Nabors Industries Ltd. 2024 Annual Report Review

Introduction

Nabors Industries Ltd., a Bermuda-based company, is a leading provider of advanced technology for the energy industry. With operations in over 15 countries, Nabors has established a global network of people, technology, and equipment to deploy solutions that deliver safe, efficient, and sustainable energy production. This review will delve into the company's 2024 annual report, highlighting key aspects of its business operations, financial performance, and strategic initiatives.

Warren.AI 💰 6.5 / 10

Business Overview

Nabors owns and operates one of the world's largest land-based drilling rig fleets and provides offshore platform rigs in the United States and international markets. The company also offers performance software, directional drilling services, tubular running services, and innovative technologies for its own rig fleet and those operated by third parties. Additionally, Nabors manufactures advanced drilling equipment and provides drilling rig instrumentation.

Key Segments

Nabors' business consists of four reportable segments:

1. U.S. Drilling: Nabors operates one of the largest land-based drilling rig fleets in the U.S., with a focus on innovation and integration in the industry.
2. International Drilling: The company operates in major international oil and gas markets, primarily in the Middle East and Latin America.
3. Drilling Solutions: Nabors Drilling Solutions offers specialized drilling technologies that enhance drilling performance and reliability.
4. Rig Technologies: This segment is primarily comprised of Canrig, which manufactures and sells top drives, catwalks, wrenches, drawworks, and other drilling-related equipment.

Financial Performance

Revenue and Profitability

In 2024, Nabors reported operating revenues of $2.9 billion, a decrease of 3% from 2023. The net loss from continuing operations attributable to Nabors common shareholders was $176.1 million, compared to a net loss of $11.8 million in 2023. The decline in U.S. activity was largely offset by increased activity in international markets, benefiting both the International Drilling and Drilling Solutions segments.

Segment Performance

• U.S. Drilling: Operating revenues decreased by 15% due to a decrease in activity, reflected by a 13% decrease in the average number of rigs working.
• International Drilling: Operating revenues increased by 7%, driven by an 8% increase in the average rigs working.
• Drilling Solutions: Operating revenues increased by 4%, with an increase in demand for international and third-party services.
• Rig Technologies: Operating revenues decreased by 17% due to a decline in U.S. activity.

Cash Flow and Liquidity

Net cash provided by operating activities totaled $581.4 million in 2024, compared to $637.9 million in 2023. The company had cash and short-term investments of $397.3 million and working capital of $427.6 million as of December 31, 2024.

Strategic Initiatives

Energy Transition

Nabors is actively investing in technologies designed to drive energy efficiency and emissions reductions. The company's portfolio includes real-time emissions monitoring, engine management controls, energy storage systems, and hydrogen technologies.

Acquisitions and Divestitures

In 2024, Nabors entered into a merger agreement to acquire Parker Drilling Company, which is expected to close in the first quarter of 2025. This acquisition is anticipated to enhance Nabors' capabilities and expand its market presence.

Risk Factors

Nabors faces several risks, including fluctuations in oil and natural gas prices, geopolitical events, and competitive pressures. The company also operates in a highly competitive industry with excess drilling capacity, which may adversely affect its results of operations.

Conclusion

Nabors Industries Ltd. is navigating a challenging market environment with a focus on innovation and strategic growth. While the company faces headwinds in the U.S. market, its international operations and strategic initiatives in energy transition position it for future growth. Investors should consider the company's financial performance, strategic initiatives, and risk factors when evaluating its investment potential.

Overall, Nabors Industries Ltd. presents a moderate investment opportunity with potential for growth, particularly in international markets and energy transition technologies.