NBR - Earnings call transcript Q3 2019

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Operator

Good morning, and welcome to the Nabors Third Quarter Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] After toward presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded.

I would like to now turn the conference over to Denny Smith, Senior VP Corporate Development and Investor Relations. ahead. go Please

Denny Smith

Executive Thank quarter's earnings everyone. these Nabors customary joining third our their how and Nabors' with Chief and Restrepo, Good Officer markets along Financial call. you perform with Today, to markets. XXXX providing Chief President Chairman conference Petrello, on our expect and we quarter in William Tony our the morning, perspectives our for Officer; results will we format into follow insights

statements a remarks, download posted these of XXXX. website Securities replay of deck of and is include commentary the as of forward a will support In call section XXXX on Exchange Since the as both slide of Act Instructions today within in our are available much the of Securities this the and for within meaning constitute webcast the Act expectations well. the the of forward-looking our they Investor may Relations nabors.com.

to risks uncertainties Exchange the Such forward-looking our time-to-time certain with and by statements as Nabors Securities Commission. filings and in from subject are disclosed

our result statements. results these factors such those actual implied a As from may differ forward-looking indicated or of materially by

otherwise on mean earnings and presentations clearly financial the qualified flow website earnings our flow flow references operating otherwise may release. we dividends during certain cash as free Likewise, EBITDA such references adjusted whether defined word made by is free context meaning flow discuss is EBITDA in or adjusted that our William to term Also after net free their in that as term indicates cash cash defined as or by after release. or and our on debt, income, unless the non-GAAP website during our and call, to EBITDA All adjusted measures, cash dividends. Tony adjusted either the

We measures. a the to of posted comparable non-GAAP most GAAP recently Relations website section our reconciliation the of financial to Investor have these measures

Tony to begin to call will I over Now, the turn

Tony Petrello

Good results us quarter as we joining our morning. Thank review third the XXXX. for you for of

will our had some American on on also I discussing the affecting our offer comments influencing These forward macro factors performance, be during activities planning. to their factors They the Before quarter. customers' Nabors' appear a material North impact markets.

main quarter, the quarter of nearly near-month WTI The cash prices $XX average. third respondents combination in gas average as America averaging Dallas well resulted having quarterly as This decline Survey the lower Fed their a the second low the the pressure Natural In traded During versus flow. to just $XX quarter. most limiting price commodity capital mid-August. second the as generate was activity Energy also free $X.XX represents recent X% in customer growth. during to over declined as limited prices access from constraint E&P investor North of cited the low as also has

and completion macroeconomic as compensated related about to future trade Finally, third lower the the expenditures. oil and decrease quarter concerns for fears shortfalls the growth for in drilling These sluggish with gas. flow wars demand factors activity expected our customer have accentuated clearly cash customers increased and

below Consequently, exit the fell industry and third counts quarter well prior average the for rig expectations.

of through all activity the the some drilling end expect Lower in We XX, year. macro result additional elements to reductions these of in

rigs the rig particular XXX third U.S. reduction. During by declined XX% land an the quarter in average XX industry count Lower

quarterly minutes. when few in topic, I will customer of a the have additional I thoughts our survey discuss results on this

that a oil operator. have either markets oil of the a one our market activity. prices large In from layer macro For still is growth This Moreover international pricing exist global of focused picture the pressures improving a incremental insulation gradual activity. or company in longer-term supportive been customer in Lower XX. those and state-owned is our markets, in provides typical of

most across rigs for demand incremental ongoing international of markets. our anticipate we Consequently,

Our U.S. up latter X% drove significant same the second reflect million, our quarter. the from of At the the increase EBITDA the a totaled occurred international the Drilling time in market that results. part results quarter. business in during change $XXX consolidated Adjusted our

XX than seven gross time, slightly excellent count less rigs. pricing, rig mix. to rig operating and daily declined Lower At Our by same performance favorable average a stable due improved the margin

quarter. In were growth markets. our our better XX%. about increased the across by This on of significantly performance several International par segment, segments balance nearly adjusted EBITDA The reflected with operating second

Nabors our Lower the in of rigs from the loss Drilling third Notably, despite party content idled improved Solutions XX. segment

the results tubular Although, directional per running rig short of segment's occurred adoption higher increasing penetration of expectations, margin this as technologies the reflect expanded, automated and content increase also drilling

let our more discuss detail. of me market in view Now the

year, count industry rig by rigs. XXX stood has the the XX%. During by averaged which of third rigs the count the week, That quarter, the beginning the is from Last XXX. declined the XXX count XXX. Since down rigs at in Lower the at XX rig or quarter third the of about XX end stood rig

the As only week, of the XX. Nabors' XX% count was year last for Lower by rigs U.S. in or down rig XX

safety that both past improved the the to which shaping is of quality is has performance value-added the rigs, our Our and record, trend. years. for the financially, relative of continue eight by to this operations At and foundation XXXX outperformance, operationally the steadily testimony is our up technology. best best-in-class

occurred results As This oil the is we of Midway prices through concerns. quarter, I mid-August indicated times, of third none. with in recessionary customer in saw we quarter with believe our sharper third rig the to and than that Lower emergence second the quality our U.S. demonstrate reductions stated we’re the previous many that. These contraction survey. activity decline fleet have XX

