8-K
Nabors Industries Ltd (NBR)
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
Form 8-K
CURRENT
REPORT
PURSUANT
TO SECTION 13 OR 15(d) OF THE
SECURITIES
EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): April 27, 2022
NABORS INDUSTRIES LTD.
(Exact name of registrant as specified in its charter)
| Bermuda | 001-32657 | 98-0363970 |
|---|---|---|
| (State or Other Jurisdiction of<br> Incorporation or Organization) | (Commission File Number) | (I.R.S. Employer<br> Identification No.) |
| Crown House<br>4 Par-la-Ville Road<br>Second Floor<br>Hamilton, HM08 Bermuda | N/A | |
| --- | --- | |
| (Address of principal executive offices) | (Zip Code) |
(441) 292-1510
(Registrant’s telephone number, including area code)
N/A
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ¨ | Written<br> communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |
|---|---|---|
| ¨ | Soliciting<br> material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |
| --- | --- | |
| ¨ | Pre-commencement<br> communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |
| --- | --- | |
| ¨ | Pre-commencement<br> communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) | |
| --- | --- | |
| Title of each class | Trading Symbol(s) | Name of exchange on which<br><br> registered |
| --- | --- | --- |
| Common shares | NBR | NYSE |
| Preferred<br> shares – Series A | NBR.PRA | NYSE |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ¨
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Item2.02 Results of Operations and Financial Condition.
On April 27, 2022, Nabors Industries Ltd. (“Nabors”) issued a press release announcing its results of operations for the three months ended March 31, 2022. A copy of that release is furnished herewith as Exhibit 99.1 and is incorporated herein by reference.
On April 28, 2022, Nabors will hold a conference call at 12:00 p.m. Central Time, regarding the Company’s financial results for the quarter ended March 31, 2022. Information about the call - including dial-in information, recording and replay of the call, and supplemental information - is available on the Investor Relations page of www.nabors.com.
The information in this Item 2.02, including Exhibits 99.1 and 99.2, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act, of 1934 or otherwise subject to liabilities of that Section or Sections 11 and 12(a)(2) of the Securities Act of 1933.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
| Exhibit<br><br>No. | Description |
|---|---|
| 99.1 | Press Release |
| 99.2 | Investor Information |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| NABORS INDUSTRIES LTD. | ||
|---|---|---|
| Date: April 27, 2022 | By: | /s/ Mark D. Andrews |
| Name: Mark D. Andrews | ||
| Title: Corporate Secretary |
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Exhibit 99.1
NaborsAnnounces First Quarter 2022 Results
HAMILTON, Bermuda, April 27, 2022 /PRNewswire/ -- Nabors Industries Ltd. (“Nabors” or the “Company”) (NYSE: NBR) today reported first quarter 2022 operating revenues of $569 million, an increase of approximately 5%, compared to operating revenues of $544 million in the fourth quarter of 2021. The net loss from continuing operations attributable to Nabors shareholders for the quarter was $184 million, or $22.51 per share. This compares to a loss of $114 million, or $14.60 per share in the prior quarter. The first quarter results include a non-cash charge of $72 million, or $8.63 per share, related to mark-to-market treatment of Nabors’ warrants. First quarter adjusted EBITDA was $131 million, compared to $132 million in the previous quarter.
Anthony G. Petrello, Nabors Chairman, CEO and President, commented, “Our first quarter financial results demonstrate the value of our technology-focused strategy. Drilling Solutions’ quarterly Adjusted EBITDA marked another post-pandemic high, and we saw excellent sequential growth in the U.S. Drilling segment.
“In the Lower 48, our daily drilling adjusted gross margin reflects the strong pricing environment. Our average daily revenue of $23,000 represents an increase of nearly $1,300 versus the prior quarter. Leading-edge daily rates continue to increase sharply and are now at least $5,000 higher than the first quarter’s average daily revenue. Adjusted EBITDA from our Drilling Solutions segment grew sequentially, on top of the strong performance in the prior quarter. This segment’s contribution to the Company’s total adjusted EBITDA exceeded 15%, an all-time high.
“The first quarter marked significant exercises of our innovative equity warrants. We issued the warrants last June, as part of our strategy to de-lever. As a result, the reduction in face value of debt outstanding from these exercises exceeded $130 million.
“Oilfield activity in the Lower 48 market, and land drilling rig counts in particular, increased significantly during the quarter. With support from commodity prices that have risen markedly since the beginning of the year, we remain optimistic that drilling activity in the oil & gas industry will continue to increase over the balance of the year. We are also encouraged by the signals coming from certain of the key international markets, where planning and tendering for additional activity are also accelerating, setting up another potential driver of future growth.”
Consolidated and Segment Results
The U.S. Drilling segment reported $74.3 million in adjusted EBITDA for the first quarter of 2022, a 7% increase from the prior quarter. Nabors’ average Lower 48 rig count, at 83.4, increased by nearly nine rigs, or 12%. Daily adjusted gross margins in the Lower 48 averaged $7,694, more than 7% higher than the prior quarter. The U.S. Drilling segment’s rig count currently stands at 96, with 89 rigs working in the Lower 48.
International Drilling adjusted EBITDA totaled $71.2 million, a $1.9 million decrease from the fourth quarter of 2021. Operations in Russia primarily accounted for this change. The International rig count averaged 72 rigs, a slight increase from the prior quarter. Daily adjusted gross margin averaged $13,134, in line with the prior quarter.
In Drilling Solutions, adjusted EBITDA increased slightly to $20.0 million reflecting increasing activity in the U.S. Revenue grew sequentially by 5%, driven by performance drilling software, managed pressure drilling, and wellbore placement.
In Rig Technologies, adjusted EBITDA declined to a loss of $1.0 million in the first quarter. Results in this segment were impacted by delays of Canrig shipments and issues related to Russia.
Adjusted Free Cash Flow and Capital Discipline
Adjusted free cash flow, defined as net cash provided by operating activities less net cash used by investing activities, as presented in the Company’s cash flow statement, was an outflow of $41 million in the first quarter. This result was primarily driven by an increase in working capital. Revenue growth, especially late in the quarter, led to increases in accounts receivable. Inventories also expanded with the expectations for increasing activity in future quarters. In addition, supply chain challenges resulted in increasing lead times and delays in shipments of equipment.
Capital expenditures for the first quarter totaled $84 million, including $33 million for the SANAD newbuilds.
The Company reduced its net debt, defined as total debt less cash, cash equivalents and short-term investments, by $55 million in the first quarter. Net debt at the end of the first quarter was $2,216 million. Exercises of warrants on Nabors common shares contributed to the improvement in net debt. Also, during the first quarter, the Company completed the replacement of its prior Revolving Credit Facility, which was scheduled to mature in 2023, with a new facility maturing in 2026.
William Restrepo, Nabors CFO, stated, “Activity across our segments and geographies continued to strengthen and is generating improving financial results, a trend we expect to continue during the year. As utilization expanded to approximately 80% for our high-spec U.S. rigs, pricing has already increased significantly and well above the higher labor expenses and general cost inflation. The market’s development since our December analyst event gives us greater confidence in the outlook for 2023. Our focus remains on the timely staffing of our expanding fleet as recruiting is still a challenge and on the aggressive management of our working capital to mitigate the impact on our cash flow from our rapidly growing business.
“Once again, we made progress reducing our net debt and expect to continue making further progress over the balance of the year. We also expect to generate adjusted free cash flow well in excess of $100 million for all of 2022. Finally, we have continued to de-risk our company’s capital structure with the extension of our credit facility in January and the reduction of our near-term outstanding notes to a manageable $261 million maturing before the end of 2024. Our $350 million credit facility was undrawn at the end of the first quarter, and we now have just under $1 billion in available capacity to issue additional priority guaranteed notes.”
