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): August 3, 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 August 3, 2022, Nabors Industries Ltd. (“Nabors”) issued a press release announcing its results of operations for the three months ended June 30, 2022. A copy of that release is furnished herewith as Exhibit 99.1 and is incorporated herein by reference.
On August 4, 2022, Nabors will hold a conference call at 12:00 p.m. Central Time, regarding the Company’s financial results for the quarter ended June 30, 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
| 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: August 3, 2022 | By: | /s/ Mark D. Andrews |
| Name: Mark D. Andrews | ||
| Title: Corporate Secretary |
3
Exhibit 99.1
Nabors AnnouncesSecond Quarter 2022 Results
HAMILTON, Bermuda, August 3, 2022 /PRNewswire/ -- Nabors Industries Ltd. (“Nabors” or the “Company”) (NYSE: NBR) today reported second quarter 2022 operating revenues of $631 million, an increase of approximately 11%, compared to operating revenues of $569 million in the first quarter of 2022. The net loss from continuing operations attributable to Nabors shareholders for the quarter was $83 million, or $9.41 per share. This compares to a loss of $184 million, or $22.51 per share, in the first quarter. The second quarter results included a non-cash charge of $22 million, or $2.42 per share, related to mark-to-market treatment of Nabors’ warrants, while the first quarter included a non-cash charge for the warrants of $72 million, or $8.63 per share. Second quarter adjusted EBITDA was $158 million, a 21% increase, compared to $131 million in the previous quarter.
Anthony G. Petrello, Nabors Chairman, CEO and President, commented, “All of our operating segments contributed to the strong adjusted EBITDA growth in the second quarter. Results in U.S. Drilling reflect improved performance in the Lower 48 market, where our daily adjusted gross margin continued to grow on higher average pricing for the fleet. Daily margin and EBITDA also improved in our international markets. In Rig Technologies, sequential revenue growth of 23% helped drive that segment’s EBITDA increase.
“In the Lower 48 market, our daily margin reflects the strong pricing momentum and our success in capturing these higher rates. Our average daily revenue of $25,566 represents an increase of more than $2,500 versus the prior quarter. Leading-edge day rates remain at least $8,000 higher than the second quarter’s average dayrates, and continued to increase in July.
“Growth in Lower 48 oilfield activity remains robust. The industry drilling rig count in this market grew 13% in the second quarter, and recently totaled more than 700. The commodity price environment remains supportive of additional increases in this activity, and most of our largest U.S. customers indicate they will add rigs by the end of the year. In addition, several of our larger customers have initiated discussions on further rig additions for 2023 and for longer contract term. We expect to reach 100% utilization in our high specification rigs relatively early next year and we anticipate a significantly tighter Lower 48 market for the industry.
“In our key International markets, tendering activity for additional rigs has increased. We remain optimistic for awards resulting in growth in these geographies. Already in the third quarter, our rig count in Saudi Arabia has increased, due to the deployment of the first newbuild rig in our SANAD joint venture with Saudi Aramco and we expect additional rig awards and deployments in Latin America within the next few months.”
Consolidated and Segment Results
The U.S. Drilling segment reported $87.4 million in adjusted EBITDA for the second quarter of 2022, an 18% increase from the prior quarter. Nabors’ average Lower 48 rig count, at 89.3, increased by nearly six rigs. Daily adjusted gross margin in the Lower 48 market averaged $8,706, more than 13% higher than the prior quarter.
International Drilling adjusted EBITDA totaled $82.4 million, a 16% increase from the prior quarter. Improved performance in Saudi Arabia and Latin America led the growth. The International rig count averaged 74.3 rigs, up more than two rigs from the prior quarter. Daily adjusted gross margin for the second quarter averaged $14,331, up $1,197 from the prior quarter.
In Drilling Solutions, adjusted EBITDA increased by 14% to $22.8 million, mainly reflecting increasing activity in the U.S. with higher volumes in performance drilling software and managed pressure drilling. Adjusted gross margin as a percentage of revenue in Drilling Solutions reached 52%, a record high since the segment’s inception.
In Rig Technologies, adjusted EBITDA improved by $4.4 million in the second quarter. Revenue increased by 23% sequentially, to $45 million, mainly due to higher aftermarket sales and equipment rentals.
Adjusted Free Cash Flow and Capital Discipline
Adjusted free cash flow totaled $57 million in the second quarter. This result was primarily driven by higher financial results in the business, lower interest payments, and improved days sales outstanding. Capital expenditures for the second quarter totaled $99 million, including $27 million for the SANAD newbuilds.
In the second quarter, net debt was $2,184 million, a $33 million reduction as compared to the first quarter. Free cash flow generated in the quarter drove the improvement in net debt.
William Restrepo, Nabors CFO, stated, “During the second quarter, activity increased across our segments, fueling a significant step up in our financial results. Our adjusted EBITDA as a percentage of revenue increased by 200 basis points to more than 25%. We expect similar improvement in the third quarter. Utilization for our high-spec Lower 48 rigs currently stands at 81%. With the current market tightness, pricing is rising rapidly. Margins are expanding, a trend we expect to continue in coming quarters. The accelerating market and our pricing momentum in the Lower 48, as well as stronger than expected fundamentals in the International segment, have significantly outpaced the estimates embedded in our previous EBITDA outlook for 2022 and 2023. We plan to provide an update for our 2023 expectations once our budget process is finalized.
“We once again made progress reducing our net debt in the second quarter. We expect further material improvement over the balance of 2022. For the full year 2022, we expect to generate adjusted free cash flow well in excess of $100 million. Outstanding debt maturing through 2024 now totals $251 million. At the end of the quarter our cash and short-term investments stood at $418 million, and our $350 million credit facility was undrawn. With our experience in managing liquidity, our demonstrated willingness to access the capital markets well ahead of debt maturities, and the healthy cash generation we are targeting over the next two years, we remain confident in our ability to manage our debt profile and materially improve our leverage.”
