Nabors Announces Third Quarter 2025 Results

HAMILTON, Bermuda, Oct. 28, 2025 /PRNewswire/ -- Nabors Industries Ltd. ("Nabors" or the "Company") (NYSE: NBR) today reported third quarter 2025 operating revenues of $818 million, compared to operating revenues of $833 million in the second quarter. Net income attributable to Nabors' shareholders for the quarter was $274 million, compared to a net loss of $31 million in the second quarter. This equates to earnings per diluted share of $16.85, compared to a loss per diluted share of $2.71 in the second quarter. The third quarter included a one-time, after-tax gain on the disposition of Quail Tools of $314 million, or $20.52 per diluted share. Third-quarter adjusted EBITDA was $236 million, compared to $248 million in the previous quarter.

3Q 2025 Highlights

Anthony G. Petrello, Nabors Chairman, CEO and President, commented, "The sale of Quail Tools is a transformative event for Nabors. We have already used a portion of the proceeds to reduce our gross debt by approximately $330 million. The balance of the proceeds is targeted for additional debt reduction. Once that is completed, the expected decrease to our gross debt will exceed 20%, compared to the level as of June 30, 2025. With that, our annual interest expense should decline by approximately $45 million, translating into a dollar-for-dollar improvement in adjusted free cash flow.

"In addition to these financial benefits, the structure of the divestiture means we effectively sold equity to fund the Parker acquisition at approximately $130 per share, a very significant premium to the current stock price. And we are retaining businesses from the acquisition that we expect to generate adjusted EBITDA of $70 million in 2026. That's a material contribution to our consolidated total.

"Nabors' third quarter results, without the contribution from Quail Tools, improved over the second quarter. This performance demonstrated the strength of our International drilling segment. As planned, we deployed additional rigs in the Eastern Hemisphere markets, including SANAD's 13 th newbuild in Saudi Arabia. Daily drilling margins in the International business continued to improve, and are on the verge of exceeding the $18,000 mark.

"Results in our Drilling Solutions ("NDS") segment reflect the sale of Quail Tools in August. Excluding the contributions of Quail Tools in the second and third quarters, NDS's adjusted EBITDA increased sequentially. This is a significant achievement in the current Lower 48 market environment.

"In U.S. Drilling, our Offshore and Alaska operations continued to perform well. The adjusted EBITDA contribution from these two businesses exceeded our previous guidance."

Segment Results

International Drilling adjusted EBITDA totaled $127.6 million, compared to $117.7 million in the second quarter. Average rig count increased by more than three rigs, reflecting the recent startup of rigs in India, Kuwait and Saudi Arabia. Daily adjusted gross margin for the third quarter improved to $17,931, driven primarily by the high-margin additions and operational improvements in Saudi Arabia.

The U.S. Drilling segment reported third quarter adjusted EBITDA of $94.2 million, compared to $101.8 million in the previous quarter. Moderating industry demand drove lower rig count and daily margin in the Lower 48, leading to this sequential decline.

Drilling Solutions adjusted EBITDA was $60.7 million, compared to $76.5 million in the second quarter. The segment's third quarter results include the contribution from Quail Tools, through the sale to Superior on August 20. The second quarter results reflected a full quarter from Quail. EBITDA from Quail in the third quarter was $20.3 million compared to $37.0 million in the second quarter. Excluding Quail from both quarters' figures, Drilling Solutions adjusted EBITDA grew slightly.

Rig Technologies adjusted EBITDA was $3.8 million, compared to $5.2 million in the prior quarter. A slowdown in aftermarket revenue across markets contributed to the sequential decrease in adjusted EBITDA.

Adjusted Free Cash Flow

In the third quarter, consolidated adjusted free cash flow was $6 million. This compares to adjusted free cash flow of $41 million in the prior quarter. Several factors impacted the third quarter performance. Collections in Mexico were substantially below expectations. The sale of Quail Tools during the quarter resulted in adjusted free cash flow from that operation that was lower than estimated. Lower capital spending during the third quarter partially offset these results.

