Nabors Industries (NYSE:NBR) reported fourth-quarter 2025 adjusted EBITDA of $222 million, topping management’s prior expectations, as stronger U.S. drilling performance and higher results from Nabors Drilling Solutions helped offset the absence of Quail Tools following its divestiture. Executives also emphasized a year of balance sheet actions, including debt reduction and refinancing, and offered guidance for 2026 that aims to keep reported EBITDA roughly in line with 2025 despite portfolio changes.
Fourth-quarter performance exceeded prior expectations
Chairman and CEO Tony Petrello said fourth-quarter results were better than what the company outlined on its previous earnings call, attributing the performance primarily to stronger U.S. drilling results—both average rig count and daily margin in the Lower 48—and increased EBITDA from the legacy Drilling Solutions segment excluding Quail Tools.
Adjusted EBITDA of $222 million equated to a 27.8% margin, down 110 basis points sequentially. In absolute dollars, EBITDA declined $15 million versus the third quarter, which management attributed primarily to Quail’s divestiture. Rodriguez noted Quail contributed $20 million of EBITDA in the third quarter; excluding that, Nabors’ EBITDA grew 2.6%, led by international drilling, Nabors Drilling Solutions, and rig technologies.
Segment updates: International growth, U.S. margin stability, and NDS gains
International drilling revenue rose to $424 million, up 4.1% sequentially, while segment EBITDA increased to $131 million. Rodriguez said international results were modestly below prior guidance, with daily rig margin averaging $17,630, down $301 sequentially and below the company’s guided range. He cited activity disruptions in Colombia that affected logistics and drilling plans, more maintenance days than anticipated in Saudi Arabia due to customer schedule updates, and startup inefficiencies. These were partly offset by stronger-than-planned activity in Mexico.
International average rig count increased by four rigs to 93.3, exceeding Nabors’ expectation, driven by a Saudi new-build deployment, two rigs deployed in Argentina, and continued operations in Mexico for rigs the company had expected to suspend. Nabors exited the quarter with 94 rigs operating.
In the U.S., drilling revenue of $241 million fell 3.7% sequentially, while segment EBITDA was $93 million, down 1%. Rodriguez said the segment exceeded guidance, driven by a stronger Lower 48 performance, with Alaska and offshore also modestly above outlook. Lower 48 revenue slipped 2.2% to $181 million as average rig count increased to 59.8, and average daily margin rose to $13,303, up 1.2%, aided by cost optimization and reduced repairs and maintenance expenses. Rodriguez said the company’s most recently signed contracts still implied expected daily revenue in the low $30,000 range.
Alaska and U.S. offshore combined generated $59 million of revenue and $26 million of EBITDA; Rodriguez said EBITDA exceeded guidance due to fewer maintenance days than anticipated, though he noted scope changes in offshore and a medium- to long-term expectation that Alaska operations remain strong.
Nabors Drilling Solutions (Drilling Solutions segment) produced $108 million of revenue and $41 million of EBITDA. Normalized for the sale of Quail, Rodriguez said NDS revenue rose slightly and EBITDA increased 2.3% sequentially, with margin improving due to international growth in services including casing running, managed pressure drilling, and performance software. Petrello added that on third-party rigs in the Lower 48, NDS revenue (excluding Quail) increased 10% sequentially in a market where the third-party average rig count rose about 1%.
Rig Technologies revenue was $38 million, up 6% sequentially, and EBITDA was $5 million, helped by year-end equipment sales.
Operational commentary: Lower 48 rig additions, high-spec rigs, and technology
Petrello said Nabors’ Lower 48 momentum “accelerated” during the fourth quarter, with four rigs added in December and an exit rig count of 62, later rising to 66. He said the additions were mainly for public operators and spread across the Permian, Eagle Ford, and Haynesville.
During the Q&A, management attributed the higher rig activity to ongoing churn across basins and a shift in the company’s customer mix. Executives said Nabors’ Lower 48 business is now about 80% public customers, while gas-directed activity accounts for roughly 20% of its rig count—up from prior levels. They also pointed to a trend toward longer laterals, stating that three- and four-mile laterals represented 19% of Nabors’ West Texas wells in 2025 versus 12% in 2024, and that the company’s PACE-X fleet is well-suited for that work.
Petrello highlighted the PACE-X Ultra, noting the first unit has been working for Coterra in South Texas since mid-September and “has delivered” against expectations. He said Nabors is working toward an agreement to deploy a second PACE-X Ultra, and is also discussing upgrades to existing PACE-X rigs, including one tagged to drill four-mile lateral wells in the Permian Basin.
He also described a new Canrig wrench featuring a three-bite design with feedback and automation, saying early use has shown strong performance and that Nabors has seen interest from other drilling contractors, with the company first prioritizing deployment on its own rigs.