price XX tempo lower survey and Once minor capital surveyed budgetary mergers consolidation to cash flows, constraints. from constraints recent some our Customers continued worries. their and in reflects to we oil Lower again, The September, customers. adjust operations' XX plans specific top

planned indicated of XXXX. that count. a respondents further just through XX% nearly Notably, participants is indicated The XX The no change. this for approximately net rigs surveyed XX remainder the industry of about in concentrated clients account the decline the Lower XX% total decline operators. Most of is of or X% two of rig

version of June decline macro magnitude before the third sentiment a was similar of which taken changes emergence quarter larger The operators. survey, among indicated number of a our

decline was change an resulted indicated double more than that level. in that actual the However,

The latest version the of the survey during in indicates largely those planned customers changes their quarter. activity completed third

over the and Their As do a survey the can on customers. time. and activity comments reminder, my of responses our plans change reflect levels

and rigs XX earlier, held our of quite I our our strong appetite for among highlighted credit We U.S. rig working the most West current conditions. after. base XX, particularly As quality industry In in count sought for up rig the most well, These and rigs. face highly comprise the XX% in rigs specification are active of Texas, market our of Lower has competitive our the Lower high rig the their customer count. the example,

of have have including Texas. XX rig PACE-X that The currently idle one rigs out XX in high-spec XX% We market. in there. our We is of West our utilization rigs X only rigs currently X

and and Marcellus Although, utilization have our some include high-spec These have the seen in activity some high East and drops Rockies, in we underperformed. the is North Midcon pressure. pricing where the Texas markets, also markets gas extremely Dakota

type rigs as somewhat weeks, the recent of pricing has high-spec for in industry, trends although pricing Within plays. edge mentioned, geography vary softened leading and by

the in in most fleet, the our majority well we line basins held as active vast Texas and Bakken. Texas on pricing, particularly the as have For West the of South

competitors pricing XX%. At Our XX Market reflect in discounted rigs discipline. time, rig has remains under highest-spec approximately Lower financial selectively for results our pricing utilization our certain come some rates. rigs for as have the the same capable pressure most our

of Our focus to and remains the value performance our delivery customers.

we succeeding. Our results indicate are

stable markets, international Pricing strengthening. these to our activity in in appears be has markets In industry XXXX. rig been

year. already the have at two deployed our several third we'll count, rig present quarter of and in end We by rigs, least more not deploy the

markets. other it remain performance realize for growing. continues our segments, opportunities additional and these In several high-spec increase. and solutions benefits our our from to of products interest in Customer results. tangible Operators is innovations in rigs adoption shows automation in Multiple

results comment Now highlights. and let our segment me on various

consolidated approximately quarter, results to million. was X% quarter. quarter. Several totaled the the second for our For This drove factors EBITDA million. to compared $XXX in X% third the third Revenue $XXX adjusted by sequentially $XXX million up performance declined

million locations. our U.S. operating the sequentially increased more in segment X% EBITDA key improvement in by rig declined decline adjusted This a in $X XX%. count. primarily several EBITDA international or than Drilling slightly despite Adjusted performance Lower XX quarter in X% better by third reflects the

U.S. improved this during margin did as quarter average Lower Offshore. Our XX daily

the Technologies, in Canada, In In affected both This weaker following remained higher the rig margin. for somewhat, average market revenue the than segment and we increased systems results declined modestly daily quarter. our second expected. robotic Rig count although EBITDA

in Canrig performance the We sequentially. are that encouraged improved

We achieved the quarter. some highlights notable during

quarter. First, markets high-spec rigs in [ph] international the we two deployed during

is a Kazakhstan. large unit very in first The

second highly Argentina. capable The a is in build unit new MXXXX

are based these accretive rigs All working U.S. be fourth NOCs and to segment's quarter. the beginning margins of in this should majors for or

increased During jobs Pilot count the by increased for number penetration total The again running We quarter. quarter, third the third the drillers Navigator. in we third-party of and job a-third. increased XX% ROCKit by the directional of

with are over six and of reach our Nearly are remotely drilling directional basins. Pilot system automated our customers expanded operated. our system We jobs for jobs running current customer spread XX XX% Pilot

scaling. we has consistent are The now initial a We rollout seeing uptake and Pilot. for been successful are

our hard drive unit on This reliability Canrig vibration drive formations will Sigma's Middle class. East next the reduces features improves of deployed of for the next-generation direct the the moving a industry-leading with advantages rig unit attractive number performance which markets. drilling top It in other and and maintenance. clients output parts, Canrig achieves high be Texas. Sigma horsepower more in even reduces first in its South its mechanism

discuss in me let detail. more Now segments our

First, XX XXX for the average and end XX. quarter rigs in to Lower U.S. the compares have third quarter. the working Drilling. currently of of an This at the third We XXX.X

our rig by in versus count XX,XXX per we the rigs quarter, managed daily margins rig seven the Even third to day. XX light quarter. our maintain this decreased During of count, to rig second Lower average

International drilling.

