Record International Drilling Margin. $75 Million in Adjusted Free Cash Flow. Nabors Reports Third Quarter 2026 Results.

Nabors posts strong Q3 revenue and cash flow, but remains loss-making amid heavy capital spend.

What the company is saying

Nabors Industries Ltd. reports a 7% sequential increase in Q3 2026 operating revenues to $872 million, emphasizing a near 11% rise in adjusted EBITDA to $246 million and a substantial jump in adjusted free cash flow to $75 million. The company highlights record international drilling margins, a growing Lower 48 rig fleet, and strong performance in Drilling Solutions as key drivers of improvement. CEO Anthony G. Petrello and CFO Miguel Rodriguez both stress disciplined capital spending, improved working capital, and higher profitability as contributors to cash generation, while also noting that SANAD newbuild spending was below forecast due to shifted construction milestones. The narrative is confident, with management projecting further margin and EBITDA gains in Q4 2026 and reaffirming full-year adjusted EBITDA guidance of approximately $930 million and free cash flow of $100–$110 million. Nabors also points to operational milestones, including the deployment of its 17th SANAD rig in Saudi Arabia, a planned return to Venezuela in 2027, and new automation module commitments. The tone is upbeat, but the company acknowledges ongoing rig suspensions in Saudi Arabia and continued capital intensity.

What the data suggests

The numbers confirm sequential improvement: Q3 2026 operating revenues reached $872 million, adjusted EBITDA rose to $246 million, and adjusted free cash flow surged to $75 million, up $62 million from Q2. Despite these gains, Nabors posted a net loss attributable to shareholders of $11 million for the quarter. International Drilling daily adjusted gross margin hit a record $19,060, up $1,526 or 8.7% sequentially, and segment EBITDA improved across International ($146 million), U.S. Drilling ($99 million), Drilling Solutions ($44 million), and Rig Technologies ($5 million). The company redeemed $100 million of 9.125% notes, reducing cash interest expense. Cash and short-term investments stood at $475 million, with long-term debt at $2.02 billion and total liabilities of $2.95 billion. Guidance for Q4 2026 targets further EBITDA and margin growth, but also anticipates $250–$260 million in capital expenditures, including $140–$150 million for SANAD newbuilds. While operational claims such as drilling records and Venezuela entry are forward-looking, the realised financial trajectory is positive, though the company remains loss-making and capital intensive.

Analysis

The announcement presents a positive tone, supported by realised sequential improvements in revenue, adjusted EBITDA, and free cash flow for Q3 2026. Key profitability metrics (net loss, adjusted EBITDA, free cash flow) are disclosed, but the company remains loss-making on a net basis. While most operational and financial claims are realised and well-supported, several forward-looking statements—such as the SANAD newbuild schedule and Venezuela contract—are aspirational and lack detailed evidence or binding terms. The capital intensity is high, with $710–$720 million in full-year capital spending (including $295–$305 million for SANAD newbuilds), but much of the benefit from these investments (e.g., new rigs, Venezuela entry) will not be realised until late 2026 or 2027. The gap between narrative and evidence is moderate: realised financial progress is clear, but some operational milestones are projected rather than achieved. The language around technology leadership and future margin expansion is optimistic but not egregiously inflated.

Risk flags

• ●Sustained net losses despite revenue and EBITDA gains highlight ongoing profitability risk. The company reported a Q3 2026 net loss attributable to shareholders of $11 million, indicating that operational improvements have not yet translated to bottom-line profit.
• ●High capital intensity persists, with full-year 2026 capital spending projected at $710–$720 million, including $295–$305 million for SANAD newbuilds. Large upfront investments increase financial risk if anticipated returns are delayed or fail to materialise.
• ●Some operational milestones, such as the Venezuela rig contract and additional SANAD deployments, are forward-looking and lack binding revenue or contract detail. Delays or execution setbacks could defer or reduce expected benefits.
• ●International rig suspensions, particularly the suspension of five SANAD rigs in Saudi Arabia, could pressure margins and limit near-term growth if not offset by new deployments or improved utilisation elsewhere.
• ●Leverage remains material, with long-term debt at $2.02 billion and total liabilities of $2.95 billion as of September 30, 2026. While the company redeemed $100 million of notes, interest expense and refinancing risk remain relevant.

