Record International Drilling Margin. $75 Million in Adjusted Free Cash Flow

HAMILTON, Bermuda, Oct. 27, 2026 /PRNewswire/ -- Nabors Industries Ltd. ("Nabors" or the "Company") (NYSE: NBR) today reported third quarter 2026 operating revenues of $872 million, up 7% sequentially. Net loss attributable to Nabors' shareholders was $11 million. Adjusted EBITDA was $246 million, up nearly 11% from the second quarter.

Record International Drilling daily adjusted gross margin, a larger Lower 48 working fleet, and growth in Drilling Solutions drove the sequential improvement. Higher profitability, lower capital spending and improved working capital contributed to $75 million in adjusted free cash flow.

Selected Financial Information

(In millions, except rig activity)

Three Months Ended

September 30,

June 30,

September 30,

2026

2026

2025

Operating revenues

$ 872.2

$ 814.8

$ 818.2

Adjusted EBITDA

$ 245.5

$ 221.7

$ 236.3

Adjusted operating income

$ 85.8

$ 61.1

$ 76.0

Adjusted free cash flow

$ 74.5

$ 12.3

$ 5.6

Average rigs working:

Lower 48

72.8

67.8

59.2

International Drilling

94.9

93.4

89.2

Average total rigs working

177.1

171.2

158.4

The quarter ended September 30, 2025 includes revenue of $34 million, EBITDA of $20 million, and operating income of $14 million from Quail Tools, which was sold in August 2025.

3Q 2026 Highlights

• International Drilling daily adjusted gross margin reached a record $19,060, up $1,526, or 8.7%, sequentially. Strong field performance across multiple countries and high-margin rig deployments drove the increase.
• The SANAD land drilling joint venture successfully deployed its 17th newbuild rig in Saudi Arabia. One additional newbuild is scheduled for deployment in 2026 and two in the first quarter of 2027, bringing the total newbuild fleet to 20.
• Nabors signed a multiyear contract to deploy one rig in Venezuela in early 2027. The deployment will mark Nabors' return to drilling operations in the country.
• Nabors rigs helped two Lower 48 operators achieve new drilling records. A PACE®-B rig in North Dakota achieved an impressive drilling performance of more than 27,600 feet in 148 hours, with an average rate of penetration of nearly 187 feet per hour. A PACE®-X rig in South Texas achieved a record performance by drilling an 18,500-foot well in under six days, averaging more than 3,200 feet per day. The operator recorded its fastest drilling performance in the basin to date.
• Canrig secured commitments for four additional RZR™ rig floor automation modules, which will bring the total deployed to six. Strong client interest supports the outlook for additional awards.

Anthony G. Petrello, Nabors Chairman, CEO and President, commented, "We delivered higher earnings and $75 million in adjusted free cash flow. Each of our four reporting segments met or exceeded its targets.

"International Drilling achieved a record daily adjusted gross margin. Strong field performance and new rig deployments with attractive economics drove the increase. We expect further margin improvement in the fourth quarter, despite a lower SANAD rig count following the suspension of five rigs.

"Our Lower 48 rig count grew as expected, and daily adjusted gross margin again exceeded guidance. We remain constructive on this market. Advanced drilling technology and reliable field delivery position us to continue increasing both rig count and daily margin.

"Drilling Solutions' business delivered double-digit sequential adjusted EBITDA growth. Greater adoption of our Performance Software and Downhole Services on Nabors rigs in the Lower 48 drove the gains. International growth in Surface and Tubular services also contributed to the segment's improvement."

Segment Results

International Drilling adjusted EBITDA increased to $146 million from $131 million in the second quarter. Daily adjusted gross margin rose by more than $1,500 to $19,060, reflecting strong field performance and contributions from the recently deployed rig in Argentina and the SANAD newbuild.

U.S. Drilling adjusted EBITDA increased to $99 million from $94 million in the second quarter. A 7% increase in the average Lower 48 working fleet and higher daily adjusted gross margin drove the improvement.

Drilling Solutions adjusted EBITDA increased to $44 million from $40 million in the second quarter, driven primarily by growth on Nabors rigs in the Lower 48 and growth in international markets.

Rig Technologies adjusted EBITDA increased to $5 million from $3 million in the second quarter. Both aftermarket revenue and capital equipment sales increased sequentially.