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Mr. Petrello added, “Last year at our Analyst Meeting, we introduced five strategic initiatives that we believe are key to our success. I am pleased that we made progress on each of these during the first quarter:
| · | Our Lower 48 business continued<br>its robust upward trend. |
|---|---|
| · | Our International segment<br>performed well in the face of challenges in Russia. In the second quarter, we are looking forward to deployments in Saudi Arabia of the<br>first In-Kingdom newbuild rig, as well as an advanced PACE^®^-M1200 series rig that incorporates the latest technology Nabors<br>has to offer. |
| --- | --- |
| · | On top of outstanding performance<br>in the prior quarter, our Drilling Solutions segment continued to grow. Our fully-automated land rig, which we deployed in 2021, has succeeded<br>in demonstrating the potential of our innovative automation. Using this new technology, we are now deploying our first automation module<br>on an existing rig in the Permian Basin. We are confident these advances, which enable both best-in-class performance and a step-change<br>improvement in safety, will see increasing demand across the industry. |
| --- | --- |
| · | We made progress to de-lever,<br>reducing net debt and total debt. |
| --- | --- |
| · | We expanded our efforts<br>supporting the Energy Transition, recently completing two additional investments. The first is a geothermal company developing leading-edge<br>drilling technology. The second company provides monitoring of greenhouse gases and other emissions. We also made additional headway on<br>our own internal initiatives in fuel management, energy storage, hydrogen, and carbon capture.” |
| --- | --- |
Outlook for the Second Quarter of 2022
Nabors expects the following quarterly metrics:
U.S. Drilling
| o | An increase in average Lower 48 rig count of 6 to 7 rigs over the first quarter average |
|---|---|
| o | Lower 48 adjusted gross margin per day of approximately $8,500, reflecting a significant<br>increase in average daily revenue from the strengthening of our leading-edge dayrates, somewhat offset by higher labor expenses and inflation |
| --- | --- |
| o | Offshore slightly above the first quarter levels and higher average dayrates in Alaska |
| --- | --- |
International
| o | An increase in average rig count of 2 to 3 rigs over the first quarter average |
|---|---|
| o | Adjusted gross margin per day of $12,700 to $13,000, including a full-quarter impact<br>from Russia |
| --- | --- |
Drilling Solutions
| o | Adjusted EBITDA up by more than 5% over the first quarter level |
|---|
Rig Technologies
| o | Adjusted EBITDA of approximately $2 million |
|---|
Capital Expenditures
| o | Capital expenditures between $110 million and $120 million |
|---|---|
| o | Capital expenditures for the full year 2022 of approximately $380 million |
| --- | --- |
Mr. Petrello concluded, “Industry fundamentals in the Lower 48, and rig counts in particular, have improved dramatically over the last several quarters. Increasing utilization is driving improvement in our financial metrics and we are now on the path toward significant pricing power. With the backdrop of the constructive commodity price outlook, we expect Nabors’ Lower 48 rig utilization and financial performance to accelerate materially over the balance of 2022. These prospects are augmented by growing adoption of our technology portfolio, which enables operators to improve their production profiles and limit their per-barrel costs. Given the positive signals coming from our international markets, we are poised for growth across the Company. That should enable us to make further progress improving our financial position.”
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About Nabors Industries
Nabors Industries (NYSE: NBR) is a leading provider of advanced technology for the energy industry. With operations in more than 15 countries, Nabors has established a global network of people, technology and equipment to deploy solutions that deliver safe, efficient and responsible energy production. By leveraging its core competencies, particularly in drilling, engineering, automation, data science and manufacturing, Nabors aims to innovate the future of energy and enable the transition to a lower-carbon world. Learn more about Nabors and its energy technology leadership: www.nabors.com.
Forward-looking Statements
The information included in this press release includes forward-looking statements within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934. Such forward-looking statements are subject to a number of risks and uncertainties, as disclosed by Nabors from time to time in its filings with the Securities and Exchange Commission. As a result of these factors, Nabors' actual results may differ materially from those indicated or implied by such forward-looking statements. The forward-looking statements contained in this press release reflect management's estimates and beliefs as of the date of this press release. Nabors does not undertake to update these forward-looking statements.
Non-GAAP Disclaimer
This press release presents certain “non-GAAP” financial measures. The components of these non-GAAP measures are computed by using amounts that are determined in accordance with accounting principles generally accepted in the United States of America (“GAAP”). Adjusted operating income (loss) represents income (loss) from continuing operations before income taxes, interest expense, earnings (losses) from unconsolidated affiliates, investment income (loss), (gain)/loss on debt buybacks and exchanges, impairments and other charges and other, net. Adjusted EBITDA is computed similarly, but also excludes depreciation and amortization expenses. In addition, adjusted EBITDA and adjusted operating income (loss) exclude certain cash expenses that the Company is obligated to make. Net debt is calculated as total debt minus the sum of cash, cash equivalents and short-term investments. Adjusted free cash flow represents net cash provided by operating activities less cash used for investing activities. Adjusted free cash flow is an important liquidity measure for the company and it is useful to investors and management as a measure of our ability to generate cash flow, after reinvesting in the company for future growth, that could be available for paying down debt or other financing cash flows, such as dividends to shareholders. Management believes that this non-GAAP measure is useful information to investors when comparing our cash flows with the cash flows of other companies. Each of these non-GAAP measures has limitations and therefore should not be used in isolation or as a substitute for the amounts reported in accordance with GAAP. However, management evaluates the performance of its operating segments and the consolidated Company based on several criteria, including Adjusted EBITDA, adjusted operating income (loss), net debt, and adjusted free cash flow, because it believes that these financial measures accurately reflect the Company’s ongoing profitability and performance. Securities analysts and investors also use these measures as some of the metrics on which they analyze the Company’s performance. Other companies in this industry may compute these measures differently. Reconciliations of consolidated adjusted EBITDA and adjusted operating income (loss) to income (loss) from continuing operations before income taxes, net debt to total debt, and adjusted free cash flow to cash flow provided by operations, which are their nearest comparable GAAP financial measures, are included in the tables at the end of this press release.
