NBR - Earnings call transcript Q3 2020

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Operator

Good afternoon, and welcome to the Nabors’ Third Quarter 2020 Earnings Release Conference Call. All participants will be in listen-only mode. [Operator instructions]. After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions]. is event this note, being recorded. Please now William Conroy, would like Relation. to to over conference the Vice turn I President Investor of Please go ahead.

William Conroy

forward-looking XXXX. us to within to forward-looking Act other and website Exchange the are the William, Organization; of our filings Nabors of in forward of XXXX and with time and the perform the perspectives results and is and section well. how and markets. we include Tony and as a insights Good Nabors' in into as of Since replay our meaning our Commission. the providing to Chairman, remarks, deck these constitute we our commentary are you expectations, much Securities Investor on our of Act their support Nabors slide Thank Chief download Securities Siggi our the Petrello, our statements for myself, Securities subject disclosed uncertainties Tony, today follow earnings available, of these of Executive Relations along Exchange posted markets Chief Instructions risks and XXXX time and statements in the quarter by Officer, in Officer; Such webcast will format afternoon, In President call expect will of members management quarter's Today, this from Restrepo, senior as conference with Meissner, nabors.com. on With customary within for a the the our may the addition President, team. with they both to Drilling are of call. William everyone. Global third today, joining Financial

EBITDA the flow. of debt, results EBITDA, or such we and EBITDA, cash their context materially net factors, term All our measures, as free or to call, word defined these those during William flow non-GAAP may by adjusted forward-looking our such qualified may either As adjusted as made adjusted operating Tony indicated references vary on statements. certain clearly as discuss that by flow, is financial the otherwise, references actual Also, result in mean non-GAAP a Likewise, implied cash measure by our in from defined our otherwise, free earnings release. indicates during the cash is to unless and whether mean presentations, that earnings release. adjusted or website income,

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

transaction Accordingly, are over With your transaction. As to will markets, you markets underway. has any inquiries welcome outlook, view Tony the turn while I that, and questions not capital regarding we our we aware, this a results, begin. regarding the Nabors currently will field to call of

Tony Petrello

of the the the efforts their our evolution follow for third for the unprecedented. our environment. afternoon. we the Good of joining progress. and wrap this position Nabors industry today market leadership recognizing twin the to by like driving will challenges staff performance. My and are would focus technology results. financial advanced The comments for start on environment the of the up and comments I begin as pandemic actions markets I Then us you review follow results quarter. will with will for quarter highlights from the a light and discussion with of current with the of I our William XXXX. will on Thank in

our of The while maintaining global our safety Our is our of improving industry-leading and health operations, excelled team employees the continuity has in paramount. record. safety

the of with make to continue progress goal ultimate zero mission-zero hurts. towards We

cost the I'm year. business avoidance. I also add the am focus and our expense to-date. processes our the quarter earlier financial On impact to front, to with progress optimize results illustrate reductions team implemented challenging on the the third full of pleased this

are last $XX lower now spending we substantially Our $XX below million year improved and our This the than outlook full for million target on capital targeting year's XXXX. is previous spending $XXX approximately of and also amount has million.

reduction. Our and immediate financial cash generation remain priorities flow net free debt

persistent progress of we on continue our As a goals. material make to these efforts, result

a I discussing moments macro Now, few will spend the environment.

third Hughes of second confidence. contributed also quarter, market The quarter, oil around appears Against During XXX from almost the Also consolidation in declined XX% the XX near-month second have activity. traded in That we the the extremes narrow Since the the WTI The have rigs. volatility lower relatively first average the to is half. by XX%. versus increased a recently to land then, increased this Baker activity consumption Lower rig seen additional demand in count Baker This the our rig industry tempo has count global has of $XX. essentially from in of at activity flat. quarter. in counts, restoration a mainly bottomed In the operators Argentina aggregate, band operator In change third August share stood quarter, environment the been group backdrop, Comparing country. XX% tier by international this and by increased. increase quarter the to and has count gain resulted rigs, at Colombia, we quarter. active third saw is increased. has performance added The the have second varies XXX, have gained been increases markets, among notable. share count current rig on we a clients. market have points this XX This bottom. largest we rig In In some count the Based activity units. our mixed, quarterly third as of others the competitors third them has in characterize against from rig relative released average X