Mr. Petrello added, “Once again, we made progress on each of our five keys to excellence:
| o | In our Lower 48 business, rig count and financial results continued their upward trends, with excellent<br>prospects for further growth. |
|---|---|
| o | Financial results in our International segment improved across several major markets, and most recently<br>we deployed the first In-Kingdom newbuild rig in Saudi Arabia. |
| o | The financial performance of our high-tech Drilling Solutions and Rig Technologies segments strengthened.<br>Market adoption of our innovation portfolio, especially our automation solutions, is accelerating. |
| o | We made additional progress to de-lever, reducing net debt and total debt, while generating free cash<br>flow. |
| o | We further expanded our Energy Transition efforts, recently completing investments in three companies<br>focusing on sodium-based battery technology, emissions monitoring, and innovative ultra-capacitor solutions. We also made additional progress<br>in our internal initiatives including fuel management, energy storage, hydrogen, and carbon capture.” |
Outlook Summary for the Third Quarter of 2022
Nabors expects the following quarterly metrics:
U.S. Drilling
| o | An increase in average Lower 48 rig count of 3 to 4 rigs over the second quarter average |
|---|---|
| o | Lower 48 adjusted gross margin per day of approximately $10,400 - $10,600 |
| o | An additional rig and higher average dayrates in Alaska; Offshore in-line with second quarter levels |
International
| o | Rig count approximately in line with the second quarter average |
|---|---|
| o | Adjusted gross margin per day of approximately $14,400 |
Drilling Solutions
| o | Adjusted EBITDA up by approximately 12% over the second quarter level |
|---|
Rig Technologies
| o | Adjusted EBITDA up by approximately $2 million over the second quarter level |
|---|
Capital Expenditures
| o | Capital expenditures between $110 million and $120 million |
|---|---|
| o | Capital expenditures for the full year 2022 of approximately $380 million |
Adjusted Free Cash Flow
| o | Free cash flow approximately breakeven |
|---|---|
| o | Free cash flow for the full year 2022 well above $100 million |
Mr. Petrello concluded, “Nabors’ second quarter financial results, and our future outlook, demonstrate the value of the strategies we’ve implemented over the past several years. In particular, our development and successful deployment of a robust, industry-leading portfolio of advanced process automation, robotization, and digitalization solutions have driven demand across the Nabors spectrum, including rigs, apps, services, and equipment. Our clients increasingly realize value from this expanding suite, by driving their productivity higher.
“Looking ahead, with a constructive commodity price environment, we see significant potential for our portfolio across global markets. Our focus includes the third-party drilling rig market, which is fertile for the adoption of many of our technologies, and international expansion. In short, our prospects today are more favorable than they have been in many years. We are well positioned today to capitalize on this environment. We look forward to reporting our progress.”
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. 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.
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
CONDENSEDCONSOLIDATED STATEMENTS OF INCOME (LOSS)
(Unaudited)
| Three Months Ended | Six Months Ended | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| June 30, | March 31, | June 30, | |||||||||||||
| (In thousands, except per share amounts) | 2022 | 2021 | 2022 | 2022 | 2021 | ||||||||||
| Revenues and other income: | |||||||||||||||
| Operating revenues | $ | 630,943 | $ | 489,333 | $ | 568,539 | $ | 1,199,482 | $ | 949,844 | |||||
| Investment income (loss) | 822 | (62 | ) | 163 | 985 | 1,201 | |||||||||
| Total revenues and other income | 631,765 | 489,271 | 568,702 | 1,200,467 | 951,045 | ||||||||||
| Costs and other deductions: | |||||||||||||||
| Direct costs | 403,797 | 312,466 | 372,712 | 776,509 | 603,120 | ||||||||||
| General and administrative expenses | 58,167 | 51,580 | 53,639 | 111,806 | 106,240 | ||||||||||
| Research and engineering | 10,941 | 7,965 | 11,678 | 22,619 | 15,432 | ||||||||||
| Depreciation and amortization | 162,015 | 174,775 | 164,359 | 326,374 | 352,051 | ||||||||||
| Interest expense | 42,899 | 41,714 | 46,910 | 89,809 | 84,689 | ||||||||||
| Other, net | 14,528 | 66,455 | 80,401 | 94,929 | 73,801 | ||||||||||
| Total costs and other deductions | 692,347 | 654,955 | 729,699 | 1,422,046 | 1,235,333 | ||||||||||
| Income (loss) from continuing operations before income taxes | (60,582 | ) | (165,684 | ) | (160,997 | ) | (221,579 | ) | (284,288 | ) | |||||
| Income tax expense (benefit) | 9,353 | 24,719 | 13,671 | 23,024 | 34,444 | ||||||||||
| Income (loss) from continuing operations, net of tax | (69,935 | ) | (190,403 | ) | (174,668 | ) | (244,603 | ) | (318,732 | ) | |||||
| Income (loss) from discontinued operations, net of tax | - | 8 | - | - | 27 | ||||||||||
| Net income (loss) | (69,935 | ) | (190,395 | ) | (174,668 | ) | (244,603 | ) | (318,705 | ) | |||||
| Less: Net (income) loss attributable to noncontrolling interest | (12,982 | ) | (5,614 | ) | (9,828 | ) | (22,810 | ) | (14,390 | ) | |||||
| Net income (loss) attributable to Nabors | (82,917 | ) | (196,009 | ) | (184,496 | ) | (267,413 | ) | (333,095 | ) | |||||
| Less: Preferred stock dividend | - | - | - | - | (3,653 | ) | |||||||||