Miguel Rodriguez, Nabors CFO, stated, "Our overall results for the third quarter exceeded our expectations, after adjusting for the effect of selling Quail Tools during the quarter. The International drilling segment was primarily responsible for this outperformance, as recent rig deployments and operational improvements contributed to the sequential growth. The very robust top line and adjusted EBITDA progression in the segment translated to an impressive 44% fall through. In the Drilling Solutions segment, several business lines improved. After considering the Quail transaction, adjusted EBITDA in NDS increased slightly. Our U.S. Drilling business exceeded our forecast, mainly due to better performance in Alaska.

"Adjusted free cash flow in the third quarter reflected a contribution from Quail for just over half of the quarter. We are disappointed with the level of improvement in collections from our main client in Mexico. There is progress being made by our customer, although it is very slow paced. This delay represents a timing factor in our adjusted free cash flow estimates.

"The Quail transaction materially improves our financial strength. We have already taken decisive actions to reduce the Company's gross debt, paying down the balance on the revolver and redeeming $150 million of the 2027 notes. With the repayment of the seller note, our net debt is now at its lowest level in more than a decade. In addition to reducing our interest expense, we also expect our improved financial position to favorably impact the cost of future financing. With the remaining cash proceeds from the sale, we are steadfast on improving our capital structure and strengthening our balance sheet."

Outlook

Nabors expects the following metrics for the fourth quarter of 2025:

U.S. Drilling

International

Drilling Solutions

Rig Technologies

Capital Expenditures

Adjusted Free Cash Flow

Mr. Petrello concluded, "The substantial value realized with the Quail transaction has produced a stronger, more durable capital structure for the Company. With this considerable improvement, we have already seen benefits, notably in our financing costs.

"As we look to the future, with international growth opportunities and potential volatility in the Lower 48 market, our geographic diversification now augmented by our sturdier balance sheet will serve us well."

About Nabors Industries

Nabors Industries (NYSE: NBR) is a leading provider of advanced technology for the energy industry. With presence in more than 20 countries, Nabors has established a global network of people, technology and equipment to deploy solutions that deliver safe, efficient and responsible energy production. By leveraging its core competencies, particularly in drilling, engineering, automation, data science and manufacturing, Nabors aims to innovate the future of energy and enable the transition to a lower-carbon world. Learn more about Nabors and its energy technology leadership: www.nabors.com.

Forward-looking Statements

The information included in this press release includes forward-looking statements within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934. Such forward-looking statements are subject to a number of risks and uncertainties, as disclosed by Nabors from time to time in its filings with the Securities and Exchange Commission. As a result of these factors, Nabors' actual results may differ materially from those indicated or implied by such forward-looking statements. The forward-looking statements contained in this press release reflect management's estimates and beliefs as of the date of this press release. Nabors does not undertake to update these forward-looking statements.

Non-GAAP Disclaimer

This press release presents certain "non-GAAP" financial measures. The components of these non-GAAP measures are computed by using amounts that are determined in accordance with accounting principles generally accepted in the United States of America ("GAAP"). Adjusted operating income (loss) represents income (loss) before income taxes, interest expense, investment income (loss), gain on disposition of Quail Tools, gain on bargain purchase, and other, net. Adjusted EBITDA is computed similarly, but also excludes depreciation and amortization expenses. In addition, adjusted EBITDA and adjusted operating income (loss) exclude certain cash expenses that the Company is obligated to make. Net debt is calculated as total debt minus the sum of cash, cash equivalents and short-term investments.

Adjusted free cash flow represents net cash provided by operating activities less cash used for capital expenditures, net of proceeds from sales of assets, and before cash paid for acquisition-related costs. Management believes that adjusted free cash flow is an important liquidity measure for the company and that it is useful to investors and management as a measure of the company's ability to generate cash flow, after reinvesting in the company for future growth, that could be available for paying down debt or other financing cash flows, such as dividends to shareholders. Adjusted free cash flow does not represent the residual cash flow available for discretionary expenditures. Adjusted free cash flow is a non-GAAP financial measure that should be considered in addition to, not as a substitute for or superior to, cash flow from operations reported in accordance with GAAP.

