Q4 2021 Nabors Industries Ltd Earnings Call

Speaker 1: Good day and welcome to the fourth quarter 2021 neighbors industry limited earnings conference.

Good day and welcome to the fourth quarter 2021 Nabors Industries Ltd earnings Conference call.

Speaker 1: All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero.

All participants will be in listen only mode should you need assistance. Please signal conference specialist by pressing the star key followed by zero.

Speaker 1: After today's presentation, there will be an opportunity to ask questions. Please note this event is being requested.

After todays presentation, there will be an opportunity to ask questions. Please note. This event is being recorded and now I'd like to turn the conference over to William Conroy, Vice President of corporate development and Investor Relations. Please go ahead.

Speaker 1: And I'd like to turn the conference over to William Conroy, Vice President of Corporate Development and Investor Relations. Please go ahead.

Speaker 2: Good afternoon, everyone. Thank you for joining NABRS fourth quarter 2021 earnings conference call.

Good afternoon, everyone. Thank you for joining Nabors fourth quarter 2021 earnings conference call.

Speaker 2: Today, we will follow our customary format with Tony Petrello, our Chairman, President, and Chief Executive Officer, and William Restrepo, our Chief Financial Officer, providing their perspectives on the quarter's results, along with insights into our markets and how we affect neighbors to perform in these markets.

We will follow our customary format with Tony Petrello, Our chairman, President and Chief Executive Officer, and William Restrepo, Our Chief Financial officer, providing their perspectives on the quarter's results along with insights into our markets and how we expect nabors to perform in these markets.

Speaker 2: In support of these remarks, a slide deck is available, both as a download within the webcast and in the investor relations section of neighbors.com.

In support of these remarks, a slide deck is available both as a download within the webcast and in the Investor Relations section of Nabors Dot com.

Speaker 2: Instructions for the replay of this call are posted on the website as well.

Instructions for the replay of this call are posted on the website as well.

Speaker 2: With us today, in addition to Tony, William and myself, are Siggy Meisner, President of our Energy Transition and Industrial Automation Organization, and other members of the senior management.

With US today in addition to Tony William and myself are Siggi Meissner President of our energy transition in industrial automation organization and other members of the senior management team.

Speaker 2: Since much of our commentary today will include our forward expectations, they may constitute forward-looking statements within the meeting of the Securities Act of 1933 and the Securities Exchange Act of 1934.

Since much of our commentary today will include our forward expectations. They may constitute forward looking statements within the meaning of the Securities Act of $19 33, and the Securities Exchange Act of $19 34.

Speaker 2: Such forward-looking statements are subject to certain risks and uncertainties, as disclosed by neighbors from time to time in our filings with the Securities and Exchange Commission.

Such forward looking statements are subject to certain risks and uncertainties as disclosed by Nabors from time to time in our filings with the Securities and Exchange Commission.

Speaker 2: As a result of these factors, our actual results may vary materially from those indicated or implied by such forward-looking safety.

As a result of these factors our actual results may vary materially from those indicated or implied by such forward looking statements.

Speaker 2: Also, during the call we may discuss certain non-GAAP financial measures such as net debt, adjusted operating income, adjusted EBITDA, and free cash flow.

Also during the call we may discuss certain non-GAAP financial measures such as net debt adjusted operating income adjusted EBITDA and free cash flow.

Speaker 2: All references to EBITDA made by either Tony or William during their presentations, whether qualified by the word adjusted or otherwise, mean adjusted EBITDA, as that term is defined on our website and in our earnings release.

All references to EBITDA made by either Tony or William during their presentations, whether qualified by the word adjusted or otherwise mean.

Adjusted EBITDA as that term is defined on our website and in our earnings release.

Likewise, unless the context clearly indicates otherwise references to cash flow mean free cash flow as that non-GAAP measure is defined in our earnings release we.

Speaker 2: Likewise, unless the context clearly indicates otherwise, references to cash flow mean free cash flow as that non-GAAP measure is defined in our earnings relief.

Speaker 2: We have posted to the investor relations section of our website a reconciliation of these non-GAAP financial measures to the most recently comparable GAAP measures.

We have posted to the Investor Relations section of our website a reconciliation of these non-GAAP financial measures to the most recently comparable GAAP measures.

Speaker 2: With that, I will turn the call over to Tony to begin.

With that I will turn the call over to Tony to begin.

Speaker 2: Good afternoon. Thank you for joining us as we review our results for the fourth quarter of 2021.

Good afternoon.

Thank you for joining us as we review our results for the fourth quarter of 2021.

This afternoon, we will follow our usual format I'll begin with some overview comments, then I will detail. The progress we made on our five key two excellence and follow with a discussion of the markets, where we will comment on our financial results I will make some concluding remarks, and we will then open up for your questions.

Speaker 2: This afternoon, we will follow our usual format. I will begin with some overview comments. Then, I will detail the progress we made on our five keys to excellence and follow with the discussion of the markets. William white may.

Speaker 2: I will make some concluding remarks and we will then open up for your questions.

I am pleased with our strong operating performance in the fourth quarter.

Speaker 3: I am pleased with our strong operating performance in the fourth quarter.

Speaker 3: Once again, all our segments met or exceeded the outlook we gave on our previous earnings call a quarter ago. We also made further progress on each of the company's five key strategic initiatives.

Once again, all our segments met or exceeded the outlook. We gave on our previous earnings call a quarter ago. We also made further progress on each of the company's five key strategic initiatives.

Speaker 3: Adjusted EBITDA in the fourth quarter was $132 million.

Adjusted EBITDA in the fourth quarter was $132 million.

Speaker 3: As you can see from this result, we finished the year on a strong note. We maintained our execution at a high level while we grew the overall business. Our global average rate count for the fourth quarter increased by 12 rigs, excluding the impact of the sailboat rigs in Canada.