quarter count realized Latin improvement XX%. quarter. rig in down EBITDA implemented of which adjusted Our the we for plans, lower America averaged international the count performance versus second increased rigs, and this the We Middle rig benefits by Despite the previously for East. the third XX quarter one the

operating very international rest than modestly, increased balance expected. upswing. as our only stable. and a market geographies These market The In improved our remained were we better experienced performance. resulted move results environment seasonal Canada, on uptime the This muted and mixed of weaker in

were Our results not that. immune to

Drilling Solutions' Encouragingly, previous U.S. of increase the performance financial lower the quarter. in versus counts and third-party Nabors' face occurred this the Solutions. rig improved slightly Drilling in

and International bright Our spots. line results were tubular running services

Rig in Canrig, essentially Robotic This segment Technologies Results our Technologies. and were flat. includes XTD Rig Technologies. Next segment

robotic initial our quarter significant benefited for Second forward results from projects. drill payments milestone

our Now discuss let our Drilling, me segment. of fourth count XX for outlook approximate quarter, the we believe current should the Lower U.S. activity. In by rig level

Lower decline our day. per to XX of couple expect dollars by a hundred We margins daily

Our should with U.S. Offshore and Alaska be the third flat quarter. business essentially

International In segment, steady the activity. driven improvement, rig we largely by expect increased

addition in deployed we to to which late commence the units two Mexico fourth high-spec in additional quarter. platform scheduled include in rigs QX, rigs during quarter. In two the have late the These

for by quarter rig the approximately two count average Our rigs. increase should fourth

in received an sanctions extension of customer Our waiver. Venezuela its

to maintain quarter third there, our at expect level. We operations

upfront All line with the sequential offset payments. count, expiration rig This of EBITDA, increase International quarter. in of amortization from in, performance, quarter be we third the by fourth essentially largely expect will in adjusted the

fourth Drilling Solutions, line Solutions, approximately quarter we the expect with Rig results in Technologies. quarter. Drilling third in

we EBITDA for quarter's adjusted Rig expect Technologies in fourth past with line quarter this forward, Looking results.

the That and concludes remarks quarter outlook. my third results our on

financial I After the will of Now results. some remarks. to for with William, comments closing will turn over call his a I follow-up discussion

William Restrepo

of share represents per the net or to from Good devaluation. share. The $X.X loss losses in charges tax million morning. quarter to of currency million Nabors operations The included a in jurisdiction $XXX $X.XX related exceptional attributable after-tax foreign per a loss share an from income $XX.X $X.XX continuing per and Argentina million in settlement, $X.XX or

in share, The compared or $XXX third per assets. $X.XX $XX in million or of in results, Results a loss share, prior included intangible million the quarter. impairments the to quarter second net quarter to $X.XX per

$X.XX or third These by of from million sequential or $XX share. for was operations were the partially $XX a million tax Revenue reduction a X.X%. million offset non-recurring gain of quarter $XXX per

of Mexico primarily Drilling count the Seasonal in also driven X.X% in contributed Lower fell by million, $XX.X declines reduced U.S. Gulf Alaska, or drop. the XX. rig the by and to

our and On remaining Technologies revenue, increased quarter's segments revenue, equipment $X.X from decreased a million, reduction moderately. Rig by, reflecting in for the sales revenue prior balance, robotic milestone systems.

Lower the Daily reflecting the an of had more slightly in anticipated. revenue, for improving XXX.X than by rig seven relatively XX Lower than, XX rig more mix. average some X.X under declined pricing rigs increased in Our count our and by we just stable rigs rigs $XXX

increased in reduction drilling downtime in several by primarily larger a slight locations. International operating of improved performance, revenue at $XXX million, segment offset our million count. This rig $X reflecting improvement

at occurred revenue seasonal million, later Rig by as increased and the $XX.X Drilling Canada fractionally $XXX,XXX, expected muted improvement was anticipated. count than increased

$XX.X million, the revenue by of quarter. $X.X Solutions declined million Drilling from previous

increases were activity by in international land. Our than lower U.S. more offset activity

the the with our segment activity lower, XX. at $XX.X incremental us Revenue significantly than activity However, the in million million. Lower Rig overseas in provided profitability, was higher Technologies loss $XX

sales. and lower Most came revenue lower decreased The spare primarily of parts from repairs. reductions came from internal of capital the margin equipment, sales

system in had quarter, revenue, North higher prior the for robotics, project a the in addition, In milestone Sea. we

to $XXX led fell Drilling, in by the $X.X million EBITDA, improved onshore This U.S. by a to the improvement million which was on International million, million, second Drilling rig by $XXX increase. $X quarter, decline. compared count while increased X%

was Canada by Solutions, our and rig to Lower rig X% results. margin the reductions sequentially. steady, corporate $XXX.X EBITDA at closing XX, million Drilling, down with revenue Drilling held and XX,XXX. U.S. daily improved margins all contributed Drilling of In overhead