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Investor Contacts: William C. Conroy, CFA, Vice President of Corporate Development & Investor Relations, +1 281-775-2423 or via e-mail william.conroy@nabors.com, or Kara Peak, Director of Corporate Development & Investor Relations, +1 281-775-4954 or via email kara.peak@nabors.com. To request investor materials, contact Nabors' corporate headquarters in Hamilton, Bermuda at +441-292-1510 or via e-mail mark.andrews@nabors.com
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NABORS INDUSTRIES LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS)
(Unaudited)
| Three<br> Months Ended | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| March<br> 31, | December<br> 31, | ||||||||
| (In<br> thousands, except per share amounts) | 2022 | 2021 | 2021 | ||||||
| Revenues and other income: | |||||||||
| Operating revenues | $ | 568,539 | $ | 460,511 | $ | 543,539 | |||
| Investment income<br> (loss) | 163 | 1,263 | 156 | ||||||
| Total revenues<br> and other income | 568,702 | 461,774 | 543,695 | ||||||
| Costs and other deductions: | |||||||||
| Direct costs | 372,712 | 290,654 | 347,238 | ||||||
| General and administrative expenses | 53,639 | 54,660 | 54,422 | ||||||
| Research and engineering | 11,678 | 7,467 | 10,223 | ||||||
| Depreciation and amortization | 164,359 | 177,276 | 167,955 | ||||||
| Interest expense | 46,910 | 42,975 | 44,570 | ||||||
| Other, net | 80,401 | 7,346 | 10,170 | ||||||
| Total costs<br> and other deductions | 729,699 | 580,378 | 634,578 | ||||||
| Income (loss) from continuing operations before income<br> taxes | (160,997 | ) | (118,604 | ) | (90,883 | ) | |||
| Income tax expense<br> (benefit) | 13,671 | 9,725 | 18,393 | ||||||
| Income (loss) from continuing operations, net of tax | (174,668 | ) | (128,329 | ) | (109,276 | ) | |||
| Income (loss) from discontinued<br> operations, net of tax | - | 19 | 13 | ||||||
| Net income (loss) | (174,668 | ) | (128,310 | ) | (109,263 | ) | |||
| Less: Net (income) loss attributable<br> to noncontrolling interest | (9,828 | ) | (8,776 | ) | (4,414 | ) | |||
| Net income (loss) attributable to<br> Nabors | (184,496 | ) | (137,086 | ) | (113,677 | ) | |||
| Less: Preferred<br> stock dividend | - | (3,653 | ) | - | |||||
| Net income (loss) attributable to<br> Nabors common shareholders | $ | (184,496 | ) | $ | (140,739 | ) | $ | (113,677 | ) |
| Amounts attributable to Nabors common shareholders: | |||||||||
| Net income (loss) from continuing operations | $ | (184,496 | ) | $ | (140,758 | ) | $ | (113,690 | ) |
| Net income (loss) from discontinued<br> operations | - | 19 | 13 | ||||||
| Net income (loss) attributable to<br> Nabors common shareholders | $ | (184,496 | ) | $ | (140,739 | ) | $ | (113,677 | ) |
| Earnings (losses) per share: | |||||||||
| Basic from continuing operations | $ | (22.51 | ) | $ | (20.16 | ) | $ | (14.60 | ) |
| Basic from discontinued<br> operations | - | - | - | ||||||
| Total Basic | $ | (22.51 | ) | $ | (20.16 | ) | $ | (14.60 | ) |
| Diluted from continuing operations | $ | (22.51 | ) | $ | (20.16 | ) | $ | (14.60 | ) |
| Diluted from<br> discontinued operations | - | - | - | ||||||
| Total Diluted | $ | (22.51 | ) | $ | (20.16 | ) | $ | (14.60 | ) |
| Weighted-average number of common shares outstanding: | |||||||||
| Basic | 8,311 | 7,102 | 7,950 | ||||||
| Diluted | 8,311 | 7,102 | 7,950 | ||||||
| Adjusted EBITDA | $ | 130,510 | $ | 107,730 | $ | 131,656 | |||
| Adjusted operating income (loss) | $ | (33,849 | ) | $ | (69,546 | ) | $ | (36,299 | ) |
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NABORS INDUSTRIES LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
| March 31, | December 31, | |||
|---|---|---|---|---|
| (In thousands) | 2022 | 2021 | ||
| (Unaudited) | ||||
| ASSETS | ||||
| Current assets: | ||||
| Cash and short-term investments | $ | 394,039 | $ | 991,488 |
| Accounts receivable, net | 297,209 | 287,572 | ||
| Assets held for sale | 16,582 | 16,561 | ||
| Other current assets | 236,238 | 222,188 | ||
| Total current assets | 944,068 | 1,517,809 | ||
| Property, plant and equipment, net | 3,245,574 | 3,332,498 | ||
| Other long-term assets | 667,524 | 675,057 | ||
| Total assets | $ | 4,857,166 | $ | 5,525,364 |
| LIABILITIES AND EQUITY | ||||
| Current liabilities: | ||||
| Current portion of debt | $ | - | $ | - |
| Other current liabilities | 513,445 | 525,228 | ||
| Total current liabilities | 513,445 | 525,228 | ||
| Long-term debt | 2,610,092 | 3,262,795 | ||
| Other long-term liabilities | 375,070 | 343,120 | ||
| Total liabilities | 3,498,607 | 4,131,143 | ||
| Redeemable noncontrolling interest in subsidiary | 677,829 | 675,283 | ||
| Equity: | ||||
| Shareholders' equity | 543,616 | 590,656 | ||
| Noncontrolling interest | 137,114 | 128,282 | ||
| Total equity | 680,730 | 718,938 | ||
| Total liabilities and equity | $ | 4,857,166 | $ | 5,525,364 |
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NABORS INDUSTRIES LTD. AND SUBSIDIARIES
SEGMENT REPORTING
(Unaudited)
The following tables set forth certain information with respect to our reportable segments and rig activity:
| Three<br> Months Ended | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| March<br> 31, | December<br> 31, | ||||||||
| (In<br> thousands, except rig activity) | 2022 | 2021 | 2021 | ||||||
| Operating revenues: | |||||||||
| U.S. Drilling | $ | 217,583 | $ | 142,299 | $ | 192,310 | |||
| Canada Drilling | - | 20,989 | - | ||||||
| International Drilling | 279,030 | 246,838 | 271,069 | ||||||
| Drilling Solutions | 54,182 | 35,706 | 51,776 | ||||||
| Rig Technologies (1) | 36,736 | 25,748 | 46,920 | ||||||
| Other reconciling<br> items (2) | (18,992 | ) | (11,069 | ) | (18,536 | ) | |||
| Total operating<br> revenues | $ | 568,539 | $ | 460,511 | $ | 543,539 | |||
| Adjusted EBITDA: (3) | |||||||||
| U.S. Drilling | $ | 74,265 | $ | 58,786 | $ | 69,249 | |||
| Canada Drilling | (19 | ) | 9,659 | 223 | |||||
| International Drilling | 71,248 | 62,611 | 73,168 | ||||||
| Drilling Solutions | 20,000 | 11,458 | 19,559 | ||||||
| Rig Technologies (1) | (1,044 | ) | (533 | ) | 3,842 | ||||
| Other reconciling<br> items (4) | (33,940 | ) | (34,250 | ) | (34,385 | ) | |||
| Total adjusted<br> EBITDA | $ | 130,510 | $ | 107,730 | $ | 131,656 | |||
| Adjusted operating income (loss): (5) | |||||||||
| U.S. Drilling | $ | (5,851 | ) | $ | (23,336 | ) | $ | (12,587 | ) |
| Canada Drilling | (19 | ) | 3,907 | 223 | |||||
| International Drilling | (6,327 | ) | (18,632 | ) | (5,749 | ) | |||
| Drilling Solutions | 14,709 | 4,710 | 12,930 | ||||||
| Rig Technologies (1) | (2,751 | ) | (2,569 | ) | 1,493 | ||||
| Other reconciling<br> items (4) | (33,610 | ) | (33,626 | ) | (32,609 | ) | |||
| Total adjusted<br> operating income (loss) | $ | (33,849 | ) | $ | (69,546 | ) | $ | (36,299 | ) |
| Rig activity: | |||||||||
| Average Rigs Working: (7) | |||||||||
| Lower 48 | 83.4 | 56.2 | 74.7 | ||||||
| Other<br> US | 6.9 | 4.3 | 6.0 | ||||||
| U.S. Drilling | 90.3 | 60.5 | 80.7 | ||||||
| Canada Drilling | - | 13.7 | - | ||||||
| International<br> Drilling | 72.0 | 64.8 | 71.4 | ||||||
| Total average rigs working | 162.3 | 139.0 | 152.1 | ||||||
| Daily Rig Revenue: (6),(8) | |||||||||
| Lower 48 | $ | 23,030 | $ | 21,656 | $ | 21,739 | |||
| Other<br> US | 72,089 | 83,793 | 77,833 | ||||||
| U.S. Drilling (10) | 26,781 | 26,115 | 25,911 | ||||||
| Canada Drilling | - | 16,995 | - | ||||||
| International Drilling | 43,065 | 42,347 | 41,239 | ||||||
| Daily Adjusted Gross Margin: (6),(9) | |||||||||
| Lower 48 | $ | 7,694 | $ | 8,466 | $ | 7,161 | |||
| Other<br> US | 37,236 | 54,974 | 47,734 | ||||||
| U.S. Drilling (10) | 9,953 | 11,803 | 10,179 | ||||||
| Canada Drilling | - | 8,160 | - | ||||||
| International Drilling | 13,134 | 12,917 | 13,172 |
1-3
| (1) | Includes our oilfield equipment manufacturing activities. |
|---|---|
| (2) | Represents the elimination of inter-segment transactions related<br> to our Rig Technologies operating segment. |