the reactions implemented those our both a In to of spring Eastern of was several of shutdown markets, Hemisphere, drilling. recall that the total in markets the will were cuts. coronavirus Subsequently, response in these muted. deeper You major customers initially in customer

future has line I base temper results increases. will oil recent these quarter. quarter largely The and EBITDA to year. year, our markets, of customer effect demand inventories, point, with To international adjusted aspects to which and Oil factors million this in there in operator the summarize few was next the developments. oil outlook. reflect market, The of COVID an which will our begun in expected prices on earlier are decline. positive continues now appear begin substantially is believe view improved the Our this Arabia These At a prices predict. experienced liquidated. at have of increase highlight resurgence its Total resultant could activity the respond our results. We being to was in the beginning largest third to to Saudi impact expectations. the These $XXX activity in commodity with stability confidence built grow. activity global difficult

Our after exceeded financial International our XX performance, interest this With specifically performance reduced and $X operation Lower we've segment million. notes, net in on approximately in payments EBITDA funding expectations. the debt by our and quarter our

daily like Lower light that exceeded net factors. our rig XX% to quarter have expectations rigs, debt. value our This an again of previous out reported to call. XXX In the laid third make business progress I our this once strategic In margin of continued from and to $X,XXX would scale we global performance, for the rig the imperative second enabled generate totaled earnings on the Our decline to reiterate XX quarter. driving us on and count geographic diversification our reduce

our In as market this our to the Lower programs environment, capabilities XX, enable pursue highest. the as are industry's in clients capabilities rig possible. these First, their efficiently

This Second, industry remain we a performance. for both Nabors. in and operational real the frontrunner safety combination differentiator is

achieved mitigate our And across us the to Third, expenses fourth, to in user margins. migrated our Since RigCLOUD reinforce of industry-leading our We our enabling by continues then, addition operations we have relentless enterprise in over platform focus financial pricing XX% to value erosion the the base our on to some been the RigCLOUD. market. digital supported reducing second has in our proposition notable our results. legacy introduced highlights We quarter. for

XX the system; process the system. type the space. installations both offering SmartDRILL, major. with digital competing development of more includes leader apps beat a directional drilling more group companies. in and place added technology the RigCLOUD our and super bolsters first automation than to we come. Our took organized position recently of digital app drilling head-to-head our in SmartSLIDE, RigCLOUD In win by steering as our currently a of challenge drilling contractors analytic This U.S.,

also SmartSLIDE our our both SmartNAV, directional count well and We for guidance grew platform.

SmartSLIDE running of XX point In crews. other our wellbore SmartSLIDE placement, and fact, our or SmartNAV increased third that levels. both the directional well words, penetration rigs. remote over a SmartNAV quarter. are and of In respective XX count quarter fully either to drilling second versus the is second for increase on quarter in rigs XX% That Lower our in reduce In quarter, XX% the third were the installed

from up rates For penetration earlier. SmartDRILL, of quarter Nabors’ increased XX% to a our X%

Lower our run sequential rig system market's AC I rapid our SmartROS, the our think acceptance We this growth of entire rig apps. XX advanced fleet. illustrates operating Smart on

now are XX. marketing We goal and on to is improve one rig the have remain contractors a third-party and standing. actively Lower our rig installation We ESG with our in customer multi focused to

This social quarter, we improved significantly. ISS our score

will the The industry our same one up over industry market than end in That up versus fared week, timeframe the reporting third future. rig averages, count declined in August. low demonstrates XX% XX%. the is of quarter we its at on additional more by look land count, XX% Comparing our Lower much has XX now Lower to by is since progress XX rigs second quarter. risen Nabors’ rate, by score commitment progress forward Last the XX% excluding working stood improved since second I XX%. our also environmental We This rig Nabors’ stacked the to rigs the the and quarter. or XX notch. working We of count ESG dropped quarterly discuss detail. view better which XXX. by rig in the

leading we evidence stability confidence. in improvement forward, to recent Looking the prices, an oil see in operator of

have the over next We rigs adding to several weeks. visibility

more international believe Colombia. to for have the discussions sight our end of activity in are and our markets, Argentina in Saudi through In gradually line the have several we in seen restarts increase of We we already rig year. We Arabia.