| Net income (loss) attributable to Nabors common shareholders | $ | (82,917 | ) | $ | (196,009 | ) | $ | (184,496 | ) | $ | (267,413 | ) | $ | (336,748 | ) |
| Amounts attributable to Nabors common shareholders: | |||||||||||||||
| Net income (loss) from continuing operations | $ | (82,917 | ) | $ | (196,017 | ) | $ | (184,496 | ) | $ | (267,413 | ) | $ | (336,775 | ) |
| Net income (loss) from discontinued operations | - | 8 | - | - | 27 | ||||||||||
| Net income (loss) attributable to Nabors common shareholders | $ | (82,917 | ) | $ | (196,009 | ) | $ | (184,496 | ) | $ | (267,413 | ) | $ | (336,748 | ) |
| Earnings (losses) per share: | |||||||||||||||
| Basic from continuing operations | $ | (9.41 | ) | $ | (26.59 | ) | $ | (22.51 | ) | $ | (31.34 | ) | $ | (46.90 | ) |
| Basic from discontinued operations | - | - | - | - | - | ||||||||||
| Total Basic | $ | (9.41 | ) | $ | (26.59 | ) | $ | (22.51 | ) | $ | (31.34 | ) | $ | (46.90 | ) |
| Diluted from continuing operations | $ | (9.41 | ) | $ | (26.59 | ) | $ | (22.51 | ) | $ | (31.34 | ) | $ | (46.90 | ) |
| Diluted from discontinued operations | - | - | - | - | - | ||||||||||
| Total Diluted | $ | (9.41 | ) | $ | (26.59 | ) | $ | (22.51 | ) | $ | (31.34 | ) | $ | (46.90 | ) |
| Weighted-average number of common shares outstanding: | |||||||||||||||
| Basic | 9,081 | 7,460 | 8,311 | 8,696 | 7,281 | ||||||||||
| Diluted | 9,081 | 7,460 | 8,311 | 8,696 | 7,281 | ||||||||||
| Adjusted EBITDA | $ | 158,038 | $ | 117,322 | $ | 130,510 | $ | 288,548 | $ | 225,052 | |||||
| Adjusted operating income (loss) | $ | (3,977 | ) | $ | (57,453 | ) | $ | (33,849 | ) | $ | (37,826 | ) | $ | (126,999 | ) |
1-1
NABORS INDUSTRIES LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
| June 30, | March 31, | December 31, | ||||
|---|---|---|---|---|---|---|
| 2022 | 2022 | 2021 | ||||
| (In thousands) | (Unaudited) | |||||
| ASSETS | ||||||
| Current assets: | ||||||
| Cash and short-term investments | $ | 417,978 | $ | 394,039 | $ | 991,488 |
| Accounts receivable, net | 278,112 | 297,209 | 287,572 | |||
| Other current assets | 227,290 | 236,820 | 222,749 | |||
| Total current assets | 923,380 | 928,068 | 1,501,809 | |||
| Property, plant and equipment, net | 3,186,849 | 3,261,574 | 3,348,498 | |||
| Other long-term assets | 690,754 | 667,524 | 675,057 | |||
| Total assets | $ | 4,800,983 | $ | 4,857,166 | $ | 5,525,364 |
| LIABILITIES AND EQUITY | ||||||
| Current liabilities: | ||||||
| Current portion of debt | $ | - | $ | - | $ | - |
| Other current liabilities | 524,058 | 513,445 | 525,228 | |||
| Total current liabilities | 524,058 | 513,445 | 525,228 | |||
| Long-term debt | 2,601,510 | 2,610,092 | 3,262,795 | |||
| Other long-term liabilities | 394,210 | 375,070 | 343,120 | |||
| Total liabilities | 3,519,778 | 3,498,607 | 4,131,143 | |||
| Redeemable noncontrolling interest in subsidiary | 680,403 | 677,829 | 675,283 | |||
| Equity: | ||||||
| Shareholders' equity | 453,200 | 543,616 | 590,656 | |||
| Noncontrolling interest | 147,602 | 137,114 | 128,282 | |||
| Total equity | 600,802 | 680,730 | 718,938 | |||
| Total liabilities and equity | $ | 4,800,983 | $ | 4,857,166 | $ | 5,525,364 |
1-2
NABORS INDUSTRIES LTD. AND SUBSIDIARIES
SEGMENT REPORTING
(Unaudited)
The following tables set forth certain information with respect to our reportable segments and rig activity:
| Three Months Ended | Six Months Ended | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| June 30, | March 31, | June 30, | |||||||||||||
| (In thousands, except rig activity) | 2022 | 2021 | 2022 | 2022 | 2021 | ||||||||||
| Operating revenues: | |||||||||||||||
| U.S. Drilling | $ | 253,008 | $ | 161,606 | $ | 217,583 | $ | 470,591 | $ | 303,905 | |||||
| Canada Drilling | - | 12,313 | - | - | 33,302 | ||||||||||
| International Drilling | 296,320 | 255,282 | 279,030 | 575,350 | 502,120 | ||||||||||
| Drilling Solutions | 55,879 | 39,111 | 54,182 | 110,061 | 74,817 | ||||||||||
| Rig Technologies (1) | 45,094 | 34,552 | 36,736 | 81,830 | 60,300 | ||||||||||
| Other reconciling items (2) | (19,358 | ) | (13,531 | ) | (18,992 | ) | (38,350 | ) | (24,600 | ) | |||||
| Total operating revenues | $ | 630,943 | $ | 489,333 | $ | 568,539 | $ | 1,199,482 | $ | 949,844 | |||||
| Adjusted EBITDA: (3) | |||||||||||||||
| U.S. Drilling | $ | 87,371 | $ | 59,784 | $ | 74,265 | $ | 161,636 | $ | 118,570 | |||||
| Canada Drilling | (15 | ) | 3,008 | (19 | ) | (34 | ) | 12,667 | |||||||
| International Drilling | 82,446 | 71,322 | 71,248 | 153,694 | 133,933 | ||||||||||
| Drilling Solutions | 22,751 | 12,796 | 20,000 | 42,751 | 24,254 | ||||||||||
| Rig Technologies (1) | 3,364 | 2,035 | (1,044 | ) | 2,320 | 1,502 | |||||||||
| Other reconciling items (4) | (37,879 | ) | (31,623 | ) | (33,940 | ) | (71,819 | ) | (65,873 | ) | |||||
| Total adjusted EBITDA | $ | 158,038 | $ | 117,322 | $ | 130,510 | $ | 288,548 | $ | 225,052 | |||||
| Adjusted operating income (loss): (5) | |||||||||||||||
| U.S. Drilling | $ | 8,288 | $ | (20,869 | ) | $ | (5,851 | ) | $ | 2,437 | $ | (44,205 | ) | ||
| Canada Drilling | (15 | ) | (2,608 | ) | (19 | ) | (34 | ) | 1,299 | ||||||
| International Drilling | 4,605 | (8,439 | ) | (6,327 | ) | (1,722 | ) | (27,071 | ) | ||||||
| Drilling Solutions | 18,260 | 6,524 | 14,709 | 32,969 | 11,234 | ||||||||||
| Rig Technologies (1) | 2,127 | (692 | ) | (2,751 | ) | (624 | ) | (3,261 | ) | ||||||
| Other reconciling items (4) | (37,242 | ) | (31,369 | ) | (33,610 | ) | (70,852 | ) | (64,995 | ) | |||||
| Total adjusted operating income (loss) | $ | (3,977 | ) | $ | (57,453 | ) | $ | (33,849 | ) | $ | (37,826 | ) | $ | (126,999 | ) |
