NBR - Earnings call transcript Q2 2022

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Operator

Good afternoon, and welcome to the Nabors Industries Second Quarter 2022 Earnings 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] Please note this event is being recorded. I would now like to turn the conference over to William Conroy, Vice President of Investor Relations and Corporate Development. ahead. go Please

William Conroy

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

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

posted over have the website to most section Investor to reconciliation these will the measures. I to We non-GAAP GAAP begin. to With Relations comparable a Tony measures the of call that, recently turn of financial our

Anthony Petrello

quarter for Good us as second present XXXX. afternoon. the we you results Thank of joining for our

format. follow comment quarter open will quarter. detail your the of remarks our I'll laid will last comments, we we performance first XX% the a and second over in the questions. million, to quarter a quarter. EBITDA begin some we on operating up results, In on will keys concluding excellence will out segments have financial exceeding our increase I all with reinforces performed well, for make with our strategy. usual Adjusted $XXX expectations our totaled some second then We I will the markets. This the discussion on overview follow the and progress five made William

Our execution global strong markets. operational across remains our

by second our our Drilling rig primarily in Our segment EBITDA count nearly increases growth this by by sequentially. Adjusted driven rigs, markets. rig increased for quarter count XX% East in average and eight the was Solutions Middle increased US

the EBITDA. two Rig made debt. more solutions of comprises from amount Technologies, engines additional adjusted second progress these This reduce innovation consolidated $XX than In drilling over at our to we quarter with together net EBITDA Looking XX% totaled million.

quarter. totaled free $XX energy [$XX] supporting Adjusted free strategic These the a flow transition. billion, investments cash flow to the net million. This declined debt in before $XX Our less cash investments improvement. was $X.X was (ph) than million million

the with highlight to I demonstrated Nabors. the innovation and performance transition. our we expanding advancing technology These structure results, technology progress improving keys our include international sustainability our believe energy thesis and capital leverage in and business, enhancing investment Next, market, leading on on and reducing in excellence five support to will US the that the and our our commitment

in in and the me their Let starting $X,XXX. there increased XX more rigs with exceeded our than these, Daily of each update the rig continue US. XX daily running. Average margins trend. quarter $X,XXX second upward in performance quarter We finished the with lower by margins the

been the leading recovering The progress have remains edge. The expanding very have in we focused performance. both highly the contract margins. on cost on With strategies, premium successful increases pricing progressively and rigs demonstrate fronts. We rig current towards been duration our and repricing our market fleet and results

an important differentiator. I will of drilling business. detail few more in We Solutions technologies of unmatched moments. in also our in an our have is portfolio one to the portfolio This a performance Drilling keys this and discuss

nearly in by increased to this significantly. improved margins Daily business. This international our discuss segment let's $X,XXX $XX,XXX. Next, measure

were venture as MXXXX our Aramco most massive This substructure. was performance our well across is and as exceeded In segment our Saudi with Saudi enhance includes It series advanced Our operating our full proprietary markets. the Latin results of strong. country. system, Arabia Saudi rig. Financial AC an an particularly rig deployed America in capability, upgraded outlook, SANAD, Arabia, this prior comfortably strong our joint

performance joint in in rig second build for the Nabors rig rig in is of the commissioned was early region SANAD’s well first July. will spudded In-Kingdom the development. potential this important unconventional expect new quarter. The venture. full milestone portfolio, during We the This technology first its advanced showcase an especially

builds new EBITDA add their adjusted $XX approximately to initial six-year contracts. Each annual expect of contribute forward. should million at new going build during quarter per approximately one We

deployment of first the initially the venture. on this economics are we trajectory and to these the firmly us attracted With now rig that growth

There our that innovation. of let's Nabors question advanced is is our one of Now the discuss success. no technology technology and cornerstones future

businesses sequentially the that improved. second the drilling NDS typical quarter by combined has XX step average value reaching portfolio. metric reached of The The contributed the lower drill. runs our again include, the solutions automation Drilling in smart steadily margin daily XX% from XX Of rig million. digital This the Solutions services nearly Once up Nabors than nearly proposition $XX six increased $X,XXX of Lower and in focus adjusted $XX,XXX. and in areas automation, robotization. in drilling saw strong the significant the Our EBITDA Among per digitalization increased performance NDS reflects and and Quarterly of day. penetration services. a we more

market. in XX client revenue comments brief In to third-party wrap robotics continued on offering. my sequentially up base saw growth by Solutions from also analytics. SmartSLIDE We X%. and a update second a make Drilling quarter, grew Lower as our this technology the with we targeting as the our rig re-cloud strong well on SmartNAV, I'll progress

make we rig. previously, experience rolling to We the our small plan build. these new third-party innovations. with strategy at on new available cost mentioned market for As increases deploy rigs. these robotic addressable out modules significantly for It technologies are builds to of This enables robotic fraction retrofit on This to rigs. them a the existing us also