Our of wage by by was other reductions crew costs. and in revenue higher $XXX per rig offset day, operating increase

to We erosion $XX,XXX the expect regions. margin quarter, price off mark daily market to rig a by around driven couple the of fourth in in fall somewhat

the a is XXX quarter, a million the $XX.X rig in $X.X count average in reduction despite XX quarter. Our EBITDA, fourth rigs third to International rigs Rig increased current should in by the count approximately quarter. XX XX. Lower rig to million the in X.X average

improvement approximately Daily locations gross to multiple margin improvement cost and $XX,XXX. America. Latin This initiatives benefits reflects from further $XX,XXX in performance from primarily operating in substantially increased better

somewhat international were recent cost rig rigs deployment one another scheduled the two the early should better rigs performance deployments of in two count in quarters. somewhat Two due and December. of Kazakhstan. our Operational in almost than platform are and prior Mexico in increase In in quarter, locations fourth all more the Argentina, for in to Russia,

We international quarter. QX EBITDA with essentially third the line expect in currently

Venezuela fourth based Our recent January. stable assumes quarter forecast late of in a rig on until waivers count U.S. extension

offset this recent reduction Saudi rig activity contract by Although of average couple Kazakhstan incremental increase of advanced fourth amortization quarter and will $X should cash an renewals. rigs, in Arabia by a the million be in following payments

in Canada was more margin decline, with $XXX,XXX at the EBITDA $X,XXX although million. expect increased to $X.X from in to been has a for margins seasonal by and count slightly than The modest increase Rig increased X.X improvement daily the fallen usual. has rebound We around market count marginally rig and three-rig now less quarter the higher expected $X,XXX. activity robust Canada recovering seasonal quarter second in mark. a the fourth than and

lines, in towards tubular the margin Drilling shift services Among product higher of as Solutions our to the in $XX.X services. improvement from largest running million, quarter. posted second continued up activity EBITDA integrated million $XX.X was

our modestly balance lines quarter, count. in The of declined the product third the lower by U.S. driven NDS rig

EBITDA we the third in to quarter. quarter, For fourth are NDS targeting similar the

EBITDA delivered better Technologies the fourth should quarter quarter. the $X.X third core as a compared the EBITDA mix. of $X.X due in mirror business improved million equipment Rig million in to Canrig EBITDA The in third. the quarter to second essentially

expect range For of million a EBITDA fourth whole, $XXX million to in the Nabors to $XXX would quarter. as we be the in

to $XX flow third as quarter. million. less minus operations, investing Now, used defined approximately quarter, liquidity cash the This in cash cash compares net activities, payments review our dividends In for prior cash million was let and dividend $XX the me after generation. free from

$XX payments as interest in included quarter semiannual approximately third compared The quarter. second to interest minimal of million payments the

of These also been their year-to-date The versus Through reduce target. are has $XX these offset impact million third implement initiatives capital. our to to have recent payments. to accounts many We our receivable. delayed delays trends continue our in required quarter the working approximately customers

the $XX quarter. million by of in third preceding expenditures quarter of level Capital $XX the million the fell below

$XXX in for full million $XXX We are million CapEx targeting the year. now to

With the flow the in free and interest semiannual absence significantly reductions, additional CapEx of should increase cash payments quarter. our fourth

our expect in as our decreasing generation initiatives. leverage. other We maintain cash debt our budgets this our reductions while year. receivables commitment our flow cash for to next working on net reduce capital of million in We're focused on and $XXX we and forecast currently updating push excess our working We year. continue cash XXXX also for on flow improving on We remain our

of be million. objective will an $XXX plan cash with of XXXX Our flow generating free minimum prepared

CapEx $XXX expenses. in on field optimization below plan cost costs, include including continued and and reduction support a Our focus a well to will level million overhead, operating

I the back that, With his remarks. concluding call Tony turn will to for

Tony Petrello

my I William. will you, morning this with remarks the now conclude Thank following.

the quarter, as quarter. This activity the XX slowdown accelerated a Lower segment. in our third the through the on reduction Drilling During caused rig count Solutions effect knock-on in we moved

time trends evidence Over international similar in there period any the little our is of same markets.

those outlook and In impactful just the rig additional we have contrast, in demand completed of remains quarter next. couple and a favorable. deployments deployments scheduled markets We this

This of company. activity markets for with In relevant am has bright performance pleased segments. I international a fact been across the the all real spot in its

high-specification market performing Drilling in our the The of well. XX%. still backdrop business the rigs approaching U.S., our Against is is utilization

We Nearly deliver penetration majors back for value That our rigs of to large group XX quickly. the of have customers. shown independents. works put currently demanding ability work we super quarters the to this three demonstrates Lower to relatively fleet and that

headwinds, is systems We encouraging. realizing Drilling significant to suite Pilot of of validate we offer the Despite the potential profitability drilling expanding. leading-edge growing the the our our continue to technology is NDS penetration The customers. automation portfolio. market committed to current In we remain value directional and Solutions, Navigator

of our Our unique portfolio sector. is businesses in

drilling, We technology. class have international well diversification services categories, asset several across drilling, land domestic and offshore, land site

We North presences of diversification also American in diverse a international markets, both with for and source production. is portfolio XX% the world's oil have This geographic together gas and account strength. of which

right land U.S. International, Lower Offshore and that EBITDA stable of increase NDS environment the firmly if outside In quarter. Approximately relatively in improving was the in believe other operations, majority have we our the throughout places. Growth a performance of company's is confirms our and in soft the market. people company's two-thirds I to led XX business EBITDA. technologies sourced the the a right sequential total words, the U.S. in rig not assets,

to is on capitalize goal to solid our profitability Our capital. on situation. on restoring remain focused this We and businesses returns

attention. That and we this you your morning. Thank remarks concludes will take your time With my for that, questions.

