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Nabors Industries Surges 195%: Will the Rally Continue Further?
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Key Takeaways
Nabors Industries has outperformed its industry as contract wins and execution drive investor confidence.
NBR is expanding internationally and through SANAD with long-term contracts supporting earnings visibility.
NBR is reducing debt while technology, pricing discipline and premium customers support profitability.
Over the past year, Nabors Industries Ltd. (NBR - Free Report) has significantly outperformed both its industry and the broader energy sector. The company's shares have surged 194.5%, substantially exceeding the 65.6% growth delivered by the Oil & Gas – Drilling sub-industry (ZSI134M) and the 29% increase recorded by the broader Oil-Energy sector (ZS12M). This remarkable outperformance reflects strong investor confidence in Nabors' strategic execution, improving operational performance and favorable positioning within the drilling market.
12-Month Price Performance Comparison
Image Source: Zacks Investment Research
Nabors Industries primarily makes money by providing land drilling rigs and related services to oil and natural gas exploration and production companies. The company generates revenues through long-term and short-term drilling contracts, with earnings driven by rig utilization, dayrates and contract duration. In addition to its core drilling business, Nabors derives revenues from its Drilling Solutions segment, which offers directional drilling, drilling automation, digital wellsite technologies and software that help customers improve operational efficiency.
The company also earns income from its Rig Technologies business, which manufactures and upgrades drilling equipment and continues to expand into energy transition opportunities, including geothermal drilling and carbon capture solutions, further diversifying its revenue streams.
Following its impressive rally, Nabors has captured investors' attention. The stock's strong performance has raised an important question: What is driving the momentum, and does it still have room to move higher? Let's examine the key growth catalysts and core fundamentals supporting the company's long-term investment case.
Why Is NBR Suddenly on Investors’ Radar?
Market Share Gains: NBR continues to strengthen its competitive position by winning additional drilling contracts despite a relatively soft United States land drilling market. Management stated that the company added four rigs during the first quarter and eight rigs since November 2025, while broader industry activity remained muted. This performance reflects Nabors' ability to attract customers through premium rigs, advanced technology and reliable execution, supporting sustainable revenue growth and improving confidence in its long-term market position.
International Growth: NBR continues expanding its international business through new rig deployments in Saudi Arabia, Argentina and Mexico while actively pursuing additional opportunities across Latin America and Asia Pacific. Management emphasized that these projects are generally backed by long-term contracts with attractive returns, providing stronger earnings visibility than short-cycle drilling markets. This growing international presence reduces dependence on North American activity and supports a more diversified and resilient revenue base.
Technology Leadership: NBR is differentiating itself through innovative drilling technologies, including the PACE-X Ultra rig, drilling automation and managed pressure drilling solutions. These technologies help customers improve drilling efficiency, lower operating costs and enhance well performance, allowing Nabors to command premium pricing. Continued investment in technology strengthens the company's competitive advantage and positions it to capture higher-margin work as customers increasingly prioritize operational efficiency.
Debt Reduction: NBR continues making meaningful progress toward strengthening its balance sheet by prioritizing debt reduction. Management highlighted the redemption of the remaining notes due in 2028, which lowers future interest expenses and extends debt maturities. Combined with improving free cash flow generation, these actions increase financial flexibility, reduce refinancing risk and create additional capacity for future investments while enhancing long-term shareholder value.
SANAD Expansion: The SANAD joint venture remains a major long-term growth engine for Nabors Industries as additional newbuild rigs continue entering service in Saudi Arabia. Management also disclosed ongoing discussions for another group of newbuild rigs that could further expand the fleet over the coming years. Because these rigs typically operate under long-term customer agreements, the expansion should provide stable cash flows, predictable earnings and attractive returns on invested capital.
Contract Visibility: NBR benefits from a growing pipeline of contracted rig additions, providing greater revenue visibility than companies that rely heavily on spot market activity. Management expects additional rigs to commence operations in both the United States and international markets, supporting utilization and reducing uncertainty around future earnings. This contractual backlog strengthens the company's ability to generate more predictable cash flows across different market cycles.
Pricing Discipline: Rather than chasing market share through aggressive discounting, Nabors has maintained pricing discipline while expanding its working rig count. Management emphasized that new business has been secured without sacrificing profitability, reflecting customers' willingness to pay for premium drilling capabilities. This disciplined commercial strategy supports margin stability and positions the company to benefit further as industry utilization improves.