As you can see from this result, we finished the year on a strong note we maintained our execution at a high level. While we grew the overall business our global average rig count for the fourth quarter increased by 12 rigs excluding the impact of the sale of our rigs in Canada.

Speaker 3: This rig count growth was driven by increases in both our U.S. drilling and international activity. Revenue in our advanced technology drilling solutions and rig technology segments also increased.

This rig count growth was driven by increases in both our U S drilling and international activity.

Revenue in our advanced technology drilling solutions and rig technology segments also increased.

Combined sequential EBITDA in these two segments grew more than 25% and accounted for nearly 18% of the company's total.

Speaker 3: combined sequential EVITA in these two segments grew more than 25% and accounted for nearly 18% of the company's total. This is a new high watermark for these segments' contribution to our EVITA.

This is a new high watermark for these segments contribution to our EBITDA.

Speaker 3: In the fourth quarter, we again made progress on our twin priorities to generate free cash flow and reduce net debt.

In the fourth quarter, we again made progress on our twin priorities to generate free cash flow and reduce net debt free.

Speaker 3: Free cash flow in the quarter totaled $50 million. As I mentioned, our EBITDA generation exceeded our outlook. Looking another way, EBITDA minus CapEx exceeded our expectations for the quarter and totaled $68 million.

Free cash flow in the quarter totaled $50 million as I mentioned, our EBITDA generation exceeded our outlook looking at other way EBITDA minus capex exceeded our expectations for the quarter and totaled $68 million pre.

Speaker 3: free cash flow was impacted by increases in working capital as the business expanded into quarter.

Free cash flow was impacted by increases in working capital as the business expanded in the quarter.

Net debt improved by $32 million in the fourth quarter, driven by the strong operating performance and disciplined capital spending I am pleased with our overall performance in the fourth quarter and for the full year I look forward to reporting further progress throughout 2022.

Speaker 3: NAC debt improved by $32 million in the fourth quarter, driven by the strong operating performance and disciplined capital spending. I am pleased with our overall performance in the fourth quarter and for the full year. I look forward to reporting further progress throughout 2022.

In 2021, we began highlighting the five key drivers that we believe support the investment thesis on Nabors. These include our leading performance in the U S.

Speaker 3: In 2021, we began highlighting the five key drivers that we believe support the investment thesis on neighbors. These include our leading performers in the U.S.

Speaker 3: The upturn in our international business, improving results in the outlook for our technology and innovation. Our commitment to sustainability and the energy transition. And our progress on our commitment to deliver.

The upturn in our international business.

Improving results and the outlook for our technology and innovation and our commitment to.

Sustainability in the energy transition and our progress on our commitment to Delever.

Speaker 3: Let me update each of these, starting with our US performance.

Let me update each of these starting with our U S performance.

Speaker 3: Our strong daily rig margins in the lower 48 improved yet again. We exited the year with 79 rigs running. In the fourth quarter, our daily margin increased to $7,161.

Our strong daily rig margins in the lower 48 improved yet again, we exited the year with 79 rigs running in the fourth quarter, our daily margin increased to $7161.

Speaker 3: This accomplishment reflects our superior value proposition and was achieved even with upward pressure on cost.

This accomplishment reflects our superior value proposition and was achieved even with upward pressure on costs.

Speaker 3: we remain committed to delivering the industry's best performance and most advanced technology while leading its safety and sustainability.

We remain committed to delivering the industry's best performance and most advanced technology, while leading in safety and sustainability.

Speaker 3: Next, let's discuss our international business. We bring those same attributes I just mentioned to our international drilling segment. Our financial results in this segment were consistent with last quarter's margin outlook.

Next let's discuss our international business, we bring those same attributes I just mentioned to our international drilling segment.

Our financial results in this segment were consistent with last quarter's margin outlook.

Speaker 3: This demonstrates our excellent performance in the field as we continue tightly disciplined spending.

This demonstrates our excellent performance in the field as we continue tightly disciplined spending.

Speaker 3: Looking ahead, we expect SAVET to deploy its first in-kingdom new build rig around the end of the first quarter. The rest of the five which have been awarded should come at a rate of approximately one per quarter.

Looking ahead, we expect sounded to deploy its first in kingdom newbuild rig around the end of the first quarter. The rest of the five which have been awarded should come at a rate of approximately one per quarter.

Speaker 3: We estimate each of these new rigs will generate annual EBITDA of approximately $10 million.

We estimate each of these new rigs will generate annual EBITDA of approximately $10 million we're excited.

Speaker 3: We are excited and excited near the deployment of the first new rig into the field.

The deployment of the first new rig into the field.

Speaker 3: The JV's long-term plan calls for a total of 50 new bill units over 10 years. Each successive year of five deployments should they have $50 million to annual EBITDA. This visibility to future growth is unmatched in the industry. Now, let's discuss our technical...

The JV is long term plan calls for a total of 50 nuclear units over 10 years, each successive year of five deployments today of $50 million to annual EBITDA.

This visibility into future growth is unmatched in the industry.

Now lets discuss our technology and innovation.

Speaker 3: Our focus on the development of advanced technology continues to pay dividends.

Our focus on the development of advanced technology continues to pay dividends.

Speaker 3: Our initiatives span several key target areas including automation, digitalization, integration, and robotization. Once again, our portfolios market position improves.

Our initiatives span several key target areas, including automation digitalization integration and organization once again, our portfolio's market position improved.

Speaker 3: Quarterly EBITDA in our drilling solution segment increased sequentially by 25%.

Orderly EBITDA in our drilling solutions segment increased sequentially by 25%.

Speaker 3: This segment, Dibata, of 19.6 million exceeded its performance in the first quarter of 2020, immediately pre-pandemic.