| (3) | Adjusted EBITDA represents net income (loss) before income<br> (loss) from discontinued operations, net of tax, income taxes, investment income (loss), interest expense, other, net and depreciation<br> and amortization. Adjusted EBITDA is a non-GAAP financial measure and should not be used in isolation or as a substitute for the<br> amounts reported in accordance with GAAP. In addition, adjusted EBITDA excludes certain cash expenses that the Company is obligated<br> to make. However, management evaluates the performance of its operating segments and the consolidated Company based on several criteria,<br> including adjusted EBITDA and adjusted operating income (loss), because it believes that these financial measures accurately reflect<br> the Company’s ongoing profitability and performance. Securities analysts and investors use this measure as one of<br> the metrics on which they analyze the Company’s performance. Other companies in this industry may compute these<br> measures differently. A reconciliation of this non-GAAP measure to net income (loss), which is the most closely comparable<br> GAAP measure, is provided in the table set forth immediately following the heading "Reconciliation of Non-GAAP Financial Measures<br> to Net Income (Loss)". |
| (4) | Represents the elimination of inter-segment transactions and<br> unallocated corporate expenses. |
| (5) | Adjusted operating income (loss) represents net income (loss)<br> before income (losses) from discontinued operations, net of tax, income taxes, investment income (loss), interest expense, and<br> other, net. Adjusted operating income (loss) is a non-GAAP financial measure and should not be used in isolation or as a substitute<br> for the amounts reported in accordance with GAAP. In addition, adjusted operating income (loss) excludes certain cash expenses that<br> the Company is obligated to make. However, management evaluates the performance of its operating segments and the consolidated Company<br> based on several criteria, including adjusted EBITDA and adjusted operating income (loss), because it believes that these financial<br> measures accurately reflect the Company’s ongoing profitability and performance. Securities analysts and investors<br> use this measure as one of the metrics on which they analyze the Company’s performance. Other companies in this<br> industry may compute these measures differently. A reconciliation of this non-GAAP measure to net income (loss), which<br> is the most closely comparable GAAP measure, is provided in the table set forth immediately following the heading "Reconciliation<br> of Non-GAAP Financial Measures to Net Income (Loss)". |
| (6) | Rig revenue days represents the number of days the Company's<br> rigs are contracted and performing under a contract during the period. These would typically include days in which operating,<br> standby and move revenue is earned. |
| (7) | Average rigs working represents a measure of the average number<br> of rigs operating during a given period. For example, one rig operating 45 days during a quarter represents approximately<br> 0.5 average rigs working for the quarter. On an annual period, one rig operating 182.5 days represents approximately 0.5<br> average rigs working for the year. Average rigs working can also be calculated as rig revenue days during the period divided<br> by the number of calendar days in the period. |
| (8) | Daily rig revenue represents operating revenue, divided by the total number of revenue<br> days during the quarter. |
| (9) | Daily adjusted gross margin represents operating revenue less<br> direct costs, divided by the total number of rig revenue days during the quarter. |
| (10) | The U.S. Drilling segment includes<br>the Lower 48, Alaska, and Gulf of Mexico operating areas. |
| --- | --- |
1-4
NABORS INDUSTRIES LTD. AND SUBSIDIARIES
RECONCILIATION OF ADJUSTED EBITDA BY SEGMENT TO ADJUSTED OPERATING INCOME (LOSS) BY SEGMENT
(Unaudited)
| Three Months Ended March 31, 2022 | ||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (In thousands) | U.S.<br> Drilling | Canada<br> Drilling | International<br> Drilling | Drilling<br> Solutions | Rig<br> Technologies | Other<br> reconciling <br> items | Total | |||||||||||||
| Adjusted operating income (loss) | $ | (5,851 | ) | $ | (19 | ) | $ | (6,327 | ) | $ | 14,709 | $ | (2,751 | ) | $ | (33,610 | ) | $ | (33,849 | ) |
| Depreciation and amortization | 80,116 | - | 77,575 | 5,291 | 1,707 | (330 | ) | 164,359 | ||||||||||||
| Adjusted EBITDA | $ | 74,265 | $ | (19 | ) | $ | 71,248 | $ | 20,000 | $ | (1,044 | ) | $ | (33,940 | ) | $ | 130,510 | |||
| Three Months Ended March 31, 2021 | ||||||||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | |
| U.S.<br><br> Drilling | Canada Drilling | International Drilling | Drilling Solutions | Rig Technologies | Other reconciling items | Total | ||||||||||||||
| Adjusted operating income (loss) | $ | (23,336 | ) | $ | 3,907 | $ | (18,632 | ) | $ | 4,710 | $ | (2,569 | ) | $ | (33,626 | ) | $ | (69,546 | ) | |
| Depreciation and amortization | 82,122 | 5,752 | 81,243 | 6,748 | 2,036 | (624 | ) | 177,276 | ||||||||||||
| Adjusted EBITDA | $ | 58,786 | $ | 9,659 | $ | 62,611 | $ | 11,458 | $ | (533 | ) | $ | (34,250 | ) | $ | 107,730 | ||||
| Three Months Ended December 31, 2021 | ||||||||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | ||
| U.S. <br><br>Drilling | Canada Drilling | International Drilling | Drilling Solutions | Rig Technologies | Other reconciling items | Total | ||||||||||||||
| Adjusted operating income (loss) | $ | (12,587 | ) | $ | 223 | $ | (5,749 | ) | $ | 12,930 | $ | 1,493 | $ | (32,609 | ) | $ | (36,299 | ) | ||
| Depreciation and amortization | 81,836 | - | 78,917 | 6,629 | 2,349 | (1,776 | ) | 167,955 | ||||||||||||
| Adjusted EBITDA | $ | 69,249 | $ | 223 | $ | 73,168 | $ | 19,559 | $ | 3,842 | $ | (34,385 | ) | $ | 131,656 |
Adjusted EBITDA by segment represents adjusted income (loss) plus depreciation and amortization.
1-5
NABORS INDUSTRIES LTD. AND SUBSIDIARIES
RECONCILIATION OF ADJUSTED GROSS MARGIN BY SEGMENT TO ADJUSTED OPERATING INCOME (LOSS) BY SEGMENT
(Unaudited)
| Three<br> Months Ended | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| March<br> 31, | December<br> 31, | ||||||||
| (In<br> thousands) | 2022 | 2021 | 2021 | ||||||
| Lower 48 - U.S. Drilling | |||||||||
| Adjusted operating income<br> (loss) | $ | (14,596 | ) | $ | (31,022 | ) | $ | (25,474 | ) |
| Plus: General and administrative<br> costs | 4,447 | 4,279 | 4,610 | ||||||
| Plus: Research<br> and engineering | 1,638 | 644 | 1,064 | ||||||
| GAAP Gross Margin | (8,511 | ) | (26,099 | ) | (19,800 | ) | |||
| Plus: Depreciation<br> and amortization | 66,243 | 68,921 | 68,994 | ||||||
| Adjusted gross<br> margin | $ | 57,732 | $ | 42,822 | $ | 49,194 | |||
| Other - U.S. Drilling | |||||||||
| Adjusted operating income (loss) | $ | 8,745 | $ | 7,686 | $ | 12,887 | |||
| Plus: General and administrative<br> costs | 383 | 525 | 515 | ||||||
| Plus: Research<br> and engineering | 132 | 83 | 105 | ||||||
| GAAP Gross Margin | 9,260 | 8,294 | 13,507 | ||||||
| Plus: Depreciation<br> and amortization | 13,873 | 13,201 | 12,842 | ||||||
| Adjusted gross<br> margin | $ | 23,133 | $ | 21,495 | $ | 26,349 | |||
| U.S. Drilling | |||||||||
| Adjusted operating income (loss) | $ | (5,851 | ) | $ | (23,336 | ) | $ | (12,587 | ) |
| Plus: General and administrative<br> costs | 4,830 | 4,804 | 5,125 | ||||||
| Plus: Research<br> and engineering | 1,770 | 727 | 1,169 | ||||||
| GAAP Gross Margin | 749 | (17,805 | ) | (6,293 | ) | ||||
| Plus: Depreciation<br> and amortization | 80,116 | 82,122 | 81,836 | ||||||
| Adjusted gross<br> margin | $ | 80,865 | $ | 64,317 | $ | 75,543 | |||
| Canada Drilling | |||||||||
| Adjusted operating income (loss) | $ | (19 | ) | $ | 3,907 | $ | 223 | ||
| Plus: General and administrative<br> costs | 20 | 366 | 174 | ||||||
| Plus: Research<br> and engineering | - | 53 | - | ||||||
| GAAP Gross Margin | 1 | 4,326 | 397 | ||||||
| Plus: Depreciation<br> and amortization | - | 5,752 | - | ||||||
| Adjusted gross<br> margin | $ | 1 | $ | 10,078 | $ | 397 | |||
| International Drilling | |||||||||
| Adjusted operating income (loss) | $ | (6,327 | ) | $ | (18,632 | ) | $ | (5,749 | ) |
| Plus: General and administrative<br> costs | 12,483 | 11,408 | 12,057 | ||||||
| Plus: Research<br> and engineering | 1,368 | 1,276 | 1,359 | ||||||
| GAAP Gross Margin | 7,524 | (5,949 | ) | 7,667 | |||||
| Plus: Depreciation<br> and amortization | 77,575 | 81,243 | 78,917 | ||||||
| Adjusted gross<br> margin | $ | 85,099 | $ | 75,294 | $ | 86,584 |
Adjusted gross margin by segment represents adjusted operating income (loss) plus general and administrative costs, research and engineering costs and depreciation and amortization.
