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Nabors Q4 Loss Wider Than Expected, Sales Match Estimates
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Nabors Industries Ltd. (NBR - Free Report) reported a fourth-quarter 2024 adjusted loss of $6.67 per share, which was wider than the Zacks Consensus Estimate of a loss of $1.86. This underperformance was mainly due to lower adjusted operating income from its U.S. Drilling and Drilling Solutions segments, coupled with increased year-over-year costs, including direct costs, general and administrative expenses, research and engineering expenses, interest expenses and other related expenses. Moreover, the loss was significantly wider than the year-ago quarter’s reported loss of $3.84 per share.
The oil and gas drilling company’s operating revenues of $730 million were in line with the Zacks Consensus Estimate. However, the figure decreased from the year-ago quarter’s $738 million, due to poor year-over-year revenue contribution from the U.S. Drilling, Drilling Solutions and Rig Technologies segments.
Nabors Industries Ltd. Price, Consensus and EPS Surprise
On the other hand, adjusted EBITDA decreased to $220.5 million from $230.1 million recorded a year ago. The figure also missed our model estimate of $226.1 million.
Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.
During the fourth quarter, Nabors’ shareholders approved the issuance of shares to Parker Wellbore (Parker) stockholders in connection with the merger between the two companies and the latter’s shareholders also gave their approval. The merger is expected to close in the first quarter of 2025, pending certain international regulatory approvals.
NBR secured contracts for three rigs in Argentina. Two of these rigs will be transferred from the United States on five-year contracts, while the third rig is already operational in the country and will begin its new contract before the year ends. Additionally, Nabors received another contract for an idle rig in Colombia. These reactivations are capital-efficient opportunities that not only support growth but also enhance Nabors' asset utilization.
SANAD project deployed its ninth new-build rig in the fourth quarter and expects to deploy two more in the first quarter of 2025. As Saudi Aramco continues to expand natural gas activities, Nabors remains involved in its customer’s growth plans with commitments to add rigs built in Saudi Arabia in the coming years, alongside extensive portfolio of drilling-related services.
NBR’s Rig Technologies, Canrig, was awarded a comprehensive rig upgrade package by a third-party drilling contractor in the United States. Canrig is actively pursuing several upgrade opportunities both domestically and internationally, showcasing its advanced technology suite.
NBR’s Segmental Performances
U.S. Drilling generated operating revenues of $241.6 million, down 9.1% from the year-ago quarter’s $265.8 million. The figure also missed our model estimate of $250.2 million. Operating profit totaled $39 million compared with $51.5 million in the year-ago quarter. The figure missed our estimated profit of $44.8 million.
International Drilling’s operational revenues of $371.4 million increased from $342.8 million a year ago. The unit’s top line also beat our estimate of $362.5 million. Operating profit totaled $29.5 million compared with the prior-year quarter’s $18.6 million. The figure also surpassed our estimated profit of $24.7 million.
Revenues from the Drilling Solutions segment totaled $76 million, down 1.3% from $77 million recorded in the prior-year quarter. The top line beat our estimate of $70 million.Additionally, the unit’s operating income of $28.9 million was lower than the year-ago quarter’s $30.1 million. The figure also missed our estimate of $30.6 million.
Revenues from Rig Technologies totaled $56.2 million, down 5.1% from the prior-year quarter’s $59.3 million. However, the figure beat our estimation of $49.5 million. The segment’s operating profit totaled $8.4 million compared with the prior-year quarter’s $5.8 million.The figure also surpassed our estimation of $4.2 million.
Financial Position of NBR
Nabors’ total costs and expenses increased to $756.3 million from $714.7 million in the year-ago quarter. Additionally, the amount surpassed our prediction of $722.7 million.
As of Dec. 31, 2024, this Zacks Rank #4 (Sell) company had $397.3 million in cash and short-term investments. Long-term debt was about $2.5 billion, with a total debt-to-total capital of 94.9%. Capital expenditures totaled $202.2 million during the same time.
For the first quarter of 2025, NBR anticipates an average rig count of approximately 61 in its U.S. drilling segment, with a daily margin of $14,800.
The company predicts that adjusted EBITDA from its operations in Alaska and the Gulf of Mexico will match the levels seen in the fourth quarter of 2024.
For its International Drilling segment, Nabors forecasts an average rig count of 85 to 86, with a daily adjusted gross margin of approximately $17,000.
In terms of financial performance, the company expects adjusted EBITDA of approximately $36 million from its Drilling Solutions segment and around $9 million from Rig Technologies segment.
Nabors anticipates capital expenditures between $195 million and $205 million, with $80 million to $85 million allocated for new builds in Saudi Arabia during the first quarter of 2025.
For the full year, NBR’s capital expenditures are expected to total approximately $710 million to $720 million, with $360 million earmarked for the SANAD new builds.
The company’s adjusted free cash flow for 2025 is expected to be approximately breakeven. The SANAD project is expected to consume around $150 million of this, while the remaining operations are expected to generate about $150 million in free cash flow.