This segment's EBITDA of $19 6 million exceeded its performance in the first quarter of 2020 immediately pre pandemic.

Speaker 3: The business crossed another milestone in the fourth quarter. When we combined the daily margins in the lower 48 from our drilling and drilling solutions businesses, drilling solutions added more than $2,000 per day in the fourth quarter.

Business crossed another milestone in the fourth quarter, when we combined daily margins in the lower 48 from our drilling and drilling solutions businesses drilling solutions at more than $2000 per day in the fourth quarter.

Speaker 3: We recognize some competitors top performance contracts which are not yet yielding superior margins. In contrast, our combined daily rate margin figure amounts to more than $9,200 per day, reflecting the value pricing of our rating and technology offering. This is the highest daily margin per rate by far in this market.

We recognize some competitors' top performance contracts, which are not yet yielding superior margins. In contrast, our combined daily rig margin figure amounts to more than $9200 per day, reflecting the value pricing of our radio technology offering. This is the highest daily margin per rig by far in this market.

Speaker 3: In addition to this quarterly performance, our pipeline of advanced technology solutions remains full. Our development initiatives focus on the critical goals of improving customer level of quality and productivity while reducing operator costs.

In addition to this quarterly performance our pipeline of advanced Technology solutions remains full our development initiatives focused on the critical goals of improving customer wellbore quality and productivity, while reducing operator costs.

Speaker 3: We believe we are unique in that our apps and products are deployable beyond the neighbor's suite on third-party ratings.

We believe we are uniquely that our apps and products are deployable beyond the neighbors fleet on third party rigs this approach to the business significantly expands our addressable market.

Speaker 3: This approach to the business significantly expands our addressable market.

Speaker 3: Notwithstanding this opportunity, the full potential of the neighbors' portfolio is maximized on neighbors' high specification rates, which we believe are the industry's most capable.

Notwithstanding this opportunity the full potential of the neighbors portfolio is maximized our neighbors high specification rigs, which we believe are the industry's most capable.

Speaker 3: Looking ahead, we expect to see greater penetration of our digital portfolio across the market.

Looking ahead, we expect to see greater penetration of our digital portfolio across the market.

I'll wrap up my comments on our technology with a brief update on our rig 801.

Speaker 3: I'll wrap up my comments on our technology with a brief update on rig 801.

Speaker 3: You will recall we deployed this groundbreaking, fully automated race in the third quarter for ExxonMobil in the Permian.

You will recall, we deployed this groundbreaking fully automated rate in the third quarter for Exxonmobil in the Permian.

Speaker 3: The rig has completed its second full pad. Its performance is comparable to our other high spec rigs. And it drills with the rig crew members away from the red zone.

The rig has completed its second full pads.

This performance is comparable to our other high spec rigs.

It drills with the rig crew members away from the Red Zone.

Now, let's discussed Delevering and the steps we've completed two we de risk our capital structure.

Speaker 3: Now let's discuss the levering and the steps we've completed to de-risk our capital structure.

Speaker 3: In the fourth quarter, we again generated free cash flow and reduced net debt. This performance capped a full year in which we generated significant free cash flow and made meaningful progress to the lever. Also, during the fourth quarter, we completed an offering of senior notes.

In the fourth quarter, we began generating free cash flow and reduce net debt. This performance capped a full year in which we generated significant free cash flow and made meaningful progress to delever.

Also during the fourth quarter, we completed an offering of senior notes.

Speaker 3: Subsequently, we closed on a new revolving credit facility. These two transactions have positioned us with materially reduced debt maturities over the next three years.

Subsequently, we closed on a new revolving credit facility.

These two transactions have positioned us with materially reduced debt maturities over the next three years.

Speaker 3: This enables us to potentially manage our debt maturities through 2024 with free cash flow.

This enables us to potentially manage our debt maturities through 2024 with free cash flow.

Speaker 3: I'll finish this discussion of our key value drivers with sustainability and the energy transition.

I'll finish this discussion of our key value drivers with sustainability and the energy transition.

Speaker 3: We continue to refine and enhance our focus on sustainability. With the emphasis we place on employee safety, we improved our safety record in 2021. With a TRIR of 0.41, we believe we lead the industry in the right direction.

We continue to refine and enhance our focus on sustainability with the emphasis we place on employee safety, we improved our safety record in 2021 with.

With a T. Our IR of <unk> 401, we believe we lead the industry.

Speaker 3: This notable accomplishment by the neighbors team to be viewed in the context of activating more than 30 rates worldwide during 2021.

This notable accomplishment by the neighbors team should be viewed in the context of activating more than 30 rigs worldwide during 2021.

On the environmental front, we made significant progress.

Speaker 3: On the environmental front, we made significant progress.

Speaker 3: We reduce our 2021 greenhouse gas emissions in our lower 48 field operations by 10% versus the 2020 level, doubling our target.

We reduced our 2021 greenhouse gas emissions in our lower 48 field operations by 10% versus the 2020 level doubling our target.

Speaker 3: We also made progress across our initiatives supporting the energy transition. Initial prototype testing of our carbon capture and hydrogen ejection technologies has been promised.

We also made progress across our initiatives supporting the energy transition initial.

The initial prototype testing of our carbon capture and hydrogen injection technologies has been promising we.

Speaker 3: We hope to have commercial products available this year. We have several more projects underway. As these proceed, we'll be reporting the results.

We hope to have commercial products available. This year, we have several more projects underway as these proceeds will be reporting the results.

Nabers energy transition Corp, or any DTC, which nabors sponsored completed its IPO in November the spec structure enables us to address the scale of energy transition opportunities with a lower cost of capital the neighbors.

Speaker 3: Neighbor's Energy Transition Corp, or NETC, which Neighbor sponsored, completed its IPO in November . The SPAC structure enables us to address the scale of energy transition opportunities with a lower cost of capital than Neighbor.