Adjusted Free Cash Flow

Consolidated adjusted free cash flow was $75 million, up $62 million sequentially. Higher profitability, lower capital spending at SANAD and across the rest of Nabors, together with lower working capital drove the improvement, partially offset by higher cash interest payments.

Miguel Rodriguez, Nabors CFO, stated, "Third quarter adjusted free cash flow exceeded our expectations. SANAD newbuild spending was below forecast as certain construction milestones shifted to later periods. Outside SANAD, controlled capital spending and improved working capital supported the cash generation.

"We anticipate delivering full-year 2026 adjusted EBITDA of approximately $930 million, reaching the upper end of our prior guidance. This outlook reflects the strength of the business, including the impact of rig suspensions in Saudi Arabia. We now expect full-year consolidated adjusted free cash flow of $100 to $110 million, including approximately $20 million of cash consumption at SANAD. This revised guidance is materially higher than our previous guidance.

"We now expect full-year consolidated capital spending of $710 to $720 million, including $295 to $305 million for SANAD's newbuild program.

"During the quarter, we redeemed $100 million of our 9.125% notes with cash on hand, continuing to deliver on our commitment to reduce gross debt. The redemption lowers cash interest expense, further strengthening our balance sheet."

Outlook

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

U.S. Drilling

• Lower 48 average rig count of 75 rigs
• Lower 48 daily adjusted gross margin of $14,500 to $14,700
• Alaska and Gulf of America combined adjusted EBITDA of approximately $12 million

International

• Average rig count of 92 to 93 rigs
• Daily adjusted gross margin of approximately $19,500

Drilling Solutions

• Adjusted EBITDA of approximately $46 million

Rig Technologies

• Adjusted EBITDA of approximately $8 million

Capital Expenditures

• Capital expenditures of $250 to $260 million, including $140 to $150 million for SANAD newbuilds in Saudi Arabia

Adjusted Free Cash Flow

• Adjusted free cash flow of $60 to $70 million, including approximately $20 million of cash consumption at SANAD

Mr. Petrello concluded, "Our third quarter results demonstrate the earnings power of our diversified portfolio. We expect further sequential adjusted EBITDA growth in the fourth quarter, led by U.S. Drilling. We remain on track to achieve an annualized adjusted EBITDA run rate of approximately $1 billion heading into 2027."

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, via email [email protected], or Kara K. Peak, Director of Corporate Development & Investor Relations, via email [email protected]. To request investor materials, contact Nabors' corporate headquarters in Hamilton, Bermuda via email [email protected]

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)

2026

2025

2026

2026

2025

Revenues and other income:

Operating revenues 

$ 872,194

$ 818,190

$ 814,795

$ 2,470,537

$ 2,387,164

Investment income (loss)

4,143

7,323

2,131

9,161

20,048

Total revenues and other income

876,337

825,513

816,926

2,479,698

2,407,212

Costs and other deductions:

Direct costs

536,577

491,828

507,551

1,537,597

1,428,009

General and administrative expenses

76,733

77,076

71,375

219,868

228,308

Research and engineering

13,341

12,978

14,209

41,056

39,735

Depreciation and amortization

159,744

160,347

160,549

476,479

490,046

Interest expense

42,087

54,334

42,678

128,526

164,741

Gain on disposition of Quail Tools

-

(415,557)

-

-

(415,557)

Gain on bargain purchase

-

-

-

-

(116,499)

Other, net

11,428

24,470

5,682

3,717

75,334

Total costs and other deductions

839,910

405,476

802,044

2,407,243

1,894,117

Income (loss) before income taxes

36,427

420,037

14,882

72,455

513,095

Income tax expense (benefit)

20,443

117,571

16,405

53,732

155,655

Net income (loss)

15,984

302,466

(1,523)

18,723

357,440

Less: Net (income) loss attributable to noncontrolling interest

(27,149)

(28,268)

(20,807)

(67,384)

(81,164)

Net income (loss) attributable to Nabors

$ (11,165)

$ 274,198

$ (22,330)

$ (48,661)

$ 276,276

Earnings (losses) per share:

Basic 

$ (1.24)

$ 18.25

$ (2.04)

$ (4.81)

$ 18.99

Diluted 

$ (1.24)

$ 16.85

$ (2.04)

$ (4.81)

