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): February 7, 2023
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 |
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. ¨
Item 2.02 Results of Operations and Financial Condition.
On February 7, 2023, Nabors Industries Ltd. (“Nabors”) issued a press release announcing its results of operations for the three months ended December 31, 2022. A copy of that release is furnished herewith as Exhibit 99.1 and is incorporated herein by reference.
On February 8, 2023, Nabors will hold a conference call at 1:00 p.m. Central Time, regarding the Company’s financial results for the quarter ended December 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><br><br>No. | Description |
|---|---|
| 99.1 | Press Release |
| 99.2 | Investor Information |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
-2-
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: February 7, 2023 | By: | /s/ Mark D. Andrews |
| Name: Mark D. Andrews | ||
| Title: Corporate Secretary |
-3-
Exhibit 99.1
| NEWS<br> RELEASE |
|---|
NaborsAnnounces Fourth Quarter 2022 Results
HAMILTON, Bermuda, February 7, 2023 /PRNewswire/ -- Nabors Industries Ltd. (“Nabors” or the “Company”) (NYSE: NBR) today reported fourth quarter 2022 operating revenues of $760 million, an increase of approximately 10%, compared to operating revenues of $694 million in the third quarter of 2022. The net loss attributable to Nabors shareholders for the quarter was $69 million, or $7.87 per share. This compares to a loss of $14 million, or $1.80 per share, in the third quarter. The fourth quarter results included a non-cash charge of $36 million, or $3.98 per share, related to mark-to-market treatment of Nabors’ warrants. The third quarter results included a non-cash gain for the warrants of $34 million, or $3.74 per share. Excluding the impact of the Nabors warrants on each quarter’s results, the net loss improved sequentially by $15 million. Fourth quarter adjusted EBITDA was $230 million, a 21% increase compared to $191 million in the previous quarter.
Anthony G. Petrello, Nabors Chairman, CEO and President, commented, “Our fourth quarter performance and financial results were impressive. Once again, all segments contributed to strong sequential growth. Total adjusted EBITDA was the highest quarterly level since 2015. The U.S. Drilling segment drove most of our growth, highlighted by unprecedented daily margins in the Lower 48 market. Daily margin and adjusted EBITDA also improved in our International segment. In Drilling Solutions, growth accelerated with the annual adjusted EBITDA run rate surpassing $120 million, as gross margin set another record at nearly 53%. Rig Technologies had its best quarter in seven years.
“In the Lower 48, we successfully repriced the majority of our rigs during the quarter. As a result, daily rig revenue increased by more than $3,500. Almost all of that increase flowed through to daily gross margin, which improved by nearly $3,500, to $14,600, an all-time high. Notwithstanding this growth, leading edge daily revenue in this market remains substantially higher than our fourth quarter average.
“In our International segment, SANAD deployed its second newbuild rig, of the initial five awards, late in the quarter. The remaining three units are expected to commence operations by the third quarter. In addition, SANAD has been awarded five more newbuild rigs, bringing the total awarded to date to 10. Deployment of this second tranche of five is expected to begin around the end of 2023 at the earliest. We also reactivated an existing rig in Saudi Arabia, and in Papua New Guinea our advanced rig contributed a full quarter at its operating rate.
“Revenue in our Drilling Solutions segment accelerated in the fourth quarter. Adjusted EBITDA increased by 18% sequentially, driven by growth across most product lines. NDS revenue on our U.S. rigs, third-party U.S. rigs, and International rigs all saw double-digit growth in the quarter.
“In our Rig Technologies segment, all product lines contributed to the increase in segment EBITDA. The most significant increases were in aftermarket parts, and rentals.
“Demonstrating our commitment and progress supporting the energy transition, Nabors was awarded the Energy Transition Award – Upstream at the 24^th^ Annual Platts Global Energy Awards in December. Our strategy has taken shape since we announced it a year ago. We have deployed multiple energy transition solutions on our rigs, as well as on third party units. Also, we are developing advanced technologies focused on responsible hydrocarbon production, hydrogen, and carbon.”
1
| NEWS<br> RELEASE |
|---|
Segment Results
The U.S. Drilling segment reported $144.1 million in adjusted EBITDA for the fourth quarter of 2022, a 26% increase from the prior quarter. Nabors’ average Lower 48 rig count, at 95, increased by three rigs. Daily adjusted gross margin in the Lower 48 market averaged $14,600, 31% higher than the prior quarter.
International Drilling adjusted EBITDA totaled $88.8 million, a 3% increase from the prior quarter. Improved performance across Latin America and in Saudi Arabia drove the growth. The International rig count averaged 75.7, up one rig sequentially. Daily adjusted gross margin for the fourth quarter averaged $14,902, up $313 from the prior quarter.
Drilling Solutions adjusted EBITDA increased sequentially by 18% to $30.3 million. Growth was strong across most product and service categories, notably Managed Pressure Drilling, Casing Running, and Performance Tools.
In Rig Technologies, adjusted EBITDA increased by 57% to $7.6 million in the fourth quarter. Revenue increased by 24% sequentially, to $62.8 million, mainly due to higher aftermarket sales, reflecting increased rig and equipment utilization across the industry.
Adjusted Free Cash Flow
Adjusted free cash flow totaled $101 million in the fourth quarter, primarily driven by higher financial results across all segments, strong collections, and disciplined capital spending. For the full year, adjusted free cash flow was $154 million. Capital expenditures for the fourth quarter totaled $103 million, including $16 million supporting the SANAD newbuilds. Full-year capital expenditures totaled $382 million, of which $91 million was for SANAD newbuilds.
At the end of the fourth quarter, net debt was $2.085 billion, a $75 million reduction compared to the third quarter.
William Restrepo, Nabors CFO, stated, “We benefitted from strong financial performance in the fourth quarter across all of our segments. U.S. Drilling delivered continued increases in pricing, as well as higher rig count. At the same time our International business continued its steady upward progression with more growth expected over the coming quarters, as activity across the globe expands from its current levels and dayrates have started to increase. Our low-capital-intensity businesses grew briskly during the quarter with both Drilling Solutions and Rig Technologies exceeding their quarterly targets.
“In the Lower 48, dayrate increases were significant as we repriced nearly two-thirds of the fleet. Our revenue per day average for the fleet reached $32,000. There’s still plenty of room to run as we reprice our fleet to the current leading edge dayrates.
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| NEWS<br> RELEASE |
|---|
“We intend to capitalize on this environment to further improve our capital structure and reduce leverage. We are already seeing the impact our cash flow generation and debt reduction has had on the cost of our debt, with interest rate spreads compressing significantly over the last quarter. For 2023, we estimate we will generate adjusted free cash flow exceeding $400 million. We intend to allocate our cash flow primarily to debt reduction and we expect to close the year with net debt of approximately $1.7 billion.”