Speaker 3: This remains an exciting initiative for neighbors, as well as one we think could have material synergies with neighbors existing operations.

This remains an exciting initiative for nabors as well as one we think could have material synergies with neighbors existing operations.

Speaker 3: To reiterate, our approach to the transition is comprised of three pillars.

To reiterate our approach to the transition is comprised of three pillars.

Speaker 3: First, reduce our own environmental footprint by applying new technologies. Second, take advantage of the opportunities in areas adjacent to our activity. And finally, invest in companies both adjacent to neighbors and in other verticals and help them to reach scale.

First reduce our own environmental footprint by applying new technologies.

Take advantage of the opportunities in areas adjacent to our activity and finally investing companies both adjacent to neighbors and in other verticals and help them to reach scale.

Now I will spend a few moments on the macro environment.

Speaker 3: The fourth quarter began with WTI just above $75, followed by a dip to the mid-60s. Since then, it's been a relatively steady climb to the $90 level. As we pointed out at our analyst meeting in December , sustained crude prices above the $60 mark provide returns that would incentivize operators to increase their drilling activity. This pricing drove activity materially higher in the quarter. Neighbors added eight rigs, equating to 11% growth.

The fourth quarter began with WTO, just above $75, followed by a dip to the mid sixties.

Since then it's been a relatively steady climb to the $90 level.

As we pointed out at our analyst meeting in December sustained crude prices above the $60 Mark provide returns that would incentivize operators to increase their drilling activity. This pricing drove activity materially higher in the quarter during the quarter Nabors added eight rigs equating to 11% growth in.

Speaker 3: In comparison, according to Inverness, from the beginning of the fourth quarter through the end, the lower 48-rig count increased by 54 rigs, or approximately 9%. This translates to a 15% share of the incremental rig count for neighbors.

In comparison, according to <unk> from the beginning of the fourth quarter through B and the lower 48 rig count increased by 54 rigs or approximately 9%.

This translates to a 15% share of the incremental rig count for Nabors.

Speaker 3: For the industry, larger clients account for slightly more than half of this growth.

The industry larger clients accounted for slightly more than half of this growth.

Speaker 3: Once again, we surveyed the largest lower 48 clients at the end of the fourth quarter. This group accounts for approximately 30% of the working rate counts.

Once again, we surveyed the largest lower 48 clients at the end of the fourth quarter. This group accounts for approximately 30% of the working rig count.

Speaker 3: Our survey indicates an increase in the activity approaching 20% of this group by the end of the year.

Our survey indicates an increase in the activity approaching 20% for this group by the end of the year.

Speaker 3: Nearly every operator amongst these 15 clients plans to increase activity.

Nearly every operator amongst these 15 clients plans to increase activity.

Speaker 3: The pricing environment is moving upward quickly. Our own leading interest day rates now stand several thousand dollars higher than the daily average in the fourth quarter. We see pricing accelerating as industry utilization increases throughout the year.

Pricing environment is moving upward quickly our own leading edge day rates now stand several thousand dollars higher than the daily average in the fourth quarter, we see pricing accelerating as industry utilization increases throughout the year.

Speaker 3: As we mentioned earlier, NDS's growth in the quarter was exceptional. This growth reflected the strong value proposition of the portfolio. Fully 74% of our lower 48 rigs run five or more NDS services.

As we mentioned earlier nds's growth in the quarter was exceptional this growth reflected the strong value proposition of the portfolio.

Fully 74% of our lower 48 rigs when five or more NDS services are.

Speaker 3: our top service runs on 99% of those rates.

Our top service, Brian 99% of those rigs.

Speaker 3: Going forward, in addition to our own domestic rigs, NDS will be focusing on both third-party and international opportunities.

Going forward in addition to our own domestic rigs Mds will be focusing on both third party and international opportunities.

Speaker 3: In our international markets, those same macro factors exist.

In our international markets those same macro factors exist.

Speaker 3: strong commodity prices and expected production increases are driving oil field activity higher. We see potential activity increasing in several countries. In particular, we have visibility to the set of new builds coming to Saudi Arabia.

Commodity prices and expected production increases are driving oilfield activity higher.

We see potential activity increasing in several countries in particular, we have visibility to the set of new builds coming in Saudi Arabia.

Speaker 3: tendering activity has picked up across other markets in the Middle East.

Tendering activity has picked up across other markets in the middle East the supply of suitable idle rigs remains limited in that region, which should be favorable for pricing.

Speaker 3: The supply of suitable aisle rakes remains limited in that region, which should be variable for pricing.

Speaker 3: We are also optimistic for additional rigs in Latin America beginning in the first half of 2022.

We are also optimistic for additional rigs in Latin America, beginning in the first half of 2022.

Speaker 3: Clients there are planning increases in activity, and we have the rigs and relationships to support those plans.

Clients there are planning increases in activity and we have the rigs and relationships to support those plans.

Speaker 3: I'll wrap up this macro discussion with an update on our labor availability and the global supply chain.

I'll wrap up this macro discussion with an update on our labor availability and the global supply chain.

Speaker 3: For labor, we have been successful at recruiting and staffing to support increases in our activity.

For labor, we have been successful at recruiting and staffing to support increases in our activity.

Speaker 3: We took actions to address the labor market tightness and remain competitive. In the fourth quarter, we increased compensation in the field and throughout the organization. As a result, this challenge has recently eased somewhat.

We took actions to address the labor market tightness and remain competitive in the fourth quarter, we increased compensation of the field and throughout the organization as a result. This challenge has recently eased somewhat.

Speaker 3: Now, let me address inflation and the supply chain. We have seen higher costs across our supply chain. Their effects have been mitigated thus far through our vertically integrated manufacturing structure.

Now, let me address inflation in the supply chain, we've seen higher costs across our supply chain.

