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 8, 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. ¨
Item 2.02 Results of Operations and Financial Condition.
On February 8, 2022, Nabors Industries Ltd. (“Nabors”) issued a press release announcing its results of operations for the three months ended December 31, 2021. A copy of that release is furnished herewith as Exhibit 99.1 and is incorporated herein by reference.
On February 9, 2022, 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, 2021. 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 No. | Description |
|---|---|
| 99.1 | Press Release |
| 99.2 | Investor Information |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
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<br> LTD. | ||
|---|---|---|
| Date: February 8, 2022 | By: | /s/ Mark D. Andrews |
| Name: Mark D. Andrews | ||
| Title: Corporate Secretary |
Exhibit 99.1
Nabors Announces Fourth Quarter 2021 Results
HAMILTON, Bermuda, February 8, 2022 /PRNewswire/ -- Nabors Industries Ltd. (“Nabors” or the “Company”) (NYSE: NBR) today reported fourth quarter 2021 operating revenues of $544 million, compared to operating revenues of $524 million in the third quarter of 2021. The net loss from continuing operations attributable to Nabors shareholders for the quarter was $114 million, or $14.60 per share. This compares to a loss of $122 million, or $15.79 per share in the prior quarter. Fourth quarter adjusted EBITDA was $132 million compared to $125 million in the third quarter.
Anthony G. Petrello, Nabors Chairman, CEO and President, commented, “With our fourth quarter financial results, we closed the year 2021 on a high note. Quarterly EBITDA increased by 5% sequentially even including the impact of the significant early termination revenue booked in the third quarter. On a normalized basis, all of our segments had strong growth, with U.S. Drilling, Drilling Solutions and Rig Technologies leading the way.
“Our Lower 48 activity and pricing surged ahead, with leading edge dayrates improving by as much as $4,000 per day toward the end of the fourth quarter. In the quarter, the contribution from our Drilling Solutions segment accounted for 15% of the Company’s total EBITDA. This proportion sets a new record high since the formation of NDS in 2016. When combined with Rig Technologies, these two technology businesses accounted for 18% of our total EBITDA. This contribution demonstrates the scale and market acceptance of our industry-leading innovation. Our International segment added rigs toward the end of the fourth quarter and positioned itself for a strong 2022 as we continue to deploy rigs in Saudi Arabia and Latin America.
“The backdrop for our performance was the constructive commodity price environment in the fourth quarter, with WTI remaining above the $65 mark. Since the fears surrounding the impact of the Omicron variant began to subside in early December, oil prices have increased steadily and have recently exceeded $90. Oilfield activity has strengthened, and in turn, rig dayrates have improved while margins are beginning to widen. Looking through the balance of 2022, we are optimistic that operators will respond to the favorable commodity environment with higher drilling activity.”
Consolidated and Segment Results
The U.S. Drilling segment reported $69.2 million in adjusted EBITDA for the fourth quarter of 2021, an 11% increase from the prior quarter. Nabors’ average Lower 48 rig count, at 75, increased by more than seven rigs, or 11%. Average daily margins in the Lower 48 were $7,161, an increase of $136 from the prior quarter. The U.S. Drilling segment’s rig count currently stands at 90, with 83 rigs working in the Lower 48.
International Drilling adjusted EBITDA decreased sequentially by 4%, to $73.2 million. Excluding the prior quarter’s $8 million gain from early termination revenue, International adjusted EBITDA increased by 7%. Rig count averaged 71 rigs, up four rigs from the third quarter. This improvement was driven primarily by activity increases across markets in Latin America and by the reactivation of temporarily idled rigs in Saudi Arabia. Average margin per day was $13,172, in line with the prior quarter, excluding the impact of the early termination revenue.
In Drilling Solutions, adjusted EBITDA increased by 25% to $19.6 million, driven by growth in the Company’s performance drilling software in the U.S. and casing running services in the international markets. Gross margin for this segment exceeded 50%.
In Rig Technologies, adjusted EBITDA increased to $3.8 million in the fourth quarter, up from $3.0 million in the third quarter. Higher aftermarket revenues were the primary driver of this increase.
Free Cash Flow and Capital Discipline
Free cash flow totaled $50 million in the fourth quarter, despite a surge in revenue toward the end of the fourth quarter that increased accounts receivable significantly. For the full year 2021, the Company generated free cash flow of $312 million.
Capital expenditures were $64 million, including $11 million for the SANAD newbuild rigs. For the full year 2021, capital expenditures totaled $244 million, of which the SANAD newbuilds accounted for $69 million. For the full year 2022, total capital expenditures of approximately $380 million are expected. This amount includes $150 million for SANAD’s newbuild rig program. This amount also includes approximately $230 million supporting Nabors’ existing global operations, and is essentially in line with the expected increase in the number of working rigs.
The Company’s year-end net debt was $2,271 million, a reduction of $32 million in the fourth quarter. For the full year, net debt decreased by $216 million. During the year, SANAD distributed a total of $118 million dollars to its shareholders, $18 million of which was distributed in the fourth quarter.
During the fourth quarter, the Company completed the placement of $700 million of Senior Priority Guaranteed Notes due in 2027. This transaction was followed by the replacement in January of the Company’s Revolving Credit Facility, which was scheduled to mature in 2023, with a new facility maturing in 2026.