Premium Customer Base: NBR continues to secure business from large exploration and production companies that value operational reliability and advanced drilling capabilities. Management noted that most recently added rigs came from public operators, demonstrating strong customer confidence in the company's high-specification fleet and technical expertise. Long-standing relationships with financially strong customers also reduce counterparty risk and support recurring business opportunities.
Final Verdict on NBR’s Potential
NBR is strengthening its market position by winning additional drilling contracts and adding rigs even in a soft U.S. land drilling environment, supported by the premium rigs and strong execution capabilities. The company is also expanding its international footprint across Saudi Arabia, Argentina, Mexico and other regions, with the SANAD joint venture serving as a key long-term growth driver through newbuild rig deployments and stable contracted activity. Its technological leadership in advanced drilling solutions, combined with disciplined pricing and strong relationships with large, high-quality exploration and production customers, supports premium positioning and margin stability.
At the same time, ongoing debt reduction efforts and a growing base of contracted rig activity enhance financial flexibility, reduce risk and improve earnings visibility across market cycles. This Zacks Rank #2 (Buy) stock represents an attractive choice for investors seeking exposure to the oil and gas sector, given its strong competitive positioning, expanding international business and improving earnings outlook.
Cenovus Energy is valued at $52.86 billion. It is a Canadian integrated energy company that produces, refines, and markets crude oil, natural gas and petroleum products. Cenovus Energy operates major oil sands and refining assets across Canada and the United States, making it one of North America's leading energy producers.
Murphy USA is valued at $10.28 billion. It is one of the largest independent gasoline and convenience store retailers in the United States, operating a network of stores primarily located near Walmart locations. Murphy USA focuses on offering low-cost fuel and everyday convenience products, supported by a strong loyalty program and disciplined capital-allocation strategy.
Marathon Petroleum is valued at $75.36 billion. It is one of the largest downstream energy companies in the United States, operating extensive refining, transportation and fuel marketing networks. Through its refining assets and retail fuel brands, Marathon Petroleum supplies gasoline, diesel and other petroleum products to consumers and businesses nationwide.
View the Zacks #1 Rank List
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Nabors Industries Surges 195%: Will the Rally Continue Further?
Key Takeaways
Over the past year, Nabors Industries Ltd. (NBR - Free Report) has significantly outperformed both its industry and the broader energy sector. The company's shares have surged 194.5%, substantially exceeding the 65.6% growth delivered by the Oil & Gas – Drilling sub-industry (ZSI134M) and the 29% increase recorded by the broader Oil-Energy sector (ZS12M). This remarkable outperformance reflects strong investor confidence in Nabors' strategic execution, improving operational performance and favorable positioning within the drilling market.
12-Month Price Performance Comparison
Image Source: Zacks Investment Research
Nabors Industries primarily makes money by providing land drilling rigs and related services to oil and natural gas exploration and production companies. The company generates revenues through long-term and short-term drilling contracts, with earnings driven by rig utilization, dayrates and contract duration. In addition to its core drilling business, Nabors derives revenues from its Drilling Solutions segment, which offers directional drilling, drilling automation, digital wellsite technologies and software that help customers improve operational efficiency.
The company also earns income from its Rig Technologies business, which manufactures and upgrades drilling equipment and continues to expand into energy transition opportunities, including geothermal drilling and carbon capture solutions, further diversifying its revenue streams.
Following its impressive rally, Nabors has captured investors' attention. The stock's strong performance has raised an important question: What is driving the momentum, and does it still have room to move higher? Let's examine the key growth catalysts and core fundamentals supporting the company's long-term investment case.
Why Is NBR Suddenly on Investors’ Radar?
Market Share Gains: NBR continues to strengthen its competitive position by winning additional drilling contracts despite a relatively soft United States land drilling market. Management stated that the company added four rigs during the first quarter and eight rigs since November 2025, while broader industry activity remained muted. This performance reflects Nabors' ability to attract customers through premium rigs, advanced technology and reliable execution, supporting sustainable revenue growth and improving confidence in its long-term market position.
International Growth: NBR continues expanding its international business through new rig deployments in Saudi Arabia, Argentina and Mexico while actively pursuing additional opportunities across Latin America and Asia Pacific. Management emphasized that these projects are generally backed by long-term contracts with attractive returns, providing stronger earnings visibility than short-cycle drilling markets. This growing international presence reduces dependence on North American activity and supports a more diversified and resilient revenue base.