clients we that third with on excellence. and on believe my prevail prefer will convinced environment. will operational concludes That remarks share the highlights results, rebounds, Nabors our contractors quarter am activity in records market. market of I established As this

challenging I environment. continue Before I the to be offers behalf virus. team like would William all also by On wishes of in Nabors and to concern company, the best perseverance this to offer those would for remarks, impacted our the their recognize who his

the of results will discussion call to I his turn William and Now guidance. for over the financial

William Restrepo

net you, Thank from per good operations third afternoon, $XXX million share. of everyone. quarter loss in represented continuing and the $XX.XX loss a The Tony, of

$XXX quarter. in share Third per quarter $XX.XX or second results compare the to a million loss of

to compares The of related to charges This of quarter. million impairments second quarter third $XX in severance included total and pre-tax charges $X million asset costs. the

The sequential $XXX on third of million saw sequential from also $XX in pre-tax million, operations for reduction the reduction quarter XX%. a a quarter gains Revenue repurchases. debt was third

Canada Drilling, rig experienced With $XX in count activity the in all which XX benefited pricing million pricing most exception revenue million $XX.X U.S. deteriorated. of declined to Lower usual from segments markets, of or the decline. drilling In continued by our weaken. XX% revenue as seasonal the average international and of and decreased recovery, our

reimbursable In negotiated decreased million with in by second various significant we addition, our reimbursable expenses. margin zero suppliers quarter, the revenue versus $X.X reduction as

Although these expenses at they similar by sequentially XX XX.X our fell amount. revenue, a also Lower count average operating XX.X%. rig reduced negotiations reduced the by

coupled decreased in XX%. approximately of or by the $XX.X related to an idling combined average rate Revenue under the This was $X,XXX, decline by Our of $XX with in revenue two for standby XX%. rig another by pricing $X,XXX. Drilling offshore deteriorated revenue day. rig. average across rigs markets, daily accounted million fleet Alaska reductions $XXX X%. Lower our Reductions primarily reimbursable decrease International or several by temporary on XX to release revenue a decreased on dropped XX rigs, by of per decreased other as a activity in million Daily count just while at for accounted the pricing $X,XXX rig a markets $XX,XXX due million U.S. for

third with negotiations customers following benefited The of several in revenue the of period quarter from out recognition international the markets.

from the pricing However, Canada the $X.X offset increase million an were more was revenue on early adjustments increased these in absence than by quarter. buffered in Drilling by This industry rig higher Solutions coming revenue sequentially of $XX.X sharp by of The of somewhat Drilling prior Technologies pricing reduction driven business. was termination revenue around seasonal normal pressure in up offset essentially deterioration the was and running activity. of in Solutions Lower reduction also the by improvement respectively. up million drilling Canada was activity Rig casing million rig and more than the decline and U.S. count. Technologies segment lower international to $X.X a by due $X.X impacted by Rig by levels. in fell while Drilling in The count, ramp XX%, million, revenue X%. for losing our held the was the Solutions Drilling better, international XX

a events both were also in in to segments. in I and capital have corporate. for million and Canadian aftermarket fallen also Drilling in almost quarter a was count. reductions Drilling benefited Technologies U.S. to the grounded that fully Adjusted our offset our in the More in reductions expenses halt, seasonal to sales second was and by While material second lower million out unusual $XXX sales and segment. quarter $XXX modest improvement equipment would third by repairs by quarter Solutions the driven International Rig line point decrease and EBITDA rig quarter. with have from The International compared decreased like

quarter second of $X from early gain net million, had came primarily The which a terminations.

in benefited quarter count or our than in to million. end slightly day reduction Drilling Negotiated which mentioned the rig quarter by $XXX approximately EBITDA sequentially. XX.X. of expenses. of Daily pricing day the guidance the $XXX versus a $XX,XXX for previous which offset in rig better per second performance earlier, by maintenance expenses The fell $XX.X for and just $X,XXX, $X,XXX. $X,XXX $X,XXX U.S. XX was reduction XX.X% mentioned of the costs, margin Daily per day. by adjustments third Lower a reimburse Average was above totaled from previously, our high million quarter. down fully The reimbursable we of $XX.X per unfavorable reductions represented impact pricing The came of the reflected million $X expected. day customers accounted compensation reduction at per

daily by as between rig quarter, expect mainly and to $X,XXX rigs the fall $X,XXX of into pricing Going the roll contracts. we fourth driven renewals the margin off

quarter. a rig operating Lower quarter, of After third with exited line in in third XX the targeting We business with costs XX the Lower are rigs period reaching the our count the XX.