Outlook for the First Quarter of 2022
Nabors expects the following quarterly metrics:
U.S. Drilling
| o | An increase in average Lower 48 rig count of 9 - 10 rigs over the fourth quarter average |
|---|---|
| o | Lower 48 daily drilling margin of $7,500 - $7,600, reflecting higher dayrates driven by increasing utilization<br>levels |
| o | An improvement in average Alaska rig count of approximately one rig over the fourth quarter level, while<br>the quarterly average U.S. Offshore rig count remains in line with the fourth quarter average. The U.S. Offshore business is expected<br>to be impacted by recertification-related downtime on one of the rigs International |
| o | Average rig count in line with the fourth quarter, with rig additions expected in subsequent quarters<br>of 2022 |
| --- | --- |
| o | Daily drilling margin of approximately $13,000 |
Drilling Solutions
| o | Adjusted EBITDA approximately equal to the fourth quarter level |
|---|
Rig Technologies
| o | Adjusted EBITDA of breakeven or higher |
|---|
Capital Expenditures
| o | Capital expenditures of $95 million to $100 million, with approximately $35 million for SANAD’s<br>newbuild rigs |
|---|
William Restrepo, Nabors CFO, stated, “During this last quarter, as has been the case for the last couple of years, Nabors continued to lead the industry in operational performance in the U.S. and internationally. Our daily drilling margins have outperformed in the Lower 48 and our industry leading consolidated EBITDA has continued its steady increase since it bottomed last year. We remain the leader in technology and innovation as measured by our Drilling Solutions margins and customer penetration.
“Our performance in the fourth quarter enabled us to continue generating free cash flow and reducing our net debt. The robust market environment entering 2022 should allow us to make additional progress on our long-term goals as we move through the year.
“The completion of the two recent financing transactions, totaling over a billion dollars, materially reduces our near-term debt maturities and extends our liquidity runway. With the lower amount of debt coming due through 2024, we intend to address those maturities with free cash flow. With the closing of the new credit facility, we have increased our Senior Priority Guaranteed Note capacity to more than $400 million. Together with our Priority Guaranteed Note capacity, we have nearly $1 billion available for future debt refinancing.”
Mr. Petrello added, “We are pleased with our operational and financial accomplishments in the fourth quarter. We made significant improvements in our financial metrics in 2021. These improvements have increased our financial flexibility, and we see a path to further delevering in the future.
“Also during 2021, we made significant progress on our Sustainability goals. We reduced our field-level Lower 48 GHG emissions intensity by 10%, doubling our annual target. For 2022, we are targeting further reductions, as we experience increasing interest from our stakeholders to work with our customers toward net zero emissions. Our safety performance, measured by TRIR, set another all-time record. And we deployed the industry’s first fully-automated land rig, R801, which removes rig staff from harm’s way during drilling operations. The systems and equipment installed on this rig, which can be employed on other Nabors rigs as well as those of third-party contractors, creates a path for existing rigs to benefit from a significant technology upgrade without requiring a newbuild. A further benefit is an expansion in the available talent pool able to work on our rigs.
“Last year we made additional advances in our efforts supporting the energy transition. We completed investments in three geothermal companies, all with potentially disruptive technology. We made headway on our own initiatives in fuel management, energy storage, hydrogen, and carbon capture. And we launched Nabors Energy Transition Corp. (NYSE: NETC), a special purpose acquisition company focused on opportunities in the energy transition, which completed its initial public offering in November.”
Mr. Petrello concluded, “As we look into 2022, we are optimistic that industry fundamentals will improve consistent with a constructive commodity price outlook. Nabors is well positioned to take advantage of an expanding market, with our highly skilled workforce and our unmatched rig fleet. We have the broadest, most impactful portfolio of digital automation technology in the drilling sector. There are tremendous opportunities to apply our core strengths to extend our leadership position in drilling technology, while enabling the responsible production of hydrocarbons. With our own improving financial position and our technology and innovation capabilities, we are ideally placed to generate value across our stakeholder base.”
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. Free cash flow represents net cash provided by operating activities less cash used for investing activities. Free cash flow is an indicator of our ability to generate cash flow after required spending to maintain or expand our asset base. 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 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 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.
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
| NABORS INDUSTRIES LTD. AND SUBSIDIARIES | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS) | |||||||||||||||
| (Unaudited) | |||||||||||||||
| Three<br> Months Ended | Year<br> Ended | ||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| December<br> 31, | September<br> 30, | December<br> 31, | |||||||||||||
