8-K: Nabors Industries Reports 1Q 2026 Results

Nabors Industries announced first quarter 2026 results, with operating revenues of $784 million and a net loss of $15 million, while also highlighting debt reduction and increased rig activity.

Summary

• Nabors Industries reported first quarter 2026 operating revenues of $784 million.
• The company incurred a net loss of $15 million for the quarter, a change from the $10 million net income in the fourth quarter of 2025.
• Adjusted EBITDA for the first quarter was $205 million.
• The SANAD land drilling joint venture deployed one newbuild rig and reactivated one suspended rig, with further deployments planned.
• In the Lower 48 market, Nabors added four rigs, bringing the total working rig count to 66.
• Nabors redeemed its remaining notes due in 2028, reducing total debt to $2.1 billion and extending its weighted average debt maturity to over five years.
• The company received three awards at the Oil & Gas Middle East Awards 2026.

Sentiment

Score: 4

Explanation: StockSavvy.ai views this as a mixed report; while debt reduction and increased Lower 48 rig activity are positive, the company reported a net loss and decreased EBITDA sequentially, indicating some operational headwinds.

Positives

• Increased working rig count in the Lower 48 market to 66, an increase of eight rigs since November 2025.
• Successful redemption of remaining 2028 notes, reducing total debt to $2.1 billion and extending weighted average debt maturity to over five years.
• SANAD joint venture deployed one newbuild rig and reactivated one rig, with four more newbuilds scheduled for 2026.
• Received three awards at the Oil & Gas Middle East Awards 2026, including Service Partner of the Year.
• First quarter adjusted free cash flow of $(48.2) million showed a $13 million improvement year-over-year compared to Q1 2025.
• Exceeded first quarter free cash flow guidance by over $35 million, driven by consistent execution and stronger working capital performance.

Negatives

• Reported a net loss of $15 million for the first quarter of 2026, compared to a net income of $10 million in the fourth quarter of 2025.
• Adjusted EBITDA decreased to $205 million in Q1 2026 from $222 million in Q4 2025.
• Adjusted operating income decreased to $48.6 million in Q1 2026 from $62.4 million in Q4 2025.
• Adjusted free cash flow was negative $48.2 million in Q1 2026, a decrease from positive $131.8 million in Q4 2025, primarily due to seasonal patterns and timing of receivables/payables.
• Daily adjusted gross margin in International Drilling decreased due to increased costs in the Middle East and higher operating expenses in certain markets.
• Rig Technologies segment adjusted EBITDA was less than $1 million, down from $5 million in the previous quarter, due to lower aftermarket revenue and logistical challenges.

Risks

• Geopolitical events in the Middle East and their broader implications on global energy markets.
• Fluctuations and volatility in worldwide prices of and demand for oil and natural gas.
• Cybersecurity incidents, attacks, and other breaches to information technology systems.
• Impact of long-term indebtedness and other financial commitments on financial and operating flexibility.
• Access to and cost of capital, including potential credit rating downgrades and interest rate environment.
• Changes in tax laws and other regulations.
• Potential long-lived asset impairments.
• Changes to U.S. trade policies and regulations.

Future Outlook

Nabors expects to exit the second quarter of 2026 with approximately 69 rigs running in the Lower 48 and to sustain that level through year-end 2026. Full-year capital spending is projected to be between $730 to $760 million. For the second quarter of 2026, the company anticipates a Lower 48 average rig count of 67-68 rigs, International Drilling average rig count of 93-95 rigs, and adjusted free cash flow of approximately $10 million.

Management Comments

• The conflict in the Middle East and its broader implications across global energy markets continue to reinforce the value of Nabors portfolio and geographic diversification.
• Nabors first quarter results reflect continued improvement in Lower 48 activity, with another increase in rig count and fleet utilization.
• We believe we are gaining share in this market as clients increasingly prioritize high-specification rigs, integrated technology, and consistent operational execution in complex drilling environments.
• In the first quarter we delivered free cash flow above our expectations.
• Our full-year outlook for rig count in the Lower 48 has strengthened.
• Our focus remains on further strengthening the balance sheet, while our consistent growth strategy supports long-term shareholder value creation.
• Looking ahead to the remainder of the year, we see continued growth opportunities across both our U.S. and International Drilling businesses.
• Our disciplined approach to improving free cash flow is reflected in our first-quarter results, and we are positioned to deliver further improvements as we execute throughout the year.

Industry Context

StockSavvy.ai notes that Nabors Industries' results reflect the ongoing dynamics in the oil and gas drilling sector, with increased activity in the Lower 48 U.S. market and strategic international deployments, particularly in Saudi Arabia through its SANAD joint venture. The company's focus on high-specification rigs, integrated technology, and debt reduction aligns with industry trends prioritizing efficiency and financial stability.

Comparison to Industry Standards

• Nabors' Lower 48 rig count increased by 9% sequentially, indicating a stronger market position compared to a general ~20% decline in Lower-48 marketed rigs across the industry between 2023 and 1Q'26.
• The company's adjusted EBITDA margin for Q1 2026 was approximately 26%, which is competitive within the oilfield services sector, though specific peer comparisons are not detailed in the filing.
• Nabors' debt reduction efforts have lowered its net leverage ratio to 1.7x as of March 31, 2026, a level significantly improved from historical highs and approaching industry benchmarks for financially sound companies.

Stakeholder Impact

• Shareholders: The net loss and sequential decrease in EBITDA may be concerning, but debt reduction and improved future outlook could be viewed positively.
• Creditors: The redemption of 2028 notes and extension of debt maturity improves the company's debt profile.
• Employees: Increased rig activity in the Lower 48 and international markets may lead to increased employment opportunities.
• Customers: Continued focus on high-specification rigs, integrated technology, and operational execution aims to meet client demands.

Next Steps

• Deploy four more newbuild rigs in the SANAD joint venture in 2026.
• Reactivate a second suspended rig in the SANAD joint venture in the second quarter.
• Exit the second quarter of 2026 with approximately 69 rigs running in the Lower 48 and sustain that level through year-end.
• Continue disciplined capital allocation with full-year capital spending in the range of $730 to $760 million.
• Focus on further strengthening the balance sheet and supporting long-term shareholder value creation.

Key Dates

Recommendation

The company shows positive momentum in debt reduction and increasing rig utilization, particularly in the Lower 48. However, the sequential decline in revenue and profitability, coupled with a net loss, warrants a cautious 'hold' stance until sustained improvement is demonstrated.

Keywords

Nabors Industries, Drilling Services, Oil and Gas, Rig Count, EBITDA, Financial Results, SEC Filing, 8-K