Key Takeaways
- Nabors Industries shares jumped 10% after it reported $75 million of third-quarter adjusted free cash flow and raised its full-year cash forecast.
- The cash matters more than the per-share loss, since it’s paying down debt.
- A record international margin, earned despite Saudi rig suspensions, is a good sign for Helmerich & Payne and SLB.
- Part of the cash came from delayed Saudi spending, so fourth-quarter free cash flow is the number to watch.
Nabors Industries (NBR) is up 10% today on $75 million of third-quarter adjusted free cash flow, a record international drilling margin and a full-year cash forecast that CFO Miguel Rodriguez called “materially higher than our previous guidance.”
That margin came despite five rig suspensions in Saudi Arabia, part of the Middle East slowdown hanging over Helmerich & Payne (HP) and SLB (SLB).
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The cash finally showed up
Nabors still lost $1.24 a share. But for a driller carrying $2 billion of debt, cash is what counts. Its free cash flow has swung between positive and negative over the past two years:
Then came $75 million in the third quarter. Lower spending at SANAD, Nabors’ Saudi joint venture, helped, because some construction milestones there slipped into later periods. Nabors now expects $100 million to $110 million for 2026.
Nabors redeemed $100 million of its 9.125% notes in the quarter. Total debt is down to $2.02 billion:
International keeps getting better
International drilling earned a record $19,060 a day in adjusted gross margin. Nabors expects about $19,500 in the fourth quarter, even with fewer rigs working.
That’s encouraging for Helmerich & Payne, up [6%] today. On Oct. 7, its CEO Trey Adams warned of “near-term activity reductions in the Middle East.” My read: the Saudi cuts are costing rigs, and the rigs still working are earning more. Helmerich & Payne’s report in mid-November will show whether its own margins held up.
SLB, down 0.9%, has already seen its Middle East business grow 13% from the second quarter “despite late-quarter disruptions,” CEO Olivier Le Peuch said in its third-quarter release.
On track for $1 billion
Nabors expects about $930 million of adjusted EBITDA for 2026. Analysts see it clearing $1 billion next year:
My take: Nabors is finally turning EBITDA into cash and sending it to its lenders. Today’s jump looks earned.
Of course, the fourth quarter’s guided $60 million to $70 million of free cash flow has to show up too.
So what is Nabors stock actually worth?
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Disclaimer:
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