1-6
NABORS INDUSTRIES LTD. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO NET INCOME (LOSS)
(Unaudited)
| Three Months Ended | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| March 31, | December 31, | ||||||||
| (In thousands) | 2022 | 2021 | 2021 | ||||||
| Net income (loss) | $ | (174,668 | ) | $ | (128,310 | ) | $ | (109,263 | ) |
| (Income) loss from discontinued operations, net of tax | - | (19 | ) | (13 | ) | ||||
| Income (loss) from continuing operations, net of tax | (174,668 | ) | (128,329 | ) | (109,276 | ) | |||
| Income tax expense (benefit) | 13,671 | 9,725 | 18,393 | ||||||
| Income (loss) from continuing operations before income taxes | (160,997 | ) | (118,604 | ) | (90,883 | ) | |||
| Investment (income) loss | (163 | ) | (1,263 | ) | (156 | ) | |||
| Interest expense | 46,910 | 42,975 | 44,570 | ||||||
| Other, net | 80,401 | 7,346 | 10,170 | ||||||
| Adjusted operating income (loss) (1) | (33,849 | ) | (69,546 | ) | (36,299 | ) | |||
| Depreciation and amortization | 164,359 | 177,276 | 167,955 | ||||||
| Adjusted EBITDA (2) | $ | 130,510 | $ | 107,730 | $ | 131,656 |
(1) Adjusted operating income (loss) represents net income (loss) before income (losses) from discontinued operations, net of tax, income taxes, investment income (loss), interest expense, and other, net. Adjusted operating income (loss) is a non-GAAP financial measure and should not be used in isolation or as a substitute for the amounts reported in accordance with GAAP. In addition, adjusted operating income (loss) excludes certain cash expenses that the Company is obligated to make. However, management evaluates the performance of its operating segments and the consolidated Company based on several criteria, including adjusted EBITDA and adjusted operating income (loss), because it believes that these financial measures accurately reflect the Company’s ongoing profitability and performance. Securities analysts and investors use this measure as one of the metrics on which they analyze the Company’s performance. Other companies in this industry may compute these measures differently.
(2) Adjusted EBITDA represents net income (loss) before income (loss) from discontinued operations, net of tax, income taxes, investment income (loss), interest expense, other, net and depreciation and amortization. Adjusted EBITDA is a non-GAAP financial measure and should not be used in isolation or as a substitute for the amounts reported in accordance with GAAP. In addition, adjusted EBITDA excludes certain cash expenses that the Company is obligated to make. However, management evaluates the performance of its operating segments and the consolidated Company based on several criteria, including adjusted EBITDA and adjusted operating income (loss), because it believes that these financial measures accurately reflect the Company’s ongoing profitability and performance. Securities analysts and investors use this measure as one of the metrics on which they analyze the Company’s performance. Other companies in this industry may compute these measures differently.
1-7
NABORS INDUSTRIES LTD. AND SUBSIDIARIES
RECONCILIATION OF NET DEBT TO TOTAL DEBT
| March 31, | December 31, | |||
|---|---|---|---|---|
| (In thousands) | 2022 | 2021 | ||
| (Unaudited) | ||||
| Current portion of debt | $ | - | $ | - |
| Long-term debt | 2,610,092 | 3,262,795 | ||
| Total Debt | 2,610,092 | 3,262,795 | ||
| Less: Cash and short-term investments | 394,039 | 991,488 | ||
| Net Debt | $ | 2,216,053 | $ | 2,271,307 |
1-8
NABORS INDUSTRIES LTD. AND SUBSIDIARIES
RECONCILIATION OF ADJUSTED FREE CASH FLOW TO
NET CASH PROVIDED BY OPERATING ACTIVITIES
(Unaudited)
| Three Months Ended | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| March 31, | December 31, | ||||||||
| (In thousands) | 2022 | 2021 | 2021 | ||||||
| Net cash provided by operating activities | $ | 41,354 | $ | 79,490 | $ | 102,293 | |||
| Less: Net cash used for investing activities | (82,107 | ) | (19,119 | ) | (52,137 | ) | |||
| Adjusted free cash flow | $ | (40,753 | ) | $ | 60,371 | $ | 50,156 |
Adjusted free cash flow represents net cash provided by operating activities less net cash used for investing activities. Management believes that adjusted free cash flow is an important liquidity measure for the company and that it is useful to investors and management as a measure of the company’s ability to generate cash flow, after reinvesting in the company for future growth, that could be available for paying down debt or other financing cash flows, such as dividends to shareholders. Adjusted free cash flow does not represent the residual cash flow available for discretionary expenditures. Adjusted free cash flow is a non-GAAP financial measure that should be considered in addition to, not as a substitute for or superior to, cash flow from operations reported in accordance with GAAP.