| Rig activity: | |||||||||||||||
| Average Rigs Working: (7) | |||||||||||||||
| Lower 48 | 89.3 | 63.5 | 83.4 | 86.3 | 59.9 | ||||||||||
| Other US | 7.1 | 5.7 | 6.9 | 7.0 | 5.0 | ||||||||||
| U.S. Drilling | 96.4 | 69.2 | 90.3 | 93.3 | 64.9 | ||||||||||
| Canada Drilling | - | 8.2 | - | - | 10.9 | ||||||||||
| International Drilling | 74.3 | 68.3 | 72.0 | 73.2 | 66.5 | ||||||||||
| Total average rigs working | 170.7 | 145.7 | 162.3 | 166.5 | 142.3 | ||||||||||
| Daily Rig Revenue: (6),(8) | |||||||||||||||
| Lower 48 | $ | 25,566 | $ | 21,015 | $ | 23,030 | $ | 24,348 | $ | 21,314 | |||||
| Other US | 70,181 | 78,215 | 72,089 | 71,116 | 80,624 | ||||||||||
| U.S. Drilling (10) | 28,852 | 25,694 | 26,781 | 27,856 | 25,890 | ||||||||||
| Canada Drilling | - | 16,512 | - | - | 16,813 | ||||||||||
| International Drilling | 43,808 | 41,102 | 43,065 | 43,445 | 41,704 | ||||||||||
| Daily Adjusted Gross Margin: (6),(9) | |||||||||||||||
| Lower 48 | $ | 8,706 | $ | 7,017 | $ | 7,694 | $ | 8,220 | $ | 7,694 | |||||
| Other US | 36,300 | 48,657 | 37,236 | 36,759 | 51,385 | ||||||||||
| U.S. Drilling (10) | 10,738 | 10,424 | 9,953 | 10,361 | 11,064 | ||||||||||
| Canada Drilling | - | 4,993 | - | - | 6,968 | ||||||||||
| International Drilling | 14,331 | 13,420 | 13,134 | 13,746 | 13,176 |
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 of tax, income tax expense (benefit),<br> investment income (loss), interest expense, other, net and depreciation and amortization. Adjusted EBITDA is a non-GAAP financial<br> measure and should not be used in isolation or as a substitute for the amounts reported in accordance with GAAP. In addition, adjusted<br> EBITDA excludes certain cash expenses that the Company is obligated to make. However, management evaluates the performance of its<br> operating segments and the consolidated Company based on several criteria, including adjusted EBITDA and adjusted operating income<br> (loss), 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 net income<br> (loss), which is the most closely comparable GAAP measure, is provided in the table set forth immediately following the heading "Reconciliation<br> of Non-GAAP Financial Measures to Net Income (Loss)". |
| (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 operations, net of tax, income tax<br> expense (benefit), investment income (loss), interest expense 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 net income (loss), which is the most closely comparable GAAP measure, is provided in the table set forth immediately<br> following the heading "Reconciliation 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 under a contract during the period. These<br> would typically include days in which 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 period. For example, one rig<br> operating 45 days during a quarter represents approximately 0.5 average rigs working for the quarter. On an annual period,<br> one rig operating 182.5 days represents approximately 0.5 average rigs working for the year. Average rigs working can<br> also be calculated as rig revenue days during the period divided by the number of calendar days in the period. |
| (8) | Daily<br> rig revenue represents operating revenue, divided by the total number of revenue days during the quarter. |
| (9) | Daily<br> adjusted gross margin represents operating revenue less direct costs, divided by the total number of rig revenue days during the<br> quarter. |
| (10) | The<br> U.S. Drilling segment includes the Lower 48, Alaska, and Gulf of Mexico operating areas. |
1-4
NABORS INDUSTRIES LTD.AND SUBSIDIARIES
NON-GAAPFINANCIAL MEARSURES
RECONCILIATION OF ADJUSTEDEBITDA BY SEGMENT TO ADJUSTED OPERATING INCOME (LOSS) BY SEGMENT
(Unaudited)
| Three<br> Months Ended June 30, 2022 | ||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (In thousands) | U.S.<br> <br><br> Drilling | Canada<br> <br><br> Drilling | International<br><br> Drilling | Drilling<br><br> Solutions | Rig<br><br> Technologies | Other<br><br> reconciling<br><br> items | Total | |||||||||||||
| Adjusted operating<br> income (loss) | $ | 8,288 | $ | (15 | ) | $ | 4,605 | $ | 18,260 | $ | 2,127 | $ | (37,242 | ) | $ | (3,977 | ) | |||
| Depreciation<br> and amortization | 79,083 | - | 77,841 | 4,491 | 1,237 | (637 | ) | 162,015 | ||||||||||||
| Adjusted<br> EBITDA | $ | 87,371 | $ | (15 | ) | $ | 82,446 | $ | 22,751 | $ | 3,364 | $ | (37,879 | ) | $ | 158,038 | ||||
| Three<br> Months Ended June 30, 2021 | ||||||||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| U.S.<br> <br><br>Drilling | Canada<br><br><br> Drilling | International<br><br><br> Drilling | Drilling<br><br><br> Solutions | Rig<br><br><br> Technologies | Other<br><br><br> reconciling<br><br> items | Total | ||||||||||||||
| Adjusted operating<br> income (loss) | $ | (20,869 | ) | $ | (2,608 | ) | $ | (8,439 | ) | $ | 6,524 | $ | (692 | ) | $ | (31,369 | ) | $ | (57,453 | ) |
| Depreciation<br> and amortization | 80,653 | 5,616 | 79,761 | 6,272 | 2,727 | (254 | ) | 174,775 | ||||||||||||
| Adjusted<br> EBITDA | $ | 59,784 | $ | 3,008 | $ | 71,322 | $ | 12,796 | $ | 2,035 | $ | (31,623 | ) | $ | 117,322 | |||||
| Three<br> Months Ended March 31, 2022 | ||||||||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| (In thousands) | U.S.<br> <br><br>Drilling | Canada<br> <br><br>Drilling | International<br><br><br> Drilling | Drilling<br><br><br> Solutions | Rig<br><br><br> Technologies | Other<br><br><br> reconciling<br><br> items | Total | |||||||||||||