There are effects have been mitigated thus far through our vertically integrated manufacturing structure with.

Speaker 3: The primary stress factor in our supply chain remains vendor lead times, which have widened significantly. Our team has been on top of this challenge and our operational continuity remains excellent.

The primary stress factor in our supply chain remains vendor lead times, which have widened significantly our team has been on top of this challenge and our operational continuity remains excellent.

Speaker 3: I would note that we managed to increase the Elling building margins in the lower 48 even as our costs increased. This speaks volumes to the performance we're delivering to our clients.

I would note that we managed to increase the only drilling margins in the lower 48, even as our cost increased this.

This speaks volumes to the performance, we're delivering to our clients.

To sum up commodity prices remain at levels that are supportive of increased operator activity.

Speaker 3: To sum up, commodity prices remain at levels that are supportive of increased operator activity.

Speaker 3: We are also encouraged by the reduction in the duct inventory, which suggests a favorable shift in operator spending towards drilling.

We are also encouraged by the reduction in the DUC inventory, which suggests a favorable shift in operator spending towards drilling Nash.

Speaker 3: Natural gas prices, as indicated by the two-year strip, remain above $3.00. We are also seeing increased interest from operators, which can benefit from these higher prices.

Natural gas prices as indicated by the two year strip remain above $3. We are also seeing increased interest from operators, which can benefit from these higher prices.

With all of this is the worst of omnicom seemingly behind US we remain vigilant to potential future disruptions from the virus and challenges in the economy. Those risks notwithstanding the current commodity environment supports increased global drilling activity.

Speaker 3: With all of this, and the worst of Omicron seemingly behind us, we remain vigilant to potential future disruptions from the virus and challenges in the economy. Those risks notwithstanding, the current commodity environment supports increased global drilling activity. Now, let me turn the call over to William, who will discuss our financial results and guidance.

Now, let me turn the call over to William who will discuss our financial results and guidance.

Speaker 3: Thank you, Tony. The net loss from continuing operations for the quarter was $114 million or $14.60 per share.

Thank you Tony.

Net loss from continuing operations for the quarter was $114 million or $14 60 per share.

Speaker 3: This compares to a loss of $122 million or $15.79 per share in the prior quarter.

This compares to a loss of $122 million.

$15 79 per share in the prior quarter.

Speaker 3: The quarterly improvement reflected the sequential increase needed done.

The quarterly improvement reflected the sequential increase in EBITDA.

Speaker 3: Revenue from operations for the fourth quarter was $544 million, a 4% improvement compared to the third quarter.

Revenue from operations for the fourth quarter was $544 million.

A 4% improvement compared to the third quarter.

Speaker 3: Strong operational results more than offset the absence of $8 million in third quarter of recombination revenue and the sale of our Canadian assets.

Strong operational results more than offset the absence of $8 million in third quarter early termination revenue.

And the sale of our Canadian assets.

Speaker 3: Canada generated $6 million in drilling revenue during the prior quarter.

Canada generated $6 million in Muni revenue during the prior quarter.

Speaker 3: Excluding those items, revenue increased by almost 7% with strong contributions from all our segments.

Excluding those items revenue increased by almost 7% with strong contributions from all our segments.

Speaker 3: Drilling Solutions, RIC Technologies and US Drilling all deliver double digit percent sequential growth.

Turning solutions rig technologies and use Julie all delivered double digit percent sequential growth.

Speaker 3: U.S. drilling and NDS benefited from higher rig count in the lower 48 market and from an improving pricing environment.

U S drilling in NDS.

Benefits from higher rig count in the lower 48 market and from an improving pricing environment.

Speaker 3: Higher activity in international markets also drove revenue increases for both drilling and NDS.

Higher activity in international markets also drove revenue increases for both drilling and NDS.

Total adjusted EBITDA of $132 million increased by $6 million or 5%.

Speaker 3: Total adjusted event of $132 million increased by 6 million or 5%.

Speaker 3: Excluding the impact of early termination revenue and the Canadian sale, EBITDA improved by approximately 14% as compared to the third quarter.

Excluding the impact of early termination revenue in the Canadian sale.

EBITDA improved by approximately 14% as compared to the third quarter.

Speaker 3: On a normalized basis, all of our segments deliver strong growth.

On a normalized basis all of our segments delivered strong.

Speaker 3: US drilling of $69.2 million was up by 7.1 million or 11% sequential.

U S drilling EBITDA of $69 2 million was up by $7 1 million or 11% sequentially.

Speaker 3: Our lower 48 average recount increased in the 4th quarter to 75 rigs up 7 rigs.

Our lower 48 average rig count increased in the fourth quarter to 75% up seven rigs.

Speaker 3: Daily rig margin came in at $7,161, $136 higher than the prior quarter.

Daily rig margin came in at $7161 $136 higher than the prior quarter.

Speaker 3: This improvement reflected a $457 increase in revenue per day, offset primarily by higher compensation for accrues.

This improvement reflected a $457 increase in revenue per day.

I'll set primarily on a higher compensation for our crews.

Speaker 3: We have adjusted compensation for RIG employees over the last two quarters to ensure we remain competitive in the tighter labor market.

We have adjusted compensation for a rig employees over the last two quarters to ensure we remain competitive in a tighter labor market.

Rig count continues to make progress on the strengthening commodity price and.

Speaker 3: breakout continues to make progress on the strengthening commodity price.

Speaker 3: and higher utilization is pushing leading edge day rates up.

And higher utilization is pushing leading edge day rates upward.

During the last months of the quarter on new pricing negotiations, we managed to push based rig day rates to between 22 and $23000 per day.

Speaker 3: during the last month of the quarter on new pricing negotiations, we managed to push base rate day rates to between $22,000 and $23,000 per day.

