Momentum Accelerates. Cash Flow Improves. Nabors 2Q 2026 Results

HAMILTON, Bermuda, July 28, 2026 /PRNewswire/ -- Nabors Industries Ltd. ("Nabors" or the "Company") (NYSE: NBR) today reported second quarter 2026 operating revenues of $815 million, an increase of approximately 4% from the first quarter. Net loss attributable to Nabors' shareholders for the quarter was $22 million. Adjusted EBITDA for the second quarter was $222 million.

Nabors' second quarter results reflected continued momentum across the international drilling franchise, strengthening Lower 48 activity, and higher free cash flow, supported by disciplined capital allocation and expanding technology adoption.

Selected Financial Information

(In millions, except rig activity)

Three Months Ended

June 30,

March 31,

June 30,

2026

2025

Operating revenues

$ 814.8

$ 783.5

$ 832.8

Adjusted EBITDA

$ 221.7

$ 204.8

$ 248.5

Adjusted operating income

$ 61.1

$ 48.6

$ 73.4

Adjusted free cash flow

$ 12.3

$ (48.2)

$ 40.6

Average rigs working:

Lower 48

67.8

65.3

62.4

International Drilling

93.4

92.6

85.9

Average total rigs working

171.2

167.9

158.3

The quarter ended June 30, 2025 includes revenue of $63 million, EBITDA of $37 million, and operating income of $26 million from Quail Tools, which was sold in August 2025.

2Q 2026 Highlights

Anthony G. Petrello, Nabors Chairman, CEO and President, commented, "Second quarter results reflected another quarter of solid operational and financial progress. All our operating segments exceeded the targets we set.

"In the Lower 48 market, Nabors' average rig count grew and we exceeded the expected exit rate. At the same time, daily gross margin outperformed our guidance. We also gained market share and extended the duration of our contract backlog. Our strategy continues to align us with customers that prioritize high-specification rigs, integrated technology and consistent operating execution in increasingly complex drilling environments.

"In our International Drilling segment, we maintained reliable operations across the Gulf markets in the Middle East. In Saudi Arabia our SANAD joint venture added two rigs, including a previously suspended rig that returned to service. Daily gross margin improved through greater operating efficiency in several geographies and additional SANAD deployments.

"Drilling Solutions' Lower 48 business delivered double-digit sequential revenue growth in the second quarter, with contributions on Nabors rigs as well as third-party rigs. Performance Software, RigCLOUD ®, and Managed Pressure Drilling led this growth."

Segment Results

International Drilling adjusted EBITDA was $131 million in the second quarter, compared to $121 million in the first quarter. Daily adjusted gross margin for the second quarter increased by more than $650 from the first quarter, to $17,534. This increase reflects stronger execution, and contributions from SANAD newbuild deployments.

The U.S. Drilling segment reported second quarter adjusted EBITDA of $94 million, compared to $88 million in the previous quarter. Lower 48 results improved as daily margin expanded 5% and the working fleet grew 4%. As expected, results from Offshore and Alaska operations declined sequentially.

Drilling Solutions adjusted EBITDA was $40 million, compared to $39 million in the first quarter. Growth in the Lower 48 market was partially offset by slightly lower international activity, mainly attributable to Surface & Tubular.

Rig Technologies adjusted EBITDA increased to $3 million, compared to $1 million in the previous quarter. Aftermarket revenue accelerated sequentially, reflecting higher customer activity. Capital Equipment revenue also improved as deliveries increased.

Adjusted Free Cash Flow

Consolidated adjusted free cash flow was $12 million in the second quarter. Adjusted free cash flow improved $60 million sequentially, reflecting higher profitability, lower cash interest payments, and seasonal working-capital movements.

Miguel Rodriguez, Nabors CFO, stated, "In the second quarter we delivered free cash flow slightly higher than our expectations. Capital spending for SANAD's newbuild program was lower than forecast, as the timing of a few construction milestones was delayed. Outside SANAD, working capital consumed more cash than expected, impacting free cash flow.

"Our full-year outlook for rig count in the Lower 48 has once again increased. We now expect to exit the third quarter with approximately 74 rigs running and to expand slightly from that level through the remainder of the year. Our revised full-year consolidated capital spending now totals $710 to $730 million, a $25 million reduction at the midpoint of our previous range. For the SANAD newbuild program, capital spending is expected to be in the range of $325 to $335 million. Previously the range was $360 to $380 million.