| (In thousands, except per share amounts) | 2021 | 2020 | 2021 | 2021 | 2020 | ||||||||||
| Revenues and other income: | |||||||||||||||
| Operating revenues | $ | 543,539 | $ | 443,396 | $ | 524,165 | $ | 2,017,548 | $ | 2,134,043 | |||||
| Investment income (loss) | 156 | 3,342 | 200 | 1,557 | 1,438 | ||||||||||
| Total revenues and other income | 543,695 | 446,738 | 524,365 | 2,019,105 | 2,135,481 | ||||||||||
| Costs and other deductions: | |||||||||||||||
| Direct costs | 347,238 | 274,278 | 336,538 | 1,286,896 | 1,333,072 | ||||||||||
| General and administrative expenses | 54,422 | 53,719 | 52,897 | 213,559 | 203,515 | ||||||||||
| Research and engineering | 10,223 | 7,285 | 9,498 | 35,153 | 33,564 | ||||||||||
| Depreciation and amortization | 167,955 | 208,654 | 173,375 | 693,381 | 853,699 | ||||||||||
| Interest expense | 44,570 | 47,943 | 42,217 | 171,476 | 206,274 | ||||||||||
| Impairments and other charges | 1,312 | 71,328 | 3,068 | 66,731 | 410,631 | ||||||||||
| Other, net | 8,858 | (151,377 | ) | 19,690 | 39,998 | (199,707 | ) | ||||||||
| Total costs and other deductions | 634,578 | 511,830 | 637,283 | 2,507,194 | 2,841,048 | ||||||||||
| Income (loss) from continuing operations before income<br> taxes | (90,883 | ) | (65,092 | ) | (112,918 | ) | (488,089 | ) | (705,567 | ) | |||||
| Income tax expense (benefit) | 18,393 | 38,842 | 2,784 | 55,621 | 57,286 | ||||||||||
| Income (loss) from continuing operations, net of tax | (109,276 | ) | (103,934 | ) | (115,702 | ) | (543,710 | ) | (762,853 | ) | |||||
| Income (loss) from discontinued operations, net of tax | 13 | 55 | (20 | ) | 20 | 7 | |||||||||
| Net income (loss) | (109,263 | ) | (103,879 | ) | (115,722 | ) | (543,690 | ) | (762,846 | ) | |||||
| Less: Net (income) loss attributable<br> to noncontrolling interest | (4,414 | ) | (4,358 | ) | (6,778 | ) | (25,582 | ) | (42,795 | ) | |||||
| Net income (loss) attributable to Nabors | (113,677 | ) | (108,237 | ) | (122,500 | ) | (569,272 | ) | (805,641 | ) | |||||
| Less: Preferred stock dividend | - | (3,653 | ) | - | (3,653 | ) | (14,611 | ) | |||||||
| Net income (loss) attributable to Nabors common shareholders | $ | (113,677 | ) | $ | (111,890 | ) | $ | (122,500 | ) | $ | (572,925 | ) | $ | (820,252 | ) |
| Amounts attributable to Nabors common shareholders: | |||||||||||||||
| Net income (loss) from continuing operations | $ | (113,690 | ) | $ | (111,945 | ) | $ | (122,480 | ) | $ | (572,945 | ) | $ | (820,259 | ) |
| Net income (loss) from discontinued operations | 13 | 55 | (20 | ) | 20 | 7 | |||||||||
| Net income (loss) attributable to Nabors common shareholders | $ | (113,677 | ) | $ | (111,890 | ) | $ | (122,500 | ) | $ | (572,925 | ) | $ | (820,252 | ) |
| Earnings (losses) per share: | |||||||||||||||
| Basic from continuing operations | $ | (14.60 | ) | $ | (16.46 | ) | $ | (15.79 | ) | $ | (76.58 | ) | $ | (118.69 | ) |
| Basic from discontinued operations | - | 0.01 | - | - | - | ||||||||||
| Total Basic | $ | (14.60 | ) | $ | (16.45 | ) | $ | (15.79 | ) | $ | (76.58 | ) | $ | (118.69 | ) |
| Diluted from continuing operations | $ | (14.60 | ) | $ | (16.46 | ) | $ | (15.79 | ) | $ | (76.58 | ) | $ | (118.69 | ) |
| Diluted from discontinued operations | - | 0.01 | - | - | - | ||||||||||
| Total Diluted | $ | (14.60 | ) | $ | (16.45 | ) | $ | (15.79 | ) | $ | (76.58 | ) | $ | (118.69 | ) |
| Weighted-average number of common shares outstanding: | |||||||||||||||
| Basic | 7,950 | 7,067 | 7,907 | 7,605 | 7,059 | ||||||||||
| Diluted | 7,950 | 7,067 | 7,907 | 7,605 | 7,059 | ||||||||||
| Adjusted EBITDA | $ | 131,656 | $ | 108,114 | $ | 125,232 | $ | 481,940 | $ | 563,892 | |||||
| Adjusted operating income (loss) | $ | (36,299 | ) | $ | (100,540 | ) | $ | (48,143 | ) | $ | (211,441 | ) | $ | (289,807 | ) |
1-1
| NABORS INDUSTRIES LTD.<br> AND SUBSIDIARIES | ||||||
|---|---|---|---|---|---|---|
| CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||
| December 31, | September 30, | December 31, | ||||
| --- | --- | --- | --- | --- | --- | --- |
| (In<br> thousands) | 2021 | 2021 | 2020 | |||
| (Unaudited) | ||||||
| ASSETS | ||||||
| Current assets: | ||||||
| Cash and short-term investments | $ | 991,488 | $ | 771,884 | $ | 481,746 |
| Accounts receivable, net | 287,572 | 282,726 | 362,977 | |||
| Assets held for sale | 16,561 | 16,785 | 16,562 | |||
| Other current assets | 222,188 | 251,232 | 270,180 | |||
| Total current assets | 1,517,809 | 1,322,627 | 1,131,465 | |||
| Property, plant and equipment, net | 3,332,498 | 3,443,737 | 3,985,707 | |||
| Other long-term assets | 675,057 | 408,462 | 386,256 | |||
| Total<br> assets | $ | 5,525,364 | $ | 5,174,826 | $ | 5,503,428 |
| LIABILITIES AND EQUITY | ||||||
| Current liabilities: | ||||||
| Current portion of debt | $ | - | $ | - | $ | - |
| Other current liabilities | 525,228 | 516,088 | 515,469 | |||
| Total current liabilities | 525,228 | 516,088 | 515,469 | |||
| Long-term debt | 3,262,795 | 3,075,520 | 2,968,701 | |||
| Other long-term liabilities | 343,120 | 348,542 | 319,610 | |||
| Total liabilities | 4,131,143 | 3,940,150 | 3,803,780 | |||
| Redeemable noncontrolling interest in subsidiary | 675,283 | 400,853 | 442,840 | |||
| Equity: | ||||||
| Shareholders' equity | 590,656 | 709,021 | 1,151,384 | |||
| Noncontrolling interest | 128,282 | 124,802 | 105,424 | |||
| Total<br> equity | 718,938 | 833,823 | 1,256,808 | |||
| Total<br> liabilities and equity | $ | 5,525,364 | $ | 5,174,826 | $ | 5,503,428 |
1-2
| NABORS INDUSTRIES LTD.<br> AND SUBSIDIARIES | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| SEGMENT REPORTING | |||||||||||||||
| (Unaudited) | |||||||||||||||
| The following tables set forth certain information with<br> 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) | 2021 | 2020 | 2021 | 2021 | 2020 | ||||||||||