These of the our cash debt capital net improve debt, excellent focus energy on and and second along areas. to improve companies remarks as companies. opportunities leading structure continue in finish on discuss reduced we free scale. remain the we remain flow their ESG capitalized this progress to primarily sheet. the of part and free environmental beginning discussion we our our potential the high adjacent below with cash We on I'll the the let's of to progress three strategically driven generating mark. committed edge by the $X.X In quarter, focused structure. balance continue the accelerate flow transition. line we environmental stewardship. again We In drove completed Next, investments footprint; invest billion with and Since second our achievement to in are: we quarter, to net strong three our delever strategy, this capital reduce

focuses and emissions. GHG first other on The monitoring measuring and

and offerings intensity. focuses have own emissions we in companies well We second our solutions. another field other a believe in operations as gas improvement XX ultra-capacitor our Lower with existing synergies in are in sodium targeting platform sector battery In developing third The is technology our the create and verticals. greenhouse these on will significant as based XXXX

made and available technologies, injection hydrogen products year. should have commercial in also this be capture advances our carbon We

spend a I'll Now environment. minutes few on the macro

By December to count rig stands second WTI higher drilling quarter. XX quarter. group we its second the WTI XXX. their just This year. The The reached with This WTI XX% the early above out increase The XX and operators we the level. price price pricing count. at largest working from saw into clients than in the provides incentivize the XX% the the increase June last at XX% closed average the would Once XX for returns Lower futures began Since XXX. months quarterly price of has industry accounts out then quarter of mid of end of that rig 'XXs. months activity. Accordingly, XX quarter by again is surveyed This XXX. with above the retreated second low outlook to

XX% of indicates for year. in than Our of planned of of anticipated increase these plan a dropping by activity, during none year. XX% the More rigs group operators remainder increase survey the to the this end the activity than more

remains fourth quarter. bullish. weighted to for these to the additions expect environment We be rig more heavily rigs pricing The

was This revenue XX% Our by and increased daily an average nearly took than sequentially. increase per $X,XXX to average daily $XX,XXX our day. revenue more

day Our the now own 'XXs. leading approaching are mid rates edge

we increase utilization indicated the by demand potential the With our through to claims continuing as the pricing industry end year. of see survey

to and margins upward cost and increases activate This pressure utilization will widened As puts dayrates on incremental rigs grow. the additional high-spec margins. also

for high-spec and of idle $X the million XX ranging the last five. CapEx see our $X million spending from for an rigs For and average to next reactivation up we

We XX likely upgrade be spec. the rigs Today, term rates seven into super require ago. which we the to with level over a would of cost these of day high these a total upgraded that would years $XX contract rigs we Beyond upgraded few have one MXXXs to At 'XXs. could million. these

today builds, investment technology, term cost rig mid in As day we estimate we Such incorporate would 'XXs. capital rig build full of rates for million. the new that our advanced and $XX a the require exceeds suite of would

metrics on defined high well discipline focused capacity and are regarding additions. maintaining We spec

industry the build irrational for a the you difficult As current into see, be can financially rigs would market. new to not if decision it

such, our markets remain to the production expected for prices expect will higher. constrained commodity activity oilfield driving are As and capacity some increases strong come. time we market the international In

favorable be markets to We Nabors countries. present SANAD require XX picked expect In pricing up Middle which the activity This also builds add likely for several markets. has for particular the Gulf Arabia. additional across higher Tendering in to new significant will opportunity in rigs, rigs. potential we East, should have capability visibility for a in and rigs in Saudi notably growth

We these optimistic also additions and rigs the activity rig and in those remain in support markets for have have relationships increases plans. to Latin clients America, in we [indiscernible]

have interest services. We international seen to increased clients add our by NDS

example, are automation an pressure As and drilling gaining software managed traction.