Each of these non-GAAP measures has limitations and therefore should not be used in isolation or as a substitute for the amounts reported in accordance with GAAP. However, management evaluates the performance of its operating segments and the consolidated Company based on several criteria, including Adjusted EBITDA, adjusted operating income (loss), net debt, and adjusted free cash flow, because it believes that these financial measures accurately reflect the Company's ongoing profitability, performance and liquidity. Securities analysts and investors also use these measures as some of the metrics on which they analyze the Company's performance. Other companies in this industry may compute these measures differently. Reconciliations of consolidated adjusted EBITDA and adjusted operating income (loss) to income (loss) from continuing operations before income taxes, net debt to total debt, and adjusted free cash flow to net cash provided by operations, which are their nearest comparable GAAP financial measures, are included in the tables at the end of this press release. We do not provide a forward-looking reconciliation of our outlook for Segment Adjusted EBITDA, Segment Gross Margin or Adjusted Free Cash Flow, as the amount and significance of items required to develop meaningful comparable GAAP financial measures cannot be estimated at this time without unreasonable efforts. These special items could be meaningful.

Investor Contacts: William C. Conroy, CFA, Vice President of Corporate Development & Investor Relations, +1 281-775-2423 or via e-mail william.conroy@nabors.com, or Kara K. Peak, Director of Corporate Development & Investor Relations, +1 281-775-4954 or via email kara.peak@nabors.com. To request investor materials, contact Nabors' corporate headquarters in Hamilton, Bermuda at +441-292-1510 or via e-mail mark.andrews@nabors.com

NABORS INDUSTRIES LTD. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS)

(Unaudited)

Three Months Ended

Nine Months Ended

September 30,

June 30,

September 30,

(In thousands, except per share amounts)

2025

2024

2025

2024

Revenues and other income:

Operating revenues

$ 818,190

$ 731,805

$ 832,788

$ 2,387,164

$ 2,200,307

Investment income (loss)

7,323

11,503

6,129

20,048

29,885

Total revenues and other income

825,513

743,308

838,917

2,407,212

2,230,192

Costs and other deductions:

Direct costs

491,828

431,705

488,881

1,428,009

1,309,007

General and administrative expenses

77,076

63,976

82,726

228,308

187,881

Research and engineering

12,978

14,404

12,722

39,735

42,629

Depreciation and amortization

160,347

159,234

175,061

490,046

477,060

Interest expense

54,334

55,350

56,081

164,741

157,222

Gain on disposition of Quail Tools

(415,557)

Gain on bargain purchase

(3,500)

(116,499)

Other, net

24,470

41,608

6,074

75,334

69,795

Total costs and other deductions

405,476

766,277

818,045

1,894,117

2,243,594

Income (loss) before income taxes

420,037

(22,969)

20,872

513,095

(13,402)

Income tax expense (benefit)

117,571

10,118

23,077

155,655

41,716

Net income (loss)

302,466

(33,087)

(2,205)

357,440

(55,118)

Less: Net (income) loss attributable to noncontrolling interest

(28,268)

(22,738)

(28,705)

(81,164)

(67,295)

Net income (loss) attributable to Nabors

$ 274,198

$ (55,825)

$ (30,910)

$ 276,276

$ (122,413)

Earnings (losses) per share:

Basic

$ 18.25

$ (6.86)

$ (2.71)

$ 18.99

$ (15.69)

Diluted

$ 16.85

$ (6.86)

$ (2.71)

$ 17.54

$ (15.69)

Weighted-average number of common shares outstanding:

Basic

14,098

9,213

14,083

12,880

9,199

Diluted

15,321

9,213

14,083

14,092

9,199

Adjusted EBITDA

$ 236,308

$ 221,720

$ 248,459

$ 691,112

$ 660,790

Adjusted operating income (loss)