| Operating revenues: | |||||||||||||||
| U.S. Drilling | $ | 192,310 | $ | 134,129 | $ | 173,441 | $ | 669,656 | $ | 713,057 | |||||
| Canada Drilling | - | 14,824 | 6,034 | 39,336 | 54,753 | ||||||||||
| International Drilling | 271,069 | 245,093 | 270,008 | 1,043,197 | 1,131,673 | ||||||||||
| Drilling Solutions | 51,776 | 31,997 | 45,880 | 172,473 | 149,834 | ||||||||||
| Rig Technologies (1) | 46,920 | 27,357 | 42,053 | 149,273 | 131,555 | ||||||||||
| Other reconciling<br> items (2) | (18,536 | ) | (10,004 | ) | (13,251 | ) | (56,387 | ) | (46,829 | ) | |||||
| Total operating<br> revenues | $ | 543,539 | $ | 443,396 | $ | 524,165 | $ | 2,017,548 | $ | 2,134,043 | |||||
| Adjusted EBITDA: (3) | |||||||||||||||
| U.S. Drilling | $ | 69,249 | $ | 62,162 | $ | 62,132 | $ | 249,951 | $ | 302,150 | |||||
| Canada Drilling | 223 | 3,501 | 1,607 | 14,497 | 13,018 | ||||||||||
| International Drilling | 73,168 | 64,490 | 76,211 | 283,312 | 321,394 | ||||||||||
| Drilling Solutions | 19,559 | 10,262 | 15,620 | 59,433 | 46,241 | ||||||||||
| Rig Technologies (1) | 3,842 | 511 | 3,005 | 8,349 | 1,818 | ||||||||||
| Other reconciling<br> items (4) | (34,385 | ) | (32,812 | ) | (33,343 | ) | (133,601 | ) | (120,729 | ) | |||||
| Total adjusted<br> EBITDA | $ | 131,656 | $ | 108,114 | $ | 125,232 | $ | 481,940 | $ | 563,892 | |||||
| Adjusted operating income (loss): (5) | |||||||||||||||
| U.S. Drilling | $ | (12,587 | ) | $ | (26,215 | ) | $ | (19,700 | ) | $ | (76,492 | ) | $ | (96,176 | ) |
| Canada Drilling | 223 | (2,501 | ) | 1,371 | 2,893 | (11,766 | ) | ||||||||
| International Drilling | (5,749 | ) | (35,462 | ) | (7,297 | ) | (40,117 | ) | (56,205 | ) | |||||
| Drilling Solutions | 12,930 | (2,532 | ) | 8,607 | 32,771 | 6,167 | |||||||||
| Rig Technologies (1) | 1,493 | (2,031 | ) | 1,926 | 158 | (13,481 | ) | ||||||||
| Other reconciling<br> items (4) | (32,609 | ) | (31,799 | ) | (33,050 | ) | (130,654 | ) | (118,346 | ) | |||||
| Total adjusted<br> operating income (loss) | $ | (36,299 | ) | $ | (100,540 | ) | $ | (48,143 | ) | $ | (211,441 | ) | $ | (289,807 | ) |
| Rig activity: | |||||||||||||||
| Average Rigs Working: (6) | |||||||||||||||
| Lower 48 | 74.7 | 53.6 | 67.6 | 65.6 | 61.9 | ||||||||||
| Other<br> US | 6.0 | 5.0 | 5.0 | 5.3 | 6.0 | ||||||||||
| U.S. Drilling | 80.7 | 58.6 | 72.6 | 70.9 | 67.9 | ||||||||||
| Canada Drilling | - | 9.7 | 4.1 | 6.5 | 9.0 | ||||||||||
| International<br> Drilling | 71.4 | 62.6 | 67.0 | 67.9 | 75.7 | ||||||||||
| Total average rigs working | 152.1 | 130.9 | 143.7 | 145.3 | 152.6 | ||||||||||
| Daily Rig Revenue: | |||||||||||||||
| Lower 48 | $ | 21,739 | $ | 20,949 | $ | 21,312 | $ | 21,436 | $ | 24,212 | |||||
| Other<br> US | 77,833 | 66,841 | 88,175 | 81,641 | 74,264 | ||||||||||
| U.S. Drilling (8) | 25,911 | 24,862 | 25,940 | 25,909 | 28,660 | ||||||||||
| Canada Drilling | - | 16,600 | 16,056 | 16,693 | 16,616 | ||||||||||
| International Drilling | 41,239 | 42,551 | 43,789 | 42,100 | 40,827 | ||||||||||
| Daily Rig Margin: (7) | |||||||||||||||
| Lower 48 | $ | 7,161 | $ | 9,541 | $ | 7,025 | $ | 7,367 | $ | 9,872 | |||||
| Other<br> US | 47,734 | 44,811 | 53,947 | 50,953 | 45,642 | ||||||||||
| U.S. Drilling (8) | 10,179 | 12,548 | 10,272 | 10,605 | 13,051 | ||||||||||
| Canada Drilling | - | 4,633 | 5,654 | 6,927 | 4,813 | ||||||||||
| International Drilling | 13,172 | 13,486 | 14,375 | 13,474 | 13,454 |
1-3
| (1) | Includes our oilfield<br> equipment manufacturing, automated systems, and downhole tools. |
|---|---|
| (2) | Represents the elimination of inter-segment<br> transactions related to our Rig Technologies operating segment. |
| (3) | Adjusted EBITDA represents income<br> (loss) from continuing operations before income taxes, interest expense, depreciation and amortization, earnings (losses) from unconsolidated<br> affiliates, investment income (loss), impairments and other charges and other, net. Adjusted EBITDA is a non-GAAP financial measure<br> and should not be used in isolation or as a substitute for the amounts reported in accordance with GAAP. In addition, adjusted EBITDA<br> excludes certain cash expenses that the Company is obligated to make. However, management evaluates the performance of its operating<br> segments and the consolidated Company based on several criteria, including adjusted EBITDA and adjusted operating income (loss),<br> because it believes that these financial 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 performance. Other<br> companies in this industry may compute these measures differently. A reconciliation of this non-GAAP measure to income<br> (loss) from continuing operations before income taxes, which is the most closely comparable GAAP measure, is provided in the table<br> set forth immediately following the heading "Reconciliation of Non-GAAP Financial Measures to Income (loss) from Continuing Operations<br> before Income Taxes". |
| (4) | Represents the elimination of inter-segment<br> transactions and unallocated corporate expenses. |
| (5) | Adjusted operating income (loss)<br> represents income (loss) from continuing operations before income taxes, interest expense, earnings (losses) from unconsolidated<br> affiliates, investment income (loss), impairments and other charges and other, net. Adjusted operating income (loss) is a non-GAAP<br> financial measure and should not be used in isolation or as a substitute for the amounts reported in accordance with GAAP. In addition,<br> adjusted operating income (loss) excludes certain cash expenses that the Company is obligated to make. However, management evaluates<br> the performance of its operating segments 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 the Company’s ongoing profitability<br> and performance. 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 these measures differently. A reconciliation of this<br> non-GAAP measure to income (loss) from continuing operations before income taxes, which is the most closely comparable GAAP measure,<br> is provided in the table set forth immediately following the heading "Reconciliation of Non-GAAP Financial Measures to Income (loss)<br> from Continuing Operations before Income Taxes". |