| Adjusted operating<br> income (loss) | $ | (5,851 | ) | $ | (19 | ) | $ | (6,327 | ) | $ | 14,709 | $ | (2,751 | ) | $ | (33,610 | ) | $ | (33,849 | ) |
| Depreciation<br> and amortization | 80,116 | - | 77,575 | 5,291 | 1,707 | (330 | ) | 164,359 | ||||||||||||
| Adjusted<br> EBITDA | $ | 74,265 | $ | (19 | ) | $ | 71,248 | $ | 20,000 | $ | (1,044 | ) | $ | (33,940 | ) | $ | 130,510 | |||
| Six<br> Months Ended June 30, 2022 | ||||||||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | |
| (In thousands) | U.S.<br> <br><br>Drilling | Canada<br> <br><br>Drilling | International<br><br><br> Drilling | Drilling<br><br><br> Solutions | Rig<br><br><br> Technologies | Other<br><br><br> reconciling<br><br> items | Total | |||||||||||||
| Adjusted operating<br> income (loss) | $ | 2,437 | $ | (34 | ) | $ | (1,722 | ) | $ | 32,969 | $ | (624 | ) | $ | (70,852 | ) | $ | (37,826 | ) | |
| Depreciation<br> and amortization | 159,199 | - | 155,416 | 9,782 | 2,944 | (967 | ) | 326,374 | ||||||||||||
| Adjusted<br> EBITDA | $ | 161,636 | $ | (34 | ) | $ | 153,694 | $ | 42,751 | $ | 2,320 | $ | (71,819 | ) | $ | 288,548 | ||||
| Six<br> Months Ended June 30, 2021 | ||||||||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | |
| U.S.<br><br><br> Drilling | Canada<br><br><br> Drilling | International<br><br><br> Drilling | Drilling<br><br><br> Solutions | Rig<br><br><br> Technologies | Other<br><br><br> reconciling<br><br> items | Total | ||||||||||||||
| Adjusted operating<br> income (loss) | $ | (44,205 | ) | $ | 1,299 | $ | (27,071 | ) | $ | 11,234 | $ | (3,261 | ) | $ | (64,995 | ) | $ | (126,999 | ) | |
| Depreciation<br> and amortization | 162,775 | 11,368 | 161,004 | 13,020 | 4,763 | (878 | ) | 352,051 | ||||||||||||
| Adjusted<br> EBITDA | $ | 118,570 | $ | 12,667 | $ | 133,933 | $ | 24,254 | $ | 1,502 | $ | (65,873 | ) | $ | 225,052 |
Adjusted EBITDA by segment represents adjusted income (loss) plus depreciation and amortization.
1-5
NABORSINDUSTRIES LTD. AND SUBSIDIARIES
NON-GAAPFINANCIAL MEARSURES
RECONCILIATIONOF ADJUSTED GROSS MARGIN BY SEGMENT TO ADJUSTED OPERATING INCOME (LOSS) BY SEGMENT
(Unaudited)
| Three<br> Months Ended | Six<br> Months Ended | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| June<br> 30, | March<br> 31, | June<br> 30, | |||||||||||||
| (In thousands) | 2022 | 2021 | 2022 | 2022 | 2021 | ||||||||||
| Lower 48 - U.S. Drilling | |||||||||||||||
| Adjusted<br> operating income (loss) | $ | (937 | ) | $ | (31,721 | ) | $ | (14,596 | ) | $ | (15,533 | ) | $ | (62,743 | ) |
| Plus:<br> General and administrative costs | 4,740 | 4,396 | 4,445 | 9,185 | 8,676 | ||||||||||
| Plus:<br> Research and engineering | 1,611 | 732 | 1,638 | 3,250 | 1,375 | ||||||||||
| GAAP Gross<br> Margin | 5,414 | (26,593 | ) | (8,513 | ) | (3,098 | ) | (52,692 | ) | ||||||
| Plus:<br> Depreciation and amortization | 65,312 | 67,119 | 66,245 | 131,556 | 136,040 | ||||||||||
| Adjusted<br> gross margin | $ | 70,726 | $ | 40,526 | $ | 57,732 | $ | 128,458 | $ | 83,348 | |||||
| Other - U.S. Drilling | |||||||||||||||
| Adjusted<br> operating income (loss) | $ | 9,225 | $ | 10,852 | $ | 8,745 | $ | 17,970 | $ | 18,538 | |||||
| Plus:<br> General and administrative costs | 307 | 550 | 383 | 691 | 1,076 | ||||||||||
| Plus:<br> Research and engineering | 139 | 100 | 132 | 270 | 183 | ||||||||||
| GAAP Gross<br> Margin | 9,671 | 11,502 | 9,260 | 18,931 | 19,797 | ||||||||||
| Plus:<br> Depreciation and amortization | 13,771 | 13,534 | 13,873 | 27,644 | 26,734 | ||||||||||
| Adjusted<br> gross margin | $ | 23,442 | $ | 25,036 | $ | 23,133 | $ | 46,575 | $ | 46,531 | |||||
| U.S. Drilling | |||||||||||||||
| Adjusted<br> operating income (loss) | $ | 8,288 | $ | (20,869 | ) | $ | (5,851 | ) | $ | 2,437 | $ | (44,205 | ) | ||
| Plus:<br> General and administrative costs | 5,047 | 4,946 | 4,828 | 9,876 | 9,752 | ||||||||||
| Plus:<br> Research and engineering | 1,750 | 832 | 1,770 | 3,520 | 1,558 | ||||||||||
| GAAP Gross<br> Margin | 15,085 | (15,091 | ) | 747 | 15,833 | (32,895 | ) | ||||||||
| Plus:<br> Depreciation and amortization | 79,083 | 80,653 | 80,118 | 159,200 | 162,774 | ||||||||||
| Adjusted<br> gross margin | $ | 94,168 | $ | 65,562 | $ | 80,865 | $ | 175,033 | $ | 129,879 | |||||
| Canada Drilling | |||||||||||||||
| Adjusted<br> operating income (loss) | $ | (15 | ) | $ | (2,608 | ) | $ | (19 | ) | $ | (34 | ) | $ | 1,299 | |
| Plus:<br> General and administrative costs | 15 | 681 | 18 | 33 | 1,048 | ||||||||||
| Plus:<br> Research and engineering | - | 33 | - | - | 85 | ||||||||||
| GAAP Gross<br> Margin | - | (1,894 | ) | (1 | ) | (1 | ) | 2,432 | |||||||
| Plus:<br> Depreciation and amortization | - | 5,617 | 2 | 2 | 11,369 | ||||||||||
| Adjusted<br> gross margin | $ | - | $ | 3,723 | $ | 1 | $ | 1 | $ | 13,801 | |||||
| International Drilling | |||||||||||||||
| Adjusted<br> operating income (loss) | $ | 4,605 | $ | (8,439 | ) | $ | (6,327 | ) | $ | (1,722 | ) | $ | (27,071 | ) | |
| Plus:<br> General and administrative costs | 13,056 | 10,621 | 12,483 | 25,539 | 22,027 | ||||||||||
| Plus:<br> Research and engineering | 1,433 | 1,406 | 1,369 | 2,802 | 2,682 | ||||||||||
| GAAP Gross<br> Margin | 19,094 | 3,588 | 7,525 | 26,619 | (2,362 | ) | |||||||||
| Plus:<br> Depreciation and amortization | 77,842 | 79,761 | 77,574 | 155,416 | 161,005 | ||||||||||
| Adjusted<br> gross margin | $ | 96,936 | $ | 83,349 | $ | 85,099 | $ | 182,035 | $ | 158,643 |
Adjusted gross margin by segment represents adjusted operating income (loss) plus general and administrative costs, research and engineering costs and depreciation and amortization.