Outlook
Nabors expects the following metrics for the first quarter 2023:
U.S. Drilling
| o | An<br> increase in average Lower 48 rig count of one rig vs. the fourth quarter average |
|---|---|
| o | Lower<br> 48 adjusted gross margin per day of approximately $16,100 - $16,300 |
| --- | --- |
| o | A<br> $2 to $3 million decrease in adjusted EBITDA for Alaska and U.S. Offshore combined, mainly<br> due to two Alaska rigs going on standby rate |
| --- | --- |
International
| o | Rig<br> count up approximately one to two rigs vs. the fourth quarter average |
|---|---|
| o | Adjusted<br> gross margin per day approximately in line with the fourth quarter |
| --- | --- |
Drilling Solutions
| o | Adjusted<br> EBITDA up by approximately 6% above the fourth quarter level |
|---|
Rig Technologies
| o | Adjusted<br> EBITDA approximately in line with the fourth quarter |
|---|
Capital Expenditures
| o | Capital<br> expenditures of $150 million, of which approximately $45 million supports SANAD newbuilds |
|---|---|
| o | Capital<br> expenditures for the full year 2023 of $490 million, including $180 million for<br> SANAD and an incremental $20 million for sustaining capex on the higher rig count |
| --- | --- |
Adjusted Free Cash Flow
| o | Adjusted<br> free cash flow for the full year 2023 to exceed $400 million |
|---|
Mr. Petrello concluded, “Our fourth quarter results capped a year of significant achievement. We reached noteworthy milestones across the company. Looking into 2023, the momentum from higher dayrates, newbuild deployments in Saudi Arabia, greater penetration of our advanced performance solutions, the start of expanding activity in international markets, and broader recognition of our decarbonization initiatives sets us up for a strong 2023.”
3
| NEWS<br> RELEASE |
|---|
About Nabors Industries
Nabors Industries (NYSE: NBR) is a leading provider of advanced technology for the energy industry. With presence in more than 20 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, investment income (loss), 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 capital expenditures, net of proceeds from sales of assets. 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. Management believes that this non-GAAP measure is useful information to investors when comparing our cash flows with the cash flows of other companies.
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| NEWS<br> RELEASE |
|---|
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 net cash provided by operations, which are their nearest comparable GAAP financial measures, are included in the tables at the end of this press release. We do not provide a forward-looking reconciliation of our outlook for Segment Adjusted EBITDA, Segment Gross Margin or Adjusted Free Cash Flow, as the amount and significance of items required to develop meaningful comparable GAAP financial measures cannot be estimated at this time without unreasonable efforts. These special items could be meaningful.
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
5
NABORSINDUSTRIES LTD. AND SUBSIDIARIES
CONDENSEDCONSOLIDATED STATEMENTS OF INCOME (LOSS)
(Unaudited)
| Three<br> Months Ended | Year<br> Ended | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| December 31, | September 30, | December 31, | |||||||||||||
| (In thousands,<br> except per share amounts) | 2022 | 2021 | 2022 | 2022 | 2021 | ||||||||||
| Revenues<br> and other income: | |||||||||||||||
| Operating<br> revenues | $ | 760,148 | $ | 543,539 | $ | 694,136 | $ | 2,653,766 | $ | 2,017,548 | |||||
| Investment<br> income (loss) | 9,194 | 156 | 4,813 | 14,992 | 1,557 | ||||||||||
| Total<br> revenues and other income | 769,342 | 543,695 | 698,949 | 2,668,758 | 2,019,105 | ||||||||||
| Costs and<br> other deductions: | |||||||||||||||
| Direct<br> costs | 457,184 | 347,238 | 432,311 | 1,666,004 | 1,286,896 | ||||||||||
| General<br> and administrative expenses | 59,031 | 54,422 | 57,594 | 228,431 | 213,559 | ||||||||||
| Research<br> and engineering | 13,911 | 10,223 | 13,409 | 49,939 | 35,153 | ||||||||||
| Depreciation<br> and amortization | 168,841 | 167,955 | 169,857 | 665,072 | 693,381 | ||||||||||
| Interest<br> expense | 44,245 | 44,570 | 43,841 | 177,895 | 171,476 | ||||||||||
| Other,<br> net | 58,124 | 10,170 | (25,954 | ) | 127,099 | 106,729 | |||||||||
| Total<br> costs and other deductions | 801,336 | 634,578 | 691,058 | 2,914,440 | 2,507,194 | ||||||||||
| Income (loss)<br> from continuing operations before income taxes | (31,994 | ) | (90,883 | ) | 7,891 | (245,682 | ) | (488,089 | ) | ||||||
| Income<br> tax expense (benefit) | 26,161 | 18,393 | 12,352 | 61,537 | 55,621 | ||||||||||
| Income (loss)<br> from continuing operations, net of tax | (58,155 | ) | (109,276 | ) | (4,461 | ) | (307,219 | ) | (543,710 | ) | |||||
| Income<br> (loss) from discontinued operations, net of tax | - | 13 | - | - | 20 | ||||||||||
| Net income<br> (loss) | (58,155 | ) | (109,263 | ) | (4,461 | ) | (307,219 | ) | (543,690 | ) | |||||
| Less:<br> Net (income) loss attributable to noncontrolling interest | (10,911 | ) | (4,414 | ) | (9,322 | ) | (43,043 | ) | (25,582 | ) | |||||
| Net<br> income (loss) attributable to Nabors | (69,066 | ) | (113,677 | ) | (13,783 | ) | (350,262 | ) | (569,272 | ) | |||||
| Less:<br> Preferred stock dividend | - | - | - | - | (3,653 | ) | |||||||||
| Net<br> income (loss) attributable to Nabors common shareholders | $ | (69,066 | ) | $ | (113,677 | ) | $ | (13,783 | ) | $ | (350,262 | ) | $ | (572,925 | ) |
| Amounts attributable<br> to Nabors common shareholders: | |||||||||||||||
| Net income<br> (loss) from continuing operations | $ | (69,066 | ) | $ | (113,690 | ) | $ | (13,783 | ) | $ | (350,262 | ) | $ | (572,945 | ) |
| Net<br> income (loss) from discontinued operations | - | 13 | - | - | 20 | ||||||||||
| Net<br> income (loss) attributable to Nabors common shareholders | $ | (69,066 | ) | $ | (113,677 | ) | $ | (13,783 | ) | $ | (350,262 | ) | $ | (572,925 | ) |
| Earnings (losses) per share: | |||||||||||||||
| Basic<br> from continuing operations | $ | (7.87 | ) | $ | (14.60 | ) | $ | (1.80 | ) | $ | (40.52 | ) | $ | (76.58 | ) |
| Basic<br> from discontinued operations | - | - | - | - | - | ||||||||||
| Total Basic | $ | (7.87 | ) | $ | (14.60 | ) | $ | (1.80 | ) | $ | (40.52 | ) | $ | (76.58 | ) |
| Diluted<br> from continuing operations | $ | (7.87 | ) | $ | (14.60 | ) | $ | (1.80 | ) | $ | (40.52 | ) | $ | (76.58 | ) |
| Diluted<br> from discontinued operations | - | - | - | - | - | ||||||||||