| (6) | Represents a measure of the average<br> number 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. |
| (7) | Daily rig margin represents operating<br> revenue less operating expenses, divided by the total number of revenue days during the quarter. |
| (8) | The U.S. Drilling segment includes<br> the Lower 48, Alaska, and Gulf of Mexico operating areas. |
1-4
| NABORS INDUSTRIES LTD.<br> AND SUBSIDIARIES | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| RECONCILIATION OF NON-GAAP FINANCIAL<br> MEASURES TO | |||||||||||||||
| INCOME (LOSS) FROM CONTINUING OPERATIONS<br> BEFORE INCOME TAXES | |||||||||||||||
| (Unaudited) | |||||||||||||||
| Three<br> Months Ended | Year<br> Ended | ||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| December<br> 31, | September<br> 30, | December<br> 31, | |||||||||||||
| (In<br> thousands) | 2021 | 2020 | 2021 | 2021 | 2020 | ||||||||||
| Adjusted EBITDA | $ | 131,656 | $ | 108,114 | $ | 125,232 | $ | 481,940 | $ | 563,892 | |||||
| Depreciation and amortization | (167,955 | ) | (208,654 | ) | (173,375 | ) | (693,381 | ) | (853,699 | ) | |||||
| Adjusted operating income (loss) | (36,299 | ) | (100,540 | ) | (48,143 | ) | (211,441 | ) | (289,807 | ) | |||||
| Investment income (loss) | 156 | 3,342 | 200 | 1,557 | 1,438 | ||||||||||
| Interest expense | (44,570 | ) | (47,943 | ) | (42,217 | ) | (171,476 | ) | (206,274 | ) | |||||
| Impairments and other charges | (1,312 | ) | (71,328 | ) | (3,068 | ) | (66,731 | ) | (410,631 | ) | |||||
| Other, net | (8,858 | ) | 151,377 | (19,690 | ) | (39,998 | ) | 199,707 | |||||||
| Income (loss) from continuing operations<br> before income taxes | $ | (90,883 | ) | $ | (65,092 | ) | $ | (112,918 | ) | $ | (488,089 | ) | $ | (705,567 | ) |
1-5
| NABORS INDUSTRIES LTD.<br> AND SUBSIDIARIES |
|---|
| RECONCILIATION OF NET DEBT TO TOTAL<br> DEBT |
| December<br> 31, | September<br> 30, | December<br> 31, | ||||
|---|---|---|---|---|---|---|
| (In<br> thousands) | 2021 | 2021 | 2020 | |||
| (Unaudited) | ||||||
| Current portion of debt | $ | - | $ | - | $ | - |
| Long-term debt | 3,262,795 | 3,075,520 | 2,968,701 | |||
| Total Debt | 3,262,795 | 3,075,520 | 2,968,701 | |||
| Less: Cash and short-term investments | 991,488 | 771,884 | 481,746 | |||
| Net<br> Debt | $ | 2,271,307 | $ | 2,303,636 | $ | 2,486,955 |
1-6
| NABORS INDUSTRIES LTD.<br> AND SUBSIDIARIES | ||||||||
|---|---|---|---|---|---|---|---|---|
| RECONCILIATION OF FREE CASH FLOW<br> TO | ||||||||
| NET CASH PROVIDED BY OPERATING ACTIVITIES | ||||||||
| (Unaudited) | ||||||||
| Three<br> Months Ended | Year<br> Ended | |||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
| December<br> 31, | September<br> 30, | December<br> 31, | ||||||
| (In<br> thousands) | 2021 | 2021 | 2021 | |||||
| Net cash provided by operating activities | $ | 102,293 | $ | 113,280 | $ | 428,776 | ||
| Net cash provided by (used for)<br> investing activities | (52,137 | ) | 19,831 | (117,225 | ) | |||
| Free cash flow | $ | 50,156 | $ | 133,111 | $ | 311,551 |
Free cash flow represents net cash provided by operating activities less cash used for investing activities. Free cash flow is an indicator of our ability to generate cash flow after required spending to maintain or expand our asset base. Management believes that this non-GAAP measure is useful information to investors when comparing our cash flows with the cash flows of other companies. 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 performance of the consolidated Company based on several criteria, including free cash flow, because it believes that these financial measures accurately reflect the Company's ongoing profitability and performance. ****
1-7
Exhibit 99.2
| 4Q 2021 Earnings Presentation NABORS INDUSTRIES LTD. February 8, 2021 |
|---|
| Forward Looking Statements 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 27A of the U.S. Securities Act of 1933 and Section 21E 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: 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; 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 political or economic instability, civil disturbance, war or acts of terrorism in any of the countries in which we do business; the possibility of changes to U.S. trade policies and regulations including the imposition of trade embargoes or sanctions; and general economic conditions, including 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. Non-GAAP Financial Measures This presentation refers to certain “non-GAAP” financial measures, such as adjusted EBITDA, net debt and 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”). A reconciliation of adjusted EBITDA to income (loss) from continuing operations before income taxes, net debt to total debt, and free cash flow to net cash provided by operating<br>activities, which are their nearest comparable GAAP financial measures, as provided in the Appendix at the end of this presentation. N A B O R S . C O M2 |
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| Rapidly Improving Results (In Thousands) 4Q’201Q’212Q’21 3Q’214Q’21 Operating Revenues $443,396 $460,511$489,333 $524,165 $543,539 Gross Margin $169,118$169,857 $176,867 $187,627 $196,301 Adjusted EBITDA$108,114 $107,730 $117,322$125,232 $131,656 Free Cash Flow $65,740 $60,371 $67,913 $133,111 $50,156 Note: For Adjusted EBITDA and FCF see non-GAAP reconciliations in the Appendix N A B O R S . C O M3 |