"We now expect full-year adjusted EBITDA of $920 to $930 million and full-year adjusted free cash flow of $20 to $30 million. This outlook includes expected free cash flow consumption at SANAD of $60 to $80 million. Our priority remains reducing debt and further strengthening the balance sheet while supporting profitable growth, which we believe positions Nabors to enhance long-term shareholder value."

Outlook

Nabors expects the following metrics for the third quarter of 2026:

U.S. Drilling

International

Drilling Solutions

Rig Technologies

Capital Expenditures

Adjusted Free Cash Flow

Mr. Petrello concluded, "Our performance through the first half of the year has exceeded our expectations. As we look forward, we anticipate second-half adjusted EBITDA to reach an annualized run-rate of $1 billion. Contracted rig additions across our drilling businesses provide strong visibility into that outlook. At the same time, prudent capital allocation should support free cash flow expansion and further strengthening of the balance sheet."

About Nabors Industries

Nabors Industries (NYSE: NBR) is a leading provider of advanced technology for the energy industry. With operations in approximately 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 bargain purchase, and other, net. Adjusted EBITDA is computed similarly, but also excludes depreciation and amortization expenses. Adjusted gross margin represents adjusted operating income (loss) plus general and administrative costs, research and engineering costs and depreciation and amortization. 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) 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 email [email protected], or Kara Peak, Director of Corporate Development & Investor Relations, +1 281-775-4954 or via email [email protected]. To request investor materials, contact Nabors' corporate headquarters in Hamilton, Bermuda at +441-292-1510 or via email [email protected]

NABORS INDUSTRIES LTD. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS)

(Unaudited)

Three Months Ended

Six Months Ended

June 30,

March 31,

June 30,

(In thousands, except per share amounts)

2026

2025

2026

2025

Revenues and other income:

Operating revenues

$ 814,795

$ 832,788

$ 783,548

$ 1,598,343

$ 1,568,974

Investment income (loss)

2,131

6,129

2,887

5,018

12,725

Total revenues and other income

816,926

838,917

786,435

1,603,361

1,581,699

Costs and other deductions:

Direct costs

507,551

488,881

493,469

1,001,020

936,181

General and administrative expenses

71,375

82,726

71,760

143,135

151,232

Research and engineering

14,209

12,722

13,506

27,715

26,757

Depreciation and amortization

160,549

175,061

156,186

316,735

329,699

Interest expense

42,678

56,081

43,761

86,439

110,407

Gain on bargain purchase

(3,500)

(116,499)

Other, net

5,682

6,074

(13,393)

(7,711)

50,864

Total costs and other deductions

802,044

818,045

765,289

1,567,333

1,488,641

Income (loss) before income taxes

14,882

20,872

21,146

36,028

93,058

Income tax expense (benefit)

16,405

23,077

16,884

33,289

38,084

Net income (loss)

(1,523)

(2,205)

4,262

2,739

54,974

Less: Net (income) loss attributable to noncontrolling interest

(20,807)

(28,705)

(19,428)

(40,235)

(52,896)

Net income (loss) attributable to Nabors

$ (22,330)

$ (30,910)

$ (15,166)

$ (37,496)

$ 2,078

Earnings (losses) per share:

Basic

$ (2.04)

$ (2.71)

$ (1.54)

$ (3.58)

$ (1.01)

Diluted

$ (2.04)

$ (2.71)

$ (1.54)

$ (3.58)

$ (1.01)

Weighted-average number of common shares outstanding:

Basic

14,273

14,083

14,213

14,243

12,271

Diluted

14,273

14,083

14,213

14,243

12,271

Adjusted EBITDA

$ 221,660

$ 248,459

$ 204,813

$ 426,473

$ 454,804

Adjusted operating income (loss)

$ 61,111

$ 73,398

$ 48,627

$ 109,738

$ 125,105

NABORS INDUSTRIES LTD. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

June 30,

March 31,

December 31,

(In thousands)

2026

2025

ASSETS

Current assets:

Cash and short-term investments

$ 509,833

$ 500,853

$ 940,738

Accounts receivable, net

443,417

417,717

391,705

Other current assets

243,929

234,031

219,130

Total current assets

1,197,179

1,152,601

1,551,573

Property, plant and equipment, net

2,908,061

2,914,886

2,920,019

Other long-term assets

314,705

318,149

318,065

Total assets

$ 4,419,945

$ 4,385,636

$ 4,789,657

LIABILITIES AND EQUITY

Current liabilities:

Current debt

$ -

$ 377,492

Trade accounts payable

365,472

322,837

300,467

Other current liabilities

268,167

262,378

315,042

Total current liabilities

633,639

585,215

993,001

Long-term debt

2,120,276

2,118,729

2,117,187

Other long-term liabilities

224,152

240,163

241,826

Total liabilities

2,978,067

2,944,107

3,352,014

Redeemable noncontrolling interest in subsidiary

495,886

489,129

482,446

Equity:

Shareholders' equity

544,128

568,942

590,727

Noncontrolling interest

401,864

383,458

364,470

Total equity

945,992

952,400

955,197

Total liabilities and equity

$ 4,419,945

$ 4,385,636

$ 4,789,657

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

Six Months Ended

June 30,

March 31,

June 30,

(In thousands, except rig activity)

2026

2025

2026

2025

Operating revenues:

U.S. Drilling

$ 252,459

$ 255,438

$ 241,144

$ 493,603

$ 486,184

International Drilling

432,497

384,970

419,496

851,993

766,688

Drilling Solutions

110,640

170,283

106,222

216,862

263,462

Rig Technologies (1)

37,485

36,527

27,222

64,707

80,692

Other reconciling items (2)

(18,286)

(14,430)

(10,536)

(28,822)

(28,052)

Total operating revenues

$ 814,795

$ 832,788

$ 783,548

$ 1,598,343

$ 1,568,974

Adjusted EBITDA: (3)

U.S. Drilling

$ 94,081

$ 101,821

$ 88,065

$ 182,146

$ 194,532

International Drilling

130,533

117,658

121,281

251,814

233,144

Drilling Solutions

40,013

76,501

38,662

78,675

117,354

Rig Technologies (1)

3,180

5,174

505

3,685

10,737

Other reconciling items (4)

(46,147)

(52,695)

(43,700)

(89,847)

(100,963)

Total adjusted EBITDA

$ 221,660

$ 248,459

$ 204,813

$ 426,473

$ 454,804

Adjusted operating income (loss): (5)

U.S. Drilling

$ 30,961

$ 39,788

$ 24,624

$ 55,585

$ 71,387

International Drilling

45,860

36,051

40,757

86,617

69,009

Drilling Solutions

32,125

50,365

31,872

63,997

83,278

Rig Technologies (1)

1,497

1,721

(1,888)

(391)

6,056

Other reconciling items (4)

(49,332)

(54,527)

(46,738)

(96,070)

(104,625)

Total adjusted operating income (loss)

$ 61,111

$ 73,398

$ 48,627

$ 109,738

$ 125,105

Rig activity:

Average Rigs Working: (7)

Lower 48

67.8

62.4

65.3

66.5

61.5

Other US

10.0

8.8

U.S. Drilling

77.8

72.4

75.3

76.5

70.3

International Drilling

93.4

85.9

92.6

93.0

85.4

Total average rigs working

171.2

158.3

167.9

169.5

155.7

Daily Rig Revenue: (6),(8)

Lower 48

$ 33,555

$ 33,466

$ 32,653

$ 33,115

$ 33,995

Other US

50,073

71,814

54,646

52,346

67,306

U.S. Drilling (10)

35,680

38,761

35,573

35,627

38,180

International Drilling

50,860

49,263

50,351

50,608

49,575

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

Lower 48

$ 13,784

$ 13,902

$ 13,177

$ 13,488

$ 14,085

Other US

17,318

32,073

19,559

18,432

31,340

U.S. Drilling (10)

14,238

16,411

14,024

14,134

16,253

International Drilling

17,534

16,880

17,211

17,478

(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 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 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

Six Months Ended

June 30,

March 31,

June 30,

(in thousands, except per share amounts)

2026

2025

2026

2025

BASIC EPS:

Net income (loss) (numerator):

Income (loss), net of tax

(1,523)

(2,205)

4,262

2,739

54,974

Less: net (income) loss attributable to noncontrolling

interest

(20,807)

