Inquiring about discussions for the fifth tranche of new rigs for SANAD and the overall Saudi market momentum.

Aramco is committed to the program, and discussions for the next tranche are expected very shortly, likely within the next quarter. Management is confident the program will continue. They also noted that 10 more suspended rigs in Saudi might return to service soon, benefiting Nabors' NDS operations. “And we expect that the next tranche will be discussed very shortly actually, probably within the next quarter, and we'll have complete visibility on it, but we're confident that the program is going to continue.”

Asking for a market perspective on potential rig additions in 2027 and what super-spec supply tightness means for Nabors.

Management is not ready to provide a 2027 rig count forecast but emphasized that most operators demand higher-spec rigs. They anticipate upgrades to existing rigs (maybe half a dozen over 12 months) and Nabors is well-positioned with Canrig to provide equipment for these upgrades. “I could see maybe a half a dozen rigs occurring of upgrades over the next 12 months by operators asking for that kind of stuff.”

Seeking details on the upside of the Quaise project, its technology, and the implications for Nabors' rigs and pricing.

Quaise uses millimeter technology to destroy rock at supercritical temperatures, aiming for ubiquitous geothermal power. The current project uses a conventional approach but lays the foundation for millimeter testing, which requires rig integration. Nabors is excited about the potential, noting Quaise's contract with Google for 250 MW. “This millimeter equipment, by the way, needs integration into the rig. So it's a special gyrotron. And a gyrotron needs changes to a rig, it needs changes to the top drive, et cetera, which again, Nabors is unique about, and that's part of the plan here to make it commercial.”

NBR

Nabors (NBR) Q2 FY26 earnings call: guidance and Q&A

Earnings call· Jun 2026 (Q2 FY26)· Energy· Jul 29, 2026

Source: earnings call transcript

Executive summary

Nabors Q2 FY26 — Strong Operational Execution and Exceeded Guidance Across All Segments

Nabors delivered a strong second quarter, outperforming expectations across all segments driven by disciplined execution and robust international performance. The company is capitalizing on improving Lower 48 market conditions with higher utilization and pricing momentum, while its technology portfolio increasingly drives earnings and differentiation. Despite some timing-related capital expenditure and free cash flow impacts, Nabors raised its full-year EBITDA guidance, underscoring confidence in its strategic positioning and ability to generate durable shareholder value.

Highlights

Adjusted EBITDA totaled $222 million, exceeding expectations and guidance across all four reporting segments.
Lower 48 daily revenue improved by more than $900 sequentially, with leading-edge pricing increasing into the low to mid-$30,000 range.
SANAD joint venture placed its 16th newbuild rig into service and returned two previously suspended rigs to work, strengthening its leadership in Saudi Arabia.
Drilling Solutions (NDS) EBITDA increased by 3.5% to $40 million, with a 90% free cash flow conversion rate, driven by 11% growth on Nabors rigs and 12% on third-party rigs in Lower 48.
Full-year 2026 EBITDA guidance raised to $920 million to $930 million, above prior expectations.

Concerns

Capital expenditures for Q2 were $158 million, below guidance due to timing of SANAD newbuild milestones, which shifted some construction into early 2027.
Adjusted free cash flow for Q2 was $12 million, modestly above guidance but impacted by slower collections in Mexico and the United States.
Q3 adjusted free cash flow is expected to be a use of approximately $40 million, including $65 million cash consumption by SANAD.
Lower 48 daily adjusted gross margin is expected to remain approximately flat in Q3 at $13,800 due to fewer near-term renewal opportunities limiting additional pricing gains.

Guidance & targets

Category	Target	Timeline	Confidence
Full-year Adjusted EBITDA	$920M-$930M high materiality	FY26	High
Full-year Adjusted Free Cash Flow	$20M-$30M high materiality	FY26	High
Full-year Consolidated Capital Expenditures	$710M-$730M medium materiality	FY26	High
Full-year SANAD Newbuild Capital Expenditures	$325M-$335M medium materiality	FY26	High
Q3 International Drilling Average Rig Count	94-96 medium materiality	Q3 · FY26	High
Q3 International Drilling Average Daily Gross Margin	$18,100-$18,400 medium materiality	Q3 · FY26	High
Q3 Lower 48 Average Working Rig Count	~73 medium materiality	Q3 · FY26	High
Q3 Lower 48 Daily Adjusted Gross Margin	$13,800 medium materiality	Q3 · FY26	Medium
Q3 Alaska and U.S. Offshore Combined EBITDA	~$11M low materiality	Q3 · FY26	High
Q3 Drilling Solutions EBITDA	~$42M medium materiality	Q3 · FY26	High
Q3 Rig Technologies EBITDA	$5M-$6M low materiality	Q3 · FY26	High
Q3 Consolidated EBITDA Margin	increase by ~100 bps medium materiality	Q3 · FY26	High
Q3 Capital Expenditures	$245M-$255M medium materiality	Q3 · FY26	High
Q3 SANAD Newbuild Capital Expenditures	~$130M medium materiality	Q3 · FY26	High
Q3 Consolidated Adjusted Free Cash Flow	use of ~$40M medium materiality	Q3 · FY26	High
Q3 SANAD Cash Consumption	~$65M medium materiality	Q3 · FY26	High
Gross Debt Reduction	at least $100M high materiality	FY26	High
Net Leverage Target	~1 turn high materiality	long-term	High
Lower 48 Leading-edge Daily Revenue	reach or exceed mid-$30,000s high materiality	by year-end 2026 and into 2027	High
Lower 48 Rig Additions from Operator Survey	11 rigs medium materiality	through end of 2026 · FY26	Medium