$ 17.54

Weighted-average number of common shares outstanding:

Basic 

14,503

14,098

14,273

14,330

12,880

Diluted 

14,503

15,321

14,273

14,330

14,092

Adjusted EBITDA

$ 245,543

$ 236,308

$ 221,660

$ 672,016

$ 691,112

Adjusted operating income (loss)

$ 85,799

$ 75,961

$ 61,111

$ 195,537

$ 201,066

NABORS INDUSTRIES LTD. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

September 30,

June 30,

December 31,

(In thousands)

2026

2026

2025

ASSETS

Current assets:

Cash and short-term investments

$ 475,145

$ 509,833

$ 940,738

Accounts receivable, net

511,663

443,417

391,705

Other current assets

218,306

243,929

219,130

Total current assets

1,205,114

1,197,179

1,551,573

Property, plant and equipment, net

2,884,274

2,908,061

2,920,019

Other long-term assets

353,929

314,705

318,065

Total assets

$ 4,443,317

$ 4,419,945

$ 4,789,657

LIABILITIES AND EQUITY

Current liabilities:

Current debt

$ -

$ -

$ 377,492

Trade accounts payable

370,483

365,472

300,467

Other current liabilities

309,510

268,167

315,042

Total current liabilities

679,993

633,639

993,001

Long-term debt

2,022,758

2,120,276

2,117,187

Other long-term liabilities

245,298

224,152

241,826

Total liabilities

2,948,049

2,978,067

3,352,014

Redeemable noncontrolling interest in subsidiary

502,718

495,886

482,446

Equity:

Shareholders' equity

565,912

544,128

590,727

Noncontrolling interest

426,638

401,864

364,470

Total equity

992,550

945,992

955,197

Total liabilities and equity

$ 4,443,317

$ 4,419,945

$ 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

Nine Months Ended

September 30,

June 30,

September 30,

(In thousands, except rig activity)

2026

2025

2026

2026

2025

Operating revenues:

U.S. Drilling

$ 274,925

$ 249,836

$ 252,459

$ 768,528

$ 736,020

International Drilling

458,544

407,235

432,497

1,310,537

1,173,923

Drilling Solutions

116,065

141,942

110,640

332,927

405,404

Rig Technologies (1)

41,747

35,597

37,485

106,454

116,289

Other reconciling items (2)

(19,087)

(16,420)

(18,286)

(47,909)

(44,472)

Total operating revenues

$ 872,194

$ 818,190

$ 814,795

$ 2,470,537

$ 2,387,164

Adjusted EBITDA: (3)

U.S. Drilling

$ 99,391

$ 94,161

$ 94,081

$ 281,537

$ 288,693

International Drilling

145,718

127,551

130,533

397,532

360,695

Drilling Solutions

43,913

60,666

40,013

122,588

178,020

Rig Technologies (1)

4,987

3,770

3,180

8,672

14,507

Other reconciling items (4)

(48,466)

(49,840)

(46,147)

(138,313)

(150,803)

Total adjusted EBITDA

$ 245,543

$ 236,308

$ 221,660

$ 672,016

$ 691,112

Adjusted operating income (loss): (5)

U.S. Drilling

$ 33,385

$ 31,429

$ 30,961

$ 88,970

$ 102,816

International Drilling

64,275

45,476

45,860

150,892

114,485

Drilling Solutions

36,150

49,982

32,125

100,147

133,260

Rig Technologies (1)

3,037

877

1,497

2,646

6,933

Other reconciling items (4)

(51,048)

(51,803)

(49,332)

(147,118)

(156,428)

Total adjusted operating income (loss)

$ 85,799

$ 75,961

$ 61,111

$ 195,537

$ 201,066

Rig activity:

Average Rigs Working: (7)

Lower 48

72.8

59.2

67.8

68.7

60.7

Other US

9.4

10.0

10.0

9.8

9.2

U.S. Drilling

82.2

69.2

77.8

78.5

69.9

International Drilling

94.9

89.2

93.4

93.6

86.7

Total average rigs working

177.1

158.4

171.2

172.1

156.6

Daily Rig Revenue: (6),(8)

Lower 48

$ 34,764

$ 34,017

$ 33,555

$ 33,704

$ 34,002

Other US

48,612

70,035

50,073

51,141

68,302

U.S. Drilling (10)

