Nabors Industries: Q4 2025 TAKE THREE

Key Developments and Outlook: In Q4, Nabors continued expanding its international footprint, with additional rig deployments under the SANAD joint venture with Saudi Aramco, bringing total deployed newbuild rigs higher year over year. The company also advanced its PACE-X Ultra rig rollout, targeting higher-spec, performance-driven demand internationally and selectively in U.S. basins.

Management reiterated its expectation of continued international momentum into 2026, supported by long-cycle contracts and demand from national oil companies. In contrast, U.S. Lower 48 activity is expected to remain pressured near term due to customer capital discipline and softer natural gas fundamentals. The geographic divergence remains the central theme heading into 2026.

Key Drivers in Q4

Quarter over quarter, NBR’s revenues declined modestly in Q4, driven primarily by lower U.S. Drilling activity and reduced rig counts in the Lower 48. International Drilling revenues remained relatively stable sequentially, supported by steady utilization and new rig deployments. Drilling Solutions' revenues also declined sequentially following project timing effects.

Operating margins in U.S. Drilling compressed due to lower activity and pricing pressure, while International Drilling margins remained comparatively resilient. Net income declined sequentially from Q3 levels, reflecting the absence of divestiture-related gains and softer operating performance.

FCF and Leverage Improved: For FY2025, Nabors’ operating cash flow increased year over year, supported by improved profitability and working capital management. However, its capital expenditures also increased, related to newbuild international rigs and technology upgrades.

Leverage improved materially during the year following the $625 million Quail Tools divestiture, which enabled debt repayment and strengthened the balance sheet. The company continued reducing revolver borrowings and managing maturities, reinforcing liquidity entering 2026. 

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.