Segment performance

Segment	Revenue	YoY	QoQ	Margin
International Drilling Revenue increased by $13 million or 3.1%. EBITDA increased by $9 million or 7.6%. EBITDA margin expanded 127 basis points to 30.2% with a robust 71% fall-through. Average rig count increased from 92.6 to 93.4. Average daily rig margin increased by $654 sequentially. Growth was driven by SANAD newbuilds and suspended rigs returning to service, partially offset by contract roll-off of two lower-margin rigs in Algeria and India. Average Rig Count: 93.4Average Daily Rig Margin: $17,534	$432M	—	3.1%	$131M EBITDA (30.2% margin)
U.S. Drilling Revenue increased by $11 million or 4.7%. EBITDA increased by $6 million or 6.8%. EBITDA margin expanded 75 basis points to 37.3% with a solid 53% fall-through. Results exceeded implied guidance, driven by Lower 48 performance.	$252M	—	4.7%	$94M EBITDA (37.3% margin)
U.S. Drilling (Lower 48) Revenue increased by $15 million or 7.8%. Average working rig count increased by 2.5 to 67.8, exiting Q2 with 71 rigs and currently at 73 rigs. Average daily revenue increased by $902. Average daily margin increased by $607. Added five rigs across major basins. Nearly 70% of working fleet serves publicly traded operators. Over 45% of rigs had at least six months of remaining duration by quarter end, expected to be ~50% in Q3. Average Working Rig Count: 67.8Average Daily Revenue: $33,555Average Daily Margin: $13,784	$207M	—	7.8%	—
U.S. Drilling (Alaska and Offshore) Combined revenue was $46 million and EBITDA was $15 million, resulting in an EBITDA margin of 33.5%, in line with guidance.	$46M	—	—	$15M EBITDA (33.5% margin)
Drilling Solutions (NDS) Revenue increased by $4 million or 4.2%. EBITDA increased by $1 million or 3.5%. EBITDA margin was 36.2%. EBITDA was 3% above guidance, primarily supported by higher penetration across both Nabors (11% revenue growth) and third-party rigs (12% revenue growth) in the Lower 48. International growth in Saudi Arabia and Argentina was partially offset by lower asset sales. Converted approximately 90% of EBITDA into free cash flow.	$111M	—	4.2%	$40M EBITDA (36.2% margin)
Rig Technologies Revenue increased to $37 million, up 37.7%. EBITDA improved to $3.2 million, modestly exceeding guidance. Improvement was driven by higher activity across the portfolio, led by a stronger performance in the Middle East. Introduced its first advanced, fully automated TITAN rig floor wrench into commercial service.	$37M	—	37.7%	$3.2M EBITDA

Deals & partnerships

Quaise Energy First commercial application of super hot enhanced geothermal systems

Began drilling on Quaise Energy project Obsidian in Oregon. This project represents the first commercial application of super hot enhanced geothermal systems. Quaise has a contract with Google for 250 megawatts, with the first well for a 50-megawatt installment.

Caturus Commissioned two highest specification PACE-X Ultra rigs

Commissioned two of our highest specification PACE-X Ultra rigs for Caturus, one in South Texas and the other in East Texas. These rigs entered service fully equipped with the MDS technology suite.

Capital programs

SANAD 50-rig newbuild program underway

Period spend: $46M (Q2 FY26), ~$130M (Q3 FY26 guidance)

Benefit:16 rigs delivered to date, 34 rigs remaining

34 rigs remain to be delivered under the 50-rig newbuild program. The reduction in SANAD's newbuild outlook reflects the movement of certain construction milestones into early 2027.