to three third from Looking to by decreased approximately million by fourth million the International count third quarter rig expect EBITDA the we average rigs improve average. quarter, $XX.X quarter. the to $XX.X in

was line very COVID operational continued the experienced with offset for third mainly International quarter rigs by dayrates, down the multiple in during rig rigs in Arabia. we standby performance second The the our XX to include quarter, trends temporary a or expectations in strong Saudi XX, count quarter.

X rigs of rig net by While of their end towards taken actions eight quarter. these The in second XX demand was were by suspended $XX,XXX temporarily, for in customers in the contracts reduction the other driven had the as pricing. the cancelled the resulted was markets ongoing quarter quarter. to mitigate prior supply count the margin reduced to imbalance, compared also which certain Daily for gross $XX,XXX commodity

benefits. included As both quarters mentioned non-recurring before,

erosion respectively. higher-than-average each number daily the $XX,XXX The in benefits quarters the rigs for large was margins. sequential was third driven of by and of suspension those termination Excluding daily quarter, a in with and and second margin $XX,XXX margins

can efficient rig absorption In addition expect lower less international Eastern with counts additional approximately rig high four decrease resulted field fourth of by count overhead. our We our Middle to in rigs quarter relatively margins. currently

rates standby Although COVID expect the these of temporarily, have we been the lower the remaining quarter, to and have suspended In two fourth been released. two rigs persist.

for up the operations first closer are we In to fourth to as add cost operation corresponding Saudi historical quarter. several rigs bring anticipate back late revert scheduled expect year addition, any This Saudi the in will to Arabia without results quarter particularly our to the norms, revenue. in resume ramp we to that

in are gains million Latin quarter, Mexico should of move That platform a our improvement the as as of the $X margins that seeing of exceptional rigs of we America. in reduce lengthy million. for by to by daily $XX,XXX low in the in said, absence are EBITDA fourth Finally, second quarter we was $X mid forecasting these impacted range. the items, Because one well the

the quarter. We rigs incremental have add the to potential first in

or addition, restrictions. the dayrates anticipate the the to of on In COVID will rates, these year. of and return are rigs to standby by full that environment the We rigs market work the to due multiple most end

rigs $X.X $X.X to the third multiple by up quarter. contribute suspension our and fourth X.X progressively and quarter. zero X.X, high temporary at which Consequently, EBITDA we expect on full also dayrate we operations now a XX Eastern seasonality. also sequentially the rigs on levels to material daily expect the was counts first start adjusted of to resume to We if year. Middle higher our significant Rig rigs recover a compared anticipate rig are to during million in increased dayrates Canada would suspended margin early next increase currently we to million count increase rigs, the in quarter. margins in due Also,

count rig and quarter. third-party million, currently rigs Nabors affected $X.X Canada. Drilling in second from X for the rigs in of million adjusted Drilling and $X.X improve operating The fourth both down in expect U.S. Solutions EBITDA We quarter. daily posted for have in volumes segment. to We this margins activity decline the

In results. has our impacted pricing addition, pressure

should equivalent Rig fourth $X.X adjusted at the million. the the quarter, quarter. the third be of We fourth third quarter. Technologies The expect of reported $X.X a EBITDA line decrease least with in in million quarter EBITDA approximately third quarter to in EBITDA

million cash in third used from This defined for to cash generation. to cash approximately let me less the $X.XX quarter. free $XXX compares quarter, review of cash Free net activities, net Now the million investing as million. billion. declined cash $X debt flow net and flow $X In liquidity totaled by prior activities, operating