1-6
| NABORS INDUSTRIES LTD. AND SUBSIDIARIES | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO NET INCOME (LOSS) | |||||||||||||||
| (Unaudited) | |||||||||||||||
| Three<br> Months Ended | Six<br> Months Ended | ||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| June<br> 30, | March<br> 31, | June<br> 30, | |||||||||||||
| (In<br> thousands) | 2022 | 2021 | 2022 | 2022 | 2021 | ||||||||||
| Net<br> income (loss) | $ | (69,935 | ) | $ | (190,395 | ) | $ | (174,668 | ) | $ | (244,603 | ) | $ | (318,705 | ) |
| (Income)<br> loss from discontinued operations, net of tax | - | (8 | ) | - | - | (27 | ) | ||||||||
| Income<br> (loss) from continuing operations, net of tax | (69,935 | ) | (190,403 | ) | (174,668 | ) | (244,603 | ) | (318,732 | ) | |||||
| Income<br> tax expense (benefit) | 9,353 | 24,719 | 13,671 | 23,024 | 34,444 | ||||||||||
| Income<br> (loss) from continuing operations before income taxes | (60,582 | ) | (165,684 | ) | (160,997 | ) | (221,579 | ) | (284,288 | ) | |||||
| Investment<br> (income) loss | (822 | ) | 62 | (163 | ) | (985 | ) | (1,201 | ) | ||||||
| Interest<br> expense | 42,899 | 41,714 | 46,910 | 89,809 | 84,689 | ||||||||||
| Other,<br> net | 14,528 | 66,455 | 80,401 | 94,929 | 73,801 | ||||||||||
| Adjusted<br> operating income (loss) (1) | (3,977 | ) | (57,453 | ) | (33,849 | ) | (37,826 | ) | (126,999 | ) | |||||
| Depreciation<br> and amortization | 162,015 | 174,775 | 164,359 | 326,374 | 352,051 | ||||||||||
| Adjusted<br> EBITDA (2) | $ | 158,038 | $ | 117,322 | $ | 130,510 | $ | 288,548 | $ | 225,052 |
(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
| June<br> 30, | March<br> 31, | December<br> 31, | ||||
|---|---|---|---|---|---|---|
| 2022 | 2022 | 2021 | ||||
| (In thousands) | (Unaudited) | |||||
| Current<br> portion of debt | $ | - | $ | - | $ | - |
| Long-term<br> debt | 2,601,510 | 2,610,092 | 3,262,795 | |||
| Total<br> Debt | 2,601,510 | 2,610,092 | 3,262,795 | |||
| Less:<br> Cash and short-term investments | 417,978 | 394,039 | 991,488 | |||
| Net<br> Debt | $ | 2,183,532 | $ | 2,216,053 | $ | 2,271,307 |
1-8
| NABORS INDUSTRIES LTD. AND SUBSIDIARIES | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| RECONCILIATION OF ADJUSTED FREE CASH FLOW TO | |||||||||
| NET CASH PROVIDED BY OPERATING ACTIVITIES | |||||||||
| (Unaudited) | |||||||||
| Three Months Ended | Six Months Ended | ||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| June 30, | March 31, | June 30, | |||||||
| (In thousands) | 2022 | 2022 | 2022 | ||||||
| Net cash provided by operating activities | $ | 120,796 | $ | 41,354 | $ | 162,150 | |||
| Capital expenditures | (76,632 | ) | (84,258 | ) | (160,890 | ) | |||
| Proceeds from sales of assets | 12,760 | 3,671 | 16,431 | ||||||
| Adjusted free cash flow | $ | 56,924 | $ | (39,233 | ) | $ | 17,691 |
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 to return to shareholders through dividend payments or share repurchases. 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. August 4, 2022 2Q 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; 2 Forward Looking Statements • 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 changes to U.S. trade policies and regulations including the imposition of trade embargoes or sanctions; and • general economic conditions, including inflation and 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 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 adjusted EBITDA to net income (loss), net debt to total debt, and adjusted margin to operating income (loss), which are their nearest comparable GAAP financial measures, are provided in the Appendix at the end of this presentation .
NABORS.COM 3 6/30/2022 Rig Utilization and Availability RIG FLEET (1)(2) 330 RIGS ON REVENUE (1) 173 UTILIZATION AT 6/30/2022 52% TOTAL U.S. OFFSHORE 12 3 25% 16 4 25% ALASKA INTERNATIONAL 133 74 56% 111 91 82% U.S. LOWER - 48 HIGH SPEC (2) (1) As of June 30, 2022 (2) Excludes non - high spec rigs in the Lower 48 (3) Excludes one operating non - high spec rig (3)
NABORS.COM Improving liquidity and leverage • Reduced net debt by $ 33 M in 2Q’22 • Adjusted free cash flow of $57M • Over $100M targeted for 2022 2 Q 2022 adjusted EBITDA of $158M Strong improvement in all segments Revenue growth of 11% Adjusted EBITDA margin (1) of 25% Drilling Solutions growth and market penetration • 2Q’22 adjusted EBITDA of $22.8M, 13.8% growth vs 1Q’22 • Adjusted gross margin % reached an all - time high of 52% in 2Q’22 • Our high margin Performance Software revenue grew by 18% Activity improving for U.S. Drilling • Average rig count up by almost 6 • Customer survey suggests 10% growth in 2H’22 • Customers initiating discussions for 2023 ESG Focus • Environmental ISS score improved from 2 in 1Q’22 to 1 in 2Q’22, placing Nabors first among our peers • Invested in 3 Energy Transition companies: • Emissions monitoring • Battery storage • Ultra - capacitors Recent Highlights Note: For adjusted EBITDA, adjusted gross margin and Net Debt see non - GAAP reconciliations in the Appendix Continued improvement in L48 profitability • L48 Drilling adjusted daily gross margin increased by over $1,000 to $8,706 (2) • We expect 3Q’22 Drilling gross margin of $10,400 to $10,600 per day • L48 NDS daily margins per rig continue to improve (1) Adjusted EBITDA margin represents adjusted EBITDA divided by operating revenues (2) 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.