| Total Diluted | $ | (7.87 | ) | $ | (14.60 | ) | $ | (1.80 | ) | $ | (40.52 | ) | $ | (76.58 | ) |
| Weighted-average<br> number of common shares outstanding: | |||||||||||||||
| Basic | 9,101 | 7,950 | 9,099 | 8,898 | 7,605 | ||||||||||
| Diluted | 9,101 | 7,950 | 9,099 | 8,898 | 7,605 | ||||||||||
| Adjusted<br> EBITDA | $ | 230,022 | $ | 131,656 | $ | 190,822 | $ | 709,392 | $ | 481,940 | |||||
| Adjusted<br> operating income (loss) | $ | 61,181 | $ | (36,299 | ) | $ | 20,965 | $ | 44,320 | $ | (211,441 | ) |
1-1
NABORSINDUSTRIES LTD. AND SUBSIDIARIES
CONDENSEDCONSOLIDATED BALANCE SHEETS
| December 31, | September 30, | December 31, | ||||
|---|---|---|---|---|---|---|
| (In thousands) | 2022 | 2022 | 2021 | |||
| (Unaudited) | ||||||
| ASSETS | ||||||
| Current assets: | ||||||
| Cash<br> and short-term investments | $ | 452,315 | $ | 425,070 | $ | 991,488 |
| Accounts<br> receivable, net | 327,397 | 302,963 | 287,572 | |||
| Other<br> current assets | 220,911 | 237,873 | 222,749 | |||
| Total<br> current assets | 1,000,623 | 965,906 | 1,501,809 | |||
| Property,<br> plant and equipment, net | 3,026,100 | 3,100,293 | 3,348,498 | |||
| Other<br> long-term assets | 703,131 | 702,356 | 675,057 | |||
| Total<br> assets | $ | 4,729,854 | $ | 4,768,555 | $ | 5,525,364 |
| LIABILITIES<br> AND EQUITY | ||||||
| Current liabilities: | ||||||
| Trade accounts<br> payable | $ | 314,041 | $ | 290,167 | $ | 253,748 |
| Other<br> current liabilities | 282,349 | 268,999 | 271,480 | |||
| Total<br> current liabilities | 596,390 | 559,166 | 525,228 | |||
| Long-term<br> debt | 2,537,540 | 2,585,517 | 3,262,795 | |||
| Other<br> long-term liabilities | 380,529 | 344,702 | 343,120 | |||
| Total<br> liabilities | 3,514,459 | 3,489,385 | 4,131,143 | |||
| Redeemable<br> noncontrolling interest in subsidiary | 678,604 | 683,005 | 675,283 | |||
| Equity: | ||||||
| Shareholders'<br> equity | 368,956 | 439,241 | 590,656 | |||
| Noncontrolling<br> interest | 167,835 | 156,924 | 128,282 | |||
| Total<br> equity | 536,791 | 596,165 | 718,938 | |||
| Total<br> liabilities and equity | $ | 4,729,854 | $ | 4,768,555 | $ | 5,525,364 |
1-2
NABORSINDUSTRIES LTD. AND SUBSIDIARIES
SEGMENTREPORTING
(Unaudited)
The following tables set forth certain information with respect to our reportable segments and rig activity:
| Three<br> Months Ended | Year<br> Ended | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| December<br> 31, | September<br> 30, | December<br> 31, | |||||||||||||
| (In<br> thousands, except rig activity) | 2022 | 2021 | 2022 | 2022 | 2021 | ||||||||||
| Operating revenues: | |||||||||||||||
| U.S. Drilling | $ | 332,845 | $ | 192,310 | $ | 297,178 | $ | 1,100,614 | $ | 669,656 | |||||
| Canada Drilling | - | - | - | - | 39,336 | ||||||||||
| International Drilling | 317,577 | 271,069 | 306,355 | 1,199,282 | 1,043,197 | ||||||||||
| Drilling Solutions | 71,307 | 51,776 | 61,981 | 243,349 | 172,473 | ||||||||||
| Rig Technologies (1) | 62,803 | 46,920 | 50,496 | 195,129 | 149,273 | ||||||||||
| Other reconciling<br> items (2) | (24,384 | ) | (18,536 | ) | (21,874 | ) | (84,608 | ) | (56,387 | ) | |||||
| Total operating<br> revenues | $ | 760,148 | $ | 543,539 | $ | 694,136 | $ | 2,653,766 | $ | 2,017,548 | |||||
| Adjusted EBITDA: (3) | |||||||||||||||
| U.S. Drilling | $ | 144,142 | $ | 69,249 | $ | 114,486 | $ | 420,264 | $ | 249,951 | |||||
| Canada Drilling | 56 | 223 | (9 | ) | 13 | 14,497 | |||||||||
| International Drilling | 88,838 | 73,168 | 85,922 | 328,454 | 283,312 | ||||||||||
| Drilling Solutions | 30,336 | 19,559 | 25,612 | 98,699 | 59,433 | ||||||||||
| Rig Technologies (1) | 7,561 | 3,842 | 4,818 | 14,699 | 8,349 | ||||||||||
| Other reconciling<br> items (4) | (40,911 | ) | (34,385 | ) | (40,007 | ) | (152,737 | ) | (133,601 | ) | |||||
| Total adjusted<br> EBITDA | $ | 230,022 | $ | 131,656 | $ | 190,822 | $ | 709,392 | $ | 481,940 | |||||
| Adjusted operating income (loss):<br> (5) | |||||||||||||||
| U.S. Drilling | $ | 68,293 | $ | (12,587 | ) | $ | 37,776 | $ | 108,506 | $ | (76,492 | ) | |||
| Canada Drilling | 56 | 223 | (9 | ) | 13 | 2,893 | |||||||||
| International Drilling | 1,750 | (5,749 | ) | (907 | ) | (879 | ) | (40,117 | ) | ||||||
| Drilling Solutions | 24,800 | 12,930 | 20,099 | 77,868 | 32,771 | ||||||||||
| Rig Technologies (1) | 6,118 | 1,493 | 3,412 | 8,906 | 158 | ||||||||||
| Other reconciling<br> items (4) | (39,836 | ) | (32,609 | ) | (39,406 | ) | (150,094 | ) | (130,654 | ) | |||||
| Total adjusted<br> operating income (loss) | $ | 61,181 | $ | (36,299 | ) | $ | 20,965 | $ | 44,320 | $ | (211,441 | ) | |||
| Rig activity: | |||||||||||||||
| Average Rigs Working: (7) | |||||||||||||||
| Lower 48 | 95.1 | 74.7 | 92.1 | 90.0 | 65.6 | ||||||||||
| Other<br> US | 7.0 | 6.0 | 7.7 | 7.2 | 5.3 | ||||||||||
| U.S. Drilling | 102.1 | 80.7 | 99.8 | 97.2 | 70.9 | ||||||||||
| Canada Drilling | - | - | - | - | 6.5 | ||||||||||
| International<br> Drilling | 75.7 | 71.4 | 74.6 | 74.2 | 67.9 | ||||||||||
| Total average rigs working | 177.8 | 152.1 | 174.4 | 171.4 | 145.3 | ||||||||||
| Daily Rig Revenue: (6),(8) | |||||||||||||||
| Lower 48 | $ | 32,719 | $ | 21,739 | $ | 29,190 | $ | 27,826 | $ | 21,436 | |||||
| Other<br> US | 72,497 | 77,833 | 70,661 | 71,333 | 81,641 | ||||||||||
| U.S. Drilling (10) | 35,447 | 25,911 | 32,380 | 31,037 | 25,909 | ||||||||||
| Canada Drilling | - | - | - | - | 16,693 | ||||||||||
| International Drilling | 45,616 | 41,239 | 44,658 | 44,311 | 42,100 | ||||||||||
| Daily Adjusted Gross Margin: (6),(9) | |||||||||||||||
| Lower 48 | $ | 14,599 | $ | 7,161 | $ | 11,165 | $ | 10,678 | $ | 7,367 | |||||
| Other<br> US | 36,592 | 47,734 | 38,034 | 37,062 | 50,953 | ||||||||||
| U.S. Drilling (10) | 16,107 | 10,179 | 13,232 | 12,625 | 10,605 | ||||||||||
| Canada Drilling | - | - | - | - | 6,927 | ||||||||||
| International Drilling | 14,902 | 13,172 | 14,589 | 14,257 | 13,474 |
1-3
| (1) | Includes<br> our oilfield equipment manufacturing activities. |
|---|---|
| (2) | Represents<br> the elimination of inter-segment transactions related to our Rig Technologies operating segment. |
| --- | --- |