1-9
Exhibit 99.2
| NABORS INDUSTRIES LTD. April 28, 2022<br>1Q 2022 Earnings<br>Presentation |
|---|
| NABORS.COM<br>We often discuss expectations regarding our future markets, demand for our products and<br>services, and our performance in our annual, quarterly, and current reports, press releases, and<br>other written and oral statements. Such statements, including statements in this document that<br>relate to matters that are not historical facts, are “forward-looking statements” within the meaning<br>of the safe harbor provisions of Section 27A of the U.S. Securities Act of 1933 and Section 21E<br>of the U.S. Securities Exchange Act of 1934. These “forward-looking statements” are based on<br>our analysis of currently available competitive, financial and economic data and our operating<br>plans. They are inherently uncertain, and investors should recognize that events and actual<br>results could turn out to be significantly different from our expectations.<br>Factors to consider when evaluating these forward-looking statements include, but are not<br>limited to:<br> • actual and potential political or economic instability, civil disturbance, war or acts of<br>terrorism involving any of the countries in which we do business<br> • the Covid-19 pandemic and its impact on oil and gas markets and prices;<br> • fluctuations and volatility in worldwide prices of and demand for oil and natural gas;<br> • fluctuations in levels of oil and natural gas exploration and development activities;<br> • fluctuations in the demand for our services;<br> • competitive and technological changes and other developments in the oil and gas and<br>oilfield services industries;<br> • our ability to renew customer contracts in order to maintain competitiveness;<br> • the existence of operating risks inherent in the oil and gas and oilfield services industries;<br> • the possibility of the loss of one or a number of our large customers;<br> • the impact of long-term indebtedness and other financial commitments on our financial<br>and operating flexibility;<br> • our access to and the cost of capital, including the impact of a further downgrade in our<br>credit rating, covenant restrictions, availability under our revolving credit facility, and<br>future issuances of debt or equity securities;<br>2<br>Forward Looking Statements<br> • our dependence on our operating subsidiaries and investments to meet our<br>financial obligations;<br> • our ability to retain skilled employees;<br> • our ability to complete, and realize the expected benefits of, strategic transactions;<br> • changes in tax laws and the possibility of changes in other laws and regulation;<br> • the possibility of changes to U.S. trade policies and regulations including the imposition<br>of trade embargoes or sanctions; and<br> • general economic conditions, including the capital and credit markets.<br>Our businesses depend, to a large degree, on the level of spending by oil and gas companies for<br>exploration, development and production activities. Therefore, sustained lower oil or natural gas<br>prices that have a material impact on exploration, development or production activities could also<br>materially affect our financial position, results of operations and cash flows.<br>The above description of risks and uncertainties is by no means all-inclusive, but is designed to<br>highlight what we believe are important factors to consider. For a discussion of these factors and<br>other risks and uncertainties, please refer to our filings with the Securities and Exchange<br>Commission ("SEC"), including those contained in our Annual Reports on Form 10-K and<br>Quarterly Reports on Form 10-Q, which are available at the SEC's website at www.sec.gov.<br>Non-GAAP Financial Measures<br>This presentation refers to certain “non-GAAP” financial measures, such as adjusted EBITDA,<br>net debt and adjusted free cash flow. The components of these non-GAAP measures are<br>computed by using amounts that are determined in accordance with accounting principles<br>generally accepted in the United States of America (“GAAP”). Reconciliations of adjusted<br>EBITDA to net income (loss), net debt to total debt, and adjusted margin to operating income<br>(loss), which are their nearest comparable GAAP financial measures, are provided in the<br>Appendix at the end of this presentation. |
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| NABORS.COM 3<br>3/31/2022 Rig Utilization and Availability<br>RIG FLEET(1)(2) 330<br>RIGS ON<br>REVENUE(1) 162<br>UTILIZATION AT<br>3/31/2022 49%<br>TOTAL U.S. OFFSHORE<br>12<br>3<br>25%<br>16<br>4<br>25%<br>ALASKA INTERNATIONAL<br>133<br>73<br>55%<br>111<br>86<br>77%<br>U.S. LOWER-48<br>HIGH SPEC(2)<br>(1) As of March 31, 2022<br>(2) Excludes non-high spec rigs in the Lower 48<br>(3) Excludes one operating non-high spec rig<br>(3) |
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| NABORS.COM<br>Improving liquidity<br>and leverage<br> • Reduced net debt by<br>$55M in 1Q’22<br> • $131M in warrant<br>exercises in 1Q’22<br> • Executed a new<br>revolving credit<br>facility, expires in<br>2026<br>1Q 2022 adjusted<br>EBITDA of $131M<br>Sequential<br>improvements in U.S.<br>Drilling and NDS<br>Resilience in<br>International Drilling<br>margins<br>Drilling Solutions<br>growth in new<br>products and L48<br>market penetration<br> • 1Q22 adjusted EBITDA<br>of $20M, 2% growth vs<br>4Q’21<br> • Installs up 6%<br>sequentially<br>Compared to 1Q’21<br> • Adjusted EBITDA<br>increased 75%<br> • Adjusted gross margin<br>percentage grew from<br>47% to 49%<br>Activity improving<br>for U.S. Drilling<br> • Average rig count up<br>by almost 10 rigs<br> • L48 high-spec<br>utilization ~ 80%<br>ESG Focus<br> • Environmental ISS<br>score improved from 3<br>in 4Q’2021 to 2 in 1Q<br>2022, placing Nabors<br>in the top 3 among our<br>peers<br>Recent<br>Highlights<br>Note: For adjusted EBITDA, adjusted gross margin<br>and Net Debt see non-GAAP reconciliations in the<br>Appendix<br>Growing combined<br>margin in the L48<br>businesses<br> • L48 Drilling adjusted<br>gross margin per day<br>increased by over<br>$530 to nearly $7,700<br> • L48 Drilling Solutions<br>total adjusted gross<br>margin up 10%<br>(1) Daily adjusted gross margin represents operating<br>revenue less directed costs, divided by the total<br>number of rig revenue days during the quarter.<br>Rig revenue days represents the number of days<br>the Company’s rigs are contracted and<br>performing under a contract during the period.<br>(1) |
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| NABORS.COM<br>Performance<br>excellence in<br>the Lower-48<br>Resilience<br>leading to<br>growth in our<br>International<br>segment<br>Technology &<br>innovation<br>rapidly taking<br>hold in the<br>market<br>Progress on our<br>commitment to<br>de-lever<br>Leading in<br>Sustainability<br>and the Energy<br>Transition<br>Five Keys to Excellence<br>2 3 4 5 1 |
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| NABORS.COM 6<br>Improving<br>revenue and margins<br>on growing rig activity<br>1 Performance Excellence In The Lower-48<br>Scaling up in a Robust Market<br>0<br>10<br>20<br>30<br>40<br>50<br>60<br>70<br>80<br>90<br>4Q 1Q 2Q 3Q 4Q 1Q<br>2020 2021 2022<br>L48 Drilling Average Rig Count<br>$0<br>$20<br>$40<br>$60<br>$80<br>$100<br>$120<br>$140<br>$160<br>$180<br>$200<br>4Q 1Q 2Q 3Q 4Q 1Q<br>2020 2021 2022<br>$ Millions<br>L48 Drilling Revenue and<br>Adjusted Gross Margin<br>Operating Revenue Adjusted Gross Margin |
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| NABORS.COM<br>Performance<br>excellence in the<br>Lower-48<br>Resilience<br>leading to<br>growth in our<br>International<br>segment<br>Technology &<br>innovation<br>rapidly taking<br>hold in the<br>market<br>Progress on our<br>commitment to<br>de-lever<br>Leading in<br>Sustainability<br>and the Energy<br>Transition<br>2 3 4 5 1<br>Five Keys to Excellence |