$ 75,961

$ 62,486

$ 73,398

$ 201,066

$ 183,730

NABORS INDUSTRIES LTD. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

September 30,

June 30,

December 31,

(In thousands)

2025

2024

ASSETS

Current assets:

Cash and short-term investments

$ 428,079

$ 387,355

$ 397,299

Notes receivable

250,035

Accounts receivable, net

487,062

537,071

387,970

Other current assets

259,251

272,465

214,268

Total current assets

1,424,427

1,196,891

999,537

Property, plant and equipment, net

2,931,290

3,063,033

2,830,957

Other long-term assets

477,787

778,739

673,807

Total assets

$ 4,833,504

$ 5,038,663

$ 4,504,301

LIABILITIES AND EQUITY

Current liabilities:

Trade accounts payable

$ 352,415

$ 364,846

321,030

Other current liabilities

327,799

304,599

250,887

Total current liabilities

680,214

669,445

571,917

Long-term debt

2,347,984

2,672,820

2,505,217

Other long-term liabilities

237,136

249,728

220,829

Total liabilities

3,265,334

3,591,993

3,297,963

Redeemable noncontrolling interest in subsidiary

629,261

806,342

785,091

Equity:

Shareholders' equity

579,776

307,984

134,996

Noncontrolling interest

359,133

332,344

286,251

Total equity

938,909

640,328

421,247

Total liabilities and equity

$ 4,833,504

$ 5,038,663

$ 4,504,301

NABORS INDUSTRIES LTD. AND SUBSIDIARIES

SEGMENT REPORTING

(Unaudited)

The following tables set forth certain information with respect to our reportable segments and rig activity:

Three Months Ended

Nine Months Ended

September 30,

June 30,

September 30,

(In thousands, except rig activity)

2025

2024

2025

2024

Operating revenues:

U.S. Drilling

$ 249,836

$ 254,773

$ 255,438

$ 736,020

$ 786,485

International Drilling

407,235

368,594

384,970

1,173,923

1,074,686

Drilling Solutions

141,942

79,544

170,283

405,404

238,079

Rig Technologies (1)

35,597

45,809

36,527

116,289

145,511

Other reconciling items (2)

(16,420)

(16,915)

(14,430)

(44,472)

(44,454)

Total operating revenues

$ 818,190

$ 731,805

$ 832,788

$ 2,387,164

$ 2,200,307

Adjusted EBITDA: (3)

U.S. Drilling

$ 94,161

$ 108,660

$ 101,821

$ 288,693

$ 343,083

International Drilling

127,551

115,951

117,658

360,695

324,820

Drilling Solutions

60,666

34,311

76,501

178,020

98,566

Rig Technologies (1)

3,770

6,104

5,174

14,507

20,235

Other reconciling items (4)

(49,840)

(43,306)

(52,695)

(150,803)

(125,914)

Total adjusted EBITDA

$ 236,308

$ 221,720

$ 248,459

$ 691,112

$ 660,790

Adjusted operating income (loss): (5)

U.S. Drilling

$ 31,429

$ 41,694

$ 39,788

$ 102,816

$ 137,308

International Drilling

45,476

32,182

36,051

114,485

78,330

Drilling Solutions

49,982

29,231

50,365

133,260

83,443

Rig Technologies (1)

877

2,761

1,721

6,933

11,830

Other reconciling items (4)

(51,803)

(43,382)

(54,527)

(156,428)

(127,181)

Total adjusted operating income (loss)

$ 75,961

$ 62,486

$ 73,398

$ 201,066

$ 183,730

Rig activity:

Average Rigs Working: (7)

Lower 48

59.2

67.8

62.4

60.7

69.5

Other US

10.0

6.2

10.0

9.2

6.4

U.S. Drilling

69.2

74.0

72.4

69.9

75.9

International Drilling

89.2

84.7

85.9

86.7

83.4

Total average rigs working

158.4

158.7

158.3

156.6

159.3

Daily Rig Revenue: (6),(8)

Lower 48

$ 34,017

$ 34,812

$ 33,466

$ 34,002

$ 35,209

Other US

70,035

66,352

71,814

68,302

66,205

U.S. Drilling (10)