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| 4Q’21 Rig Utilization and Availability TOTAL U.S. LOWER 48 HIGH SPEC(2) U.S. OFFSHORE ALASKAINTERNATIONAL RIG FLEET(1)(2)330 152 75 3 3 71 46% 68% 25% 19% 53% ON REVENUE 111 1216 133 AVERAGE UTILIZATION (1) As of December 31, 2021 (2) Excludes non-high spec rigs in the Lower-48 Note: Subtotals may not foot due to rounding N A B O R S . C O M4 |
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| N A B O R S . C O M Recent Highlights Note: For adjusted EBITDA, FCF and Net Debt see non-GAAP reconciliations in the Appendix 4Q 2021 adjusted EBITDA of $132M All segments strengthening Resilience in International Drilling margins Strengthening margins in the L48 businesses Combined Drilling and Solutions daily margin of more than $9,270 Combined gross margin reached $65.1 million, and delivered margins of 36.2% Generated FCF of $50M in 4Q 2021 •2021 FCF of $312M •Reduced Net Debt by $32M during 4Q 2021 •Improved Net Debt by $216M since YE 2020 Improving liquidity •Issued $700M of new senior notes due in 2027 •Executed a new revolving credit facility, expires in 2026 Drilling Solutions growth in new products and L48 market penetration 4Q21 adjusted EBITDA of $20M, 25% growth vs 3Q Compared to 4Q’20 •EBITDA increased 91% •Profit margin widened from 46% to 50% •62% growth in total installs vs 39% growth in Nabors rig count ESG Focus 2021 Accomplishments: •~10% emissions intensity reduction in L48 •TRIR of 0.41, improved from 0.49 in 2020 |
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| Five Keys to Excellence 12 3 4 5 N A B O R S . C O M Resilience leading to growth in our International segment Technology & innovation rapidly taking hold in the market Progress on our commitment to delever Leading in Sustainability and the Energy Transition |
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| 1Perfo rm anc e E xc ellenc e In The Lo wer - 48 Leading in Lower-48 Daily Margins Lower-48 Daily Margins, Including NDS (and similar services for peers) $17,500 Scalable business that outpaces the competition • Nabors’ Lower-48 NDS segment contributed ~$2,111 per day in 4Q’21 • Consistently higher daily margin vs largest peers $15,000 $12,500 $10,000 $7,500 $5,000 $2,500 $0 1Q2Q 3Q 4Q 1Q2Q 3Q 4Q 1Q2Q 3Q 4Q 2019 2020 NBRPeer 1Peer 2 2021 Notes: • 1Q’20-2Q’20 includes one-time ~$1,200-$6,200 per day of ETF for our peers • 1Q’21 Peer adjusted for one-off item of ~$1,300 per day • Calculated based on reported financials • Nabors Drilling Solutions margin included N A B O R S . C O M7 |
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| Five Keys to Excellence 12 3 4 5 N A B O R S . C O M Resilience leading to growth in our International segment Technology & innovation rapidly taking hold in the market Progress on our commitment to delever Leading in Sustainability and the Energy Transition |
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| 2 Resilienc e Leading to Gro wth in Our Internatio nal S egm ent ResultsBolstered by Strong International Margins and RigCounts $15,000 International Margin per day (Avg. $13,451/day) Change in Average Rig Counts* 0% $10,000 -20% -40% $5,000 -60% $-1Q2Q3Q4Q1Q2Q3QQ4 20202021 -80% 1Q2Q3Q4Q1Q2Q3Q4Q 20202021 NBR InternationalNBR Lower 48Lower 48 Market *Nabors L48 represents rigs generating revenue N A B O R S . C O M9 |
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| 2 Resilienc e Leading to Gro wth in Our Internatio nal S egm ent Significant International Opportunity $90 International EBITDA Potential w/Estimated* Growth from SANAD alone Embarking on Newbuild Program $85 $8M Early Term •50 rigs over the next 10 years, awarded 5 rigs to-date •First deployment expect end of 1Q’22 •~$70M capex in 2021 and ~ $150M expected in 2022, internally funded by SANAD •6-year initial contracts, full payout within 5 years, plus 4-year renewal at market •Annual EBITDA of ~$10M per rig $80 Million $70 $65 $60 Q1Q2Q3Q4Q1Q2Q3Q4 20212022 * These estimates are based on current market conditions and the projections are based on information received from third parties, which are subject to change. N A B O R S . C O M10 |
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| Five Keys to Excellence 12 3 4 5 N A B O R S . C O M Resilience leading to growth in our International segment Technology & innovation rapidly taking hold in the market Progress on our commitment to delever Leading in Sustainability and the Energy Transition |
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| 3 Im pro v ing Outlo o k Fo r Our Tec hno lo gy & Inno v atio n Ground-Breaking and Scalable Now Drilling in the Permian PACE®-R801 Successfully completed its second pad for a supermajor in the Permian Basin Nabors PACE®-R801: Industry’s First Fully Automated Land Rig 1 Field performance on par with Nabors high-specification fleet 2 Fully robotic and controlled by one person; crew undertakes other value-added responsibilities 3 Fully isolates all personnel from the red zone 4 Robotics deliver consistent and repeatable performance 5 Opportunities to integrate featured robotics and automated technologies across Nabors fleet N A B O R S . C O M 12 |