Important Earnings at a Glance
While we have discussed NBR’s fourth-quarter results in detail, let us take a look at three other key reports of this space.
Oil and gas equipment and services provider Liberty Energy (LBRT - Free Report) reported a fourth-quarter 2024 adjusted net income of 10 cents per share, which marginally beat the Zacks Consensus Estimate of 9 cents, due to a year-over-year decrease in costs and expenses. However, the bottom line underperformed the year-ago quarter’s reported figure of 54 cents, due to poor equipment and service execution, along with lower activity.
As of Dec. 31, Liberty had approximately $20 million in cash and cash equivalents. The pressure pumper’s long-term debt of $190.5 million represented a debt-to-capitalization of 8.8%.
Another oil and gas equipment and services provider Halliburton Company (HAL - Free Report) posted a fourth-quarter 2024 adjusted net income per share of 70 cents, same as the Zacks Consensus Estimate but below the year-ago quarter’s profit of 86 cents (adjusted). The numbers indicated softer activity in the region of North America, partly offset by improved fluid work in the Gulf of Mexico.
As of Dec. 31, 2024, the company had approximately $2.6 billion in cash/cash equivalents and $7.2 billion in long-term debt, representing a debt-to-capitalization ratio of 40.4. The company generated $1.5 billion of cash flow from operations in the fourth quarter, leading to a free cash flow of $1.1 billion.
Energy infrastructure provider Kinder Morgan (KMI - Free Report) reported fourth-quarter adjusted earnings per share of 32 cents, shy of the Zacks Consensus Estimate of 33 cents. The lower-than-expected quarterly earnings were primarily due to decreased volumes on certain systems, asset divestitures and lower crude, CO2 and NGL volumes. KMI’s fourth-quarter DCF was $1.3 billion, up from $1.2 billion a year ago.
As of Dec. 31, 2024, Kinder Morgan reported $88 million in cash and cash equivalents. Its long-term debt amounted to $29.8 billion at the quarter-end. For 2025, Kinder Morgan anticipates a net income of $2.8 billion, up 8% from the prior-year level, and an adjusted EPS of $1.27, up 10%. The company expects to declare dividends of $1.17 per share, up 2% from the prior-year figure. It also anticipates budgeted adjusted EBITDA of $8.3 billion, up 4% from the previous-year level.
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Nabors Q4 Loss Wider Than Expected, Sales Match Estimates
Nabors Industries Ltd. (NBR - Free Report) reported a fourth-quarter 2024 adjusted loss of $6.67 per share, which was wider than the Zacks Consensus Estimate of a loss of $1.86. This underperformance was mainly due to lower adjusted operating income from its U.S. Drilling and Drilling Solutions segments, coupled with increased year-over-year costs, including direct costs, general and administrative expenses, research and engineering expenses, interest expenses and other related expenses. Moreover, the loss was significantly wider than the year-ago quarter’s reported loss of $3.84 per share.
The oil and gas drilling company’s operating revenues of $730 million were in line with the Zacks Consensus Estimate. However, the figure decreased from the year-ago quarter’s $738 million, due to poor year-over-year revenue contribution from the U.S. Drilling, Drilling Solutions and Rig Technologies segments.
Nabors Industries Ltd. Price, Consensus and EPS Surprise
Nabors Industries Ltd. price-consensus-eps-surprise-chart | Nabors Industries Ltd. Quote
On the other hand, adjusted EBITDA decreased to $220.5 million from $230.1 million recorded a year ago. The figure also missed our model estimate of $226.1 million.
Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.
During the fourth quarter, Nabors’ shareholders approved the issuance of shares to Parker Wellbore (Parker) stockholders in connection with the merger between the two companies and the latter’s shareholders also gave their approval. The merger is expected to close in the first quarter of 2025, pending certain international regulatory approvals.
NBR secured contracts for three rigs in Argentina. Two of these rigs will be transferred from the United States on five-year contracts, while the third rig is already operational in the country and will begin its new contract before the year ends. Additionally, Nabors received another contract for an idle rig in Colombia. These reactivations are capital-efficient opportunities that not only support growth but also enhance Nabors' asset utilization.
SANAD project deployed its ninth new-build rig in the fourth quarter and expects to deploy two more in the first quarter of 2025. As Saudi Aramco continues to expand natural gas activities, Nabors remains involved in its customer’s growth plans with commitments to add rigs built in Saudi Arabia in the coming years, alongside extensive portfolio of drilling-related services.
NBR’s Rig Technologies, Canrig, was awarded a comprehensive rig upgrade package by a third-party drilling contractor in the United States. Canrig is actively pursuing several upgrade opportunities both domestically and internationally, showcasing its advanced technology suite.