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| NABORS.COM<br>-80%<br>-60%<br>-40%<br>-20%<br>0%<br>1Q 2Q 3Q 4Q 1Q 2Q 3Q Q4 Q1<br>2020 2021 2022<br>Change in Average Rig Counts(1)<br>NBR International NBR Lower 48 Lower 48 Market<br> $-<br> $5,000<br> $10,000<br> $15,000<br>1Q 2Q 3Q 4Q 1Q 2Q 3Q Q4 Q1<br>2020 2021 2022<br>International Adjusted Gross Margin per day<br>8<br>Results Bolstered by Strong International<br>Margins and Rig Counts<br>Resilience Leading to Growth in Our International Segment<br>(1) NBR Lower 48 represents rigs generating revenue<br>2 |
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| NABORS.COM 9<br>Significant International Opportunity<br>Resilience Leading to Growth in Our International Segment<br> • 50 rigs over the next 10 years, awarded 5<br>rigs to-date<br> • First deployment expected 2Q’22<br> • ~ $150M capital expense expected in<br>2022, internally funded by SANAD<br> • 6-year initial contracts, full payout within<br>5 years, plus 4-year renewal at market<br> • Rigs projected to yield adjusted EBITDA<br>above the segment per capita average<br>Embarking on Newbuild Program<br>* These estimates are based on current market conditions and the projections are<br>based on information received from third parties, which are subject to change.<br>2<br>65<br>70<br>75<br>80<br>85<br>1QA 2QF 3QF 4QF 1Q 2Q 3Q 4Q<br>2022 2023 F<br>International Average Rig Count Potential<br>Estimated* Growth from SANAD Alone |
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| NABORS.COM<br>Performance<br>excellence in the<br>Lower-48<br>Resilience<br>leading to<br>growth in our<br>International<br>segment<br>Technology &<br>innovation<br>rapidly taking<br>hold in the<br>market<br>Progress on our<br>commitment to<br>de-lever<br>Leading in<br>Sustainability<br>and the Energy<br>Transition<br>2 3 4 5 1<br>Five Keys to Excellence |
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| NABORS.COM 11<br>Ground-Breaking and Scalable<br>Technology for the Future<br>Improving Outlook For Our Technology & Innovation<br>PACE®-R801<br>Successfully completed<br>its third pad for a<br>supermajor in the<br>Permian Basin<br>Nabors PACE®-R801: Industry’s First Fully Automated Land Rig<br>1<br>Field performance on<br>par with Nabors high-<br>specification fleet<br>2<br>Fully robotic and controlled<br>by one person; crew<br>undertakes other value-<br>added responsibilities<br>3<br>Fully isolates all<br>personnel from<br>the red zone<br>4<br>Robotics deliver<br>consistent and<br>repeatable<br>performance<br>5<br>Currently deploying<br>automation module on<br>existing rig at a fraction of<br>newbuild cost<br>3 |
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| NABORS.COM<br>20%<br>25%<br>30%<br>35%<br>40%<br>45%<br>50%<br>55%<br> $-<br> $10<br> $20<br> $30<br> $40<br> $50<br> $60<br>Q3 Q4 Q1 Q2 Q3 Q4 Q1<br>2020 2021 2022<br>NDS Revenue & Adjusted Gross Margin<br>Revenue Adjusted Gross Margin<br>% Adjusted Gross Margin<br>12<br>NDS Capitalizing on Growing Rig Count<br>and Higher Penetration<br>Improving Outlook For Our Technology & Innovation<br>Revenue<br>Up 85%<br>Adjusted GM<br>Up 131%<br>Expanding our high-value / high-margin<br>low-capital technology services<br> “Nabors currently realizing what they dreamed the<br>future should look like (digitization, etc.)…the<br>collaborative approach in developing new<br>technologies has truncated traditional timelines<br>that have allowed us to surpass our peers into<br>consistent Top Quartile performance.”<br>Bakken customer<br>December 2021<br>3 |
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| NABORS.COM 13<br>Customer Adoption Fueling Rapid<br>NDS Footprint Expansion<br>Improving Outlook For Our Technology & Innovation<br>0<br>20<br>40<br>60<br>80<br>100<br>120<br>140<br>160<br>180<br>ROCKit REVit SmartDRILL<br>U.S. Performance Software Installs<br>2020 3Q 2020 4Q 2021 1Q 2021 2Q 2021 3Q 2021 4Q 2022 1Q<br>35<br>45<br>52<br>58<br>64<br>71<br>95<br>0<br>10<br>20<br>30<br>40<br>50<br>60<br>70<br>80<br>90<br>100<br>3Q 4Q 1Q 2Q 3Q 4Q 1Q<br>2020 2021 2022<br>U.S. RigCLOUD® Services Installs<br>Nabors 3rd Party<br>NDS technology consistently adds value on both Nabors’ and Third-party rigs<br> ® ™ ®<br>3 |
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| NABORS.COM<br>0<br>200<br>400<br>600<br>800<br>1000<br>1200<br>1400<br>1600<br>1800<br>Q2'17 Q4'17 Q2'18 Q4'18 Q2'19 Q4'19 Q2'20 Q4'20 Q1'21 Q2'21 Q3'21 Q4'21 Q1'22<br>Cumulative Number of Wells Drilled<br>14<br>Smart SuiteTM Growth Trajectory Validates<br>Customer Acceptance<br>Improving Outlook For Our Technology & Innovation<br> • 100% Customer Retention Rate*<br> • 1,500+ Wells Drilled<br> • International Deployment in KSA<br>SmartDRILLTM<br>Automation<br>Commercialization<br>SmartNAVTM & SmartSLIDETM<br>Solutions Commercialization<br>Third-Party<br>SmartDRILLTM<br>Deployment<br>*The number of active users at Q1’22 quarter-end continuing use of the service divided by the total number of active users at the<br>beginning of the quarter<br>3 |
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| NABORS.COM<br>Performance<br>excellence in the<br>Lower-48<br>Resilience<br>leading to<br>growth in our<br>International<br>segment<br>Technology &<br>innovation<br>rapidly taking<br>hold in the<br>market<br>Progress on<br>our<br>commitment<br>to de-lever<br>Leading in<br>Sustainability<br>and the Energy<br>Transition<br>2 3 4 5 1<br>Five Keys to Excellence |
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| NABORS.COM<br> $-<br> $0.5<br> $1.0<br> $1.5<br> $2.0<br> $2.5<br> $3.0<br> $3.5<br> $4.0<br> $4.5<br>1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q<br>2018 2019 2020 2021 2022<br>Billions<br>Net Debt<br>16<br>Significant Headway toward Financial Goals<br>Progress on Our Commitment to Delever 4<br>$1.65B Net Debt reduction from previous high in 1Q 2018<br>$1.65B<br>Note: Net Debt see non-GAAP reconciliations in the Appendix |
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| NABORS.COM<br>84 177<br>745<br>558 700<br>390<br>$0<br>$200<br>$400<br>$600<br>$800<br>$1,000<br>2022 2023 2024 2025 2026 2027 2028<br>Million<br>Notes Outstanding<br>17<br>Debt Maturity Profile as of 3/31/22<br>Progress on Our Commitment to Delever<br>In 1Q 2022:<br> • Reduced the face value of outstanding notes by $208 million<br> • Warrant exercises resulted in $131 million of the $208 million total reduction<br> • Signed new $350 million credit facility due in 2026, undrawn on 3/31/2022<br>(1)<br>4<br>(1) Face value of debt outstanding |
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| NABORS.COM<br>Performance<br>excellence in the<br>Lower-48<br>Resilience<br>leading to<br>growth in our<br>International<br>segment<br>Technology &<br>innovation<br>rapidly taking<br>hold in the<br>market<br>Progress on<br>our<br>commitment<br>to de-lever<br>Leading in<br>Sustainability<br>and the Energy<br>Transition<br>2 3 4 5 1<br>Five Keys to Excellence |
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| NABORS.COM<br>Expanding the<br>implementation of solutions<br>on third-party rigs<br>Energy Efficiency & Emission<br>Reduction Technologies<br>Geothermal Development<br>Leveraging IP to create<br>products applicable beyond<br>the rigs, including carbon<br>capture technologies<br>Expansion Beyond<br>Oil & Gas<br>Further differentiating<br>Nabors rigs<br>Developing verticals on<br>identified hydrogen, fuel<br>efficiency and energy<br>storage applications<br>Providing expertise in<br>drilling and engineering<br>services & solutions<br>Adding to the long-term<br>power solution – creating<br>Geothermal 2.0<br>19<br>Moving Forward on the Energy Transition<br>Leading in the Sustainability and Energy Transition 5 |
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| NABORS.COM 20<br>Leading in the Sustainability and Energy Transition<br> • Advanced control system optimizes the efficiency of fuel<br>consumption<br> • Deploying energy storage systems on multiple rigs<br> • Introducing innovative fuel enhancer to reduce fuel<br>consumption and GHG emissions<br> • Achieved approximately a 10% reduction in carbon emissions<br>intensity in the Lower 48 in 2021<br>Operating rigs with the environment as a stakeholder<br>Investing in carbon capture, emissions<br>monitoring/reduction, energy storage and power<br>management technologies<br>Dedicated to improving the environmental<br>footprint of OFS<br>5<br>Growing Commitment to Operational and<br>Environmental Stewardship<br>PowerTAP™ highline power transformer module |