| (3) | Adjusted<br> EBITDA represents net income (loss) before income (loss) from discontinued operations, net<br> of tax, income tax expense (benefit), investment income (loss), interest expense, other,<br> net and depreciation and amortization. Adjusted EBITDA is a non-GAAP financial measure and<br> should not be used in isolation or as a substitute for the amounts reported in accordance<br> with GAAP. In addition, adjusted EBITDA excludes certain cash expenses that the Company is<br> obligated to make. However, management evaluates the performance of its operating segments<br> and the consolidated Company based on several criteria, including adjusted EBITDA and adjusted<br> operating income (loss), because it believes that these financial measures accurately reflect<br> the Company’s ongoing profitability and performance. Securities analysts<br> 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 these measures differently. A<br> 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<br> of Non-GAAP Financial Measures to Net Income (Loss)". |
| --- | --- |
| (4) | Represents<br> the elimination of inter-segment transactions and unallocated corporate expenses. |
| --- | --- |
| (5) | Adjusted<br> operating income (loss) represents net income (loss) before income (losses) from discontinued<br> operations, net of tax, income tax expense (benefit), investment income (loss), interest<br> expense and other, net. Adjusted operating income (loss) is a non-GAAP financial<br> measure and should not be used in isolation or as a substitute for the amounts reported in<br> accordance with GAAP. In addition, adjusted operating income (loss) excludes certain cash<br> expenses that the Company is obligated to make. However, management evaluates the performance<br> of its operating segments and the consolidated Company based on several criteria, including<br> 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<br> 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 these measures differently. A<br> 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<br> of Non-GAAP Financial Measures to Net Income (Loss)". |
| --- | --- |
| (6) | Rig<br> revenue days represents the number of days the Company's rigs are contracted and performing<br> under a contract during the period. These would typically include days in which<br> operating, standby and move revenue is earned. |
| --- | --- |
| (7) | Average<br> rigs working represents a measure of the average number of rigs operating during a given<br> 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<br> 182.5 days represents approximately 0.5 average rigs working for the year. Average<br> rigs working can also be calculated as rig revenue days during the period divided by the<br> number of calendar days in the period. |
| --- | --- |
| (8) | Daily<br> rig revenue represents operating revenue, divided by the total number of revenue days during<br> the quarter. |
| --- | --- |
| (9) | Daily<br> adjusted gross margin represents operating revenue less direct costs, divided by the total<br> number of rig revenue days during the quarter. |
| --- | --- |
| (10) | The<br> U.S. Drilling segment includes the Lower 48, Alaska, and Gulf of Mexico operating areas. |
| --- | --- |
1-4
NABORSINDUSTRIES LTD. AND SUBSIDIARIES
NON-GAAPFINANCIAL MEASURES
RECONCILIATION OF ADJUSTED EBITDA BY SEGMENT TO ADJUSTED OPERATING INCOME(LOSS) BY SEGMENT
(Unaudited)
(Inthousands)
| Three<br> Months Ended December 31, 2022 | ||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| U.S.<br> <br> Drilling | Canada<br><br> Drilling | International<br><br> Drilling | Drilling<br><br> Solutions | Rig<br> <br> Technologies | Other<br><br> reconciling<br> items | Total | ||||||||||||
| Adjusted operating<br> income (loss) | $ | 68,293 | $ | 56 | $ | 1,750 | $ | 24,800 | $ | 6,118 | $ | (39,836 | ) | $ | 61,181 | |||
| Depreciation<br> and amortization | 75,849 | - | 87,088 | 5,536 | 1,443 | (1,075 | ) | 168,841 | ||||||||||
| Adjusted<br> EBITDA | $ | 144,142 | $ | 56 | $ | 88,838 | $ | 30,336 | $ | 7,561 | $ | (40,911 | ) | $ | 230,022 | |||
| Three<br> Months Ended December 31, 2021 | ||||||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| U.S.<br> <br> Drilling | Canada<br><br> Drilling | International<br><br> Drilling | Drilling<br><br> Solutions | Rig<br> <br> Technologies | Other<br><br> reconciling<br> items | Total | ||||||||||||
| Adjusted operating<br> income (loss) | $ | (12,587 | ) | $ | 223 | $ | (5,749 | ) | $ | 12,930 | $ | 1,493 | $ | (32,609 | ) | $ | (36,299 | ) |
| Depreciation<br> and amortization | 81,836 | - | 78,917 | 6,629 | 2,349 | (1,776 | ) | 167,955 | ||||||||||
| Adjusted<br> EBITDA | $ | 69,249 | $ | 223 | $ | 73,168 | $ | 19,559 | $ | 3,842 | $ | (34,385 | ) | $ | 131,656 | |||
| Three<br> Months Ended September 30, 2022 | ||||||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | |
| U.S.<br> <br> Drilling | Canada<br><br> Drilling | International<br><br> Drilling | Drilling<br><br> Solutions | Rig<br> <br> Technologies | Other<br><br> reconciling<br> items | Total | ||||||||||||
| Adjusted operating<br> income (loss) | $ | 37,776 | $ | (9 | ) | $ | (907 | ) | $ | 20,099 | $ | 3,412 | $ | (39,406 | ) | $ | 20,965 | |
| Depreciation<br> and amortization | 76,710 | - | 86,829 | 5,513 | 1,406 | (601 | ) | 169,857 | ||||||||||
| Adjusted<br> EBITDA | $ | 114,486 | $ | (9 | ) | $ | 85,922 | $ | 25,612 | $ | 4,818 | $ | (40,007 | ) | $ | 190,822 | ||
| Year<br> Ended December 31, 2022 | ||||||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | ||
| U.S.<br> <br> Drilling | Canada<br><br> Drilling | International<br><br> Drilling | Drilling<br><br> Solutions | Rig<br> <br> Technologies | Other<br><br> reconciling<br> items | Total | ||||||||||||
| Adjusted operating<br> income (loss) | $ | 108,506 | $ | 13 | $ | (879 | ) | $ | 77,868 | $ | 8,906 | $ | (150,094 | ) | $ | 44,320 | ||
| Depreciation<br> and amortization | 311,758 | - | 329,333 | 20,831 | 5,793 | (2,643 | ) | 665,072 | ||||||||||
| Adjusted<br> EBITDA | $ | 420,264 | $ | 13 | $ | 328,454 | $ | 98,699 | $ | 14,699 | $ | (152,737 | ) | $ | 709,392 | |||
| Year<br> Ended December 31, 2021 | ||||||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| U.S.<br> <br> Drilling | Canada<br><br> Drilling | International<br><br> Drilling | Drilling<br><br> Solutions | Rig<br> <br> Technologies | Other<br><br> reconciling<br> items | Total | ||||||||||||
| Adjusted operating<br> income (loss) | $ | (76,492 | ) | $ | 2,893 | $ | (40,117 | ) | $ | 32,771 | $ | 158 | $ | (130,654 | ) | $ | (211,441 | ) |
| Depreciation<br> and amortization | 326,443 | 11,604 | 323,429 | 26,662 | 8,191 | (2,947 | ) | 693,381 | ||||||||||
| Adjusted<br> EBITDA | $ | 249,951 | $ | 14,497 | $ | 283,312 | $ | 59,433 | $ | 8,349 | $ | (133,601 | ) | $ | 481,940 |
Adjusted EBITDA by segment represents adjusted income (loss) plus depreciation and amortization.
