Nabors Q3 Revenue Rises 7% as Adjusted Free Cash Flow Hits $75 Million

Nabors Industries Ltd. (NBR ) reported third-quarter 2026 operating revenues of $872 million on October 27, 2026, up 7% from the second quarter, with adjusted EBITDA of $246 million and adjusted free cash flow of $75 million, according to the company’s quarterly earnings release. The Hamilton, Bermuda-based drilling contractor said record International Drilling daily adjusted gross margin, a larger Lower 48 working fleet and growth in Drilling Solutions drove the sequential improvement.

Operating revenues were $872.2 million for the quarter ended September 30, 2026, versus $814.8 million in the second quarter. Net loss attributable to Nabors shareholders was $11 million, or $1.24 per share basic and diluted; net income was $16.0 million before $27.1 million of income attributable to noncontrolling interest. Adjusted EBITDA was $245.5 million versus $221.7 million in the prior quarter, and adjusted operating income was $85.8 million versus $61.1 million. Adjusted free cash flow was $74.5 million versus $12.3 million in the second quarter.

The company attributed the $62 million sequential increase in adjusted free cash flow to higher profitability, lower capital spending at the SANAD joint venture and across the rest of Nabors, and lower working capital, partially offset by higher cash interest payments. Net cash provided by operating activities was $238.9 million, while capital expenditures net of proceeds from asset sales were $164.4 million.

Segment Results and Rig Activity

International Drilling adjusted EBITDA rose to $146 million from $131 million in the second quarter. Daily adjusted gross margin reached a record $19,060, up $1,526, or 8.7%, sequentially, which the company attributed to strong field performance across multiple countries and contributions from a recently deployed rig in Argentina and a SANAD newbuild.

U.S. Drilling adjusted EBITDA increased to $99 million from $94 million, driven by a 7% increase in the average Lower 48 working fleet and higher daily adjusted gross margin. Lower 48 daily adjusted gross margin was $14,016 versus $13,784 in the second quarter. Drilling Solutions adjusted EBITDA rose to $44 million from $40 million, and Rig Technologies adjusted EBITDA rose to $5 million from $3 million as both aftermarket revenue and capital equipment sales increased sequentially.

Average rigs working totaled 177.1 in the quarter, versus 171.2 in the second quarter and 158.4 in the third quarter of 2025, with the Lower 48 averaging 72.8 rigs and International Drilling averaging 94.9. The year-ago quarter included $34 million of revenue, $20 million of EBITDA and $14 million of operating income from Quail Tools, which was sold in August 2025; the 2025 period also included a $415.6 million gain on that disposition.

The SANAD land drilling joint venture deployed its 17th newbuild rig in Saudi Arabia during the quarter. One additional newbuild is scheduled for deployment in 2026 and two in the first quarter of 2027, bringing the total newbuild fleet to 20. Chairman, CEO and President Anthony Petrello said the company expects further International margin improvement in the fourth quarter despite a lower SANAD rig count following the suspension of five rigs.

Nabors also signed a multiyear contract to deploy one rig in Venezuela in early 2027, which the company said will mark its return to drilling operations in the country.

In the Lower 48, a PACE-B rig in North Dakota drilled more than 27,600 feet in 148 hours at an average rate of penetration of nearly 187 feet per hour, and a PACE-X rig in South Texas drilled an 18,500-foot well in under six days, averaging more than 3,200 feet per day. The company said the South Texas operator recorded its fastest drilling performance in the basin to date. Canrig secured commitments for four additional RZR rig floor automation modules, bringing the total deployed to six.

Debt Reduction and 2026 Outlook

Chief Financial Officer Miguel Rodriguez said Nabors redeemed $100 million of its 9.125% notes with cash on hand during the quarter, a redemption he said lowers cash interest expense. Total debt was $2.02 billion at September 30, 2026, and net debt was $1.55 billion, down from $1.61 billion at June 30, 2026. Cash and short-term investments were $475.1 million.

Rodriguez said third-quarter adjusted free cash flow exceeded the company’s expectations, with SANAD newbuild spending below forecast as certain construction milestones shifted to later periods, while controlled capital spending and improved working capital outside SANAD supported cash generation.

Nabors anticipates full-year 2026 adjusted EBITDA of approximately $930 million, reaching the upper end of its prior guidance, Rodriguez said. The company now expects full-year consolidated adjusted free cash flow of $100 million to $110 million, including approximately $20 million of cash consumption at SANAD, a forecast Rodriguez described as “materially higher than our previous guidance.” Full-year consolidated capital spending is expected at $710 million to $720 million, including $295 million to $305 million for SANAD’s newbuild program.

For the fourth quarter of 2026, the company guided to a Lower 48 average rig count of 75 with daily adjusted gross margin of $14,500 to $14,700, Alaska and Gulf of America combined adjusted EBITDA of approximately $12 million, an International average rig count of 92 to 93 with daily adjusted gross margin of approximately $19,500, Drilling Solutions adjusted EBITDA of approximately $46 million, and Rig Technologies adjusted EBITDA of approximately $8 million. Fourth-quarter capital expenditures are expected at $250 million to $260 million, including $140 million to $150 million for SANAD newbuilds, with adjusted free cash flow of $60 million to $70 million including approximately $20 million of SANAD cash consumption.

Petrello said Nabors expects 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,” he said.