SANAD, Mexico, and Venezuela: Activity outlook and optionality
In Saudi Arabia, Petrello said SANAD deployed its 14th new-build rig during the fourth quarter, with five more planned to commence work during 2026, bringing the total to 19, and a 20th expected in early 2027. He also said SANAD received notices for two of its three suspended rigs to resume operations—one late in the first quarter and another late in the second quarter—under existing contracts extended by the suspension period.
Management said SANAD elected not to renew contracts for three smaller rigs that generated “very little” EBITDA and free cash flow, and that the joint venture is evaluating alternatives while potentially using crews from those rigs to support planned deployments in a tight labor market.
In Mexico, Petrello said the activity outlook has improved and Nabors expects to restart a fourth offshore platform rig early in 2026. Rodriguez highlighted improved collections, stating that a sizable portion of 2024 receivables were settled by Pemex in the fourth quarter and that a meaningful portion of 2025 services were paid on time, calling it “a major step forward.”
Petrello also addressed Venezuela, noting Nabors has five idle rigs and a small number of key local personnel in-country. He said the company is in discussions with multiple operators and would be prepared to return to work with suitable commercial terms and security arrangements, though 2026 guidance does not assume any Venezuela reactivations.
Balance sheet actions, free cash flow, and 2026 guidance
Petrello said Nabors reduced net debt by $554 million versus year-end 2024 through a series of transactions that included the Parker Wellbore acquisition (for shares and assumed debt), the sale of Quail Tools, debt redemptions, and refinancing. He said the company expects to reduce annualized cash interest expense by about $45 million and that retained Parker businesses are projected to contribute at least $70 million in adjusted EBITDA in 2026.
Rodriguez said 2025 revenue was $3.2 billion, up 8.7% year over year, with full-year adjusted EBITDA of $913 million, $31 million higher than the prior year. He also reported fourth-quarter adjusted free cash flow of $132 million and full-year adjusted free cash flow of about $117 million, exceeding revised post-Parker guidance of about $80 million. He attributed fourth-quarter outperformance to stronger EBITDA, lower capital expenditures, improved working capital from higher Mexico collections, and one-time claim settlements.
On capital spending, Nabors reported fourth-quarter capex of $158 million and full-year 2025 capex of $695 million, including $274 million for SANAD new builds. For 2026, management guided total capex of $730 million to $760 million, including $360 million to $380 million for SANAD, reflecting construction milestones shifting from 2025 into 2026.
For the first quarter of 2026, Rodriguez guided to Lower 48 average rig count of 64 to 65 rigs with daily adjusted gross margin around $13,200; international average rig count of 91 to 92 rigs with daily gross margin of $17,500 to $17,600; Drilling Solutions EBITDA around $39 million; and Rig Technologies EBITDA around $2 million. He said consolidated adjusted free cash flow is expected to be negative $80 million to negative $90 million in the first quarter, largely due to SANAD’s cash use plus seasonal items such as heavier cash interest payments, annual bonuses, and property taxes.
For full-year 2026, management said it expects to maintain the same reported EBITDA level as 2025, while achieving 6% to 8% EBITDA growth normalized for Quail, driven by international drilling and Nabors Drilling Solutions. Rodriguez also said Nabors plans to reduce gross debt by at least $100 million during 2026.
- Lower 48 (full-year): average 61 to 64 rigs; daily gross margin $13,000 to $13,400.
- Alaska/offshore (full-year): EBITDA $55 million to $60 million.
- International (full-year): average 96 to 98 rigs, December exit at or above 101 rigs; targeted daily gross margin $18,500.
- Nabors Drilling Solutions (full-year): EBITDA $160 million to $170 million, normalized for Quail.
- Rig Technologies (full-year): EBITDA $22 million to $25 million.
Rodriguez also detailed debt actions that included issuing $700 million of senior priority guaranteed notes due 2032 to retire 2027 maturities, and redeeming remaining 2028 notes after quarter end, extending maturities to June 2029 with a $250 million maturity described as manageable. He said the company’s net leverage ratio improved to about 1.7x, the lowest since 2008, and that two credit rating agencies upgraded elements of Nabors’ debt structure.
About Nabors Industries (NYSE:NBR)
Nabors Industries Ltd. is a global oil and gas drilling contractor that provides land and offshore drilling rigs, drilling equipment and related services to energy companies around the world. The company’s operations span two core segments: drilling and evaluation, which includes land‐based and platform drilling rigs as well as wellbore survey services, and wellbore technologies, offering pressure control equipment, downhole tools and specialized maintenance services. Nabors’ integrated model combines rig operations with engineered products and field support, positioning it as a full‐service provider in the upstream sector.
The company maintains a diverse, modern fleet of automated and conventional drilling rigs and has pioneered advanced drilling technologies, including automated drilling controls and managed pressure drilling systems.