NBR’s Segmental Performances
U.S. Drilling generated operating revenues of $241.6 million, down 9.1% from the year-ago quarter’s $265.8 million. The figure also missed our model estimate of $250.2 million. Operating profit totaled $39 million compared with $51.5 million in the year-ago quarter. The figure missed our estimated profit of $44.8 million.
International Drilling’s operational revenues of $371.4 million increased from $342.8 million a year ago. The unit’s top line also beat our estimate of $362.5 million. Operating profit totaled $29.5 million compared with the prior-year quarter’s $18.6 million. The figure also surpassed our estimated profit of $24.7 million.
Revenues from the Drilling Solutions segment totaled $76 million, down 1.3% from $77 million recorded in the prior-year quarter. The top line beat our estimate of $70 million.Additionally, the unit’s operating income of $28.9 million was lower than the year-ago quarter’s $30.1 million. The figure also missed our estimate of $30.6 million.
Revenues from Rig Technologies totaled $56.2 million, down 5.1% from the prior-year quarter’s $59.3 million. However, the figure beat our estimation of $49.5 million. The segment’s operating profit totaled $8.4 million compared with the prior-year quarter’s $5.8 million.The figure also surpassed our estimation of $4.2 million.
Financial Position of NBR
Nabors’ total costs and expenses increased to $756.3 million from $714.7 million in the year-ago quarter. Additionally, the amount surpassed our prediction of $722.7 million.
As of Dec. 31, 2024, this Zacks Rank #4 (Sell) company had $397.3 million in cash and short-term investments. Long-term debt was about $2.5 billion, with a total debt-to-total capital of 94.9%. Capital expenditures totaled $202.2 million during the same time.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
NBR’s Guidance
For the first quarter of 2025, NBR anticipates an average rig count of approximately 61 in its U.S. drilling segment, with a daily margin of $14,800.
The company predicts that adjusted EBITDA from its operations in Alaska and the Gulf of Mexico will match the levels seen in the fourth quarter of 2024.
For its International Drilling segment, Nabors forecasts an average rig count of 85 to 86, with a daily adjusted gross margin of approximately $17,000.
In terms of financial performance, the company expects adjusted EBITDA of approximately $36 million from its Drilling Solutions segment and around $9 million from Rig Technologies segment.
Nabors anticipates capital expenditures between $195 million and $205 million, with $80 million to $85 million allocated for new builds in Saudi Arabia during the first quarter of 2025.
For the full year, NBR’s capital expenditures are expected to total approximately $710 million to $720 million, with $360 million earmarked for the SANAD new builds.
The company’s adjusted free cash flow for 2025 is expected to be approximately breakeven. The SANAD project is expected to consume around $150 million of this, while the remaining operations are expected to generate about $150 million in free cash flow.
Important Earnings at a Glance
While we have discussed NBR’s fourth-quarter results in detail, let us take a look at three other key reports of this space.
Oil and gas equipment and services provider Liberty Energy (LBRT - Free Report) reported a fourth-quarter 2024 adjusted net income of 10 cents per share, which marginally beat the Zacks Consensus Estimate of 9 cents, due to a year-over-year decrease in costs and expenses. However, the bottom line underperformed the year-ago quarter’s reported figure of 54 cents, due to poor equipment and service execution, along with lower activity.
As of Dec. 31, Liberty had approximately $20 million in cash and cash equivalents. The pressure pumper’s long-term debt of $190.5 million represented a debt-to-capitalization of 8.8%.
Another oil and gas equipment and services provider Halliburton Company (HAL - Free Report) posted a fourth-quarter 2024 adjusted net income per share of 70 cents, same as the Zacks Consensus Estimate but below the year-ago quarter’s profit of 86 cents (adjusted). The numbers indicated softer activity in the region of North America, partly offset by improved fluid work in the Gulf of Mexico.
As of Dec. 31, 2024, the company had approximately $2.6 billion in cash/cash equivalents and $7.2 billion in long-term debt, representing a debt-to-capitalization ratio of 40.4. The company generated $1.5 billion of cash flow from operations in the fourth quarter, leading to a free cash flow of $1.1 billion.
Energy infrastructure provider Kinder Morgan (KMI - Free Report) reported fourth-quarter adjusted earnings per share of 32 cents, shy of the Zacks Consensus Estimate of 33 cents. The lower-than-expected quarterly earnings were primarily due to decreased volumes on certain systems, asset divestitures and lower crude, CO2 and NGL volumes. KMI’s fourth-quarter DCF was $1.3 billion, up from $1.2 billion a year ago.
As of Dec. 31, 2024, Kinder Morgan reported $88 million in cash and cash equivalents. Its long-term debt amounted to $29.8 billion at the quarter-end. For 2025, Kinder Morgan anticipates a net income of $2.8 billion, up 8% from the prior-year level, and an adjusted EPS of $1.27, up 10%. The company expects to declare dividends of $1.17 per share, up 2% from the prior-year figure. It also anticipates budgeted adjusted EBITDA of $8.3 billion, up 4% from the previous-year level.