Nabors Industries Stock

Nabors Industries, Ltd. (Nabors) owns and operates one of the world’s largest land-based drilling rig fleets and is a provider of offshore platform rigs in the United States and international markets.

Nabors also provides performance tools, directional drilling services, tubular running services and innovative technologies for its own rig fleet and those operated by third parties. In addition, Nabors manufactures advanced drilling equipment and provides drilling rig instrumentation. The company is well positioned to seamlessly integrate downhole hardware, surface equipment and software solutions into the company’s AC rig designs.

With operations in over 15 countries, the company is a global provider of drilling and drilling-related services for land-based and offshore oil and natural gas wells, with a fleet of rigs and drilling-related equipment which, as of December 31, 2023 included:

291 actively marketed rigs for land-based drilling operations in the United States and various countries throughout the world; and

28 actively marketed rigs for offshore platform drilling operations in the United States and multiple international markets.

Segments

The company operates through U.S. Drilling, International Drilling, Drilling Solutions, and Rig Technologies segments.

U.S. Drilling

Nabors operates one of the largest land-based drilling rig fleets in the U.S. The company continues to drive innovation and integration in the industry. Nabors offers a full suite of advanced solutions, including performance software and automation technologies. The company is active in the major hydrocarbon basins across the Lower 48 market and Alaska, as well as offshore in the Gulf of Mexico. The company’s marketed U.S. fleet as of December 31, 2023 consisted of 166 AC rigs, which use alternating electrical current in order to make ultra fine adjustments to optimize drilling, 9 SCR land rigs, legacy rigs using direct current silicon-controlled rectifiers to drive motors, and 12 offshore platform rigs.

Since the company introduced its first AC land rig in 2002, the company has continued to develop industry-leading breakthroughs. As the industry shifted to multi-well pad drilling, the company anticipated the demand for greater efficiencies and adaptability for batch drilling on multi-well drilling pads. As a result, the company developed its PACE drilling rigs. In 2013, the company introduced its PACE-X800 rig equipped with an advanced walking system with multidirectional capabilities that enables the rig to move efficiently over multiple wellheads on a pad. Because the rig’s ancillary equipment is integrated within the rig, it moves easily between adjacent rows of wells. In 2016, the company introduced its PACE-M800 and PACE-M1000 rigs, which complement the company’s existing PACE-X800 rigs. Both versions of the M-series are designed to move rapidly between pads.

The company has developed and deployed a full suite of technology supporting Nabors and third-party rigs. Demonstrating Nabors technology leadership, the company employs automation to improve safety, increase efficiencies and build agility for the company’s customers.

International Drilling

The company operates in major international oil and gas markets, primarily in the Middle East and Latin America, most notably Saudi Arabia, Argentina, Colombia and Mexico. Many of the company’s rigs are designed to address the challenges of working in specific operating environments, such as desert climates, mountainous regions, and tropical zones.

As of December 31, 2023, the company’s international fleet consisted of 116 land-based drilling rigs and 16 actively marketed platforms rigs in the international offshore drilling markets.

Drilling Solutions

Nabors Drilling Solutions (‘NDS’) offers specialized drilling technologies, such as proprietary drilling-bit steering systems and rig instrumentation software that enhance drilling performance and wellbore placement.

The company’s tools are ideal for applications where high reliability, precise wellbore placement and drilling efficiency are required. Impactful NDS products and services include:

ROCKit, a directional steering control system that increases performance while slide drilling, through drill string oscillation and precise toolface control;

SmartNAV, a collaborative guidance and advisory platform that delivers automated directional drilling information and instructions to drive consistent decision making, transparency, and improved performance;

SmartSLIDE, an advanced directional steering control system that automates slide drilling to consistently deliver high performance; and

RigCLOUD, a digital infrastructure that integrate applications to deliver real-time insight into operations across the rig fleet.

Nabors offers a full range of tubular running services (‘TRS’). TRS primarily includes casing running, tubing running and torque monitoring. Nabors also offers managed pressure drilling (‘MPD’) services that expands the capability of rigs to drill wells in otherwise challenging formations. The company’s proprietary software empowers the driller to deliver these services with consistency and repeatability. Both TRS and MPD integrate with the rig, eliminating the need for third party service providers and thereby improving efficiencies.