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| NABORS.COM<br>Geothermal<br>Market<br>Technology<br>Advancements<br>Ubiquitous<br>Ability to create<br>heat reservoirs<br>by drilling into<br>deep, hard rock<br>Technological advancements are<br>enabling wide-scale commercial<br>geothermal development<br>Innovative Drilling Technologies<br>Reducing cost per energy-unit produced by using and<br>combining new technologies<br>Baseload<br>Reliable and<br>available 24/7<br>Renewable<br>The heat is<br>continuously<br>replenished<br>naturally<br>Nabors and its predecessor entities have<br>been continuously innovating in the energy<br>sector for over 100 years<br>21<br>Leading in the Sustainability and Energy<br>Transition<br>5 |
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| NABORS.COM<br>Appendix<br>22 |
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| NABORS.COM 23<br>Reconciliation of Non-GAAP Financial Measures to<br>Net Income (Loss)<br>Adjusted EBITDA represents net income (loss) before income (loss) from discontinued operations, net of tax, income taxes, investment income (loss), interest<br>expense, other, net and depreciation and amortization. Adjusted EBITDA is a non-GAAP financial measure and should not be used in isolation or as a substitute for<br>the amounts reported in accordance with GAAP. In addition, adjusted EBITDA excludes certain cash expenses that the Company is obligated to make. However,<br>management evaluates the performance of its operating segments and the consolidated Company based on several criteria, including adjusted EBITDA and<br>adjusted operating income (loss), because it believes that these financial measures accurately reflect the Company’s ongoing profitability and performance.<br>Securities analysts and investors use this measure as one of the metrics on which they analyze the Company’s performance. Other companies in this industry may<br>compute these measures differently. A reconciliation of this non-GAAP measure to net income (loss), which is the most closely comparable GAAP measure, is<br>provided in the table below.<br>Three Months Ended<br>March 31, December 31, March 31,<br>2021 2021 2022<br>Net income (loss) ($128,310) ($109,263) ($174,668)<br>(Income) loss from discontinued operations, net of tax ($19) ($13) $0<br>Income (loss) from continuing operations, net of tax ($128,329) ($109,276) ($174,668)<br>Income tax expense (benefit) $9,725 $18,393 $13,671<br>Income (loss) from continuing operations before income taxes ($118,604) ($90,883) ($160,997)<br>Investment (income) loss (1,263) (156) (163)<br>Interest Expense 42,975 44,570 46,910<br>Other, net 7,346 10,170 80,401<br>Adjusted Operating Income (loss) (69,546) (36,299) (33,849)<br>Depreciation and Amortization 177,276 167,955 164,359<br>Adjusted EBITDA $107,730 $131,656 $130,510<br>(In Thousands) |
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| NABORS.COM<br>Three Months Ended<br>March 31, December 31, March 31,<br>2021 2021 2022<br>Lower 48 - U.S. - Drilling<br>Adjusted operating income (31,022) $ (25,474) $ (14,596) $<br>Plus: General and administrative costs 4,279 4,610 4,447<br>Plus: Research and engineering 644 1,064 1,638<br>GAAP Gross Margin (26,099) (19,800) (8,511)<br>Plus: Depreciation and amortization 68,921 68,994 66,243<br>Adjusted gross margin 42,822 $ 49,194 $ 57,732 $<br>Other - U.S. - Drilling<br>Adjusted operating income 7,686 $ 12,887 $ 8,745 $<br>Plus: General and administrative costs 525 515 383<br>Plus: Research and engineering 83 105 132<br>GAAP Gross Margin 8,294 13,507 9,260<br>Plus: Depreciation and amortization 13,201 12,842 13,873<br>Adjusted gross margin 21,495 $ 26,349 $ 23,133 $<br>U.S. - Drilling<br>Adjusted operating income (23,336) $ (12,587) $ (5,851) $<br>Plus: General and administrative costs 4,804 5,125 4,830<br>Plus: Research and engineering 727 1,169 1,770<br>GAAP Gross Margin (17,805) (6,293) 749<br>Plus: Depreciation and amortization 82,122 81,836 80,116<br>Adjusted gross margin 64,317 $ 75,543 $ 80,865 $<br>(In Thousands)<br>24<br>Reconciliation of U.S. Drilling Segment Adjusted Gross Margin<br>to U.S. Drilling Segment Adjusted Operating Income<br>Adjusted gross margin by segment represents Adjusted operating income (loss) plus General and administrative costs, Research and engineering costs and<br>Depreciation and amortization. |
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| NABORS.COM 25<br>Reconciliation of Net Debt to Total Debt<br>Net debt is computed by subtracting the sum of cash, cash equivalents and short-term investments from total debt. This non-GAAP measure has limitations and<br>therefore should not be used in isolation or as a substitute for the amounts reported in accordance with GAAP. However, management evaluates the performance<br>of its operating segments and the consolidated Company based on several criteria, including net debt, because it believes that this financial measure accurately<br>measures the Company’s liquidity. In addition, securities analysts and investors use this measure as one of the metrics on which they analyze the company’s<br>performance. Other companies in this industry may compute this measure differently. A reconciliation of net debt to total debt, which is the nearest comparable<br>GAAP financial measure, is provided in the table below.<br>March 31, December 31, March 31,<br>2021 2021 2022<br>Long-Term Debt $2,898,879 $3,262,795 $2,610,092<br>Current Debt - - -<br>Total Debt $2,898,879 $3,262,795 $2,610,092<br>Cash & Short-term Investments $417,561 $991,488 $394,039<br>Net Debt $2,481,318 $2,271,307 $2,216,053<br>(In Thousands) |
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| NABORS.COM 26<br>Reconciliation of Adjusted EBITDA by Segment to<br>Adjusted Operating Income (Loss) by Segment<br>Adjusted EBITDA by segment represents adjusted income (loss) plus depreciation and amortization..<br>(In Thousands) Three Months Ended March 31, 2022<br>U.S.<br>Drilling<br>Canada<br>Drilling<br>International<br>Drilling<br>Drilling<br>Solutions<br>Rig<br>Technologies<br>Other<br>reconciling<br> items<br>Total<br>Adjusted operating income (loss) (5,851) $ (19) $ (6,327) $ 14,709 $ (2,751) $ (33,610) $ (33,849) $<br>Depreciation and amortization 80,116 - 77,575 5,291 1,707 (330) 164,359<br>Adjusted EBITDA 74,265 $ (19) $ 71,248 $ 20,000 $ (1,044) $ (33,940) $ 130,510 $<br>(In Thousands) Three Months Ended March 31, 2021<br>U.S.<br>Drilling<br>Canada<br>Drilling<br>International<br>Drilling<br>Drilling<br>Solutions<br>Rig<br>Technologies<br>Other<br>reconciling<br> items<br>Total<br>Adjusted operating income (loss) (23,336) $ 3,907 $ (18,632) $ 4,710 $ (2,569) $ (33,626) $ (69,546) $<br>Depreciation and amortization 82,122 5,752 81,243 6,748 2,036 (624) 177,276<br>Adjusted EBITDA 58,786 $ 9,659 $ 62,611 $ 11,458 $ (533) $ (34,250) $ 107,730 $<br>(In Thousands) Three Months Ended December 31, 2021<br>U.S.<br>Drilling<br>Canada<br>Drilling<br>International<br>Drilling<br>Drilling<br>Solutions<br>Rig<br>Technologies<br>Other<br>reconciling<br> items<br>Total<br>Adjusted operating income (loss) (12,587) $ 223 $ (5,749) $ 12,930 $ 1,493 $ (32,609) $ (36,299) $<br>Depreciation and amortization 81,836 - 78,917 6,629 2,349 (1,776) 167,955<br>Adjusted EBITDA 69,249 $ 223 $ 73,168 $ 19,559 $ 3,842 $ (34,385) $ 131,656 $ |
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| NABORS INDUSTRIES LTD.<br>NABORS.COM<br>NABORS CORPORATE SERVICES<br>515 W. Greens Road<br>Suite 1200<br>Houston, TX 77067-4525<br>@naborsglobal<br>Contact Us:<br>William C. Conroy, CFA<br>VP - Corporate Development and<br>Investor Relations<br>William.Conroy@nabors.com<br>Kara K. Peak<br>Director - Corporate Development<br>and Investor Relations<br>Kara.Peak@nabors.com |
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