 2025.

"Firm pricing in the Lower 48 bolstered daily gross margin. We again reduced costs in this market. Looking to the second quarter, we continue to experience sluggish activity in the natural gas basins. This should keep average rig count slightly below the average for the first quarter.

"We retired both the convertible notes that were due in January 2024 and the senior notes due in 2025, with the proceeds from our $650 million notes offering in the fourth quarter of 2023. Our next maturity is in 2026. 

"We still have a number of open international tenders and active negotiations. It's increasingly evident that the robust trends in our international segment should continue to provide us with high return opportunities with attractive payback periods. Nonetheless, we intend to avoid taking on more than we can afford. We will remain focused on generating free cash flow and reducing our net debt."

Outlook

Nabors expects the following metrics for the second quarter of 2024:

U.S. Drilling             

• Lower 48 average rig count of approximately 70 rigs
• Lower 48 daily adjusted gross margin of approximately $15,500
• Alaska and Gulf of Mexico adjusted EBITDA of approximately $21 million

International

• Average rig count up by two to three rigs versus the first quarter average
• Daily adjusted gross margin of approximately $15,700

Drilling Solutions

• Adjusted EBITDA of $30 - $32 million

Rig Technologies

• Adjusted EBITDA of $8 - $10 million

Capital Expenditures

• Capital expenditures of approximately $190 million, with approximately $70 million for the newbuilds in Saudi Arabia
• Full-year capital expenditures of approximately $590 million, including funding for the recent rig awards

Mr. Petrello concluded, "I am pleased with our early success to secure additional backlog in our international business. We are targeting several more opportunities and are optimistic for additional success. We also see growing adoption of our advanced technology, both in the U.S. on third-party rigs and in international markets. These developments validate our strategy and should drive future free cash flow."

About Nabors Industries

Nabors Industries (NYSE: NBR) is a leading provider of advanced technology for the energy industry. With presence in more than 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) from continuing operations before income taxes, interest expense, investment income (loss), and other, net. Adjusted EBITDA is computed similarly, but also excludes depreciation and amortization expenses. 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. 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. Management believes that this non-GAAP measure is useful information to investors when comparing our cash flows with the cash flows of other companies.

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 and performance. 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) from continuing operations 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, +1 281-775-2423 or via e-mail william.conroy@nabors.com, or Kara Peak, Director of Corporate Development & Investor Relations, +1 281-775-4954 or via email kara.peak@nabors.com. To request investor materials, contact Nabors' corporate headquarters in Hamilton, Bermuda at +441-292-1510 or via e-mail mark.andrews@nabors.com

NABORS INDUSTRIES LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS)
(Unaudited)
		Three Months Ended
		March 31,				December 31,
(In thousands, except per share amounts)		2024		2023		2023
Revenues and other income:
Operating revenues		$ 733,704		$ 779,139		$ 725,801
Investment income (loss)		10,201		9,866		12,042
Total revenues and other income		743,905		789,005		737,843
Costs and other deductions:
Direct costs		437,077		462,329		424,769
General and administrative expenses		61,751		61,730		57,003
Research and engineering		13,863		15,074		13,926
Depreciation and amortization		157,685		163,031		161,228
Interest expense		50,379		45,141		49,938
Other, net		16,108		(42,375)		7,878
Total costs and other deductions		736,863		704,930		714,742
Income (loss) before income taxes		7,042		84,075		23,101
Income tax expense (benefit)		16,044		23,015		19,244
Net income (loss)		(9,002)		61,060		3,857
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