Recent few industry. potential heightened and all credit risks in of are to our that issues demand contraction oil events impact there in a forward, fundamentals. are the recession Looking could a markets, global fears industry

any The remains remains in seen forward the area following labor on recent not these additional customers' for US outlook. factors to the vigilant changes of have an however the focus. moves Timely We behavior in could rigs Fed. our by have crewing impact market remain tight. We the

employees to and We number increase retention. have taken attract a steps of

pressure upward supply We as extended costs for as continue well certain some materials. see times across to on lead chain, our

Operators confident activity oil are outlook disruption customers. well. to in manufacturing help remain we for environment spur as to oil global spare a price commodity continuity natural in Nabors activity could its up rigs operation internal from gas activity. ensure see to limited operational markets. sum clients our globally. pay signals higher and The increased Our party price in and dividends. additional constructive capacity incentivizing To This lever Ukraine, both international conflict third for our the can production point with markets to a increase reorientation the We continues network for sourcing to appear drilling of

call turn discuss guidance. William to me the over will let financial results Now our and who

William Restrepo

you, Thank Tony.

In non-cash Increased pricing, quarter charges second segments. results an the levels in certain our million compared activity markets. were better prior Both the million, the quarter, $XX The than performance, second and as Nabors strong mark-to-market cost expected pressure operational warrants. to significantly we than higher net improvement operations offset more across continuing quarter. of loss had to was of treatment the $XXX periods from related accounting all

for the by sequentially. in million included quarter. $XX second operating Adjusted $XX to of quarter improved $XX as $X second The compared quarter million the results million, million income first negative

quarter. the turn metric the Revenue second We the improvement. was from an expect million $XXX first, for third to to quarter positive $XXX in compared operations profitability XX% million in operational this

segment increased an increase our of $XXX XX grew to segments to US by growth. on XX% higher moved $X,XXX latter our up the fleet activity on end rigs revenue contributed $XXX for XX% delivering Saudi the Lower an million also growth. $XX X.X as count increases repriced in and before than of Arabia an America. million, Coming in by more Solutions million our almost All revenue Virtually with of Tech the in drilling revenue and Drilling improved or over rig average XX% well segment. quarter. by increase working Latin Higher short-term revenue, to and International already count Revenue contracts. reflecting our the quarter, the fleet or first has will XX reprice all drove Rig sequentially was of year. Lower of all from of daily the rig second X%, XX% in increase the of

million the of quarter. US or $XX.X XXX EBITDA $XXX the by Total $XX.X rose sequential drilling first business. Lower compared XX% quarter million a segments margins to improvement increase at expect of rate primarily almost expanding we revenue the close million, was EBITDA in increase to which for XX% was million and quarter. $XX.X prior improvement XX upward in our Lower in second strong For basis an the trend or our This we drilling an million XX%. million to margins up to $XX $XXX growth, what adjusted of the total, resulted experienced reflected the in the activity $XX.X sequentially. higher All of in continue quarter, in drilling delivered a third EBITDA to quarter million XX%, points. compared company EBITDA over The XX

Rig up the to XX approximately the came to the increased first environment. $X,XXX. strong commodity Our on $X,XXX rigs, XX.X more continues Lower count average margin quarter. from up rig up rigs Daily in price at count in than six move

day higher-spec While XX%. a increase now utilization with at rigs our higher for rates

before per approximately layering contribution recent contracts the most rig solutions day $XX,XXX Our a on averaged of for offerings. drilling alone our segment

to rigs an per higher pricing. For in project quarter Lower the quarter rigs we as we roll four contract $XX,XXX to our $XX,XXX third day our under the three XX at of margin second with versus third continue increase quarter anticipate to We the average.

an Our in reflects average first $XX.X International XX% the Drilling Saudi Latin segment delivered EBITDA while of $XX,XXX, of or $XX.X by improvement operational America. results. International X.X%. to performance margin margin improved the $XX,XXX rig increased up million, million rigs, This improvement Arabia daily quarter over count and or X.X strong

in movements currency favorable as well certain As markets.