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| 3 Im pro v ing Outlo o k Fo r Our Tec hno lo gy & Inno v atio n NDS Capitalizing on Growing RigCount and Higher Penetration Expanding our high-value / high-margin low-capital technology services $60 $50 NDS Revenue & Gross Profit 55% 50% Revenue Up 77% Gross Profit Up 129% $40 $30 45% 40% 35% “Nabors is doing a great job as a key stakeholder of our drilling program with safety, quality, delivery and cost performance and developing technology and tools they deploy to continuously improve.” Bakken customer November 2021 $20 $10 $-3Q4Q1Q2Q3Q4Q 20202021 RevenueGross Profit% GM 30% 25% 20% N A B O R S . C O M13 |
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| 3 Im pro v ing Outlo o k Fo r Our Tec hno lo gy & Inno v atio n Customer Adoption Fueling Rapid NDS Footprint Expansion NDS technology consistently adds value on both Nabors’ and Third-party rigs 140 120 U.S. Performance Software Installs U.S. RigCLOUD® Services Installs 80 71 7064 58 100 80 60 40 20 0 6052 5045 4035 30 20 10 0 ROCKit ® REVit ® SmartDRILL™ 3Q4Q1Q2Q3Q4Q 2020 3Q2020 4Q2021 1Q2021 2Q2021 3Q2021 4Q 20202021 Nabors3rd Party N A B O R S . C O M14 |
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| 3 Im pro v ing Outlo o k Fo r Our Tec hno lo gy & Inno v atio n Smart SuiteTM Growth Trajectory Validates Customer Acceptance 1400 Cumulative Number of Wells Drilled 1000 •94% Customer Retention Rate* •1,250+ Wells Drilled SmartDRILLTM Automation Commercialization Third-Party SmartDRILLTM Deployment 800 •Third-Party & International Deployment 600 400 SmartNAVTM & SmartSLIDETM Solutions Commercialization 200 0 Q2'17Q4'17Q2'18 Q4'18Q2'19 Q4'19Q2'20 Q4'20 Q1'21Q2'21 Q3'21Q4'21 *The number of active users at 4Q’21 quarter-end continuing use of the service divided by the total number of active users at the beginning of the quarter N A B O R S . C O M15 |
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| 3 Im pro v ing Outlo o k Fo r Our Tec hno lo gy & Inno v atio n PLATFORM POWERED BY Industry’s SmartROSTM RigCLOUD® 50+ Smart Apps Most Robust SmartSLIDETM REVitTM SmartDRILLTM App Portfolio SmartNAVTM RigCLOUD AnalyticsTM ROCKitTM A broad suite of capabilities in optimization, automation, analytics, planning and more. myDRILLSTM SmartPLANTM SmartCRUISETM RigCLOUD MetricsTM Integrated MPD Integrated TRS MWD SuiteTM Upcoming SmartApps N A B O R S . C O M16 |
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| Five Keys to Excellence 12 3 4 5 N A B O R S . C O M Resilience leading to growth in our International segment Technology & innovation rapidly taking hold in the market Progress on our commitment to delever Leading in Sustainability and the Energy Transition |
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| 4 Pro gress o n Our Co m m itm ent to Delev er Significant Headway toward Financial Goals Semiannual FCF has been trending upward since 1H 2018 (previous downturn) $1.6B Net Debt reduction from previous high in 1Q 2018 $350 Free Cash Flow $4.5 Net Debt $300 $250 $200 Millions $100 $50 $-$(50) $(100) 1H2H1H2H1H2H1H2H 2018201920202021 $4.0 $3.5 $3.0 $2.5 $2.0 $1.5 $1.0 $0.5 $-Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2018 2019 2020 2021 Billions Note: For FCF and Net Debt see non-GAAP reconciliations in the Appendix N A B O R S . C O M18 |
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| 4 Pro gress o n Our Co m m itm ent to Delev er Key Delevering Initiatives Free Cash Flow $312M for full year 2021, including Canada asset sale proceeds Warrants Innovative dividend issuance to incentivize delevering Asset Sales Optimizing our capital allocation with asset sales of $124M for 2021, including $94M from the sale of the Canada drilling assets Note: For FCF see non-GAAP reconciliations in the Appendix N A B O R S . C O M19 |
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| 4 Pro gress o n Our Co m m itm ent to Delev er Debt Maturity Profile as of 1/31/22 In December and January: •Paid down $460 million on previous credit facility •Repurchased $89 million of 2023 and 2025 Senior Notes $1,000 $800 Millions (1) 15 $400 $200 $0 105 287 767 560 700 390 2022 2023 2024 2025 2026 2027 2028 Revolving Credit Facility (1) Notes Outstanding (2) (1) Previous facility terminated on 1/21/2022, new $350 million facility due in 2026, $15 million currently drawn (2) Face value of debt outstanding N A B O R S . C O M20 |
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| Five Keys to Excellence 12 3 4 5 O R S . C O M N A B Resilience leading to growth in our International segment Technology & innovation rapidly taking hold in the market Progress on our commitment to delever Leading in Sustainability and the Energy Transition |
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| 5 Leading in the S ustainability and E nergy Transitio n Moving Forward on the Energy Transition Energy Efficiency & Emission Reduction Technologies Expansion Beyond Oil & Gas Geothermal Development Further differentiating Nabors rigs Expanding the implementation of solutions on third-party rigs Developing verticals on identified hydrogen, fuel efficiency and energy storage applications Leveraging IP to create products applicable beyond the rigs, including carbon capture technologies Providing expertise in drilling and engineering services & solutions Adding to the long-term power solution – creating Geothermal 2.0 N A B O R S . C O M 22 |
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| 5 Leading in the S ustainability and E nergy Transitio n Growing Commitment to Operational and Environmental Stewardship Driving Lower Carbon Intensity Dedicated to improving the environmental footprint of OFS 28 Increasing Dual-Fuel Rig Count23 Operating rigs with the environment as a stakeholder 14 •28 dual-fuel (blended natural gas & diesel) 13 •1 using biodiesel 11 •3 w/ advanced energy storage/management system •5 high-line (grid powered) Investing in carbon capture, emissions monitoring and minimization, power management technologies YE 20201Q'212Q'213Q'214Q'21 N A B O R S . C O M 23 |