(28,705)

(19,428)

(40,235)

(52,896)

Less: accrued distribution on redeemable

noncontrolling interest in subsidiary

(6,757)

(7,264)

(6,683)

(13,440)

(14,448)

Numerator for basic earnings per share:

Adjusted income (loss), net of tax - basic

(29,087)

(38,174)

(21,849)

(50,936)

(12,370)

Weighted-average number of shares outstanding -

basic

14,273

14,083

14,213

14,243

12,271

Earnings (losses) per share:

Total Basic

(2.04)

(2.71)

(1.54)

(3.58)

(1.01)

DILUTED EPS:

Adjusted income (loss), net of tax - diluted

(29,087)

(38,174)

(21,849)

(50,936)

(12,370)

Weighted-average number of shares outstanding -

diluted

14,273

14,083

14,213

14,243

12,271

Earnings (losses) per share:

Total Diluted

(2.04)

(2.71)

(1.54)

(3.58)

(1.01)

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 June 30, 2026

U.S.

Drilling

International

Drilling

Solutions

Rig

Technologies

Other

reconciling

items

Total

Adjusted operating income (loss)

$ 30,961

$ 45,860

$ 32,125

$ 1,497

$ (49,332)

$ 61,111

Depreciation and amortization

63,120

84,673

7,888

1,683

3,185

160,549

Adjusted EBITDA

$ 94,081

$ 130,533

$ 40,013

$ 3,180

$ (46,147)

$ 221,660

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

Three Months Ended March 31, 2026

U.S.

Drilling

International

Drilling

Solutions

Rig

Technologies

Other

reconciling

items

Total

Adjusted operating income (loss)

$ 24,624

$ 40,757

$ 31,872

$ (1,888)

$ (46,738)

$ 48,627

Depreciation and amortization

63,441

80,524

6,790

2,393

3,038

156,186

Adjusted EBITDA

$ 88,065

$ 121,281

$ 38,662

$ 505

$ (43,700)

$ 204,813

Six Months Ended June 30, 2026

U.S.

Drilling

International

Drilling

Solutions

Rig

Technologies

Other

reconciling

items

Total

Adjusted operating income (loss)

$ 55,585

$ 86,617

$ 63,997

$ (391)

$ (96,070)

$ 109,738

Depreciation and amortization

126,561

165,197

14,678

4,076

6,223

316,735

Adjusted EBITDA

$ 182,146

$ 251,814

$ 78,675

$ 3,685

$ (89,847)

$ 426,473

Six Months Ended June 30, 2025

U.S.

Drilling

International

Drilling

Solutions

Rig

Technologies

Other

reconciling

items

Total

Adjusted operating income (loss)

$ 71,387

$ 69,009

$ 83,278

$ 6,056

$ (104,625)

$ 125,105

Depreciation and amortization

123,145

164,135

34,076

4,681

3,662

329,699

Adjusted EBITDA

$ 194,532

$ 233,144

$ 117,354

$ 10,737

$ (100,963)

$ 454,804

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

Six Months Ended

June 30,

March 31,

June 30,

(In thousands)

2026

2025

2026

2025

Lower 48 - U.S. Drilling

Adjusted operating income (loss)

$ 24,722

$ 21,515

$ 17,405

$ 42,127

$ 40,510

Plus: General and administrative costs

4,974

4,481

5,324

10,298

9,298

Plus: Research and engineering

1,198

888

1,143

2,341

1,711

GAAP Gross Margin

30,894

26,884

23,872

54,766

51,519

Plus: Depreciation and amortization

54,093

52,080

53,595

107,688

105,305

Adjusted gross margin

$ 84,987

$ 78,964

$ 77,467

$ 162,454

$ 156,824

Other - U.S. Drilling

Adjusted operating income (loss)

$ 6,239

$ 18,273

$ 7,219

$ 13,458

$ 30,877

Plus: General and administrative costs

407

896

458

865

1,301

Plus: Research and engineering

166

126

GAAP Gross Margin

6,732

19,233

7,757

14,489

32,304

Plus: Depreciation and amortization

9,027

9,953

9,846

18,873

17,840

Adjusted gross margin

$ 15,759

$ 29,186

$ 17,603

$ 33,362

$ 50,144

U.S. Drilling

Adjusted operating income (loss)