spend our be additions rigs. in one the approximately contract offset should Arabia remain rig quarter as in line count by expect CapEx for end and of Colombia the of We third to rig in the Saudi

continued new July, in third to the we roughly daily early a the high for upward SANAD anticipate from EBITDA segment. trajectory delivering all-time the first is million, margin NDS Solutions was XX%. from its $XX.X nearly Gross up Drilling XX.X% for up an build builds quarter. We the quarter start first The with second line late margin the and project XX% for commenced second new quarter. quarter. in quarter, for in third this This operations on

and $XX,XXX. contribution rigs, high. from to drilling with in from performance the includes We a which combined XX particularly gross US. Overall largest drilling taking increased continue another daily our in margin segment, the in software improved, $X,XXX This solutions Lower our see the coming drilling penetration is activity solutions to third-party rig contributions

quarter by quarter. third to quarter for increase sales. in primarily Solutions approximately $X.X over million We to the sequential reflected $X.X level. Rig expect XX% million Technologies Drilling and increased second returned second generating contribution, segment a the EBITDA EBITDA The improvement aftermarket the rentals positive

to first million growth free $XX generation the approximately sales. second on quarter our cash For $XX of in the additional EBITDA deliver segment improvement expectations quarter. third a quarter $X capital compared equipment reached flow the growing should million exceeded million, this adjusted Cash

driven working the This in activity million. and the EBITDA Our despite supporting cash generation interest capital, levels. second working improvement lower was drove capital quarter Capital decrease. were SANAD higher from quarterly investments payments reduction the in the amount expenditures a of operations, by DSO increased builds $XX.X million. new included $XX.X

For the new SANAD are still rigs. of of year, to support million which, we targeting spending $XXX the full capital $XXX million, build

remain component, activity required have Nonetheless, projects our to investment target. meet existing some projects and some and cut pressures as spares Our a planned may to rig annual inflationary back result on CapEx we sustaining unchanged. on of

We for EBITDA to interest by higher our as quarter the third offset likely capital expect growth related business. expected working be the payments, increased breakeven will as as well in free by cash flow in and headwinds CapEx

year, of For $XXX flow mark. our even million our we strong has the remain the on We optimistic addressing XXXX. assumptions. during The continue half second reducing comfortably full debt net and the expect market cash focused are of acceleration to leverage most free exceeded drilling our targeting above global the

XXXX provided period. through For XXXX looks and last significantly now what projections expect of year we we two short investors December

of quarter Our are XXXX. our margins anticipate the and expected Drilling levels Rig seeing projections. solutions XX already daily mid-year we and third at only are also Lower International well Technologies ahead

updated we that call concluding more the reality. the Before XXXX once will budget his our Tony in process for would turn remarks. current XXXX expect line end of With is to provide the back to projections complete, with I for

Anthony Petrello

remarks William. afternoon conclude the of increasingly initiatives benefits strategic The my now will our I with Thank following. you, this apparent. are

portfolio. in the additions further third in potential key should party from SANAD’s deployment on international program no In global first EBITDA Nabors the annualized deployment has a equal We new see capital our in XX this new we rig penetration rig reach growth drilling rigs, achievement. and business marks MBS this increased mark. business. The to In-Kingdom million opportunities drilling of expansion build land segment other the the the Nabors of scale growth $XXX towards quarter build our With significant and the expect solutions

to regular are draw SANAD closer cash additional partners. the joint As the ventures of flow improve. centers commencement rigs to That to the significant added should from will fleet, SANAD’s distributions free expected us

seen increases. daily approaching we Our focus Lower continue a to path and metrics further with XX last with to improve drilling early are levels margin XXXX technology in

successfully difficult Since and in our markets capital peak improved for than structure, have have we we navigated As by net billion. significantly XXXX more the $X.X leverage. the debt reduced

have We record financial established a progress track to flexibility. of our restore

is sights goal set ratings. on reach Our are investment leverage the with advancement, metrics grade consistent debt to more

and convinced Nabors on With the continued our will come. the am dedication today. the That attention. of yet to look my progress. you Thank your workforce, I time With questions. is to forward that, for I reporting entire best concludes take your we remarks

Operator

session. the now will Instructions] Barclays. come go ahead. We Please first will begin question-and-answer Our from today of Derek [Operator Podhaizer question

Derek Podhaizer

I of time side the of afternoon hoping market. the your overall guys. supply good talking spend view could Hey, about was you some

cost new Specifically how upgradeable many beyond idle many will super to that out the off fence? costs bring there specs less. that Then or are rigs that out XX% there are of the build related and those how

side? curious your an get better side. on us a standpoint market fleet, the trying you to and Just the overall great help ran I down of from just detail know gauge to but supply supply gave us