Operator

now question will session. Lynagh The go first begin Connor question-and-answer from comes Stanley. We ahead. Morgan [Operator Please Instructions] with

Connor Lynagh

morning good Thanks, guys.

William Restrepo

morning. Good

Connor Lynagh

free you you've laid pretty the big target next next year. obviously level for at What cash year. wondering if million we're could phase. the factors $XXX big walk moving in So impressive out million $XXX there? are budgeting to flow just year But you this bridging high a the through pieces early I'm from

Tony Petrello

you. that do for will William

William Restrepo

Hey Connor.

about million than plenty but higher we're all this our to year like year. expecting first starting $XXX this of year So indications to we're have see expect we EBITDA said. process, see next that you our we preliminary just budgeting of just Obviously,

of So much that's not and our higher, that be discuss ready should incremental part to but by yet we're plan. how

$XX million. $XX dividends year, $XX our going should to dividends. incremental did if CapEx an Interest by quarter year. cut next Then so And the cut after of about may first million I recall or the this pay you in of we drop that. million by we're we another think Secondly, expenses

accretive our for those So should to cash XXXX. $XX flow be million

you things million. would add above up say I you $XXX If comfortably those all the million, up $XXX to end that

Connor Lynagh

to fourth cash helpful. the release? How to Got is And flow, that about it. about just be is That's downside the a going thinking you how think there? contingent better upon quarter do capital working what

William Restrepo

is more to be about I interest like going expense the which pieces are lower. $XX mean the million biggest though

make $XX -- very the be for I And job another we on our lower what course, our have focused that of most going capital we team my efficient the we part that. quarter. working to sure we think our of in CapEx the have saw of third is million to size is business from and

bit how of do from Obviously customers of squeeze well a fourth millions working that working Some tens to capital. may dollars capital few we will is tough in gauge quarter. year-end of expect come but pay, from the the to a

quarter. numbers, addition three asset $XX and couple In idle I the Again, that, to those a we in our in $XX see and dollars as of somewhere think sales million have tens assets range that are ongoing the to part of do quarter, well. but millions big noncore of fourth we'll that's in as in fourth maybe not are of well process million to the

Connor Lynagh

Okay. much. very Thanks

William Restrepo

You’re welcome.

Operator

Scott The with Please next ahead. Gruber go question comes from Citigroup.

Scott Gruber

Yes, good morning.

William Restrepo

morning. Good

Scott Gruber

In during September, accounts Was there think receivable a facility. you entered you quarter? the cash sales from receivables sell purchase any Did I any to benefit there? a

William Restrepo

view signed Connor sold is I that and this way we receivables those an to The some. agreement we sell

this? do but usual basically more time did year. been started I meeting payments commitments we this, on delaying this hate our not customers have to paying and pretty that payment year and their why early than say this So

getting is have quarter DSO on in from their a suffered every with the fact So those we and year. do this deteriorated result shareholders. they're delays cash as collections I flow that that the and guess we've has push underperformed But to something our year-to-date

capital the So impact about $XX million. our is working and is here

is view agreement this I defensive. way the So

to we needs. in have erosion whenever So use or that DSO of and the our some compensate deterioration we

accelerating by instance, some but the be it offset to in delayed million we we us has bringing DSO number our of and paid $XX about of recently impact I does the should bought bonds it this revolver receivable to been the the collections back past. For unfavorable guess, allow the and and

improve also our DSO. just sales mitigate the impact. not accounts countering receivable using this We're these by customer we're internal trying obviously, So to to tactics

approved also quicker get them So by out more we're get our and frequently. we're invoicing invoices to the clients door out and -- trying

instance. doing We for visits. We see high-level went client have to management PEMEX recently team our

very Our we went invoices make have it, incremental President And no than for receivables, of global because liquidity can future, to rather if name up a -- of this we you result drilling sales any rapid think want Operations making those of of, in disputes, we there we collections. got nice in and everything slower to and the mistakes collections.

did to we We and the delays some with of would some the in So way. the offset offset payments collections range the I the quarter somewhere quarter. collected the that -- $XX before by in third million sold say in of that was end

Scott Gruber

Got you.

William Restrepo

Thanks.