1-5
NABORSINDUSTRIES LTD. AND SUBSIDIARIES
NON-GAAPFINANCIAL MEASURES
RECONCILIATIONOF ADJUSTED GROSS MARGIN BY SEGMENT TO ADJUSTED OPERATING INCOME (LOSS) BY SEGMENT
(Unaudited)
| Three<br> Months Ended | Year<br> Ended | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| December 31, | September 30, | December 31, | |||||||||||||
| (In thousands) | 2022 | 2021 | 2022 | 2022 | 2021 | ||||||||||
| Lower 48 - U.S. Drilling | |||||||||||||||
| Adjusted<br> operating income (loss) | $ | 58,299 | $ | (25,474 | ) | $ | 25,551 | $ | 68,317 | $ | (119,000 | ) | |||
| Plus:<br> General and administrative costs | 4,977 | 4,609 | 4,798 | 18,960 | 17,890 | ||||||||||
| Plus:<br> Research and engineering | 1,637 | 1,065 | 1,652 | 6,539 | 3,736 | ||||||||||
| GAAP<br> Gross Margin | 64,913 | (19,800 | ) | 32,001 | 93,816 | (97,374 | ) | ||||||||
| Plus:<br> Depreciation and amortization | 62,768 | 68,994 | 62,583 | 256,907 | 273,638 | ||||||||||
| Adjusted<br> gross margin | $ | 127,681 | $ | 49,194 | $ | 94,584 | $ | 350,723 | $ | 176,264 | |||||
| Other - U.S. Drilling | |||||||||||||||
| Adjusted<br> operating income (loss) | $ | 9,994 | $ | 12,887 | $ | 12,225 | $ | 40,189 | $ | 42,508 | |||||
| Plus:<br> General and administrative costs | 324 | 513 | 343 | 1,357 | 2,122 | ||||||||||
| Plus:<br> Research and engineering | 166 | 105 | 157 | 594 | 408 | ||||||||||
| GAAP<br> Gross Margin | 10,484 | 13,505 | 12,725 | 42,140 | 45,038 | ||||||||||
| Plus:<br> Depreciation and amortization | 13,081 | 12,844 | 14,127 | 54,852 | 52,805 | ||||||||||
| Adjusted<br> gross margin | $ | 23,565 | $ | 26,349 | $ | 26,852 | $ | 96,992 | $ | 97,843 | |||||
| U.S. Drilling | |||||||||||||||
| Adjusted<br> operating income (loss) | $ | 68,293 | $ | (12,587 | ) | $ | 37,776 | $ | 108,506 | $ | (76,492 | ) | |||
| Plus:<br> General and administrative costs | 5,301 | 5,122 | 5,141 | 20,317 | 20,012 | ||||||||||
| Plus:<br> Research and engineering | 1,803 | 1,170 | 1,809 | 7,133 | 4,144 | ||||||||||
| GAAP<br> Gross Margin | 75,397 | (6,295 | ) | 44,726 | 135,956 | (52,336 | ) | ||||||||
| Plus:<br> Depreciation and amortization | 75,849 | 81,838 | 76,710 | 311,759 | 326,443 | ||||||||||
| Adjusted<br> gross margin | $ | 151,246 | $ | 75,543 | $ | 121,436 | $ | 447,715 | $ | 274,107 | |||||
| Canada Drilling | |||||||||||||||
| Adjusted<br> operating income (loss) | $ | 56 | $ | 223 | $ | (9 | ) | $ | 13 | $ | 2,893 | ||||
| Plus:<br> General and administrative costs | (17 | ) | 175 | 9 | 24 | 1,711 | |||||||||
| Plus:<br> Research and engineering | - | - | - | - | 115 | ||||||||||
| GAAP<br> Gross Margin | 39 | 398 | - | 37 | 4,719 | ||||||||||
| Plus:<br> Depreciation and amortization | (1 | ) | (1 | ) | - | 2 | 11,604 | ||||||||
| Adjusted<br> gross margin | $ | 38 | $ | 397 | $ | - | $ | 39 | $ | 16,323 | |||||
| International Drilling | |||||||||||||||
| Adjusted<br> operating income (loss) | $ | 1,750 | $ | (5,749 | ) | $ | (907 | ) | $ | (879 | ) | $ | (40,117 | ) | |
| Plus:<br> General and administrative costs | 13,368 | 12,058 | 12,599 | 51,505 | 44,993 | ||||||||||
| Plus:<br> Research and engineering | 1,542 | 1,357 | 1,558 | 5,903 | 5,560 | ||||||||||
| GAAP<br> Gross Margin | 16,660 | 7,666 | 13,250 | 56,529 | 10,436 | ||||||||||
| Plus:<br> Depreciation and amortization | 87,089 | 78,918 | 86,830 | 329,335 | 323,431 | ||||||||||
| Adjusted<br> gross margin | $ | 103,749 | $ | 86,584 | $ | 100,080 | $ | 385,864 | $ | 333,867 |
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
NABORSINDUSTRIES LTD. AND SUBSIDIARIES
RECONCILIATIONOF NON-GAAP FINANCIAL MEASURES TO NET INCOME (LOSS)
(Unaudited)
| Three<br> Months Ended | Year<br> Ended | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| December 31, | September 30, | December 31, | |||||||||||||
| (In thousands) | 2022 | 2021 | 2022 | 2022 | 2021 | ||||||||||
| Net<br> income (loss) | $ | (58,155 | ) | $ | (109,263 | ) | $ | (4,461 | ) | $ | (307,219 | ) | $ | (543,690 | ) |
| (Income)<br> loss from discontinued operations, net of tax | - | (13 | ) | - | - | (20 | ) | ||||||||
| Income (loss)<br> from continuing operations, net of tax | (58,155 | ) | (109,276 | ) | (4,461 | ) | (307,219 | ) | (543,710 | ) | |||||
| Income<br> tax expense (benefit) | 26,161 | 18,393 | 12,352 | 61,537 | 55,621 | ||||||||||
| Income (loss)<br> from continuing operations before income taxes | (31,994 | ) | (90,883 | ) | 7,891 | (245,682 | ) | (488,089 | ) | ||||||
| Investment<br> (income) loss | (9,194 | ) | (156 | ) | (4,813 | ) | (14,992 | ) | (1,557 | ) | |||||
| Interest<br> expense | 44,245 | 44,570 | 43,841 | 177,895 | 171,476 | ||||||||||
| Other,<br> net | 58,124 | 10,170 | (25,954 | ) | 127,099 | 106,729 | |||||||||
| Adjusted<br> operating income (loss) (1) | 61,181 | (36,299 | ) | 20,965 | 44,320 | (211,441 | ) | ||||||||
| Depreciation<br> and amortization | 168,841 | 167,955 | 169,857 | 665,072 | 693,381 | ||||||||||
| Adjusted<br> EBITDA (2) | $ | 230,022 | $ | 131,656 | $ | 190,822 | $ | 709,392 | $ | 481,940 |
(1) Adjusted operating income (loss) represents net income (loss) before income (losses) from discontinued operations, net of tax, income tax expense (benefit), 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 tax expense (benefit), 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
NABORSINDUSTRIES LTD. AND SUBSIDIARIES
RECONCILIATIONOF NET DEBT TO TOTAL DEBT
