Nabors Industries Ltd.

Nabors Industries has raised its full-year 2026 adjusted EBITDA guidance to a range of $920 million to $930 million and now expects to generate $20 million to $30 million in adjusted free cash flow. The company reported second-quarter adjusted EBITDA of $222 million on consolidated revenue of $815 million, with EBITDA margin expanding 107 basis points to 27.2 percent. International drilling revenue reached $432 million and EBITDA rose to $131 million, while U.S. Lower 48 drilling revenue increased to $207 million. Management highlighted that SANAD put its 16th newbuild rig into service in Saudi Arabia, where Nabors operates approximately 196 land rigs, and noted that 34 rigs remain to be delivered under the 50-rig newbuild program. The company also reaffirmed its commitment to reduce gross debt by at least $100 million during 2026 and revised its full-year capital expenditure forecast to between $710 million and $730 million.

Oil prices are currently trading just below $70 per barrel, much lower than the shut-in prices of existing U.S. wells, which are below $50 per barrel according to the Federal Reserve Bank of Dallas. This environment benefits Phillips 66, a leading refiner with a diversified business across midstream and chemicals, as it can purchase crude at lower costs. Nabors Industries, a provider of drilling technology and services, also stands to gain because the current oil prices, which are much lower than the shut-in prices, are likely supporting exploration and production activities, driving demand for its services. On its first-quarter 2026 earnings call, Nabors said it expects rig day rates in the Lower 48 to rise to the mid-$30,000 range through 2027 from the low-$30,000 range.

Barclays and RBC Capital have raised their price targets for Nabors Industries following the company's strong first-quarter EBITDA and free cash flow performance. Barclays analyst Eddie Kim upgraded Nabors to Equal Weight from Underweight and lifted the price objective to $99 from $65, citing the energy services sector's best position in 20 years. RBC Capital analyst Keith Mackey increased his price target to $120 from $91 and maintained a Sector Perform rating after Nabors reported revenue of $784 million and a narrower-than-expected loss per share of $1.54, beating the consensus estimate of a $2.44 loss by about 37%. The results reflected robust EBITDA generation amid Middle East disruption and improved free cash flow, with the full-year outlook gradually strengthening.