$ 30,961

$ 39,788

$ 24,624

$ 55,585

$ 71,387

Plus: General and administrative costs

5,381

5,377

5,782

11,163

10,599

Plus: Research and engineering

1,284

952

1,223

2,507

1,837

GAAP Gross Margin

37,626

46,117

31,629

69,255

83,823

Plus: Depreciation and amortization

63,120

62,033

63,441

126,561

123,145

Adjusted gross margin

$ 100,746

$ 108,150

$ 95,070

$ 195,816

$ 206,968

International Drilling

Adjusted operating income (loss)

$ 45,860

$ 36,051

$ 40,757

$ 86,617

$ 69,009

Plus: General and administrative costs

16,748

17,867

17,609

34,357

34,245

Plus: Research and engineering

1,826

1,499

1,749

3,575

2,913

GAAP Gross Margin

64,434

55,417

60,115

124,549

106,167

Plus: Depreciation and amortization

84,673

81,607

80,524

165,197

164,135

Adjusted gross margin

$ 149,107

$ 137,024

$ 140,639

$ 289,746

$ 270,302

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

Six Months Ended

June 30,

March 31,

June 30,

(In thousands)

2026

2025

2026

2025

Net income (loss)

$ (1,523)

$ (2,205)

$ 4,262

$ 2,739

$ 54,974

Income tax expense (benefit)

16,405

23,077

16,884

33,289

38,084

Income (loss) before income taxes

14,882

20,872

21,146

36,028

93,058

Investment (income) loss

(2,131)

(6,129)

(2,887)

(5,018)

(12,725)

Interest expense

42,678

56,081

43,761

86,439

110,407

Gain on bargain purchase

(3,500)

(116,499)

Other, net

5,682

6,074

(13,393)

(7,711)

50,864

Adjusted operating income (loss) (1)

61,111

73,398

48,627

109,738

125,105

Depreciation and amortization

160,549

175,061

156,186

316,735

329,699

Adjusted EBITDA (2)

$ 221,660

$ 248,459

$ 204,813

$ 426,473

$ 454,804

(1) Adjusted operating income (loss) represents net income (loss) before income tax expense (benefit), investment income (loss), interest expense, 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 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)

June 30,

March 31,

December 31,

(In thousands)

2026

2025

Current debt

$ -

$ 377,492

Long-term debt

2,120,276

2,118,729

2,117,187

Total Debt

2,120,276

2,118,729

2,494,679

Less: Cash and short-term investments

509,833

500,853

940,738

Net Debt

$ 1,610,443

$ 1,617,876

$ 1,553,941

NABORS INDUSTRIES LTD. AND SUBSIDIARIES

RECONCILIATION OF ADJUSTED FREE CASH FLOW TO

NET CASH PROVIDED BY OPERATING ACTIVITIES

(Unaudited)

Three Months Ended

Six Months Ended

June 30,

March 31,

June 30,

(In thousands)

2026

2025

2026

2025

Net cash provided by operating activities

$ 135,242

$ 151,810

$ 113,339

$ 248,581

$ 239,545

Add: Capital expenditures, net of proceeds from sales

of assets

(122,900)

(141,849)

(161,558)

(284,458)

(301,010)

Free cash flow

$ 12,342

$ 9,961

$ (48,219)

$ (35,877)

$ (61,465)

Cash paid for acquisition related costs (1)

30,635

40,816

Adjusted free cash flow

$ 12,342

$ 40,596

$ (48,219)

$ (35,877)

$ (20,649)

(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.

NABORS INDUSTRIES LTD. AND SUBSIDIARIES

NON-GAAP FINANCIAL MEASURES

RECONCILIATION OF QUAIL TOOLS FINANCIAL MEASURES

(Unaudited)

Three months

ended

June 30,

(In thousands)

2025

Drilling Solutions operating revenues

$ 170,283

Less: remaining Drilling Solutions business

(107,701)

Quail Tools operating revenues

$ 62,582

Drilling Solutions adjusted operating income (loss)

$ 50,365

Less: remaining Drilling Solutions business

(24,075)

Quail Tools adjusted operating income (loss)

$ 26,290

Quail Tools depreciation and amortization

10,722

Quail Tools adjusted EBITDA

$ 37,012

SOURCE Nabors Industries Ltd.