NABORS.COM Performance excellence in the Lower - 48 Resilience leading to growth in our International segment Technology & innovation rapidly taking hold in the market 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 10 20 30 40 50 60 70 80 90 100 4Q 1Q 2Q 3Q 4Q 1Q 2Q 2020 2021 2022 L48 Drilling Average Rig Count $0 $50 $100 $150 $200 $250 4Q 1Q 2Q 3Q 4Q 1Q 2Q 2020 2021 2022 L48 Drilling Revenue and Adjusted Gross Margin Operating Revenue Adjusted Gross Margin 6 Improving revenue and margins on growing rig activity 1 Performance Excellence In The Lower - 48 Scaling up in a Robust Market
NABORS.COM Performance excellence in the Lower - 48 Resilience leading to growth in our International segment Technology & innovation rapidly taking hold in the market 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 Increases in rig activity driving margin expansion 8 Results Bolstered by Strong International Margins and Growing Rig Counts Resilience Leading to Growth in Our International Segment 2 50 55 60 65 70 75 80 4Q 1Q 2Q 3Q 4Q 1Q 2Q 2020 2021 2022 International Drilling Average Rig Count $0 $50 $100 $150 $200 $250 $300 4Q 1Q 2Q 3Q 4Q 1Q 2Q 2020 2021 2022 International Drilling Revenue and Adjusted Gross Margin Operating Revenue Adjusted Gross Margin
NABORS.COM 65 70 75 80 85 1QA 2QA 3QF 4QF 1Q 2Q 3Q 4Q 2022 2023 F International average rig count potential growth* from SANAD newbuilds 9 Significant International Opportunity Resilience Leading to Growth in Our International Segment • 50 rigs over 10 years, awarded 5 rigs to - date • First startup in early July, and second expected in late 3Q • $150M capital expense expected in 2022, funded organically by SANAD • 6 - year initial contracts, payout within 5 years, plus 4 - year renewal at market Embarking on Newbuild Program • These estimates are based on current market conditions and the projections are based on information received from third parties, which are subject to change. The estimates exclude potential growth from markets outside Saudi Arabia. 2
NABORS.COM Performance excellence in the Lower - 48 Resilience leading to growth in our International segment Technology & innovation rapidly taking hold in the market 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 30% 35% 40% 45% 50% 55% 60% $- $10 $20 $30 $40 $50 $60 4Q 1Q 2Q 3Q Q4 Q1 2Q 2020 2021 2022 NDS Revenue and Adjusted Gross Margin Revenue Gross Margin % GM 11 NDS Capitalizing on Growing Rig Count and Higher Penetration Improving Outlook For Our Technology & Innovation Revenue Up 75% Adjusted GM Up 97% Expanding our high - value / high - margin low - capital technology services “Nabors currently realizing what they dreamed the future should look like (digitization, etc.)…the collaborative approach in developing new technologies has truncated traditional timelines that have allowed us to surpass our peers into consistent Top Quartile performance .” Bakken customer December 2021 3 Gross margin % of ~ 52% in 2Q 2022, an all time high
NABORS.COM 0 20 40 60 80 100 120 140 160 180 ROCKit SmartDRILL U.S. Performance Software Installs 2020 4Q 2021 1Q 2021 2Q 2021 3Q 2021 4Q 2022 1Q 2022 2Q 45 52 58 64 71 83 87 0 10 20 30 40 50 60 70 80 90 4Q 1Q 2Q 3Q 4Q 1Q 2Q 2020 2021 2022 U.S. RigCLOUD® Services Installs Nabors 3rd Party 12 Customer Adoption Fueling Rapid NDS Footprint Expansion Improving Outlook For Our Technology & Innovation NDS technology consistently adds value on both Nabors’ and Third - party rigs ® Œ 3
NABORS.COM Case Study: F or a major operator in U.S. Bakken Savings of > $141,000 per well D rives performance R educes cost Removes personnel from well site 13 Smart Suite TM Significantly Improving Performance - 500 1,000 1,500 2,000 Pre-Smart Suite Smart Suite Average Feet per Day Average Feet per Day +28% 0 50 100 150 200 Pre-Smart Suite Smart Suite Average Rate of Penetration (ft/day) Average Rate of Penetration +23% SmartNAV Ρ Automated directional guidance system, improves wellbore placement accuracy SmartSLIDE Ρ Directional steering control system, automates slide drilling to optimize performance SmartDRILL Ρ Full - stand automated drilling activity sequencer, executes driller best practices, and reduces unplanned trips Smart Suite TM Improving Outlook For Our Technology & Innovation 3 Ρ Ρ Ρ Ρ
NABORS.COM 0 200 400 600 800 1000 1200 1400 1600 1800 2000 Q2'17 Q4'17 Q2'18 Q4'18 Q2'19 Q4'19 Q2'20 Q4'20 Q1'21 Q2'21 Q3'21 Q4'21 Q1'22 Q2'22 Cumulative Number of Wells Drilled 14 Smart Suite TM Growth Trajectory Validates Customer Acceptance Improving Outlook For Our Technology & Innovation • 90% Customer Retention Rate* • 1,800+ Wells Drilled • International Deployment in KSA SmartDRILL TM Automation Commercialization SmartNAV TM & SmartSLIDE TM Solutions Commercialization Third - Party SmartDRILL TM Deployment *The number of active users at 2Q’22 quarter - end continuing use of the service divided by the total number of active users 12 months prior 3
NABORS.COM Performance excellence in the Lower - 48 Resilience leading to growth in our International segment Technology & innovation rapidly taking hold in the market 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 2018 2019 2020 2021 2022 Billions Net Debt 16 Significant Headway toward Financial Goals Progress on Our Commitment to De - lever 4 ~ $1.7B Net Debt (1) reduction from previous high in 1Q 2018 $1.7B (1) Net Debt: see non - GAAP reconciliations in the Appendix
