Nabors Industries’ Perspective in Q1 2026: KEY Takeaways

Industry Outlook

We have already discussed Nabors Industries' (NBR) Q1 2026 financial performance in our recent article. Here is an outline of its strategies and outlook. Its management believes that tightening global oil supply and durable demand are creating a more constructive market than in 2025. 

However, backwardated oil futures and price volatility are limiting near-term changes to operator drilling plans. The company expects Middle East supply disruptions to persist, supporting commodity prices and activity levels outside the region. Management also sees potential for higher drilling activity later in the year if supply-demand fundamentals continue to tighten.

Q2 Outlook and Guidance

Management expects Middle East-related inefficiencies to reduce Q2 EBITDA by $6 million to $8 million, primarily within International Drilling. International rig count is expected to increase to 93-95 rigs, supported by additional activity in Saudi Arabia and rigs that started work in Q1. 

International drilling margins are also expected to improve as seasonal impacts fade and activity normalizes. In the U.S., the Lower 48 rig count is expected to increase to 67-68 rigs, with modest margin improvement driven by pricing. Despite ongoing regional uncertainty, management remains confident in a stronger second half of 2026 and expects full-year results to remain broadly in line with guidance.

SANAD Update And Latin America Outlook

SANAD deployed its 15th new-build rig during Q1 and expects four additional rigs to start work in 2026. The company also resumed operations on one previously suspended rig, with a second scheduled to restart later in Q2. Management said activity levels in Saudi Arabia continue to reflect customers' commitment to long-term development plans despite regional uncertainty. 

In Latin America, Mexico's activity improved with the early restart of a fourth offshore platform rig. The company also added a rig in Argentina during Q1 and expects another to start in Q3, increasing its rig count there to 14.

NA Outlook And Rig Count

According to NBR’s management, higher oil prices have not yet triggered broad increases in capital spending by large public operators because price volatility remains high. The company believes greater clarity on global supply disruptions would improve operator confidence and support activity growth. 

In natural gas, Middle East LNG disruptions could increase U.S. export opportunities, although weak power-generation demand has weighed on prices. Longer term, new LNG export projects and rising data center power demand are expected to strengthen U.S. gas consumption. 

The company added four rigs during Q1 and eight rigs since November 2025, bringing its total rig count to 66. Most of the recent rig additions came from public operators across the Permian, Haynesville, and Eagle Ford basins. 

Relative Valuation

NBR is currently trading at an EV/EBITDA multiple of 4.3x. Based on sell-side analysts' EBITDA estimates, the forward EV/EBITDA multiple is slightly higher. The current multiple is also lower than its five-year average EV/EBITDA multiple of 5.7x.

NBR's forward EV/EBITDA multiple expansion versus the current EV/EBITDA contrasts with its peers because the company's EBITDA is expected to decrease, while EBITDA for its peers is expected to rise in the next four quarters. This typically results in a higher EV/EBITDA multiple compared to its peers. The stock's EV/EBITDA multiple is lower than its peers' (HP, PTEN, and PDS) average of 5.9x. So, the stock is undervalued compared to its peers.

Final Commentary

Nabors sees a more constructive drilling market as global oil supplies tighten and demand remains resilient. However, oil price volatility and backwardation continue to delay broader operator spending increases. The company expects international activity to grow, supported by new SANAD rigs, improving margins, and expanding operations in Saudi Arabia and Latin America. U.S. rig activity is also improving, with recent additions across the Permian, Haynesville, and Eagle Ford. 

NBR’s management expects Middle East disruptions to remain a near-term headwind but believes full-year results remain on track. Overall, NBR sees the strongest growth opportunities emerging in the second half of 2026. The stock is undervalued compared to its peers.