| December 31, | September 30, | December 31, | ||||
|---|---|---|---|---|---|---|
| (In thousands) | 2022 | 2022 | 2021 | |||
| (Unaudited) | ||||||
| Long-term<br> debt | $ | 2,537,540 | $ | 2,585,517 | $ | 3,262,795 |
| Less:<br> Cash and short-term investments | 452,315 | 425,070 | 991,488 | |||
| Net<br> Debt | $ | 2,085,225 | $ | 2,160,447 | $ | 2,271,307 |
1-8
NABORSINDUSTRIES LTD. AND SUBSIDIARIES
RECONCILIATIONOF ADJUSTED FREE CASH FLOW TO
NETCASH PROVIDED BY OPERATING ACTIVITIES
(Unaudited)
| Three<br> Months Ended | Year<br> Ended | ||||||||
|---|---|---|---|---|---|---|---|---|---|
| December 31, | September 30, | December 31, | |||||||
| (In<br> thousands) | 2022 | 2022 | 2022 | ||||||
| Net<br> cash provided by operating activities | 199,989 | 138,950 | $ | 501,089 | |||||
| Add: Capital<br> expenditures, net of proceeds from sales of assets | (98,682 | ) | (103,591 | ) | (346,732 | ) | |||
| Adjusted<br> free cash flow | $ | 101,307 | $ | 35,359 | $ | 154,357 |
Adjusted free cash flow represents net cash provided by operating activities less cash used for capital expenditures, net of proceeds from sales of assets. 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. February 7, 2023 4Q 2022 Earnings Presentation
NABORS.COM We often discuss expectations regarding our future markets, demand for our products and services, and our performance in our annual, quarterly, and current reports, press releases, and other written and oral statements . Such statements, including statements in this document that relate to matters that are not historical facts, are “forward - looking statements” within the meaning of the safe harbor provisions of Section 27 A of the U . S . Securities Act of 1933 and Section 21 E of the U . S . Securities Exchange Act of 1934 . These “forward - looking statements” are based on our analysis of currently available competitive, financial and economic data and our operating plans . They are inherently uncertain, and investors should recognize that events and actual results could turn out to be significantly different from our expectations . Factors to consider when evaluating these forward - looking statements include, but are not limited to: • actual and potential political or economic instability, civil disturbance, war or acts of terrorism involving any of the countries in which we do business; • the Covid - 19 pandemic and its impact on oil and gas markets and prices; • fluctuations and volatility in worldwide prices of and demand for oil and natural gas; • fluctuations in levels of oil and natural gas exploration and development activities; • fluctuations in the demand for our services; • competitive and technological changes and other developments in the oil and gas and oilfield services industries; • our ability to renew customer contracts in order to maintain competitiveness; • the existence of operating risks inherent in the oil and gas and oilfield services industries; • the possibility of the loss of one or a number of our large customers; • the impact of long - term indebtedness and other financial commitments on our financial and operating flexibility; • our access to and the cost of capital, including the impact of a further downgrade in our credit rating, covenant restrictions, availability under our revolving credit facility, and future issuances of debt or equity securities; • our dependence on our operating subsidiaries and investments to meet our financial obligations; 2 Forward Looking Statements • our ability to retain skilled employees; • our ability to complete, and realize the expected benefits of, strategic transactions; • changes in tax laws and the possibility of changes in other laws and regulation; • the possibility of changes to U.S. trade policies and regulations including the imposition of trade embargoes or sanctions; and • general economic conditions, including inflation, rising interest rates and the general status of the capital and credit markets. Our businesses depend, to a large degree, on the level of spending by oil and gas companies for exploration, development and production activities . Therefore, sustained lower oil or natural gas prices that have a material impact on exploration, development or production activities could also materially affect our financial position, results of operations and cash flows . The above description of risks and uncertainties is by no means all - inclusive but is designed to highlight what we believe are important factors to consider . For a discussion of these factors and other risks and uncertainties, please refer to our filings with the Securities and Exchange Commission ("SEC"), including those contained in our Annual Reports on Form 10 - K and Quarterly Reports on Form 10 - Q, which are available at the SEC's website at www . sec . gov . We undertake no obligation to publicly update or revise any forward - looking statement as a result of new information, future events or otherwise, except as otherwise required by law . Non - GAAP Financial Measures This presentation refers to certain “non - GAAP” financial measures, such as adjusted EBITDA, net debt and adjusted free cash flow . 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”) . Reconciliations of non - GAAP measures to the most comparable GAAP measures are provided in the Appendix at the end of this presentation .
