Key Developments and Outlook: In Q3, Nabors completed the $625 million sale of Quail Tools to Superior Energy, using proceeds to repay debt and strengthen its balance sheet. It deployed the first PACE-X Ultra rig in South Texas, delivering faster drilling performance than planned. The SANAD JV with Saudi Aramco added another newbuild rig, bringing total deployments to 13.
NBR’s management sees a divergence in its geographic outlook. While it sees “international growth opportunities,” a “potential volatility in the Lower 48 market” can mar its near-term growth trajectory.
Key Drivers In Q3
Quarter-over-quarter, revenues in the company's Drilling Solutions operating segment fell the most (by 17%) in Q3, followed by the U.S. Drilling segment (2% down). International Drilling, on the other hand, witnessed a sequential revenue rise of 6%. Rig margins in U.S. Drilling decreased by 4%, while they improved marginally, by 2%, in International Drilling during this period. The company’s net loss in Q2 turned to a net profit of $274.2 million in Q3.
The sale of Quail Tools, stronger international drilling activity, and synergy gains from the Parker Wellbore acquisition drove a net income increase in Q3.
FCF Declined but Leverage Improved: NBR's cash flow from operations increased (37% up) in Q3 2025 compared to the previous quarter. However, its capex increased more sharply, and so, FCF declined by 44% in Q3. Its debt-to-equity ratio (2.5x) fell sharply from the start of the year, primarily due to higher shareholders' equity. Also, the sale of Quail Tools generated a large cash inflow and helped pay down the balance on the revolver and redeem $150 million of the 2027 notes.
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.