Speaker 3: I would like to point out that these rates do not include additional items normally charged on top of the base day rate when providing drilling rig services. Now do they include

I would like to point out that these rates do not include additional items normally charged on top of the base day rate when providing drilling rig services.

They include our NDS offerings.

Speaker 3: This price momentum has translated into higher average daily revenue for a fee.

This price momentum has translated into higher average daily revenue from our fleet.

Speaker 4: We expect average day rates and margins to continue to increase during the coming months.

We expect average day rates and margins to continue to increase during the coming months.

For the first quarter.

Speaker 4: For the first quarter, we project our lower 48 average daily margin to be between $7,500 and $7,600 as we continue to roll our rigs onto contracts with higher prices.

We project, our lower 48 average daily margin to be between 7500 $7600 as we continued to roll our rigs under contracts with higher pricing.

Speaker 4: Currently, our lower 48 rig count stands at 83, which translates into 75% utilization for higher spec rigs.

Currently our lower 48 rig count stands at 83, which translates into 75% utilization for higher spec rates.

Speaker 4: We forecast an increase of 9 to 10 rigs in the first quarter versus the fourth quarter average.

We forecast an increase of nine to 10 rigs in the first quarter versus the fourth quarter average.

On a net basis EBITDA from our other markets within the U S drilling segment grew moderately versus the third quarter.

Speaker 4: On a net basis, EBITDA from other markets within the U.S. drilling segment grew moderately due to the addition of one rig in Alaska.

Due to the addition of one rig in Alaska.

Speaker 4: For the first quarter, we expect to add another ray in Alaska.

For the first quarter, we expect to add another rig in Alaska.

Speaker 4: However, the combined EBITDA of these two markets should decrease by several million dollars.

However, the combined EBITDA of these two markets should decrease by several million dollars.

Speaker 4: The Alaska improvement will be more than offset by non-recurring downtime for recertification on our most impactful offshore rates.

Yeah, Alaska improvement will be more than offset by nonrecurring downtime for recertification on our most impactful offshore rig.

Speaker 4: International EBITDA of $73.2 million in the fourth quarter decreased sequentially by $3 million.

International EBITDA of $73 2 million in the fourth quarter decreased sequentially by $3 million.

Speaker 4: driven primarily by the absence of the early termination revenue realized in the third quarter.

Driven primarily by the absence of the early termination revenue realized in the third quarter.

Speaker 4: Excluding this item, EBITDA improved by roughly 7% as rate count increased by 4.4 rigs on average.

Excluding this item EBITDA improved by roughly 7% as rig count increased by $4 four rigs on average.

Speaker 4: Daily margin of $13,172 decreased by $1,203, reflecting the prior quarter's early termination revenue. Turn recount in the international...

Daily margin of $13172 decreased by $1203, reflecting their prior quarters early termination revenue.

Current rig count in the International segment is 72.

Speaker 4: We expect recount in the first quarter to remain in line with the fourth quarter average with further rate additions coming in the following quarter.

We expect our rig count in the first quarter to remain in line with the fourth quarter average.

Further rig additions coming in the following quarters.

Speaker 4: Daily margin is targeted at approximately $13,000 in line with the fourth quarter level.

Daily margin is targeted at approximately $13000 in line with the fourth quarter level.

Turning solutions continued making meaningful strides in the fourth quarter.

Speaker 4: Dirling Solutions continued making meaningful strides in the fourth quarter.

Speaker 4: EBITDA of $19.6 million was up $4 million, or 25% from the third quarter.

EBITDA of $19 6 million was up $4 million or 25% from the third quarter.

Speaker 4: Gross margin for NDS was over 50% for the quarter.

Gross margin for NDS was over 50% for the quarter.

Speaker 4: We continue to see penetration improvements across all of our product lines, with the largest contributions coming from performance software in the US, and case-running services in international markets.

We continue to see penetration improvements across all of our product lines with the largest contributions coming from performance software in the U S and casing running services in international markets.

Speaker 4: Activity in the lower 48 generally improved, taking our combined drilling rig and drilling solutions daily gross margin to nearly $9,300.

Activity in the lower 48, generally improved taking our combined drilling rig and drilling solutions daily gross margin to nearly $9300.

Speaker 4: This translates into approximately a $2,100 per day contribution from our rapidly growing solution segment up from roughly $1,900 per day in the prior quarter.

This translates into approximately at $2100 per day contribution from our rapidly growing solutions segment up from roughly $1900 per day in the prior quarter.

Speaker 4: The combined gross margin for lower 48 drilling and solutions reached $65.1 million and delivered gross margins of 36.2%.

The combined gross margin for lower 48 drilling and solutions reached $65 1 million.

And delivered gross margins of 36, 2%.

Speaker 4: we expect first quarter ABA-DEL for the Dining Solutions segment to be just above the fourth quarter level.

We expect first quarter EBITDA for their learning solutions segment to be just about the fourth quarter level.

Speaker 4: It is worth highlighting this segment's growth year over year.

It is worth highlighting this segments growth year over year.

Speaker 4: Comparing to the fourth quarter a year ago, NDS EBITDA increased by over 90% and its EBITDA contribution to neighbors as a whole increased from 9% to 15%, while gross profit margin widened by 4 percentage points.

Compared to the fourth quarter, a year ago, NDS EBITDA increased by over 90% and it's EBITDA contributions enablers as a whole decreased from 9% to 15% while gross profit margin widened by four percentage points.

Speaker 4: RIC technologies generated a bid of $3.8 million in the fourth quarter and $800,000 improvement.

Rig technologies generated EBITDA of $3 8 million in the fourth quarter and $800000 improvement there.

Speaker 4: The growth was primarily related to improved rate activity, which resulted in higher aftermarket sales.

Growth was primarily related to improve rig activity, which resulted in higher after market sales.

Speaker 4: Higher specification requirements also drove demand for recertification.