39,219

37,441

38,761

38,527

37,831

International Drilling

49,596

47,281

49,263

49,583

47,041

Daily Adjusted Gross Margin: (6),(9)

Lower 48

$ 13,151

$ 15,051

$ 13,902

$ 13,778

$ 15,561

Other US

31,527

37,363

32,073

31,408

37,058

U.S. Drilling (10)

15,805

16,911

16,411

16,104

17,379

International Drilling

17,931

17,085

17,534

17,635

16,407

(1)

Includes our oilfield equipment manufacturing activities.

(2)

Represents the elimination of inter-segment transactions related to our Rig Technologies operating segment.

(3)

Adjusted EBITDA represents net income (loss) before income tax expense (benefit), investment income (loss), interest expense, gain on disposition of Quail Tools, gain on bargain purchase, other, net and depreciation and amortization. Adjusted EBITDA is a non-GAAP financial measure and should not be used in isolation or as a substitute for the amounts reported in accordance with GAAP. In addition, adjusted EBITDA excludes certain cash expenses that the Company is obligated to make. However, management evaluates the performance of its operating segments and the consolidated Company based on several criteria, including adjusted EBITDA and adjusted operating income (loss), because it believes that these financial measures accurately reflect the Company's ongoing profitability and performance. Securities analysts and investors use this measure as one of the metrics on which they analyze the Company's performance. Other companies in this industry may compute these measures differently. A reconciliation of this non-GAAP measure to net income (loss), which is the most closely comparable GAAP measure, is provided in the table set forth immediately following the heading "Reconciliation of Non-GAAP Financial Measures to Net Income (Loss)".

(4)

Represents the elimination of inter-segment transactions and unallocated corporate expenses.

(5)

Adjusted operating income (loss) represents net income (loss) before income tax expense (benefit), investment income (loss), interest expense, gain on disposition of Quail Tools, gain on bargain purchase and other, net. Adjusted operating income (loss) is a non-GAAP financial measure and should not be used in isolation or as a substitute for the amounts reported in accordance with GAAP. In addition, adjusted operating income (loss) excludes certain cash expenses that the Company is obligated to make. However, management evaluates the performance of its operating segments and the consolidated Company based on several criteria, including adjusted EBITDA and adjusted operating income (loss), because it believes that these financial measures accurately reflect the Company's ongoing profitability and performance. Securities analysts and investors use this measure as one of the metrics on which they analyze the Company's performance. Other companies in this industry may compute these measures differently. A reconciliation of this non-GAAP measure to net income (loss), which is the most closely comparable GAAP measure, is provided in the table set forth immediately following the heading "Reconciliation of Non-GAAP Financial Measures to Net Income (Loss)".

(6)

Rig revenue days represents the number of days the Company's rigs are contracted and performing under a contract during the period. These would typically include days in which operating, standby and move revenue is earned.

(7)

Average rigs working represents a measure of the average number of rigs operating during a given period. For example, one rig operating 45 days during a quarter represents approximately 0.5 average rigs working for the quarter. On an annual period, one rig operating 182.5 days represents approximately 0.5 average rigs working for the year. Average rigs working can also be calculated as rig revenue days during the period divided by the number of calendar days in the period.

(8)

Daily rig revenue represents operating revenue, divided by the total number of revenue days during the quarter.

(9)

Daily adjusted gross margin represents operating revenue less direct costs, divided by the total number of rig revenue days during the quarter.

(10)

The U.S. Drilling segment includes the Lower 48, Alaska, and Gulf of Mexico operating areas.