36,343

39,219

35,680

35,880

38,527

International Drilling

52,524

49,596

50,860

51,262

49,583

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

Lower 48

$ 14,016

$ 13,151

$ 13,784

$ 13,677

$ 13,778

Other US

14,203

31,527

17,318

17,067

31,408

U.S. Drilling (10)

14,037

15,805

14,238

14,100

16,104

International Drilling

19,060

17,931

17,534

17,842

17,635

(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)

2026

2025

2026

2026

2025

BASIC EPS:

Net income (loss) (numerator):

Income (loss), net of tax

$

15,984

$

302,466

$

(1,523)

$

18,723

$

357,440

Less: net (income) loss attributable to noncontrolling

interest

(27,149)

(28,268)

(20,807)

(67,384)

(81,164)

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

(6,832)

(7,344)

(6,757)

(20,272)

(21,792)

Numerator for basic earnings per share:

Adjusted income (loss), net of tax - basic

$

(17,997)

$

257,276

$

(29,087)

$

(68,933)

$

244,628

Weighted-average number of shares outstanding - basic

14,503

14,098

14,273

14,330

12,880

Earnings (losses) per share:

Total Basic

$

(1.24)

$

18.25

$

(2.04)

$

(4.81)

$

18.99

DILUTED EPS:

Adjusted income (loss), net of tax - basic

$

(17,997)

$

257,276

$

(29,087)

$

(68,933)

$

244,628

Add: after tax interest expense of convertible notes

—

848

—

—

2,544

Add: effect of reallocating undistributed earnings of

unvested shareholders

—

28

—

—

24

Adjusted income (loss), net of tax - diluted

$

(17,997)

$

258,152

$

(29,087)

$

(68,933)

$

247,196

Weighted-average number of shares outstanding - basic

14,503

14,098

14,273

14,330

12,880

Add: if converted dilutive effect of convertible notes

—

1,176

—

—

1,176

Add: dilutive effect of potential common shares

—

47

—

—

36

Weighted-average number of shares outstanding -

diluted 

14,503

15,321

14,273

14,330

14,092

Earnings (losses) per share:

Total Diluted

$

(1.24)

$

16.85

$

(2.04)

$

(4.81)

$

17.54

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, 2026

U.S.

Drilling

International

Drilling

Drilling

Solutions

Rig

Technologies

Other

reconciling

items

Total

Adjusted operating income (loss)

$ 33,385

$ 64,275

$ 36,150

$ 3,037

$ (51,048)

$ 85,799

Depreciation and amortization 

66,006

81,443

7,763

1,950

2,582

159,744

Adjusted EBITDA

$ 99,391

$ 145,718

$ 43,913

$ 4,987

$ (48,466)

$ 245,543

Three Months Ended September 30, 2025

U.S.

Drilling

International

Drilling

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 June 30, 2026

U.S.

Drilling

International

Drilling

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

Nine Months Ended September 30, 2026

U.S.

Drilling

International

Drilling

Drilling

Solutions

Rig

Technologies

Other

reconciling

items

Total

Adjusted operating income (loss)

$ 88,970

$ 150,892

$ 100,147

$ 2,646

$ (147,118)

$ 195,537

Depreciation and amortization 

192,567

246,640

22,441

6,026

8,805

476,479

Adjusted EBITDA

$ 281,537

$ 397,532

$ 122,588

$ 8,672

$ (138,313)

$ 672,016

Nine Months Ended September 30, 2025

U.S.

Drilling

International

Drilling

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

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)

2026

2025

2026

2026

2025

Lower 48 - U.S. Drilling

Adjusted operating income (loss)

$ 31,434

$ 13,689

$ 24,722

$ 73,561

$ 54,199

Plus: General and administrative costs

5,018

4,745

4,974

15,316

14,043

Plus: Research and engineering

1,253

1,121

1,198

3,594

2,832

GAAP Gross Margin

37,705

19,555

30,894

92,471

71,074

Plus: Depreciation and amortization

56,230

52,120

54,093

163,918

157,425

Adjusted gross margin

$ 93,935

$ 71,675

$ 84,987

$ 256,389

$ 228,499

Other - U.S. Drilling

Adjusted operating income (loss)