Rig Technologies

The company’s Rig Technologies segment is primarily consisted of Canrig, which manufactures and sells top drives, catwalks, wrenches, drawworks and other drilling related equipment, such as robotic systems and downhole tools which are installed on both onshore and offshore drilling rigs. Rig Technologies also provides aftermarket sales and services for the installed base of its equipment.

NDS and Rig Technologies’ portfolio of services and capabilities are available to third-party customers both in domestic and international markets.

Business Strategy

The company’s business strategy is to build shareholder value and enhance the company’s competitive position by leveraging its existing global infrastructure and leading operating performance to capitalize on growth opportunities; enhancing the company’s technology position and advancing drilling technology both on the rig and downhole; expanding the company’s portfolio of value-added services to its customers; investing in alternative energy and carbon reduction technologies; and achieving superior operational and health, safety and environmental performance.

The company’s strategy combines advanced drilling rig designs – complete with integrated downhole tools, surface equipment, and software – with operational performance, industry-leading safety, and an innovative technology roadmap.

Drilling Contracts

The company’s drilling contracts are typically daywork contracts. While daywork contracts represent the bulk of the company’s relationships, the company also has footage contracts (in which the drilling contractor is paid on the basis of a rate per foot drilled) and turnkey contracts (in which the drilling contractor is paid for drilling a well to a specified depth for a fixed price). The company also offers performance enhancing drilling services, performance software and equipment, such as managed pressure services, directional drilling, rotary steering systems and measurement while drilling. These additional products and services are additive to the company’s rig charges. The company’s contracts for land-based and offshore drilling have durations that are single-well, multi-well or term.

Customers

The company’s customers include major international, national and independent oil and gas companies. One customer, Saudi Aramco, accounted for approximately 26% of the company’s consolidated operating revenues during the year ended December 31, 2023, which operating revenues are primarily included in the results of the company’s International Drilling reportable segment. The company’s contracts with Saudi Aramco are on a per rig basis. These contracts are primarily operated through SANAD, the company’s joint venture with Saudi Aramco.

Seasonality

The company’s operations are subject to seasonal factors. Specifically, the company’s drilling operations in Alaska generally experience reduced levels of activity and financial results during the second quarter of each year (year ended December 2023), due to the annual spring thaw.

Competition

Significant competitors in the company’s U.S. Drilling segment include Helmerich & Payne Inc., Patterson-UTI Energy Inc., Precision Drilling Corp., and Ensign Energy Services Inc. In the company’s International segment, significant competitors with operations in multiple countries include KCA Deutag Drilling Limited.

The company’s Rig Technologies segment competes primarily with NOV, KCA Deutag, and several smaller rig equipment suppliers. The company’s Drilling Solutions segment competes with services provided by NOV, Pason, Baker Hughes Co., Halliburton Co., SLB, Expro Group Holdings NV, Weatherford International plc., as well as several of the company’s drilling competitors and smaller, specialized service providers.

Energy Transition

Nabors has a fast-growing portfolio of technologies designed to drive energy efficiency and emissions reductions for the company and its customers. The company’s portfolio of energy transition related technologies includes real-time emissions monitoring quantification and reporting and analytics software, engine management controls, energy storage systems, and hydrogen technologies, as well as solutions that enable use of high-line power and dual-fuels.

In addition, Nabors has invested in venture opportunities in several high potential markets addressing carbon reduction. The company’s initial investments focus on alternative energy sources, such as geothermal, hydrogen, energy storage and carbon capture, including utilization and sequestration technologies and emissions monitoring. For example, in February 2023, Nabors Energy Transition Corp. (‘NETC’) entered into a definitive agreement for a business combination, with one such investment target, Vast Solar Pty. Ltd. (‘Vast’), a development-stage company specializing in the design and manufacturing of concentrated solar thermal power (CSP) systems. The business combination was completed on December 18, 2023 with NETC merging with and into a wholly owned subsidiary of Vast. Following the merger, Nabors now has a significant non-controlling equity investment in Vast.

Research and Development

The company’s research and engineering expenses totaled $56.3 million in 2023.

History

Nabors Industries Ltd. was founded in 1952. The company was incorporated in 2001 as a Bermuda exempted company.