Technology Leadership: NBR is differentiating itself through innovative drilling technologies, including the PACE-X Ultra rig, drilling automation and managed pressure drilling solutions. These technologies help customers improve drilling efficiency, lower operating costs and enhance well performance, allowing Nabors to command premium pricing. Continued investment in technology strengthens the company's competitive advantage and positions it to capture higher-margin work as customers increasingly prioritize operational efficiency.
Debt Reduction: NBR continues making meaningful progress toward strengthening its balance sheet by prioritizing debt reduction. Management highlighted the redemption of the remaining notes due in 2028, which lowers future interest expenses and extends debt maturities. Combined with improving free cash flow generation, these actions increase financial flexibility, reduce refinancing risk and create additional capacity for future investments while enhancing long-term shareholder value.
SANAD Expansion: The SANAD joint venture remains a major long-term growth engine for Nabors Industries as additional newbuild rigs continue entering service in Saudi Arabia. Management also disclosed ongoing discussions for another group of newbuild rigs that could further expand the fleet over the coming years. Because these rigs typically operate under long-term customer agreements, the expansion should provide stable cash flows, predictable earnings and attractive returns on invested capital.
Contract Visibility: NBR benefits from a growing pipeline of contracted rig additions, providing greater revenue visibility than companies that rely heavily on spot market activity. Management expects additional rigs to commence operations in both the United States and international markets, supporting utilization and reducing uncertainty around future earnings. This contractual backlog strengthens the company's ability to generate more predictable cash flows across different market cycles.
Pricing Discipline: Rather than chasing market share through aggressive discounting, Nabors has maintained pricing discipline while expanding its working rig count. Management emphasized that new business has been secured without sacrificing profitability, reflecting customers' willingness to pay for premium drilling capabilities. This disciplined commercial strategy supports margin stability and positions the company to benefit further as industry utilization improves.
Premium Customer Base: NBR continues to secure business from large exploration and production companies that value operational reliability and advanced drilling capabilities. Management noted that most recently added rigs came from public operators, demonstrating strong customer confidence in the company's high-specification fleet and technical expertise. Long-standing relationships with financially strong customers also reduce counterparty risk and support recurring business opportunities.
Final Verdict on NBR’s Potential
NBR is strengthening its market position by winning additional drilling contracts and adding rigs even in a soft U.S. land drilling environment, supported by the premium rigs and strong execution capabilities. The company is also expanding its international footprint across Saudi Arabia, Argentina, Mexico and other regions, with the SANAD joint venture serving as a key long-term growth driver through newbuild rig deployments and stable contracted activity. Its technological leadership in advanced drilling solutions, combined with disciplined pricing and strong relationships with large, high-quality exploration and production customers, supports premium positioning and margin stability.
At the same time, ongoing debt reduction efforts and a growing base of contracted rig activity enhance financial flexibility, reduce risk and improve earnings visibility across market cycles. This Zacks Rank #2 (Buy) stock represents an attractive choice for investors seeking exposure to the oil and gas sector, given its strong competitive positioning, expanding international business and improving earnings outlook.
Other Key Picks
Investors interested in the energy sector might look at some other top-ranked stocks like Cenovus Energy (CVE - Free Report) , Murphy USA (MUSA - Free Report) and Marathon Petroleum (MPC - Free Report) , sporting a Zacks Rank #1 (Strong Buy) each at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Cenovus Energy is valued at $52.86 billion. It is a Canadian integrated energy company that produces, refines, and markets crude oil, natural gas and petroleum products. Cenovus Energy operates major oil sands and refining assets across Canada and the United States, making it one of North America's leading energy producers.
Murphy USA is valued at $10.28 billion. It is one of the largest independent gasoline and convenience store retailers in the United States, operating a network of stores primarily located near Walmart locations. Murphy USA focuses on offering low-cost fuel and everyday convenience products, supported by a strong loyalty program and disciplined capital-allocation strategy.
Marathon Petroleum is valued at $75.36 billion. It is one of the largest downstream energy companies in the United States, operating extensive refining, transportation and fuel marketing networks. Through its refining assets and retail fuel brands, Marathon Petroleum supplies gasoline, diesel and other petroleum products to consumers and businesses nationwide.