Risks & headwinds

Middle East Geopolitical Tensions Q2 FY26

financial impact of the related cost pressure was broadly in line with our guidance

Mitigation:SANAD's operations have continued without interruption, and the growth ahead is substantial.

Slower Collections Q2 FY26

Adjusted free cash flow of $12 million, modestly above our guidance. The mix differ from our expectations, reflecting the timing of SANAD newbuild milestones and slower collections in Mexico and the United States.

Mitigation:We view the collections headwind as timing related and expect this will normalize over the balance of the year.

Lower 48 Pricing Gains Limited Q3 FY26

Daily adjusted gross margin is expected to remain approximately flat with the second quarter at $13,800

Mitigation:We expect U.S. industry activity to build progressively, supported by stable oil prices and an improving outlook for natural gas demand.

What to watch in Q3 FY26

SANAD newbuild program progress

next quarter

Current 16 rigs delivered, 34 remaining

Target Next tranche discussions, continued deliveries

Why it matters

SANAD's expansion program is a key driver of international earnings growth for Nabors.

And we expect that the next tranche will be discussed very shortly actually, probably within the next quarter, and we'll have complete visibility on it, but we're confident that the program is going to continue.

Find out whether NBR delivers this. Inve re-checks your case every morning.

Q&A highlights

Seeking insights on activity and pricing trends, particularly regarding the target of mid-$30,000s for leading-edge pricing.

Management expects continued discipline from major players, with private operators driving recent activity. Super-spec rig utilization is increasing, which is expected to accelerate pricing. They anticipate reaching the mid-$30,000s for leading-edge pricing by year-end.

“I think right now, we're focused on continued utilization of the current rigs and seeing some tightening of the pricing as things move forward, particularly as operators demand more upgrades of existing equipment.”

asked by Joseph Laetsch · answered by Anthony Petrello

2 min read 6 chapters

Detailed narrative

Strong Q2 Performance and Raised Outlook

Nabors exceeded its Q2 EBITDA guidance across all segments, driven by strong operational execution in Lower 48 and international drilling. This performance led to a raised full-year 2026 EBITDA guidance of $920 million to $930 million and adjusted free cash flow guidance of $20 million to $30 million, despite SANAD's cash consumption.

The company's consolidated EBITDA margin expanded 107 basis points to 27.2% with a 54% fall-through, reflecting outstanding portfolio-wide execution.

International Growth and SANAD's Role

The international business continues to strengthen, particularly in Saudi Arabia where the SANAD JV placed its 16th newbuild rig and returned two suspended rigs to service. SANAD, with 55 rigs and a 28% market share, is central to Saudi Aramco's natural gas expansion, with 34 newbuilds remaining in the 50-rig program, providing a long runway for growth.

Operations in the Middle East continued without disruption despite regional geopolitical tensions.

Lower 48 Market Dynamics

The U.S. Lower 48 market saw a notable upward turn in Q2, with the Baker Hughes land rig count increasing by 31 rigs or 6%. Nabors added five rigs, with nearly 70% of its working fleet serving publicly traded operators.

Daily revenue improved by over $900 sequentially to $33,555, and leading-edge pricing is expected to reach or exceed mid-$30,000s by year-end 2026/2027 as utilization tightens. The company expects to exit Q3 with 74 rigs operating in the Lower 48.

Technology and Innovation as a Differentiator

Nabors' technology strategy, focused on improving drilling performance and expanding customer returns, was evident in Q2. NDS revenue grew 11% on Nabors' Lower 48 rigs and 12% on third-party rigs, driven by demand for software products like MPD and RigCloud.

The deployment of PACE-X Ultra rigs with the full NDS suite generates over $40,000 daily revenue, showcasing the 'rig as a platform' strategy and creating higher revenue and stronger margins.

Strategic International Markets

Beyond Saudi Arabia, Nabors highlighted strong performance in Kuwait (three deep gas rigs on long-term contracts) and Oman (four rigs, multiple tenders). Argentina is a compelling success story with 13 operating rigs (soon 14) and a 30% market share, where NDS contributed 46% of EBITDA in H1 2026.

Venezuela presents an improving long-term opportunity with five idle rigs positioned for potential activity resumption, given its large resource base and proximity to refining capacity.

Capital Discipline and Allocation

The company remains committed to capital discipline, with full-year CapEx guidance of $710 million to $730 million, including $325 million to $335 million for SANAD newbuilds. Management emphasized selective deployment of capital only where expected returns and contract duration justify the investment. Nabors aims to reduce gross debt by at least $100 million in 2026 and achieve a net leverage of approximately one turn long-term.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.