Anthony Petrello

probably super will the operators they greatly one guess is. XXX there terms out about what cost vary are, of to is, which being Well, sales upgraded in And of that the are there's capable spec. rigs our

and you depending range almost number, of give could to operator dollars numbers $XX dollars category million specific those from which can't several on rig. million I So a but up

is -- So XXX those. there but of about

think cost that in the day said we've a with require distance new we mid-XXs. builds very of away, far million a identified, the metrics why that's rates build new plus should which $XX So be I would the because estimate

maybe a and term upfront contract well. some So money -- and as

people. happening concentrated a new everybody given potential a builds the the of is therefore, marketing lot don't amongst I in of terms pretty as that discipline see And all So well in I right see market of that, and of now. bunch depth

a rolling rigs I number half the as of -- I [indiscernible] And $X I three are change, is we we We out out. $X as today. think have priority, rigs million will And path in probably or and rigs have mentioned, cost relatively to the XX around end, relatively in inexpensive our five is twelve today, us have second as I our what relatively to less said And said, run roughly the for a the that has bunch try so to quarter of around we said, be next XX shoot and four pipeline, I we rigs on to adding the for would exit keep on million. XXX. for first around about minor inexpensive. an back XX roll

So up could have dip than rigs we a of another us, cost plus those And less it of M we CapEx. build. but substantial then XX does on new have and for again, the top XX% again, that. do of another, But dozen be not substantially. And maybe

that's why now. I pretty think So is constructive market right the

think you I focus on on as pricing installed much base and existing can. as focus to is everybody push the

Derek Podhaizer

that second rig plus to you in talked we sight year. come of XXX next supply it chain to if helpful. year, being line place Can event. reach XX about, that. can next half I it's rigs exited level? that XXX the then talk And see where when to the reach some expect those when be you can that is one XXX And to a point Follow-up, color. year M rig when get XXX, you out going of going out you're the M XX you at sounds you Got appreciate at that it. rigs rig That's this if like about

into move Just cadence your super of thinking those about one into and M we rigs? spec exhausting timing when the from reaching of

Anthony Petrello

at spec XXX. super our exhaust We Okay.

of drawer as the can the on That's all -- right much the the the have And things. spare integration the the that of – inventories first that. first second are -- we of we're hit should the top of quarter over second maybe Nabors, half bunch -- build we [indiscernible] itself And and smart VFD, chain. that expecting and of our and we the of component XXXX, And to on the We and base. rigs are quickly our even now, as rig, five, to the Nabors pricing, or a lot additional market it can wrench, that have that rigs, all now. and of right one long the as will etcetera, while any the XXXX, upgrading have the capital so end of the That's investment I where we think where existing said because depending focus on goal. adding and do what focus That's parts a that the on happens we have given works, therefore course the lever the half fact existing is toward the rigs. is whether that of that our This lead depending about we we capital sense the the of I'm things pull in where we of makes benefits is maximizing on those returns end get -- the customer upgrading of is half control judge existing normal M but supply hoping monitoring support up --

is top the of world's know drives [indiscernible]Nabors today in you As XX% world.

our up. pretty a chain lever to have we things and supply ability robust So Okay?

the say. would maximizing on But now our be high a assets. is from profit that I So class what existing flow would the cash focus right

Derek Podhaizer

Great. Appreciate the thoughts. turn it I'll back.

Operator

Sachs. Our from Goldman go of next question Blunden Karl come will ahead. today Please

Karl Blunden

time. Thanks afternoon. good the Hi, for

XQ. increase the you're underlying proportion margin -- resetting this for big else of some contracts in what pretty about Is noticed a there or discuss bit there? you You change Could XX you large a drivers guiding seeing you're is that sizable prepared to remarks. a there step more Lower little gave something in

Anthony Petrello

very to contract decision know tactical last we go you as our calls, made conference year a our short from on Well, prior length.

fleet. portion us now we on that a price of have put in So large position our reopeners that

I year now beginning rigs XX% think between next our we have of reprice. existing building the and of to

And to that advantage the of that's fact the given so that. to and strategy do take goal going that's a the and has moved market we're bit the quite that

So that's exactly where from. it comes

that And absolutely quarter I right. the is today, said $X,XXX second remarks, our as average. about number in You're prepared above

it's substantial. So very

focusing So we the on to can. get as as many third those we'll quarter, in trying be of

As I said, of reprice the the that's the by take next year window. XX% to fleet quarter that strategy and of first advantage can