NABORS.COM 3 12/31/2022 Rig Utilization and Availability RIG FLEET (1)(2) 329 RIGS ON REVENUE (1) 180 UTILIZATION AT 12/31/2022 55% TOTAL U.S. OFFSHORE 12 3 25% 16 4 25% ALASKA INTERNATIONAL 134 77 57% 111 96 86% U.S. LOWER - 48 HIGH SPEC (2) (1) As of December 31, 2022 (2) Excludes non - high spec rigs in the Lower 48
NABORS.COM Improving liquidity and leverage Adjusted 4Q free cash flow of $101M (Full year $154M ) Improved Net Leverage metric to 2.9x adjusted EBITDA 4 Q 2022 adjusted EBITDA of $ 230 M Significant sequential improvements in all segments globally Revenue growth of 10% Adjusted EBITDA up 47% year - on - year Drilling Solutions growth 4Q’22 adjusted EBITDA of $30M, 18% growth vs 3Q’22 Adjusted gross margin % (2) reached an all - time high of over 52% in 4Q’22 International improving 2 nd SANAD newbuild and one legacy rig commenced late 4Q’22 3 additional SANAD rigs to start in 2Q’23 - 3Q’23 5 additional newbuilds awarded for deployment in 2024 Adding 1 rig in Argentina in 2Q’23 Currently participating in tenders in multiple markets ESG Focus Multiple deployment PowerTAP Ρ grid power module Initial deployment of PowerFLOW Ρ supercapacitor - based energy storage solution Recent Highlights Note: For reconciliations of adjusted EBITDA, adjusted gross margin, n et d ebt and adjusted free cash flow to the most comparable GAAP measure see non - GAAP in the Appendix Continued improvement in L48 L48 Drilling 4Q adjusted daily gross margin increased 31% to ~$14,600 (1) We expect 1Q’23 Drilling adjusted gross margin of $16,100 to $16,300 per day 4Q daily revenue of $33,000 increased by $3,500 sequentially (1) A djusted daily gross margin represents adjusted gross margin (operating revenue less direct costs), divided by the total number of rig revenue days during the quarter. Rig revenue days represents the number of days the Company’s rigs are contracted and performing under a contract during the period. (2) Adjusted gross margin percent represents adjusted gross margin divided by total revenue
NABORS.COM Performance excellence in the Lower - 48 Expanding & enhancing our International segment Advancing technology & innovation with demonstrated results Progress on our commitment to de - lever Leading in Sustainability and the Energy Transition Five Keys to Excellence 2 3 4 5 1
NABORS.COM $0 $2,000 $4,000 $6,000 $8,000 $10,000 $12,000 $14,000 $16,000 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 2021 2022 L48 Drilling Adjusted Daily Gross Margin (1) 0 10 20 30 40 50 60 70 80 90 100 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 2021 2022 L48 Drilling Average Rig Count 6 Improving revenue and margins on growing rig activity 1 Performance Excellence In The Lower - 48 Strong Momentum in Rig Count and Margin (1) Daily revenue and adjusted daily gross margin for drilling rigs only, does not include Nabors Drilling Solutions
NABORS.COM Performance excellence in the Lower - 48 Expanding & enhancing our International segment Advancing technology & innovation with demonstrated results Progress on our commitment to de - lever Leading in Sustainability and the Energy Transition 2 3 4 5 1 Five Keys to Excellence
NABORS.COM $0 $2,000 $4,000 $6,000 $8,000 $10,000 $12,000 $14,000 $16,000 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 2021 2022 International Drilling Adjusted Daily Gross Margin 50 55 60 65 70 75 80 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 2021 2022 International Drilling Average Rig Count Increases in rig activity driving margin expansion 8 Growing International Rig Count and Margin Resilience Leading to Growth in Our International Segment 2
NABORS.COM 40 45 50 55 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 2022 A 2023 F 2024 F SANAD Estimated Average Rig Count Potential* 9 Significant Growth Trajectory in Saudi Arabia Resilience Leading to Growth in Our International Segment • Awarded additional 5 rigs (10 rigs total to - date) • 50 rigs to be deployed over 10 years • First startup in 3Q’22, second in 4Q’22 and third expected in 1Q’23 • $180M capital expense expected in 2023, funded organically by SANAD • 6 - year initial contracts, payout within 5 years, plus 4 - year renewal at market Newbuild Program Generating Revenue • These estimates are based on current market conditions and expectations are based on information received from third parties, which are subject to change. 2
NABORS.COM Performance excellence in the Lower - 48 Expanding & enhancing our International segment Advancing technology & innovation with demonstrated results Progress on our commitment to de - lever Leading in Sustainability and the Energy Transition 2 3 4 5 1 Five Keys to Excellence
NABORS.COM 20% 25% 30% 35% 40% 45% 50% 55% 60% $- $10 $20 $30 $40 $50 $60 $70 $80 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 2021 2022 NDS Revenue & Adjusted Gross Margin Revenue Adjusted gross margin Adjusted GM % 11 NDS Capitalizing on Growing Rig Count and Higher Penetration Improving Outlook For Our Technology & Innovation Revenue (1) Up 100% Adjusted GM (1) Up 126% Expanding our high - value / high - margin low - capital technology services 3 Adjusted gross margin % of >52% in 4Q 2022, an all time high (1) Compared to 1Q 2021
NABORS.COM 52 58 64 71 83 87 92 100 0 10 20 30 40 50 60 70 80 90 100 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 2021 2022 U.S. RigCLOUD® Services Installs Nabors 3rd Party 0 20 40 60 80 100 120 140 160 180 200 ROCKit SmartDRILL U.S. Performance Software Installs 1Q'21 2Q'21 3Q'21 4Q'21 1Q'22 2Q'22 3Q'22 4Q'22 Customer Adoption Fueling Rapid NDS Footprint Expansion 12 Improving Outlook For Our Technology & Innovation NDS technology consistently adds value on both Nabors rigs and Third - party rigs ® 3 ®
NABORS.COM Case Study: For a major operator in Midland Manual Sliding: Avg. 50 interactions per slide Using Automation: Avg. 10 interactions per slide 13 SmartSLIDE ® Significantly Improving Performance SmartNAV® Automated directional guidance system, improves wellbore placement accuracy SmartSLIDE® Directional steering control system, automates slide drilling to optimize performance SmartDRILL® Full - stand automated drilling activity sequencer, executes driller best practices, and reduces unplanned trips Smart Suite TM Improving Outlook For Our Technology & Innovation 3 Auto Driller and Top Drive Quill Interactions per Slide Measured Depth (ft) Consistently fewer interactions* using SmartSLIDE ® increases accuracy and improves performance * Number of interactions defined as the number of times a driller adjusts the auto driller or top drive during a slide
NABORS.COM 0 500 1000 1500 2000 2500 3000 Q2'18 Q4'18 Q2'19 Q4'19 Q2'20 Q4'20 Q1'21 Q2'21 Q3'21 Q4'21 Q1'22 Q2'22 Q3'22 Q4'22 Cumulative Number of Wells Drilled 14 Smart Suite Growth Trajectory Validates Customer Acceptance Improving Outlook For Our Technology & Innovation 2,400+ Wells Drilled SmartDRILL ® Automation Commercialization SmartNAV ® & SmartSLIDE ® Solutions Commercialization Third - Party SmartDRILL ® Deployment 3 Third - Party SmartSLIDE ® Deployment
NABORS.COM Performance excellence in the Lower - 48 Expanding & enhancing our International segment Advancing technology & innovation with demonstrated results Progress on our commitment to de - lever Leading in Sustainability and the Energy Transition 2 3 4 5 1 Five Keys to Excellence
NABORS.COM $- $0.5 $1.0 $1.5 $2.0 $2.5 $3.0 $3.5 $4.0 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 2018 2019 2020 2021 2022 Billions Net Debt 16 Significant Headway toward Financial Goals Progress on Our Commitment to De - lever 4 ~ $1.8B Net Debt (1) reduction from previous high in 1Q 2018 $1.8B (1) Net Deb is a non - GAAP metric; see reconciliations in the Appendix
NABORS.COM Performance excellence in the Lower - 48 Expanding & enhancing our International segment Advancing technology & innovation with demonstrated results Progress on our commitment to de - lever Leading in Sustainability and the Energy Transition 2 3 4 5 1 Five Keys to Excellence