Scott Gruber

No. and normal kind it you new how Are hearing that sense hearing in terms is others. days And as that by of the mean, domestic certainly DSO from makes the It E&Ps kind they're geography? targeting? the that I this we're guys are We're is of stretching. one well? about of just seeing widespread disappointment

William Restrepo

it's it's they're true I pressure. the -- think it's bit don't but a usual think little flow a new clients. more normal. it's that normal don't getting new I And cash normal a

excuses ratcheted they've up the bit. now that's mean a right little game. So their usual But I

have We the play and game -- been I for doing a we we've that time. have always mean, then clients long this

So not counter make sure to tactics and that we don't counter us. -- are do else they somebody that the know and to they we use what that that how to

invoices. we're to delay trying clients on think take goes and excuses that all going from the remove of of giving part that -- their the situation on game But we're that's cautious is time and very advantage I we're and that's the game. usual the to not So

in new bit a U.S. of yes, lot norm things Latin the excuses valuation a normal. and that. it it's some a I claim places of some clients just to year, those in in -- Argentina, mean allowed but not more. of renegotiate usual the America, like And It's but a lot using clients like we that. think saw tactics It's to started I our a delay this and

said, been, quarters. that that but million like see So $XX-plus we've in And that's this year the a all I year time little we've impact seen must usual. couple had has bit a the three I the range. more year than it we been in this say first The tough

Scott Gruber

more the can Nabors as maintenance I it back. CapEx the a do you how ask And get just quick one organization we is just If about guys given whole? question you. on Got moving for little I'll think turn pieces,

William Restrepo

think lowest for somewhere CapEx whole organization maintenance the the depends bare we bones I count. on it as high XXXs a right? like that's more. normal more our the XXX but be count, XXX, dependent little in can again, is low it would that's number very CapEx, get So a the rig on and But the maintenance rig to pushing in much A somewhere XXXs, obviously a is

Scott Gruber

At rig the XXXs? do could the count low you current

William Restrepo

At count, can get we yes. the current the current at under XXX rig

Scott Gruber

it. Got you. Okay. Thank

Operator

Kurt from The Please comes with question next Hallead ahead. RBC. go

Kurt Hallead

morning. Good

William Restrepo

Hi, Kurt.

Kurt Hallead

Hi.

on understand it to be help debt is there William? Or net going -- an you cash year absolute net a just be, when you into So my the second reduce here -- reduction I financials us for debt sheet? as is year next think one of be next my the balance can follow-up generate go questions there's to just stick -- you into the if going on would building

William Restrepo

I XXXXs about is minimum it's $XXX No. the reduction which September be going million, to see mean year. that year. a I going to of definitely next next mean, mature is you're the in

than So would expect the be that's bigger reduction see that. to a reduction minimum but much going to I

you was see, on and initial we're $XXX million. about million the outstanding As can now $XXX at the XXXXs

the So we've at picking and been XXXXs. we've it XXXXs and picking the at been

during, fall -- very coming three the significantly next XXXX during maturities will XXXX. year this those think I

Kurt Hallead

it, Got base quarter. customer survey additional of for Tony and that every color, the thanks Okay. you that on your end do

or high you given do what kind -- really start they're that As have step maybe indication you E&Ps you to degree any the going of how on terms in have of XXXX? of beyond E&Ps conviction have on a you given

Tony Petrello

jour. early little And contracting topic can't a to talk too rigs. great in interest them, a I it. about from additional premature. been the is of it's It's little a high-spec this dialogue. Obviously, du say deal would I say there's

that's moves a William's has Obviously, that to from think up. overall issue. can indications And think we are the early are commodity big the be to always comment cooperate. you directionally, see I But going price the macro yes. we're And

the about And and up. -- rig for we're count directionally, our quarter. next So fourth go going average pretty clear year to we it's said

Kurt Hallead

Okay context in play margin fourth competitive the where got the some you that pressures cash quarter dynamics indicate it. degradation. And of and then through

try fleet As there's the do sense think you you through that that year, pricing of into through first as into year? should process some still you Or do pricing get on next we get Or again you that, going through the stabilize? think part think process? be next a to to

Tony Petrello

Again, And have limited. about a you apples-to-apples be talk visibility I here. to of the you're think, really you Got mean, make pricing. there's about talk sure careful when to I around. going I think talking is lot

I be And day of would mean, the talk at the as in placing if our rates low rates. people teens. rigs we're heard, surprised about with kit. same you rigs the mid-XXs calibre, you've I same found those the

is as day. you in little segment In $XXX the When markets, it you in maybe as indicated, a The real a break the I here weakness think oil there, weakness to we gas as markets. markets the U.S. have down, weaker there's much

few our down, markets high-spec been see rigs. a We've dollars. on and able this to a towards shift a to in We That re-price of could navigate get up our oil be just fleet reason to don't the with focus couple on to utilization the mix thousand rigs.

That having us. any -- haven't a sense but to undercutting competitor we a lost to rig doesn't make that, said And us.

drillers four and share you as And of So, the relatively rigs. for they've disciplined. know, been high-spec the account top lion's

don't look big a year, into seen is some think, event changing, to yet. next pretty I that added occur all That that's as haven't again that we I environment. going supportive

Kurt Hallead

I No. great color. That's Thanks, Tony great, it. appreciate that's

Operator

Chris Please with The Voie from comes next ahead. question Fargo. Wells go

Chris Voie

Good morning, guys.

Tony Petrello

Good morning.