Higher specification requirements also drove demand for re certifications.

Speaker 4: For the first quarter, we expect Ibeda to come in on the positive side of break-even. Now turning to the negative side, we expect Ibeda to come in on the positive side.

For the first quarter, we expect EBITDA to come in on the positive side of breakeven.

Now turning to our liquidity and cash generation.

Speaker 4: Free cash flow totaled $50 million in the fourth quarter. We delivered material free cash flow even with higher accounts receivable, which reflected stronger revenue toward the end of the quarter.

Free cash flow totaled $50 million in the fourth quarter.

We delivered material free cash flow, even with higher accounts receivable.

Which reflected stronger revenue towards the end of the quarter.

Speaker 4: This compares to free cash flow of $133 million in the prior quarter.

This compares to free cash flow of $133 million in the prior quarter.

Speaker 4: The third quarter included a net benefit of $78 million from strategic transactions, namely the sale of our Canadian drilling assets for $94 million.

Third quarter included a net benefit of $78 million.

From strategic transactions, namely the sale of our Canadian drilling assets for $94 million.

This sale was partly offset by several investments in geothermal and other energy transition initiatives totaling $16 million.

Speaker 4: This sale was partly offset by several investments in geothermal and other energy transition initiatives totaling 16 million dollars.

Speaker 4: For the full year 2021, we generated free cash flow of $312 million as we continue to deliver industry-leading results together with sustained cost and capital discipline.

For the full year 2021, we generated free cash flow of $312 million.

As we continue to deliver industry, leading results together with sustained cost and capital discipline.

The first quarter is normally challenging in terms of cash flow generation as we paid several large annual items, such as property taxes insurance premiums and employee bonuses in.

Speaker 4: The first quarter is normally challenging in terms of cash flow generation as we pay several large annual items such as property taxes, insurance premiums, and employee bonuses.

Speaker 4: In addition, capital expenditures for the year tend to be front-loaded.

In addition capital expenditures for the year tend to be Frontloaded.

Speaker 4: Nonetheless, we are targeting breakeven free cash flow for the first quarter of 2022, as we expect some tailwinds from our year-end accounts receivable to offset this annual tail.

Nonetheless, we are targeting breakeven free cash flow for the first quarter of 2022.

As we expect some tailwind from our year end accounts receivable.

We'll offset these annual payouts.

Speaker 4: Capital expenses in the fourth quarter were $64 million, essentially in line with the prior quarter. This includes $11 million.

Capital expenses in the fourth quarter were $64 million essentially in line with the prior quarter.

This includes $11 million for the Santa <unk>.

For the full year of 2021, Capex totaled $244 million in.

Speaker 4: For the full year 2021, CAPEX totaled $244 million, including $69 million for the Senate new bill.

Including $69 million for the Senate newborns.

Speaker 4: We are targeting cap rates between $95 and $100 million in the first quarter, including approximately $35 million for the Santa's new bill.

We are targeting capex between 95 and $100 million in the first quarter, including approximately 35 million for the standup new goods.

Speaker 4: Our forecast capital spending for full year 2022 is approximately 380 million dollars, including 150 million for San Ed Newby.

Our forecast capital spending for full year 2022 is approximately $380 million.

<unk> $150 million percent of new business.

Speaker 4: The increase in the X Sanad CAPEX reflects primarily the increase in average recount for 2022 over the prior year's level.

The increasingly ex Senate Capex reflects primarily the increase in average rig count for 2022 over the prior year's level.

Speaker 4: In the fourth quarter, net debt declined by $32 million to $2.27 billion.

In the fourth quarter net debt declined by $32 million to $2 27 billion.

Speaker 4: This improvement was driven primarily by the positive free cash flow. Some were upset by the distribution of an additional $9 million to each of SANA's shareholders.

This improvement was driven primarily by the positive free cash flow.

Somewhat offset by the distribution of an additional $9 million to each of synovus shareholders.

Speaker 4: For the full year 2021, we reduced net debt by $216 million, despite total distributions of $59 million to Saudi Aramco from Orsanic JV.

For the full year 2021, we reduced net debt by $260 million. Despite total distributions of $59 million to Saudi Aramco from our Sarnia JV.

Speaker 4: We also continue to take steps to improve our position in terms of liquidity and then maturity profile.

We also continued to take steps to improve our position in terms of liquidity and debt maturity profile.

Speaker 4: During the fourth quarter, we issued senior priority guarantee notes with a principal amount of $700 million due in November 2027.

During the fourth quarter, we issued senior priority guaranteed notes with a principal amount of $700 million.

Due in November 2027.

Speaker 4: We then use the proceeds from this transaction to reduce our nearer term maturity.

We then use the proceeds from this transaction to reduce our nearer term maturities.

Speaker 4: Subsequent to year end, we closed on a new revolving credit facility maturing in 2026 with a principal amount of $350 million.

Subsequent to year end, we closed on a new revolving credit facility maturing in 2026 with a principal amount of $350 million.

The new credit facility.

Speaker 4: The new credit facility replaced our previous facility maturing in 2023.

Placed our previous facility maturing in 2023.

The facility includes the accordion and grower features for additional funding totaling up to $200 million.

Speaker 4: The facility includes accordion and grower features for additional funding totaling up to $200 million.

Speaker 4: and a carve-out that can be used for a secured letter of credit facility of up to $150 million.

In a carve out that can be used for a secured letter of credit facility of up to about $150 million.

Speaker 4: With the closing of the new credit facility, we have also increased our senior priority guarantee note capacity to over $400 million.

With the closing of the new credit facility. We have also increased our senior priority guaranteed no capacity to over $400 million.

Speaker 4: Together with the capacity on our priority guaranteed notes, we have nearly $1 billion available for future debt refinance.