NABORS.COM Expanding penetration on third - party rigs Energy Efficiency & Emission Reduction Technologies Geothermal Development Leveraging IP to applications beyond the rigs, including carbon capture Expansion Beyond Oil & Gas D ifferentiates Nabors rigs Developing new verticals in: hydrogen, fuel efficiency and energy storage Providing expertise in drilling and engineering services & solutions Adding to the long - term power solution – creating Geothermal 2.0 18 Moving Forward on the Energy Transition Leading in Sustainability and the Energy Transition 5
NABORS.COM 19 Leading in Sustainability and the Energy Transition • Advanced advisory and control system optimizes the efficiency of fuel consumption • Deploying energy storage systems on multiple rigs • Introducing innovative fuel enhancer to reduce fuel consumption and GHG emissions Operating rigs with the environment as a stakeholder Investing in carbon capture, emissions monitoring/reduction, energy storage, power management technologies and geothermal energy Dedicated to improving the environmental footprint of OFS 5 Growing Commitment to Operational and Environmental Stewardship PowerTAP Ρ highline power transformer module
20 NABORS.COM Ubiquitous Ability to create heat reservoirs by drilling into deep rock formations Innovative Drilling Technologies Reducing cost per energy - unit produced by using and combining new technologies Baseload Reliable and available 24/7 Renewable Subsurface heat replenished naturally Nabors and its predecessor entities have been continuously innovating in the energy sector for over 100 years Geothermal Market Technology Advancements Technological advancements are enabling wide - scale commercial geothermal development Leading in Sustainability and the Energy Transition 5
NABORS.COM Appendix 21
NABORS.COM Three Months Ended December 31, September 30, December 31, 2021 2022 2022 Net income (loss) ($109,263) ($4,461) ($58,155) (Income) loss from discontinued operations, net of tax (13) 0 0 Income (loss) from continuing operations, net of tax ($109,276) ($4,461) ($58,155) Income tax expense (benefit) 18,393 12,352 26,161 Income (loss) from continuing operations before income taxes ($90,883) $7,891 ($31,994) Investment (income) loss (156) (4,813) (9,194) Interest Expense 44,570 43,841 44,245 Other, net 10,170 (25,954) 58,124 Adjusted Operating Income (loss) (36,299) 20,965 61,181 Depreciation and Amortization 167,955 169,857 168,841 Adjusted EBITDA $131,656 $190,822 $230,022 (In Thousands) 22 Reconciliation of Non - GAAP Financial Measures to Net Income (Loss) Adjusted EBITDA represents net income (loss) before income (loss) from discontinued operations, net of tax, income taxes, inv est ment income (loss), interest expense, other, net and depreciation and amortization. Adjusted EBITDA is a non - GAAP financial measure and should not be used in isolation or as a subst itute for the amounts reported in accordance with GAAP. In addition, adjusted EBITDA excludes certain cash expenses that the Company is obligated to make. However, management evalua tes the performance of its operating segments and the consolidated Company based on several criteria, including adjusted EBITDA and adjusted operating income (loss), because it be lie ves that these financial measures accurately reflect the Company’s ongoing profitability and performance. Securities analysts and investors use this measure as one of the metrics on wh ich they analyze the Company’s performance. Other companies in this industry may compute these measures differently. A reconciliation of this non - GAAP measure to net income (los s), which is the most closely comparable GAAP measure, is provided in the table below.
NABORS.COM Three Months Ended December 31, September 30, December 31, 2021 2022 2022 Lower 48 - U.S. - Drilling Adjusted operating income (25,474)$ 25,551$ 58,299$ Plus: General and administrative costs 4,609 4,798 4,977 Plus: Research and engineering 1,065 1,652 1,637 GAAP Gross Margin (19,800) 32,001 64,913 Plus: Depreciation and amortization 68,994 62,583 62,768 Adjusted gross margin 49,194$ 94,584$ 127,681$ Other - U.S. - Drilling Adjusted operating income 12,887$ 12,225$ 9,994$ Plus: General and administrative costs 513 343 324 Plus: Research and engineering 105 157 166 GAAP Gross Margin 13,505 12,725 10,484 Plus: Depreciation and amortization 12,844 14,127 13,081 Adjusted gross margin 26,349$ 26,852$ 23,565$ U.S. - Drilling Adjusted operating income (12,587)$ 37,776$ 68,293$ Plus: General and administrative costs 5,122 5,141 5,301 Plus: Research and engineering 1,170 1,809 1,803 GAAP Gross Margin (6,295) 44,726 75,397 Plus: Depreciation and amortization 81,838 76,710 75,849 Adjusted gross margin 75,543$ 121,436$ 151,246$ (In Thousands) 23 Reconciliation of U.S. Drilling Segment Adjusted Gross Margin to U.S. Drilling Segment Adjusted Operating Income Adjusted gross margin by segment represents Adjusted operating income (loss) plus General and administrative costs, Research an d engineering costs and Depreciation and amortization.
NABORS.COM December 31, September 30, December 31, 2021 2022 2022 Long-Term Debt $3,262,795 $2,585,517 $2,537,540 Cash & Short-term Investments $991,488 $425,070 $452,315 Net Debt $2,271,307 $2,160,447 $2,085,225 (In Thousands) 24 Reconciliation of Net Debt to Total Debt Net debt is computed by subtracting the sum of cash, cash equivalents and short - term investments from total debt. This non - GAAP measure has limitations and therefore should not be used in isolation or as a substitute for the amounts reported in accordance with GAAP. However, management evaluates the perf orm ance of its operating segments and the consolidated Company based on several criteria, including net debt, because it believes that this financial measure accurately measures th e C ompany’s liquidity. In addition, securities analysts and investors use this measure as one of the metrics on which they analyze the company’s performance. Other companies in this ind ust ry may compute this measure differently. A reconciliation of net debt to total debt, which is the nearest comparable GAAP financial measure, is provided in the table be low .
NABORS.COM (In Thousands) Three Months Ended December 31, 2022 U.S. Drilling Canada Drilling International Drilling Drilling Solutions Rig Technologies Other reconciling items Total Adjusted operating income (loss) 68,293$ 56$ 1,750$ 24,800$ 6,118$ (39,836)$ 61,181$ Depreciation and amortization 75,849 - 87,088 5,536 1,443 (1,075) 168,841 Adjusted EBITDA 144,142$ 56$ 88,838$ 30,336$ 7,561$ (40,911)$ 230,022$ Three Months Ended September 30, 2022 U.S. Drilling Canada Drilling International Drilling Drilling Solutions Rig Technologies Other reconciling items Total Adjusted operating income (loss) 37,776$ (9)$ (907)$ 20,099$ 3,412$ (39,406)$ 20,965$ Depreciation and amortization 76,710 - 86,829 5,513 1,406 (601) 169,857 Adjusted EBITDA 114,486$ (9)$ 85,922$ 25,612$ 4,818$ (40,007)$ 190,822$ Three Months Ended December 31, 2021 U.S. 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$ 25 Reconciliation of Adjusted EBITDA by Segment to Adjusted Operating Income (Loss) by Segment Adjusted EBITDA by segment represents adjusted income (loss) plus depreciation and amortization.
NABORS.COM Three Months Ended December 2022 Net cash provided by operating activities $199,989 Add: Capital expenditures, net of proceeds from sales of assets ($98,682) Adjusted free cash flow $101,307 (In Thousands) 26 Reconciliation of Adjusted Free Cash Flow to Net Cash Provided by Operating Activities Adjusted free cash flow represents net cash provided by operating activities less cash used for capital expenditures, net of pro ceeds from sales of assets. Management believes that adjusted free cash flow is an important liquidity measure for the company and that it is useful to investors and management a s 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 to return to shareholders th rough dividend payments or share repurchases. Adjusted free cash flow does not represent the residual cash flow available for discretionary expenditures. Adjusted free cash flow i s 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.
NABORS INDUSTRIES LTD. NABORS.COM NABORS CORPORATE SERVICES 515 W. Greens Road Suite 1200 Houston, TX 77067 - 4525 @naborsglobal Contact Us: William C. Conroy, CFA VP - Corporate Development and Investor Relations William.Conroy@nabors.com Kara K. Peak Director - Corporate Development and Investor Relations Kara.Peak@nabors.com