Bottom line

Nabors Industries delivered a strong Q3 2026 operational and financial performance, with revenue up 7%, adjusted EBITDA up nearly 11%, and free cash flow rising sharply to $75 million. Despite these improvements, the company remains loss-making and continues to deploy significant capital, particularly into the SANAD newbuild program and expansion efforts in Saudi Arabia and Venezuela. Management's guidance for Q4 and full-year 2026 is optimistic, targeting further EBITDA growth and higher free cash flow, but much of the anticipated benefit from new rigs and international contracts will not be realised until late 2026 or 2027. Investors should focus on the company's ability to convert operational gains into sustained profitability and monitor execution on long-dated projects and capital discipline. The most important takeaway is that while the financial trajectory is improving, Nabors remains exposed to execution and capital allocation risks, and a clear path to net profitability has yet to be established.

Announcement summary

(NYSE:NBR) Nabors Industries Ltd. reported third quarter 2026 operating revenues of $872 million, representing a 7% sequential increase. Net loss attributable to Nabors' shareholders was $11 million for the quarter. Adjusted EBITDA reached $246 million, up nearly 11% from the second quarter. Adjusted free cash flow was $75 million, driven by higher profitability, lower capital spending, and improved working capital. For the three months ended September 30, 2026, operating revenues were $872.2 million, adjusted EBITDA was $245.5 million, adjusted operating income was $85.8 million, and adjusted free cash flow was $74.5 million. Average rigs working were 72.8 in the Lower 48, 94.9 in International Drilling, and 177.1 in total. International Drilling daily adjusted gross margin reached a record $19,060, up $1,526 or 8.7% sequentially. The SANAD land drilling joint venture deployed its 17th newbuild rig in Saudi Arabia, with one more scheduled for 2026 and two in Q1 2027, targeting a total of 20 newbuilds. Nabors signed a multiyear contract to deploy one rig in Venezuela in early 2027, marking its return to drilling operations in the country. Nabors rigs enabled two Lower 48 operators to achieve new drilling records, including a PACE®-B rig in North Dakota drilling over 27,600 feet in 148 hours and a PACE®-X rig in South Texas drilling an 18,500-foot well in under six days. Canrig secured commitments for four additional RZR™ rig floor automation modules, bringing the total deployed to six. International Drilling adjusted EBITDA increased to $146 million from $131 million in the second quarter, with daily adjusted gross margin rising by more than $1,500 to $19,060. U.S. Drilling adjusted EBITDA increased to $99 million from $94 million, Drilling Solutions adjusted EBITDA increased to $44 million from $40 million, and Rig Technologies adjusted EBITDA increased to $5 million from $3 million. Consolidated adjusted free cash flow was $75 million, up $62 million sequentially. Nabors redeemed $100 million of its 9.125% notes during the quarter. For the fourth quarter of 2026, Nabors expects a 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, International 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 of $250 to $260 million (including $140 to $150 million for SANAD newbuilds in Saudi Arabia), and adjusted free cash flow of $60 to $70 million (including approximately $20 million of cash consumption at SANAD). Nabors anticipates delivering full-year 2026 adjusted EBITDA of approximately $930 million and full-year consolidated adjusted free cash flow of $100 to $110 million, including approximately $20 million of cash consumption at SANAD. Full-year consolidated capital spending is expected to be $710 to $720 million, including $295 to $305 million for SANAD's newbuild program. As of September 30, 2026, cash and short-term investments were $475,145,000, accounts receivable were $511,663,000, and total assets were $4,443,317,000. Current liabilities were $679,993,000, long-term debt was $2,022,758,000, and total liabilities were $2,948,049,000. Shareholders' equity was $565,912,000. The company operates in Saudi Arabia, Venezuela, Argentina, and the United States.

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