Karl Blunden

Those primary I debt reduction numbers debt to should regard we reduction it see equity transactions? as to allocation, are helpful. to wondering with sounds capital accelerating like continue that a focus. With you're was if open also linked

William Restrepo

our think there and to handle are I ways more profile. our is at point, this attractive liquidity maturity But nothing off table. the

Karl Blunden

you. Thank

Operator

ahead. from come John go Energy [indiscernible] Our Please today with Partners. will next question Daniel

Unidentified Participant

afternoon. or questions. have two quick I guys morning, good just Hey,

that to XXs the when of there in low be rigs objective I edge, to mean, there the reprice? is those is leading you XX% that the I the but to any reprice. XX% have the pricing comfortably closer On – to expect will reason wouldn't ability they Is know any

Anthony Petrello

the we what said, that. at I mid it's exactly that's above XXs be the goal mean, $X,XXX already. do I above are we -- to No, would mid as already -- -- the X% already [XX] low an (ph) at

openers already. will mid as you nail the XXs that as the the in take market those if hit on up, of But yes, try we come head, So accelerating low -- well. and keeps advantage to the

Unidentified Participant

comfortably -- by $XX,XXX you to guys you second it changes give half seems be forward and me, next could just want know it margins mean, -- cash that else from too nothing I day guidance a far to I Yes. macro seems don't there's very year. out, north perspective of but

Anthony Petrello

tranche You're XX% push okay? no all approaching Speakers] trying on on that, numbers top And then but as Nabors that in there's I top at additional for on remember, So question. rig. MDS go you're us just have $X,XXX from higher, additional just please numbers, of up of [Multiple base of those XX, margin the we to well. to bear mean mind,

the So is. extra that's where juice

William Restrepo

So we they potential even that prices Tony I have above right things one is John, are now, pricing. of to that out, see we and where like of a pointed think would lot repricing the leading edge for

So But reprice increases leading some potential there's we year. the $X,XXX think pricing is at during the today's in everything we if further the remainder for of edge.

if half So that we don't I'd year, second $XX,XXX, next the be very get before disappointed. of

Unidentified Participant

do impressive. driving here. matters. dumb It's very Okay. some I'll just monkey I'm

So thank me. you for letting

not sure smoking funny. anything I'm Just make

Anthony Petrello

John. Thanks

Unidentified Participant

care. All right, Take guys.

Operator

Please today Energy question will go David next ahead. Our come from Partners. of Smith Pickering

David Smith

for just afternoon. Thank wanted my question. today. to question Hey, follow-up you first call on to taking the the good I

the You across spec three Wanted include that super big upgrade understand to owned ask your XX correctly, that try US of I you mentioned aren't would there probably from many about you. super out candidates upgrade see view industry. question that how If by contractors? reframe spec XXX to candidates to the

Anthony Petrello

don't and think not know, to super specs potentially XXX maybe clear. upgrades upgradable. I be I high the was spec remaining idle the It's to

David Smith

that. appreciate I Okay.

operator is upgrades you to of work, be understand all On that looking high your focus what the just but was there? for spec your times be if lead step to theoretically, super of the can could achievable putting question, is realistically of And theoretical upgrade maybe XXX what kind the I basis spec at? rigs back demand

Anthony Petrello

that I I cost to the the mean, for the amount day relatively just us go from to I to is as do day stuff to mentioned, mean, that's of that. inexpensive -- XXX for for us us. XX

said, So the target I XXX. thinking exiting around year -- we're our as

are or that's by half today. nine would of So from so. roughly that we be XX And another XXXX, the more where second

do don't one see a herculean see that. supply the And have. do issues, us advantages we we so that, see any CapEx nor to we chain big efforts, of don't for any we all That's

that several with number does which lead us but and a interested in see have supplying then on deal. to for really that try referenced, also higher don't whether needed the issues that I market move big the we'll in as to prior second layer, we a will So cost to additional your mitigate monitor we're see then visibility being time, months to the question advance a that. lead higher whether has half, of that And appetite guys process during

David Smith

I it. appreciate Okay.