NABORS INDUSTRIES LTD. AND SUBSIDIARIES

Reconciliation of Earnings per Share

(Unaudited)

Three Months Ended

Nine Months Ended

September 30,

June 30,

September 30,

(in thousands, except per share amounts)

2025

2024

2025

2024

BASIC EPS:

Net income (loss) (numerator):

Income (loss), net of tax

302,466

(33,087)

(2,205)

357,440

(55,118)

Less: net (income) loss attributable to noncontrolling interest

(28,268)

(22,738)

(28,705)

(81,164)

(67,295)

Less: deemed dividends to SPAC public shareholders

(750)

—

(750)

—

Less: distributed and undistributed earnings allocated to unvested shareholders

(8,828)

—

(9,106)

—

Less: accrued distribution on redeemable noncontrolling interest in subsidiary

(7,344)

(7,363)

(7,264)

(21,792)

(21,929)

Numerator for basic earnings per share:

Adjusted income (loss), net of tax - basic

257,276

(63,188)

(38,174)

244,628

(144,342)

Weighted-average number of shares outstanding - basic

14,098

9,213

14,083

12,880

9,199

Earnings (losses) per share:

Total Basic

18.25

(6.86)

(2.71)

18.99

(15.69)

DILUTED EPS:

Adjusted income (loss), net of tax - basic

257,276

(63,188)

(38,174)

244,628

(144,342)

Add: after tax interest expense of convertible notes

848

—

2,544

—

Add: effect of reallocating undistributed earnings of unvested shareholders

—

Adjusted income (loss), net of tax - diluted

258,152

(63,188)

(38,174)

247,196

(144,342)

Weighted-average number of shares outstanding - basic

14,098

9,213

14,083

12,880

9,199

Add: if converted dilutive effect of convertible notes

1,176

—

1,176

—

Add: dilutive effect of potential common shares

—

Weighted-average number of shares outstanding - diluted

15,321

9,213

14,083

14,092

9,199

Earnings (losses) per share:

Total Diluted

16.85

(6.86)

(2.71)

17.54

(15.69)

NABORS INDUSTRIES LTD. AND SUBSIDIARIES

NON-GAAP FINANCIAL MEASURES

RECONCILIATION OF ADJUSTED EBITDA BY SEGMENT TO ADJUSTED OPERATING INCOME (LOSS) BY SEGMENT

(Unaudited)

(In thousands)

Three Months Ended September 30, 2025

U.S.

Drilling

International

Drilling

Solutions

Rig

Technologies

Other

reconciling

items

Total

Adjusted operating income (loss)

$ 31,429

$ 45,476

$ 49,982

$ 877

$ (51,803)

$ 75,961

Depreciation and amortization

62,732

82,075

10,684

2,893

1,963

160,347

Adjusted EBITDA

$ 94,161

$ 127,551

$ 60,666

$ 3,770

$ (49,840)

$ 236,308

Three Months Ended September 30, 2024

U.S.

Drilling

International

Drilling

Solutions

Rig

Technologies

Other

reconciling

items

Total

Adjusted operating income (loss)

$ 41,694

$ 32,182

$ 29,231

$ 2,761

$ (43,382)

$ 62,486

Depreciation and amortization

66,966

83,769

5,080

3,343

159,234

Adjusted EBITDA

$ 108,660

$ 115,951

$ 34,311

$ 6,104

$ (43,306)

$ 221,720

Three Months Ended June 30, 2025

U.S.

Drilling

International

Drilling

Solutions

Rig

Technologies

Other

reconciling

items

Total

Adjusted operating income (loss)

$ 39,788

$ 36,051

$ 50,365

$ 1,721

$ (54,527)

$ 73,398

Depreciation and amortization

62,033

81,607

26,136

3,453

1,832

175,061

Adjusted EBITDA

$ 101,821

$ 117,658

$ 76,501

$ 5,174

$ (52,695)

$ 248,459

Nine Months Ended September 30, 2025

U.S.

Drilling

International

Drilling

Solutions

Rig

Technologies

Other

reconciling

items

Total

Adjusted operating income (loss)

$ 102,816

$ 114,485

$ 133,260

$ 6,933

$ (156,428)

$ 201,066

Depreciation and amortization

185,877

246,210

44,760

7,574

5,625

490,046

Adjusted EBITDA

$ 288,693

$ 360,695

$ 178,020

$ 14,507

$ (150,803)

$ 691,112

Nine Months Ended September 30, 2024

U.S.