William Restrepo

morning. Good

Chris Voie

curious Just EBITDA compared and be $X XQ, persistent the amortization about benefit, million forward? that to to continue. is And going XXXX through flattish in going

William Restrepo

benefit. third and it So the way It's actually quarter. the The amortization the not other around. is through were renewed. expired We had contracts a

contract, life the the So those of at paid significant and over had the were of were contract. -- those -- And amortized upgrades those beginning the were contracts right?

the incremental in cost in implementing that's fourth, and we continuing quarter, America some East. offsetting rig count won't initiatives -- in but cost third the South were million those So are the it right? $X So that and the Middle what's be

in of we from positives. the What mind we things, means third by should in some have $X same non-cash, amortization -- the need that because be you terms that's million the cash the to fourth accounting, But in flow versus those if -- the So of revenue. that, though, some are offset deferred EBITDA is right? the those quarter have in better our revenue being keep

Chris Voie

didn't I guess will I persistent meant. I it correctly. what That's be forward. express yes. That going Right,

William Restrepo

Yes be that persistent. should

Chris Voie

just curious technology Yeah, then the on okay. And am I front.

some I the to think, could maybe one of on things forward costs going to de-manning extent. rigs be progress reduce

potential. might XX, be if capture any passing EMVs that a doing And just curious you near-term to am through that. thoughts curious, to able the what is benefits Lower on think, from you Just I to specifically, extent, versus your in so,

Tony Petrello

better automation. a provide by looks tries in bodies, portfolio mean not workflows large just And is a Well automation to NDS extra service out squeeze processes. fact but portion to at all-in and -- the solution. so And I better, of Sure.

So, that's value the real proposition.

a So crew notes typical respect as can with our a example, casing half casing top a said with new come add you less drive the does five-man where automate now tool of what we effectively up for to most with casing running than here, and our we've managed running to in people. solution to

drilling, mentioned we catching direction similarly, now without the what's jobs site. we on big we're of think, And as some are time. that's XX% directional running, now And traction on drillers

operation remote same wells with this concept think to customers BOE they is as different lower achieve supervise that a I at the that's But have I objective. their ways future. the look do several for We resonating time. think And center can cost

unless think, their I can't thinking the outside operators there. get you start to redo box excuse really -- me workflows of

on convincing So there's make happen. that to to that has some go

Chris Voie

from makes that? as Okay. drive sense. well that margin-per-day That ultimately lower and all But tailwind a should essentially per cost day some

Tony Petrello

Absolutely. Yes. Absolutely.

Chris Voie

to NDS revenues? Or incremental see we're going

Tony Petrello

On rig side? the

Chris Voie

Yes.

Tony Petrello

around yet the looking per we're What the of lower rig On reducing for rig. them see of effectively the by in I don't revenue maybe produced the crew terms And in of That's number added go on crew therefore way used valued at to rig other more side, rig costs will being body the the buys rig absorb see bodies, it. is I up. tasks terms people saving crew.

XXX matter that the rig course my throw rig to They consolidated here and if to I go comes site, the The industry else the the you in natural contractor. see There's is around guys. it's thesis In well a Everybody of the -- beginning our time. from and you the well. world the site is at drilling about end goes. all look person actually the at only

So the natural group the get of the rig trying more consolidator actually and that make people. crew that to out intend core we of focus to is

them actually not is So higher whole crew If correct free how the things up with as figuring more have necessarily those new drilling with we're do reducing out automating effectively stuff process use five-man that's which other we tasks. on value-added to them, but the guys we'll to going well.

repurpose So that's our objective to them.

William Restrepo

been quarter. that that the in has the the a had conventional jobs make casing in of people first a And NDS complement we by mean software. on I'll the a of dramatically running predominance full performance with a with comment vast vast fact along I quarter, and the has stars one shifted third of Chris. of

and half So jobs quarter, land in of first integrated in process. U.S. the shifted a replaced conventional we with of it's the them before amount some we money made in because our and quarter running. down we we about with third casing in doing money conventional we shut the jobs in were -- or In the that lost jobs nice

money significant Lower amount making of now the in We're XX. U.S.

in certainly of sacrifice mean, revenue. Nabors I yes, initiatives resulting So automation at are lower for no some cost to these

Chris Voie

on cushion that day services? higher of it is is time? between rates consistent note pretty a just That's the a competitors given dollars. Is helpful. And over base you mentioned related thousand bit your and revenue additional And guys few probably one a day per for reported the the

William Restrepo

I mean, I pieces. an are little No. talk a don't that's clients Every rate. -- very rate, but people about I base negotiate mean fiction. -- negotiate Others of all-inclusive a different the clients client from lot

we base like rate. don't base, have a really So

We or same the most $XX $XX take range. $XX the are And services. to placing our up of same the rigs in thing clients the

a lot of of get for they're but to money pay day per and mean base most the in can talk much it's as to as rates, they in is people and I most to things. today's then going that just terms of try get market amount the clients decline about So same of much going day how

Tony Petrello

And AFE clients to the a with really have target make an number the economics.

that trying And solution and of best a for solve them. we're to figure at providing what good the number for is so they're and combination that that's for out what

William Restrepo

is for they Some not $XX on base it's guy's rate, that. base rate is a Others the but fixed big what depends $XX. call -- definition

Chris Voie

Okay. Thank you.

Operator

Praveen question next from comes with The go Raymond Narra ahead. Please James.