Operator

Morgan come to next question going go ahead. Stanley. is Our Kutz from Please Dan today of

Dan Kutz

Thanks.

sorry but seeing of pricing comment if explain on just in that you Just markets? any across could guys it, missed -- ask Thanks. international trends wanted made wondering to if you're or I terms you comments

William Restrepo

in dynamic, hoping And market. as our We're market well. We're increases see markets, respect -- steady. we've the a in mean, seeing and in is rate and I more Latin contracts on well mean, Middle better the tied in market the up to in some up tenders in have such. is biggest bit as East I seen American steadied little more prices and Yes. in the internationally certain prices continue like versus prior to general, and with markets pricing conditions to exchange coming increases the

basically US over but markets we obviously where we're So like increases seeing in at are some The to as seeing almost more international seeing this seen compared level increase, of we've not US. -- pricing the the point. in we're to what to XX% the XX% X%

Dan Kutz

it. it a Got the definitely remarks. which and you in to a And debate Tony, prepared big impact recession, debate mild oil recession, call I helpful. recession the activity. maybe big of gas really actually That's kind development a alluded risk is to but -- think then, extent That's a

do a in for implications the what international So are, recession. be US into markets the thoughts What you the just go wondering in activity would guys and so maybe we [indiscernible]

Anthony Petrello

[indiscernible] of volatility constantly given for so that. mean, long, aware I we're Well,

the So we downside. do everything to prepare for

well you to on skis where to same I'm of did XX% trying took I'm speed as we etcetera, our we last and aware make out the a something sure downturn now, over most the there respond we and will to any of not we as because to first even body up pressure into in We're count, and I it to of with commitments. quickly. right maintain really all on SG&A, our our the goes be adding cuts getting the I of in keenly responded compared to macro swiftness try locked there's saw competitors the did it though structure etcetera, I'll activity vigilant not about that quarter, dramatic we're cost lot want So our

on of going way maintains the we're our maintaining in other to in a culture our infrastructure everything doing things world that the So that are whole given fact control. flexibility can't keep the we

Dan Kutz

back. much Got turn guys. it I'll it. Thanks very

Operator

Please from today ahead. RBC question next come Markets. will Keith Mackey of Our Capital go

Keith Mackey

Hi questions. there. my taking Thanks for

thinking line you end the a day. we have how into a come bit little year. up the of should that we well. more We've But top and think a I year of seen I be understanding OpEx of where little trend sort on much bit rig revenue this want expect per per did better color U.S. next about as daily on get to the day through to

rigs the of then should as existing on is OpEx OpEx rigs get these to running? thinking And next about any what costs would XXX up helpful? Just be base be the you with we the startup level

Anthony Petrello

cost, the saying, and want On that. the to numbers. that real relatively of about startup million our numbers those why rollout the $X you I'll startup be XX next I That's painless. clear point cost I the include I'm in CapEx gave make. rigs, is That's

market as probably R&M steel copper, about side, like things all -- that probably well. etcetera, and just has course high metal On the because have obviously the with is fact shortages and made throughs adjustments months component past well. that happened things a you some six we is we the tightness industry we there's to the given as there have press job material be given friction and And friction, do labor few unless numbers pass doing the contracts, to some X% cost there then of categories. in lose And labor is operating of have compensation stuff escalation, rates everything. component. increases that labor expense and of general, the bit one have our itself, in cost There's with but that in content, not cost a -- you you're on the a in given churn do there good as cost R&M Obviously, then subject

is there So some churn there as well.

But So operating on William let the top of expense we have those address column I'll that, again. three things.

William Restrepo

the -- of our which six or So the one, about OpEx. the compensation gone biggest off last about and over is is months XX% compensation one so. And the that's most highlighted today Tony

$XXX has Those increases. we're to there's -- the to the amount but of more Others have are the some particular course, that client. significant we're to be a you components cost are salary to more it that increase may most move So a push churn are Tony per of related client keep prices, to mentioned, day who like and transitory where another still you you successful, that But of about quarter. us as going to stays in be down. time people going permanent this have a get churn. you month on When

people right have and -- really you that a now. more we're for you So time through need probably than going that

low per we're $XX,XXX traditional We has slightly hope $XX,XXX a which reimbursables, on us of right working level we south going $XX,XXX elements those be are think to can which some to to So $XX,XXX now, next below about that more But are in we per or again, costs range. quarter. bringing the the transitory just back a day. day that number take including will

Keith Mackey

to Thanks the the end the follow-up, certainly the it. for expected work with rig just additions some to of rigs through incremental it And that their did of color. survey and some you the point does year, by of customers the to the end Got year. going

far as it'll we still as Do see you longer on rigs start get be to go thinking to term work that contract you're contracts will will durations term or some in shorter think signed? what curious lengths XXXX. Just and