NABORS.COM 75 177 728 558 700 390 $0 $200 $400 $600 $800 $1,000 2022 2023 2024 2025 2026 2027 2028 Million Notes Outstanding 17 Debt Maturity Profile as of 6/30/22 Progress on Our Commitment to De - lever In 2Q 2022: • Reduced outstanding notes by $25M in face value • Undrawn $350M credit facility; cash and STI of $418M • $251M in maturities through 2024 (1) 4 (1) Face value of debt outstanding
NABORS.COM Performance excellence in the Lower - 48 Resilience leading to growth in our International segment Technology & innovation rapidly taking hold in the market 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 the implementation of solutions on third - party rigs Energy Efficiency & Emission Reduction Technologies Geothermal Development Leveraging IP to create products applicable beyond the rigs, including carbon capture technologies Expansion Beyond Oil & Gas Further differentiating Nabors rigs Developing verticals on identified hydrogen, fuel efficiency and energy storage applications Providing expertise in drilling and engineering services & solutions Adding to the long - term power solution – creating Geothermal 2.0 19 Moving Forward on the Energy Transition Leading in the Sustainability and Energy Transition 5
NABORS.COM 20 Leading in the Sustainability and Energy Transition • Advanced 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 • Achieved approximately a 10% reduction in carbon emissions intensity in the Lower 48 in 2021 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
NABORS.COM Geothermal Market Technology Advancements Ubiquitous Ability to create heat reservoirs by drilling into deep rock formations Technological advancements are enabling wide - scale commercial geothermal development 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 21 Leading in the Sustainability and Energy Transition 5
NABORS.COM Appendix 22
NABORS.COM 23 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. Three Months Ended June 30, March 31, June 30, 2021 2022 2022 Net income (loss) ($190,395) ($174,668) ($69,935) (Income) loss from discontinued operations, net of tax ($8) $0 $0 Income (loss) from continuing operations, net of tax ($190,403) ($174,668) ($69,935) Income tax expense (benefit) $24,719 $13,671 $9,353 Income (loss) from continuing operations before income taxes ($165,684) ($160,997) ($60,582) Investment (income) loss 62 (163) (822) Interest Expense 41,714 46,910 42,899 Other, net 66,455 80,401 14,528 Adjusted Operating Income (loss) (57,453) (33,849) (3,977) Depreciation and Amortization 174,775 164,359 162,015 Adjusted EBITDA $117,322 $130,510 $158,038 (In Thousands)
NABORS.COM Three Months Ended June 30, March 31, June 30, 2021 2022 2022 Lower 48 - U.S. - Drilling Adjusted operating income (31,721)$ (14,596)$ (937)$ Plus: General and administrative costs 4,396 4,447 4,740 Plus: Research and engineering 732 1,638 1,611 GAAP Gross Margin (26,593) (8,511) 5,414 Plus: Depreciation and amortization 67,119 66,243 65,312 Adjusted gross margin 40,526$ 57,732$ 70,726$ Other - U.S. - Drilling Adjusted operating income 10,852$ 8,745$ 9,225$ Plus: General and administrative costs 550 383 307 Plus: Research and engineering 100 132 139 GAAP Gross Margin 11,502 9,260 9,671 Plus: Depreciation and amortization 13,534 13,873 13,771 Adjusted gross margin 25,036$ 23,133$ 23,442$ U.S. - Drilling Adjusted operating income (20,869)$ (5,851)$ 8,288$ Plus: General and administrative costs 4,946 4,830 5,047 Plus: Research and engineering 832 1,770 1,750 GAAP Gross Margin (15,091) 749 15,085 Plus: Depreciation and amortization 80,653 80,116 79,083 Adjusted gross margin 65,562$ 80,865$ 94,168$ (In Thousands) 24 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 25 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 . June 30, March 31, June 30, 2021 2022 2022 Long-Term Debt $2,823,125 $2,610,092 $2,601,510 Current Debt - - - Total Debt $2,823,125 $2,610,092 $2,601,510 Cash & Short-term Investments $399,897 $394,039 $417,978 Net Debt $2,423,228 $2,216,053 $2,183,532 (In Thousands)
NABORS.COM (In Thousands) Three Months Ended June 30, 2022 U.S. Drilling Canada Drilling International Drilling Drilling Solutions Rig Technologies Other reconciling items Total Adjusted operating income (loss) 8,288$ (15)$ 4,605$ 18,260$ 2,127$ (37,242)$ (3,977)$ Depreciation and amortization 79,083 - 77,841 4,491 1,237 (637) 162,015 Adjusted EBITDA 87,371$ (15)$ 82,446$ 22,751$ 3,364$ (37,879)$ 158,038$ (In Thousands) Three Months Ended June 30, 2021 U.S. Drilling Canada Drilling International Drilling Drilling Solutions Rig Technologies Other reconciling items Total Adjusted operating income (loss) (20,869)$ (2,608)$ (8,439)$ 6,524$ (692)$ (31,369)$ (57,453)$ Depreciation and amortization 80,653 5,616 79,761 6,272 2,727 (254) 174,775 Adjusted EBITDA 59,784$ 3,008$ 71,322$ 12,796$ 2,035$ (31,623)$ 117,322$ (In Thousands) Three Months Ended March 31, 2022 U.S. Drilling Canada Drilling International Drilling Drilling Solutions Rig Technologies Other reconciling items Total Adjusted operating income (loss) (5,851)$ (19)$ (6,327)$ 14,709$ (2,751)$ (33,610)$ (33,849)$ Depreciation and amortization 80,116 - 77,575 5,291 1,707 (330) 164,359 Adjusted EBITDA 74,265$ (19)$ 71,248$ 20,000$ (1,044)$ (33,940)$ 130,510$ 26 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 27 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. Three Months Ended June 30 2022 Net cash provided by operating activities $120,796 Capital expenditures ($76,632) Proceeds from sales of assets $12,760 Adjusted free cash flow $56,924 (In Thousands)
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