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

ongoing that expenditures. million $XX the Nonetheless, expect we customers quarter We're in once million now targeting with the cash to year some quarter, the the final than free controlling million expenses deliver in we $XXX by as again flow. fourth numerous $XX collections, In XXXX. in During delayed were deliver to of also lower had full free for weakness capital third CapEx cash prior quarter. negotiations flow we managed experienced the quarter, third we Capital our invoicing. positive positive

the set $XXX million Our million. for to quarter target at $XX is

drop will improve. payments forecast to and interest collections Our are sharply

we our that a facility, also all same the the our credit covenants. draw to on million company September. notes end interest liquidity, revolver provides I of negotiate to new time, and At million, of removed credit that facility issue $XXX amendment and following an Our highlight to flexibility successfully like leverage quarter, million our ratio with the in stood amendment rate. $XXX of notes. key various the repayment of able component $XXX up maturity includes the to third during of would maintain additional to same were The total at our quarter, existing at senior our bonds, to expiring the the capacity in

$XX We now $XXX XXXX senior million other due in our million. maturities. on also stands of notes The balance repurchased remaining at

short-term million million. due and which million $XXX the XXXX One conclusion. due of Tony's convertible Senior $XXX for final in X.X% were X.XX% Late in we at before issued item private quarter newly Notes Guaranteed investment a completed closed Priority exchanged notes in cash XXXX. Our $XX.X balances of roughly week, transaction, the last

million X% issued to Senior Guaranteed our offer last Notes. outstanding In $XXX up exchange notes launched in for an XXXX week, we newly to addition, Priority

October call to and his refer will remarks. you For release for the XX will more related turn to press I Tony With concluding information, that, back filings. our I

Tony Petrello

benefit stakeholder set prioritizes remarks constituencies decision-making; our ago initiatives, A on real-time this themes this and available operators operations include majors. initiatives I include: expanded optimized which had to advanced around of Initially, around breadth by we value the have safety; simply which X an products services themes, smaller speed, smaller growing. as The their their specifically have services. and transformation of see same now was resources from and clear chain positive William. coming the These to of stakeholders. second, addressing clients These resources our well which is costs. quarter you, the well. data inherent which improves safety; They total value Advancements of high. traction we my afternoon scale portfolio. gained society. uptake quality advanced now I themes growing production; to these to among change was in third, will and When for to performance the their finally, ESG in community. of call, driven the higher X Thank and utilize following: increased recently, for Integration, demand on wellsite; the following: portfolio volumes and Traditionally, in the in full the comprehensive uses time, digitalization, automation, wellbores; the More highlighted super lack our recognized across was well its the began the our from with these They these conclude and benefits wellsite our initiatives the our in ESG, company wide-ranging improvement these impact At prevented them utilizing benefits. facilitate sensitivity realize the

As customer. the has have to implementation approach by we portfolio evolved, the our simplify taken

me Let examples. X offer

placement Nabors is while to made The leveraging here of in First, remote co-located drilling directional negligible. benefits the operational enables investment we This headquarters. the wellbore remote operator investment customers’ in realize in our the Houston. operations provide our center

RigCLOUD and kind and data delivers It rigs. sources. the That open example Nabors format destination. beyond any in second consolidates technology streaming Nabors, that The we it is the an infrastructure remarks of was in adoption ecosystem. current short, analytics clients’ operators like this to has the and information industry. largest questions. client planning, we that afternoon. preferred In It's for reach It all concludes provide across the reinforce in We with digitalization then of to apps but our downturn all With third-party to take collection, environment from It's the an data rig need can this RigCLOUD, market your other. platform. of view you the performance. our will no our On bring execution Today, time Nabors attention. automation compatible and is that, opportunity That Thank we as and your said and for position industry. and the a operators. been leader the drive as optimize to its

Operator

our question [Operator first Kurt of Instructions] comes Hallead from And RBC.

Kurt Hallead

to off of kind I the initially maybe that outlook a would get more start do for That's kind example. the on difficult just on international our think U.S. vis-à-vis want Canadian around of and I the bit front. markets, what to hands little

you to part You see going into see to indicated first that expect a cash significant margins. also increase in year significant the in next a and increase activity of

So can I context a in you about -- how third or maybe we that? to of kind was if that wondering say, it quarter relative think should second XXXX? provide quarter provide of And to, context

