Nabors Posts Sequential EBITDA Rebound, Cuts 2026 Capex
Nabors Industries swung to positive adjusted free cash flow of $12.3 million and raised its Lower 48 rig-count outlook even as it trimmed full-year capital spending by $25 million at the midpoint.
Nabors Industries (NBR) reported a sequential rebound in profitability for the second quarter of 2026, breaking a two-quarter slide in adjusted EBITDA while cutting its capital budget for the year. The onshore and offshore drilling contractor posted adjusted EBITDA of $221.7 million, up from $204.8 million in the first quarter, though still below the $248.5 million it generated a year earlier.
The quarter marked a turn after adjusted EBITDA had fallen in consecutive periods, from $221.6 million in the fourth quarter of 2025 to $204.8 million in the first quarter of 2026. Revenue rose about 4% sequentially to $815 million from $783.5 million, though it remained below the $832.8 million posted in the second quarter of 2025. Net loss attributable to Nabors narrowed to $22 million from $31 million in the prior quarter, but the company has not returned to the profitability it showed in the fourth quarter of 2025, when it reported net income of $10 million.
Adjusted free cash flow swung to positive $12.3 million from negative $48.2 million in the first quarter, a $60 million sequential improvement attributed to higher profitability, lower cash interest payments and seasonal working-capital movements.
The U.S. Lower 48 business drove much of the improvement. Average rig count there grew to 67.8 from 65.3 as the company added five rigs, and segment adjusted EBITDA for U.S. Drilling rose to $94 million from $88 million, with daily margin in the Lower 48 expanding 5% and the working fleet growing 4%. Offshore and Alaska operations continued to weigh on results, extending a drag that had already shown up in the prior two quarters. Internationally, average rig count edged up to 93.4 from 92.6 as SANAD added two rigs, including one previously suspended, and daily adjusted gross margin in International Drilling rose more than $650 to $17,534, reversing a first-quarter decline driven by higher Middle East staffing and logistics costs.
Drilling Solutions adjusted EBITDA held roughly flat at $40 million versus $39 million in the first quarter but remained far below the $76.5 million posted a year earlier, a gap largely explained by the August 2025 sale of Quail Tools, which had contributed $37 million of EBITDA in that prior-year period. The segment's international-mix commentary that featured in earlier quarters gave way this period to an emphasis on double-digit sequential revenue growth in the Lower 48 third-party business. Rig Technologies improved to $3 million in adjusted EBITDA from $1 million in the first quarter, helped by higher aftermarket revenue and increased capital equipment deliveries.
Nabors introduced full-year 2026 guidance of adjusted EBITDA between $920 million and $930 million and adjusted free cash flow of $20 million to $30 million, a figure that includes $60 million to $80 million of cash consumption tied to the SANAD newbuild program. For the first time, the company guided to a second-half annualized EBITDA run-rate of $1 billion. It also raised its Lower 48 exit-rig-count target for the third quarter to approximately 74 rigs, up from a current count of 66, with slight further growth expected through year-end.
Even as it lifted its activity outlook, Nabors cut its full-year 2026 capital spending guidance to a range of $710 million to $730 million, a $25 million reduction at the midpoint, with SANAD newbuild capex guidance trimmed to $325 million to $335 million from a prior $360 million to $380 million range.
Net debt held roughly flat at $1.61 billion versus $1.62 billion in the first quarter, a markedly slower pace of reduction than in the prior two quarters, when the company had cut total debt by $386 million since the end of 2024 following the fourth-quarter redemption of its 2027 and 2028 notes and the issuance of $700 million in new notes. Cash and short-term investments fell to $509.8 million from $500.9 million in the first quarter and $940.7 million at year-end 2025, after Nabors paid down $377.5 million of current debt to zero over the first quarter.