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| 5 Leading in the S ustainability and E nergy Transitio n Geothermal Market Technology Advancements Nabors and its predecessor entities have been continuously innovating in the energy sector for over 100 years Innovative Drilling Technologies Reducing cost per energy-unit produced by using and combining new technologies Technological advancements are enabling wide-scale commercial geothermal development Baseload Reliable and available 24/7 Renewable The heat is continuously replenished naturally Ubiquitous Ability to create heat reservoirs by drilling into deep, hard rock N A B O R S . C O M24 |
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| 5 Leading in the S ustainability and E nergy Transitio n Geothermal Partners Selections Partner GoalsBenefits from Partnering with Nabors Integrating surface and subsurface systems for delivery of higher-heat harvesting efficiency at low capital cost through the use of alternative fluids and turbine innovations Nabors’ global footprint, technology development and deployment expertise, automaton and digitalization capabilities, and leadership in well construction Scaling supercritical utility-scale geothermal technologies on a global basis / seeking to displace coal power generation Nabors’ industry and regulatory expertise, global operational footprint and excellent track record in Health, Safety & Environment protocols Developing and globally scaling novel millimeter-wave drilling systems to drill up to 5 miles below the surface at radically lower cost Nabors’ existing global supply chain, as well as its development and deployment capabilities N A B O R S . C O M25 |
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| Nabors Investment Thesis Driving the evolution of energy production technology with: Leading position in automation and digitalization The largest international footprint in the drilling sector Commitment to advancing the energy transition N A B O R S . C O M26 |
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| Appendix N A B O R S . C O M27 |
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| Reconciliation of Adjusted EBITDA to Income (Loss) from Continuing Operations before Income Tax Adjusted EBITDA represents income (loss) from continuing operations before income taxes, interest expense, depreciation and amortization, earnings (loss) from unconsolidated affiliates, investment income (loss), impairments and other charges and other, net. 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, because it believes that this financial measure accurately reflects 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 this measure differently. A reconciliation of this non-GAAP measure to income (loss) from continuing operations before income taxes, which is the most closely comparable GAAP measure, is provided below. Th re e Mo n th s E n de d (I n Th o u s an ds ) De ce mb e r 31 , Mar ch 31 , J u n e 30 , Se p t e mb e r 30 , De ce mb e r 31 , 2 0 2 0 2 0 2 12 0 2 12 0 2 12 0 2 1 Adjusted EBITDA $108,114 $107,730 $117,322 $125,232 $131,656 Depreciation and Amortization 208,654 177,276 (174,775) (173,375) (167,955) Adjusted Operating Income (loss) (100,540) (69,546) (57,453) (48,143) (36,299) Investment Income (loss) 3,342 1,263 (62) 200 156 Interest Expense (47,943) (42,975) (41,741) (42,217) (44,570) Other, net 80,049 (7,346) (66,455) (22,758) (10,170) I n co m e (lo s s ) fro m co n tin u in g o pe ratio n s be fo re in co m e tax e s ($65 ,092) ($1 1 8,604) ($1 65 ,684) ($1 1 2,91 8) ($90,883) N A B O R S . C O M28 |
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| 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 performance of its operating segments and the consolidated Company based on several criteria, including net debt, because it believes that this financial measure accurately 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 performance. Other companies in this industry 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 below. (I n Th o u s an ds ) De ce mb e r 31 ,Mar ch 31 ,J u n e 30 ,Se p t e mb e r 30 ,De ce mb e r 31 , 2 0 2 0 2 0 2 12 0 2 12 0 2 12 0 2 1 Long-Term Debt $2,968,701$2,898,879 $2,823,125$3,075,520 $3,262,795 Current Debt -----Total Debt $2,968,701$2,898,879 $2,823,125$3,075,520 $3,262,795 Cash & Short-term Investments $481,746$417,561$399,897 $771,884$991,488 Ne t D e bt $2,486,955$2,481 ,31 8 $2,423,228 $2,303,636 $2,271 ,307 N A B O R S . C O M29 |
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| Reconciliation of Free Cash Flow to Net Cash Provided by Operating Activities Free cash flow represents net cash provided by operating activities less cash used for investing activities. Free cash flow is an indicator of our ability to generate cash flow after required spending to maintain or expand our asset base. Management believes that this non-GAAP measure is useful information to investors when comparing our cash flows with the cash flows of other companies. 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 performance of the consolidated Company based on several criteria, including free cash flow, because it believes that these financial measures accurately reflect the Company's ongoing profitability and performance. A reconciliation of this measure to net cash provided by operating activities is provided below. N A B O R S . C O M30 |
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| NABORS INDUSTRIES LTD. 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 NABORS.COM NABORS CORPORATE SERVICES 515 W. Greens Road Suite 1200 Houston, TX 77067-4525 @ n a b o r s g l o b a l |
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