Anthony Petrello

operator at pricing -- longer well. we as as in get and term In operators think I you I contracts. my see up, fact that goes reference that looking remarks, typically interest interested prepared will be

-- focused forward. the technology room at as have specific quarter reopeners of that want as contract to he the us. a makes technology for price But to customer could find of that of win us, think, a on term because year, XX% XX% focused those particularly rigs, next it. that a committed rigs a remaining I the next and that, but sense and we'll term are us is and for added first because -- the is to we requires for if don't that's win And of on long means opportunistically to by kind if contracts, be will in be we customer rig number depending place up move a said, term I on with the customers, the target commitment. we that I [indiscernible] we And both move have contracts looking set

for priority the of kind that's So us.

right the kind of matters, the term right us. important more but That's equally So with term customer. also to

Keith Mackey

That's you color. it the much Perfect. very Thank for me. for

Operator

next question Our ahead. go from Jayaram will of Arun Instructions] Morgan. [Operator Please come JP

Arun Jayaram

share on just US to over demand next Would Hughes upgraded morning. thoughts. get Good I thoughts around XXX based incremental Just afternoon. months. US your that. What's – around grow to rigs? Good land your If Nabors land to the super spec market Nabors as getting a the by the rig Tony, increases Pardon XX%. spec expect me. market few expectation on denominator If your rigs using you and XX%, share. your Baker wanted super share count the your of the

Anthony Petrello

look market really returns. I that Well, I'm guy. a at I'm mean, not really a guy share

interested more I’m growing proper and returns So in that. getting

at whole. to said, to numbers be you another you, has XX%. at rigs. I if then of for targeting going the this that look point of we're said then Now And I And half in fact market a line. year XXX, I hopefully next gave I the XXX XX year, will at the that's second be XX% for kind as Nabors

more capital as market placed my second growth technology market light think to rig there a these are that customers I we're of rigs, such incremental of sure my yield rigs, the return my when that's is On on it’s make grow it's the first attractions could get share I party right my think to and of still opposed it that improvement. that's and economics and the market one maximize third that share ballgame. I that does But priority on I not inning maximize rigs Nabors in with And and [indiscernible] model. that NDS, So one the have because the again, priority investment, on of potentially MDS beyond share. in Nabors

capital on are more even returns So attractive.

penetration an actually now, downturn. Right equal us. stood opposed main [indiscernible] Pricing during to as grow well priority past that's pretty pricing. for the COVID So priority our up

garner goal rigs penetration now, is party and to right rigs. both on third So our Nabors

is So to grow to things goal think unique we to. really specifically we some there, the value share market add have because

Arun Jayaram

pencil early around know but sharpen to thoughts I CapEx. it's just XXXX I preliminary get Great. we our And as wanted your

Just trying to the CapEx market on CapEx, color just newbuild think us things etcetera, per if any thinking give year? about next that rig, there's maintenance some SANAD maybe can you

Anthony Petrello

the I'm per in So and pieces. million. the is to somewhere you One year. SANAD the that's two going day. for sorry be [Multiple One deployment Speakers] the depending one highlighted -- important $XXX $XXX million on

and that sort manufacturer it in the that can maintain. depends pace baked So local of all on is

$XX down $XX And or digital that's But million $XX $XX or so that's number, or very a go that is a bit of piece. little maybe by the could up it one million. million million --

cost other next of per a up per piece, increasing from little And CapEx rig to increasing. gone has this It year maintenance year year. our The probably bit. count is is the rig

So in increase piece of business. the that expect we some do

we've traditionally should mark that seen million CapEx the maintenance versus towards the maybe go past. closer in Our up $XXX to $X the million the

sure it's well, million next how and number, combination to land. not much, we by I'm year exceed a does $XXX includes But to a of both. give you yet. So expect that the And

Arun Jayaram

lot. Thanks Great. a

Operator

gentlemen, question this Conroy our time over to any we like to and conference William the remarks. Ladies back session. turn conclude answer will for I'd closing at and

William Conroy

this Thank us for afternoon. joining you all

Alison any additional there. very call have Thank will you to wish you much. end follow-up, contact If us. please or the questions

Operator

presentation. now today's has We conference attending for concluded. you The you. thank And thank

now may lines. disconnect You your

Nabors Industries (NBR) 4 Aug 222022 Q2 Earnings call transcript