Tony Petrello

to markets. with a of the out in effectively a X downturn rigs, amongst we're East spread rig is we X X as Well, indicated by quarter, and international, bunch Middle count respect different Xs next about in Okay. envisioning of the

consists expected that's going -- all a and down move on costs, to Arabia the probably We friction in low also the quarter. up of Saudi that way and in there's in the of the would think that that margin -- to about mid in platform that to indicated rig COVID-related cost The down is about $X,XXX stuff quarter per that rig go range. $XX,XXX for mid Saudi

rig. per So power going the in quarter fourth $XX,XXX earnings probably about the be to normalized is probably

of gives quarter you fourth is. the idea an So where that

about first the in to rigs as from in second work the first progressively see additional Looking X we year, quarter forward XX we And quarter. America, William going line the to of sight in signaled, quarter in and probably, out East. Middle ones throughout right quarter the then rig Latin X next the now, fourth have a to

landscape So it is together. I but COVID in wave. terms We want is it the wouldn't feels the right big That don't now. kind to hope. that caveat for Obviously, say all way international OPEC and a -- say take feel you second of gives some I I of a bottom,

Kurt Hallead

years quite That's And want technology great. also Yes, and that's with Yes. of then, you've bit touch a Analyst Tony, quite maybe traction guys ago your gained on I fantastic. it. dynamics to clearly, Day at few outlined then you the a

do an referenced kind track differentiate business its for release could of that So to Solutions growth of you of how of of on think that we count, But press growth just activity? next shouldn't that kind your the of your can years performance overall out. overall play I Drilling in rig over rig see there about think kind Group of kind how how kind And dynamics for that about the kind of business? to relative overall kind get we couple rate the be opportunity sense a will

Tony Petrello

Well, Sure. out Analyst to go the automation Day, set back sort site. we you if think of I for of rig think landscape I

and our everybody SmartSLIDE a our push increasing and of we And first a a is think can be well been with actually that. In as I penetration fact, of think. reported, I at you directional software with were interested that from the showed that we in slide of there's package. Today, button course, slide that we that, Day how adoption to doing outlined had the come that done that, we showed that see up a initial can drilling Analyst statistics

we're steroids, I think everyone's as the indicated, your rigs optimizations, Nabors available, for And what words, more do operating different we've the we've faced going same for could you lot spent not thing it also of but Nabors rigs, do to more has on issues it's okay? -- done think platform do with up we our in to is It might system, thing more. worldwide. to per market flexibility. -- rig getting which everything has the this rig really has scale engine on sequencing to which just total the you way on for it system, making we time us we allow just call the operating want about the that, actually open just that In Nabors' intelligent actually other this terms a for and

RigCLOUD the vision. platform And idea that's there made but So we this that. to-date. all stat in that's available ecosystem then wider And we where we've and is and the a I'm of make scale hope therefore, apps progress the to that the enable increased to with the the happy in then get technology, take pretty

the ago And make the this got goal. now made with right bet. just years I the bread some bet we it. in to was think space we That's X

Kurt Hallead

Okay. calibrate? can on, you like, of those us per rate? year Any potentially that along year a is it -- help Anything growth XX% thoughts lines kind

Tony Petrello

now, obviously Right can I looking it's I’m mean, double-digits you at. going a number, I not for to growth give tell but I'm that's you sure.

growth. -- on but but would a definitely it's specific double-digit be low end. putting on the XX% number it, So

Operator

question of from Stanley. Connor Lynagh next Morgan The comes

Connor Lynagh

was is a Middle East. wondering in us that through been or is in potential discussion point, some confirmed locked resumptions discuss could be the thinking some to these rig delay Could in I At that those there -- the that OPEC the there's help we just in or and incremental how world? somewhat outcomes this cuts it might think potential extent if you our sensitize we on how should around of the fluid. based resumption production,

William Restrepo

now that right feeling those return. we're confident rigs Connor, will

in very in given our turn. suspension those confident, the The put for that client rigs that area, we average is feel I have with we rigs fairly actually question. XX will that and in think were actual particular communications confident those

for versus fourth for those to rig X average quarter a the in that assuming are increase market. X We count

Connor Lynagh

That's you're saying the just X X. that to in QX,

William Restrepo

Yes.