Praveen Narra

an rig presumption? that of fair we in XXXX? morning Good on presume see follow-up be that Hi. the questions how I XQ If maintenance CapEx. it mode I to on kind is stays to guys. similar just and one would is to where maintenance guess is U.S. kind Scott's that unfair CapEx it now shaping Or of wanted up, XXXX environment of at

Tony Petrello

And side the lower at run lower are count rig the it U.S. level pretty maintained. that could well we actually -- is side. U.S. The rigs it on could on therefore, pretty --

the to a the side, portion. while on on U.S. I So, confident sustain it U.S. for ability the think on I'm pretty

Praveen Narra

a I for is those There's of discussions a change ownership quick been plans I some guess, days. in know Okay. But change development there still Perfect. Alaska. on And one it's for me. assets. then early in just

its on shape up thoughts Nabors? Just curious that impact your on could guys' and how

Tony Petrello

in is I team been amongst And good think the his country you industry. Hildebrand it's as for and the know. operators Jeff the best

successful company privately and they the think E&P are country. most in run I the with best

it's of me his And to will I three down case. make And I to been sense no money, hopefully made think everybody to no has trickle think of lot the with actually I and a figure the a way think risk and resource out and it's for you pipeline to it's full team geological major industry, have anomalies always going a half because why world that's a the else. Jeff that's and good there one up

Praveen Narra

Thank you. Perfect. Okay.

Denny Smith

think running we’re I time. let's of out

Let's out. one more just close take the please call and question,

Operator

ahead. The next with comes Zurcher Tudor, from Please question Holt. Pickering, Taylor go

Taylor Zurcher

Hey, thanks squeezing for in. me

looks Latin in in as down relates question, couple a First QX America, like Colombia. of to it it went rigs

that'll a And time, obviously So then same curious happen a or a as Argentina, change in perspective you you're could and couple QX high-spec you're political secondarily, At in soon what if share in some the QX. rigs of to Colombia. in to adding there's regime few seeing Argentina.

might but hear on So forward maybe have your business the early, just extent your that impact to thoughts it's too moving there. curious to any

Tony Petrello

rigs Well, as you we three Argentina. correctly we the two that in summarised, yes, have That's referred going to. seven of

-- we let Colombia, In is only something in about say Our in point. thinks this haven't that don't we market and such the really The I troubling Colombia. Edgar anything sanctions that that. current rigs from see have at extended, seen Venezuela Argentina think negative elections have I'll right was we the impact that any

Edgar Rincon

Yeah.

So for different rigs. of classes I have we two Colombia, say would

high then have course, high have out Of and specs rigs quarter. utilization. and some those legacy aspect the came you that lower have a of the rigs very we specs see we high are during count the with the And the

we'll some there challenges and of as say to believe be place expect the believe time in We the programs budget as terms high We and program would for that both rigs. will And customer I year for see in the ability on comes in, the in same of utilization next of hopefully go execution. very were activity by, ready legacy the to goes again. have and the the high the course, have the of up spec terms we rigs that

Taylor Zurcher

I Or a new be give for payments And discussions ways a XXXX we're then, the helpful. through, the flow to to That's event? of how thus builds we really with it. CapEx down those construction know that are Aramco, from Got starting an first Okay. expect should for a new builds? portion on the then the us progressing still the you could five for update around is follow-up And out far? of but build more to as program of budgeted JV the XXXX, a new

Tony Petrello

right. All

our that, very all there I informed previously, virtually which basically think position comment, overall Before rigs sound. is we've I renewed that XXXX. think we get I just for our make let me an And is as you

we in So have and rig a we have XXXX, fleet rig. stable an additional

One talked of up coming the rig first seven rigs, the about the is quarter. additional in we

of kind sound. the -- base the is environment which sets that here So very

towards of The on but bit reps The CapEx, the of venture, going XXXX. there's that yet what we're to of I we're in scale manufacturing terms new new the little looking time the for the were talk it's for thinking the issues, the having I'll rigs, been And order let for William about fit rigs. how a happen. the year for end to slowness joint manufactured about think into facility

William Restrepo

in in expectation budgeting we're the that CapEx we included a So, expenses conservative XXXX. for will that next year, have some have we

for initial somewhere it's think in of million I the range $XX payments.

bit but Aramco the little be and have $XX in of turn rigs Of indicate that timing the may rigs Discussions the be will country not the course, bit. slip with both a -- manufacturer budgeted little to the about budget may a we conservative. ready, million. That in put

Taylor Zurcher

Thank Understood. you.

Denny Smith

question feel free and always, any we'll you Thank now. Ladies out? if or much. e-mails. us very wind gentlemen, get want comments to you you your to or this just have call Jake, other to questions call the up do And as or if close didn't we

Operator

session, Yes. going other This Smith back turn the question-and-answer over I'm for any concludes and closing remarks. Denny to conference our to

Denny Smith

gentlemen it No. Thank That for ladies and up. you, participating. winds

Operator

you has Thank presentation. today's conference The now attending for concluded.

disconnect. now may You

Nabors Industries (NBR) 30 Oct 192019 Q3 Earnings call transcript