Drilling

International

Drilling

Solutions

Rig

Technologies

Other

reconciling

items

Total

Adjusted operating income (loss)

$ 137,308

$ 78,330

$ 83,443

$ 11,830

$ (127,181)

$ 183,730

Depreciation and amortization

205,775

246,490

15,123

8,405

1,267

477,060

Adjusted EBITDA

$ 343,083

$ 324,820

$ 98,566

$ 20,235

$ (125,914)

$ 660,790

NABORS INDUSTRIES LTD. AND SUBSIDIARIES

NON-GAAP FINANCIAL MEASURES

RECONCILIATION OF ADJUSTED GROSS MARGIN BY SEGMENT TO ADJUSTED OPERATING INCOME (LOSS) BY SEGMENT

(Unaudited)

Three Months Ended

Nine Months Ended

September 30,

June 30,

September 30,

(In thousands)

2025

2024

2025

2024

Lower 48 - U.S. Drilling

Adjusted operating income (loss)

$ 13,689

$ 30,353

$ 21,515

$ 54,199

$ 102,458

Plus: General and administrative costs

4,745

5,084

4,481

14,043

14,297

Plus: Research and engineering

1,121

972

888

2,832

2,845

GAAP Gross Margin

19,555

36,409

26,884

71,074

119,600

Plus: Depreciation and amortization

52,120

57,470

52,080

157,425

176,535

Adjusted gross margin

$ 71,675

$ 93,879

$ 78,964

$ 228,499

$ 296,135

Other - U.S. Drilling

Adjusted operating income (loss)

$ 17,740

$ 11,341

$ 18,273

$ 48,617

$ 34,850

Plus: General and administrative costs

568

313

896

1,869

944

Plus: Research and engineering

211

134

GAAP Gross Margin

18,393

11,696

19,233

50,697

35,928

Plus: Depreciation and amortization

10,612

9,496

9,953

28,452

29,240

Adjusted gross margin

$ 29,005

$ 21,192

$ 29,186

$ 79,149

$ 65,168

U.S. Drilling

Adjusted operating income (loss)

$ 31,429

$ 41,694

$ 39,788

$ 102,816

$ 137,308

Plus: General and administrative costs

5,313

5,397

5,377

15,912

15,241

Plus: Research and engineering

1,206

1,014

952

3,043

2,979

GAAP Gross Margin

37,948

48,105

46,117

121,771

155,528

Plus: Depreciation and amortization

62,732

66,966

62,033

185,877

205,775

Adjusted gross margin

$ 100,680

$ 115,071

$ 108,150

$ 307,648

$ 361,303

International Drilling

Adjusted operating income (loss)

$ 45,476

$ 32,182

$ 36,051

$ 114,485

$ 78,330

Plus: General and administrative costs

18,015

15,699

17,867

52,260

45,548

Plus: Research and engineering

1,665

1,543

1,499

4,578

4,454

GAAP Gross Margin

65,156

49,424

55,417

171,323

128,332

Plus: Depreciation and amortization

82,075

83,768

81,607

246,210

246,491

Adjusted gross margin

$ 147,231

$ 133,192

$ 137,024

$ 417,533

$ 374,823

Adjusted gross margin by segment represents adjusted operating income (loss) plus general and administrative

costs, research and engineering costs and depreciation and amortization.

NABORS INDUSTRIES LTD. AND SUBSIDIARIES

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO NET INCOME (LOSS)

(Unaudited)

Three Months Ended

Nine Months Ended

September 30,

June 30,

September 30,

(In thousands)

2025

2024

2025

2024

Net income (loss)

$ 302,466

$ (33,087)

$ (2,205)

$ 357,440

$ (55,118)

Income tax expense (benefit)

117,571

10,118

23,077

155,655

41,716

Income (loss) before income taxes

420,037

(22,969)

20,872

513,095

(13,402)

Investment (income) loss

(7,323)

(11,503)

(6,129)

(20,048)

(29,885)