Connor Lynagh

far SANAD update. it. to times the wanted Got today. Obviously, an just plan than was get then in in drawn we're different And Okay.

expect as how of think just cash the newbuild So the you your discuss be time? for program expenditures capital newbuild you general after, over I to will program, be is driving, think portion year could to And fund expectations this on the how about that of guess executed pace sufficient year you ultimately the we if accumulation, we where should next about model? and think the that

Tony Petrello

rig the -- Aramco deal. up there of years. obligation concept this the the an -- see, XXX And been we you the where But cash XX of next the going good want we our operations fast own thinking have at, comes was to issues whether no part a a newbuilds. And as they That over building as issue off SANAD probably on that start for when And the as that time, that's such objective. a it years, rigs get thing and was on So been basically, their only process. we've haven't SANAD issuing can it's the assessing was was thought. their a built. studying from through rigs lot half X Aramco first have in the more trigger gotten was order mind. going if Today, actually appeal their issued And to The have Aramco to allocated half count built be arrived the than And as era needs, Kingdom. to we past actually they obviously, to rigs obviously, in pull those because they're program would count the couple of that by rig until to is decision. they about

those that the that hitting they'll Xst first more any probably the reassessing it's context they're see no we the likelihood, late the or in right event year, around -- newbuilds with probably think after moving of but the of whether now, very XXXX, late likely -- issue until of XXXX. something sort of the forward other it, in maybe I CapEx So in

Connor Lynagh

there. to you Is And just what reaffirm mean it….?

William Restrepo

the breakeven we an we're to by cash forward, years of. I is question probably what have funding, a flow. care going Connor, the first answer about terms And today the point and think SANAD in of that's in your between X cash accumulating then, taken

being generated new versus flow new the cash from CapEx. rigs the So

the the it's comfortable and sense now SANAD self-funding. think think in that with I right we pretty situation we're So

Connor Lynagh

And comment Understood. just an wanted I Tony's to The is CapEx a activity that until or comment? hitting clarify late there. Yes. newbuilds comment not 'XX, very

William Restrepo

moving delivered pieces terms course, mean, customer, very in my lot be we’d our that by a of funding I discussions of would of with it a be not. whether optimistic, year-end. opinion, or have That And in will lot a for rig there's, of

that impact lot give pieces is we think for not in the And a -- any are many be should there's on XXXX minimum. there feedback. stuff so too CapEx us of yet moving But to

Operator

Goldman Karl next comes of The Blunden from question Sachs.

Karl Blunden

CapEx little be assumptions to performance level to and flow recently early 'XX. XXXX, be cash or your maybe today? cash a that in impressive really that controlled you can But jump for a the it's Yes, can XQ A to guide. given think you allow market into generate the do neutral about

Tony Petrello

but this let I'll not my which higher I'll the CapEx, task than let William of, year, though, what master amplify. be proud But answer it any that really we're that. think was should we

William Restrepo

next will a Obviously, next mid-double about tell be activity will in year, we what is levels somewhere uncertainty still that you lot that assume year our we latest the of figures for cash I deliver Yes. there's what we year. millions of on dollars. what But like can based forecast next think of

again our see it more levels very is costs discipline, then we're today. And that focused and under because control. some So rebound also on maintaining becoming CapEx part we from overhead our we think of are do efficient activity I keeping we but have the

forecast, So all, all but in view. think that good number certainly going I be be XXXX, it will positive as it's in not a to our as

Karl Blunden

And near-term helpful. obviously, liquidity have got standpoint with to levers relative a to and maturities, regard you ongoing. That's help about liquidity exchange you've other you to that the thinking then that's just from

capture? a So of SANAD sit to things get feasibility I million, then extend to $XXX you could bit maturities remaining, addition you that. that, And But about look just about extracting that JV? priority have or the of won't capacity do terms that something where discount in guaranteed is of cash from extra ask also in

William Restrepo

discount think -- and release terms over think But for potential SANAD. the some the you of temporary at do in some years excess X on refer there I least, basis I'll a so I to is there cash, capture in is press next forth. the

Aramco We those engaged haven't discussions. in really with

success have we discussions. reasonable the couple So of future in temporary at obligations can't sitting hundred my and really on are would the or analysis you that progress there a discussions for how least million today a dollars those give But SANAD basis. any of those the of excess feel I there's does imply

to that can that do including say We are and plus lot are So want inventories of the much that's I yet finalized, discussed a think that. more. all say but I haven't ongoing we I built. capital, those don't working with clients negotiations our and on

I be those think to are of going collections. numbers flow well. could those as into material fairly XXXX in And terms

will little feel So good think a legs maybe And more overhead. feel our We expect. about than bit we capital. CapEx. have working and I operating about feel the good We about expenses good activity people the

all So issues accretive all to those we next our flow in all, feel will cash be year.

