Market Outlook
Nabors continues to see a constructive outlook for North American drilling as demand for high-specification rigs and integrated drilling technologies strengthens. Lower 48 activity exceeded management's expectations during the quarter, supported by market share gains and improving contract visibility. International growth also remains supported by SANAD (a joint venture between Nabors Industries and Saudi Aramco) deployments in Saudi Arabia and expanding activity across key Middle East and Latin American markets.
Management now expects FY2026 adjusted EBITDA of $920-$930 million and adjusted free cash flow of $20-$30 million, reflecting greater confidence in second-half activity.
Key Performers in Q2
NBR’s performance improved across all major operating segments during the quarter. Its U.S. Drilling segment EBITDA increased by 7% sequentially in Q2, supported by a 4% increase in the Lower 48 working fleet and a 5% improvement in daily margins. In International Drilling, EBITDA increased by 8%, benefiting from stronger operating efficiency and additional SANAD deployments, while Drilling Solutions continued to benefit from growth in Performance Software, RigCLOUD, and Managed Pressure Drilling technologies.
Capex plan was reduced
Adjusted free cash flow improved to $12 million, representing a $60 million sequential improvement. Nabors, however, reduced its FY2026 capital spending outlook to $710-$730 million while reaffirming debt reduction as its primary capital allocation priority.
Thanks for reading the NBR Take Three, designed to give you three critical takeaways from NBR's earnings report. Soon, we will present a second update on NBR's earnings, highlighting its current strategy, news, and notes we extracted from our deeper dive.