Interest expense

54,334

55,350

56,081

164,741

157,222

Gain on disposition of Quail Tools

(415,557)

Gain on bargain purchase

(3,500)

(116,499)

Other, net

24,470

41,608

6,074

75,334

69,795

Adjusted operating income (loss) (1)

75,961

62,486

73,398

201,066

183,730

Depreciation and amortization

160,347

159,234

175,061

490,046

477,060

Adjusted EBITDA (2)

$ 236,308

$ 221,720

$ 248,459

$ 691,112

$ 660,790

(1) Adjusted operating income (loss) represents net income (loss) before income tax expense (benefit), investment income (loss), interest expense, gain on disposition of Quail Tools, gain on bargain purchase and other, net. Adjusted operating income (loss) is a non-GAAP financial measure and should not be used in isolation or as a substitute for the amounts reported in accordance with GAAP. In addition, adjusted operating income (loss) excludes certain cash expenses that the Company is obligated to make. However, management evaluates the performance of its operating segments and the consolidated Company based on several criteria, including adjusted EBITDA and adjusted operating income (loss), because it believes that these financial measures accurately reflect the Company's ongoing profitability and performance. Securities analysts and investors use this measure as one of the metrics on which they analyze the Company's performance. Other companies in this industry may compute these measures differently.

(2) Adjusted EBITDA represents net income (loss) before income tax expense (benefit), investment income (loss), interest expense, gain on disposition of Quail Tools, gain on bargain purchase, other, net and depreciation and amortization. Adjusted EBITDA is a non-GAAP financial measure and should not be used in isolation or as a substitute for the amounts reported in accordance with GAAP. In addition, adjusted EBITDA excludes certain cash expenses that the Company is obligated to make. However, management evaluates the performance of its operating segments and the consolidated Company based on several criteria, including adjusted EBITDA and adjusted operating income (loss), because it believes that these financial measures accurately reflect the Company's ongoing profitability and performance. Securities analysts and investors use this measure as one of the metrics on which they analyze the Company's performance. Other companies in this industry may compute these measures differently.

NABORS INDUSTRIES LTD. AND SUBSIDIARIES

RECONCILIATION OF NET DEBT TO TOTAL DEBT

(Unaudited)

September 30,

June 30,

December 31,

(In thousands)

2025

2024

Long-term debt

$ 2,347,984

$ 2,672,820

$ 2,505,217

Less: Cash and short-term investments

428,079

387,355

397,299

Net Debt

$ 1,919,905

$ 2,285,465

$ 2,107,918

NABORS INDUSTRIES LTD. AND SUBSIDIARIES

RECONCILIATION OF ADJUSTED FREE CASH FLOW TO

NET CASH PROVIDED BY OPERATING ACTIVITIES

(Unaudited)

Three Months Ended

Nine Months Ended

September 30,

June 30,

September 30,

(In thousands)

2025

Net cash provided by operating activities

$ 207,880

$ 151,810

$ 447,425

Add: Capital expenditures, net of proceeds from sales of assets

(202,267)

(141,849)

(503,277)

Free cash flow

$ 5,613

$ 9,961

$ (55,852)

Cash paid for acquisition related costs (1)

30,635

40,816

Adjusted free cash flow

$ 5,613

$ 40,596

$ (15,036)

(1) Cash paid related to the Parker Drilling acquisition

Adjusted free cash flow represents net cash provided by operating activities less cash used for capital expenditures, net of proceeds from sales of assets, and before cash paid for acquisition related costs. Management believes that adjusted free cash flow is an important liquidity measure for the company and that it is useful to investors and management as a measure of the company's ability to generate cash flow, after reinvesting in the company for future growth, that could be available for paying down debt or other financing cash flows, such as dividends to shareholders. Adjusted free cash flow does not represent the residual cash flow available for discretionary expenditures. Adjusted free cash flow is a non-GAAP financial measure that should be considered in addition to, not as a substitute for or superior to, cash flow from operations reported in accordance with GAAP.

SOURCE Nabors Industries Ltd.