Operator

Sean [Operator come from of Instructions]. Meakim next our JPMorgan. will And question

Sean Meakim

basis. quarterly a The course. accretive? the in where see point being matters of of as average activity, this XX, on Lower we're mix you But of you equation, and where the do rig slope the dilutive recovery from the addition margins goes in even dayrates has count improving a rigs activated, average rolling lot to fulcrum there's that now being rigs and a being if of indicated, the bottomed and the marginally Tony, to new headwind contracts on

Tony Petrello

is rates. and average how out want Well, at if do colleagues rates cause lower manage are it's ever some you going obviously, but therefore, to our up subsidizing today, us daily And to rig anything you want figure incremental competitor to to to below even grow dayrate. at today's Obviously, grow, dilution. don't that. And our margins to

that's out it’s but to is below if you back that's the on over strategy down incrementally good my obviously, add that up to to what the the rigs now, those on of a ability so match number taking upturn. to more an And margin how move give to And that the maybe prospect and everybody, that does time, that I'm it. mission And I upturn news rates balance up. were aware for sense. to the try pricing mission guess is us right not except without we makes that's our figure

They've that's So the news out but some hit an -- other they right this, balance, where a is the day is said, landscape traded. But in to I where rate that we're good it better position people, upside think make way, I there There's trajectory on new rigs nail of that done the on contracts. traded have and as old in against happen. head. new here, this the by you

our with cash But basis, competitors contracts stuff. done don't But we of other We've their accelerate keep get to done like and to because that. think a the of we that, So of have value playing that I in flow place tended on the haven't upswing. that benefit and our I just kind is trade. NPVs present again, some guess,

with concerned So upswing more is we're match -- to that trying what way. just right

Sean Meakim

then... that. Understood. And I appreciate

William Restrepo

question. In your XXXX, answer Sean, to

we in daily will here think first half margins year. I through next the see what’s of

Sean Meakim

Right.

that. I Okay. appreciate

of So moving to these Maybe the issues, a being but multiple fleet, I just a little of tough, trough own lot margins. your day. lot international your level confidence for a cycle. XQ XQ always yourself just on of a better setting durations. different around the on was given also to mix for contract hoping parts XX,XXX you're curious get margins. There's get try to your There's But this around half always a sounds continents, 'XX. to up thoughts more get you’re pretty first I'm to just

the back in few high years peaked You a teens.

but margins really thinking around normalized international cycle Just through importantly, will can where and lows, you risks more be lower a business? on then be this about basis, do think for

William Restrepo

excluding paying, think we're XXX calculating of cost. about another, Saudi, alone. it penalty leakage terms that So and our revenue I the best leakage Tony in margins, which another XXX underlying Mexico it's then that's we're and which of is COVID maybe is XXX, platform that said COVID the movement,

in absorbed all the that fourth being is So quarter.

in typical that it's So sense. somewhat

significant fourth expect that rigs to good back we is are we around -- that number that now per coming higher-margin XX,XXX next of that and some is. our The So quarter be is day news but really suspension That's have indicates margin. the a fleet right that year. do where in

going -- will that away, go And $XXX I impact. -- certainly I about those have is to penalty we So COVID think. the which per positive to a is mentioned, think day, going that's

I But going a between think the into improve hopefully, progresses. number. to it's next be you difficult $XX,XXX put that So and we the as give if day somewhere normalize, year to range perspective, $XX,XXX, all that per on we're year you

our We Colombia count, a rig Kazakhstan also margins. have some few eroded. That highest of probably has eroded. have of absorbed blows those has

So been have those big hits.

see that back to past getting used is a XX,XXX take to the to we in the range lot. So going

Operator

would our like concludes closing remarks. to over question-and-answer any for back session. to Conroy I This the William turn conference

William Conroy

ladies gentlemen, for We'll this wrap and call up you, there. afternoon. joining Thank the us

always. If free you please email, questions, as to or call have any

Operator

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

Nabors Industries (NBR) 4 Nov 202020 Q3 Earnings call transcript