$ 1,951

$ 17,740

$ 6,239

$ 15,409

$ 48,617

Plus: General and administrative costs

411

568

407

1,276

1,869

Plus: Research and engineering

115

85

86

281

211

GAAP Gross Margin

2,477

18,393

6,732

16,966

50,697

Plus: Depreciation and amortization

9,776

10,612

9,027

28,649

28,452

Adjusted gross margin

$ 12,253

$ 29,005

$ 15,759

$ 45,615

$ 79,149

U.S. Drilling

Adjusted operating income (loss)

$ 33,385

$ 31,429

$ 30,961

$ 88,970

$ 102,816

Plus: General and administrative costs

5,429

5,313

5,381

16,592

15,912

Plus: Research and engineering

1,368

1,206

1,284

3,875

3,043

GAAP Gross Margin

40,182

37,948

37,626

109,437

121,771

Plus: Depreciation and amortization

66,006

62,732

63,120

192,567

185,877

Adjusted gross margin

$ 106,188

$ 100,680

$ 100,746

$ 302,004

$ 307,648

International Drilling

Adjusted operating income (loss)

$ 64,275

$ 45,476

$ 45,860

$ 150,892

$ 114,485

Plus: General and administrative costs

18,855

18,015

16,748

53,212

52,260

Plus: Research and engineering

1,824

1,665

1,826

5,399

4,578

GAAP Gross Margin

84,954

65,156

64,434

209,503

171,323

Plus: Depreciation and amortization

81,443

82,075

84,673

246,640

246,210

Adjusted gross margin

$ 166,397

$ 147,231

$ 149,107

$ 456,143

$ 417,533

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)

2026

2025

2026

2026

2025

Net income (loss)

$ 15,984

$ 302,466

$ (1,523)

$ 18,723

$ 357,440

Income tax expense (benefit)

20,443

117,571

16,405

53,732

155,655

Income (loss) before income taxes

36,427

420,037

14,882

72,455

513,095

Investment (income) loss

(4,143)

(7,323)

(2,131)

(9,161)

(20,048)

Interest expense

42,087

54,334

42,678

128,526

164,741

Gain on disposition of Quail Tools

-

(415,557)

-

-

(415,557)

Gain on bargain purchase

-

-

-

-

(116,499)

Other, net

11,428

24,470

5,682

3,717

75,334

Adjusted operating income (loss) (1)

85,799

75,961

61,111

195,537

201,066

Depreciation and amortization 

159,744

160,347

160,549

476,479

490,046

Adjusted EBITDA (2)

$ 245,543

$ 236,308

$ 221,660

$ 672,016

$ 691,112

(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)

2026

2026

2025

Current debt

$ -

$ -

$ 377,492

Long-term debt

2,022,758

2,120,276

2,117,187

Total Debt

2,022,758

2,120,276

2,494,679

Less: Cash and short-term investments

475,145

509,833

940,738

Net Debt

$ 1,547,613

$ 1,610,443

$ 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

Nine Months Ended

September 30,

June 30,

September 30,

(In thousands)

2026

2025

2026

2026

2025

Net cash provided by operating activities

$ 238,893

$ 207,880

$ 135,242

$ 487,474

$ 447,425

Add: Capital expenditures, net of proceeds from sales of

assets

(164,370)

(202,267)

(122,900)

(448,828)

(503,277)

Free cash flow

$ 74,523

$ 5,613

$ 12,342

$ 38,646

$ (55,852)

Cash paid for acquisition related costs (1)

-

-

-

-

40,816

Adjusted free cash flow

$ 74,523

$ 5,613

$ 12,342

$ 38,646

$ (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.

NABORS INDUSTRIES LTD. AND SUBSIDIARIES

NON-GAAP FINANCIAL MEASURES

RECONCILIATION OF QUAIL TOOLS FINANCIAL MEASURES

(Unaudited)

Three months

ended

September 30,

(In thousands)

2025

Drilling Solutions operating revenues

$ 141,942

Less: remaining Drilling Solutions business

(107,744)

Quail Tools operating revenues

$ 34,198

Drilling Solutions adjusted operating income (loss)

$ 49,982

Less: remaining Drilling Solutions business

(35,720)

Quail Tools adjusted operating income (loss)

$ 14,262

Quail Tools depreciation and amortization 

6,043

Quail Tools adjusted EBITDA

$ 20,305

SOURCE Nabors Industries Ltd.