Together with our capacity and our priority guaranteed notes, we have nearly $1 billion available for future debt refinancing.

We made significant progress in 2021, we generated over $300 million in free cash flow and reduce net debt by $260 million.

Speaker 4: We made significant progress in 2021. We generated over $300 million in free cash flow and reduced net debt by $260 million.

Speaker 4: With the completion of the two recent financial transactions, we are well positioned in terms of liquidity and runway in our debt maturities. Currently, we are seeing a...

With the completion of the two recent financial transactions, we are well positioned in terms of liquidity and runway and our debt maturities.

Currently we are seeing a robust market environment.

Speaker 4: With our confidence in additional growth through 2022, we expect to continue capitalizing on the market upswing and make further progress on our long-term objectives to continue generating free cash flow and reducing our net debt.

With our confidence in additional growth through 2022.

We expect to continue capitalizing on the market upswing and make further progress on our long term objectives to continue generating free cash flow.

And reducing our net debt.

Speaker 4: With that, I'll turn the call back to Tony for his concluding remarks.

With that I'll turn the call back to Tony for his concluding remarks.

Speaker 3: Thank you, William. I will now conclude my remarks this afternoon with the following. In 2016, we unveiled our strategy aimed at extending neighbors' technology leadership in the global land drilling industry. With our advances in process automation, digitalization, integration, and robotization, we have achieved our goals. Over the same period, we set out to significantly improve our capital structure and materially de-lever.

Thank you William I will now conclude my remarks this afternoon with the following.

The 2016, we unveiled our strategy aimed at extending Nabors technology leadership in the global land drilling industry.

With our advances in process automation digitalization integration and globalization, we have achieved our goals.

Over the same period, we set up to significantly improve our capital structure and materially de lever.

Speaker 3: Our financial results, capped off by the fourth quarter, demonstrate material progress on those schools as well.

Our financial results capped off by the fourth quarter demonstrate material progress on those flows as well.

Recognizing these successes we believe the future holds unprecedented opportunities.

Speaker 3: Recognizing these successes, we believe the future holds unprecedented opportunities.

Speaker 3: Neighbors is ideally positioned to help drive the energy transition.

Nabors is ideally positioned to help drive the energy transition.

Speaker 3: At the same time, we are committed to the responsible production of hydrocarbons.

At the same time, we are committed to the responsible production of hydrocarbons. We believe this combination opens up a long wide runway for nabors as I have said before the best is yet to come.

Speaker 3: We believe this combination opens up a long, wide runway for neighbors. As I have said before, the best is yet to come.

Speaker 3: That concludes my remarks today. Thank you for your time and attention. With that, we will take your questions.

That concludes my remarks today. Thank you for your time and attention with that we will take your questions.

Speaker 1: We will now begin the question and answer session. To ask a question, you may press star, then one, on your touch tone phone.

We will now begin the question and answer session.

To ask a question you May Press Star then one on your Touchtone phone.

Speaker 1: If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star, then 2. At this time, we'll pause momentarily to...

If youre using a speakerphone please pick up your handset before pressing the keys.

To withdraw your question. Please press Star then two.

At this time, we will pause momentarily to assemble our roster.

Our first question comes from Conor went off from Morgan Stanley . Please go ahead.

Speaker 1: Connor went off from Morgan Stanley . Please go ahead and...

Speaker 2: Yeah, thanks. One of the things that stood out to me most in the in the press release was the $4,000 step up in day rates. I was wondering if you could give a little bit more color, you know, how nuanced was that contract signing, you know, was there any special features to the rig? And how realistic would it would it be to think of the rest of your fleet migrating towards that type of a rate over the year here?

Yes. Thanks.

One of the things that stood out to me most of that in the press release was $4000 step up in day rates I was wondering if you could give a little bit more color Hao.

Nuanced was that contract signing was there anything special features to the rig.

And how realistic what would it be to think of the rest of your fleet migrating towards that type of a rate over the year here.

Okay, well I guess the color is that we see living edge base rates moving pretty quickly here the fourth quarter average revenue per day. As you know was 21 seven and the number you referred to is leading edge I wouldn't say every every renewal was at that but that's pretty applicable to most of the discussions and and and and.

Speaker 3: Okay, well, I guess the color is that we see living edge base rates moving pretty quickly here. The fourth quarter average revenue per day, as you know, was 21.7. And the number you referred to is leading edge. I wouldn't say every renewal was at that, but that's pretty applicable to most of the discussions. And it interestingly applies to almost all the base.

Interestingly applies to almost all of the basins.

Speaker 3: Permian, Haynesville, North Dakota, I think may not be as applicable as Marcellus given the fact that market is suffering a little bit from takeaway capacity limits.

Permian.

Haynesville North Dakota, I think where it may not be as applicable to Marcellus given the fact that that market is suffering a little bit from takeaway capacity limits.

Speaker 3: and we've operated zero heads. So that puts a little bit of a damper on things. But generally, I think the market is very hot. In my 30 years of neighbors, it's probably the hottest in terms of ramping up.

<unk> hedged so that puts a damper on things, but generally I think the market is very hot in my 30 years Nabors is probably the hottest in terms of ramping up the ramp up of day rates that's ever been a course that offer extremely low point that was also unprecedented so take it with a grain of salt I think the other point to.

Speaker 3: ramp up of day rates that's ever been, of course, that's off an extremely low point that was also unprecedented. So taking it with a grain of salt. I think the other point to note is that even at these higher rates given costs and other points, we're still not at a price where you cannot afford new capital investments. So we're not really earning the kind of return that we really need to keep the industry healthy. But all that said, obviously it's over.

Notice that even at these higher rates given cost.

Other points, we're still.

Prices were you cannot afford new capital investment. So we're not really earning the kind of return that we really need to keep the industry healthy, but all of that said, obviously its all very constructive.

Speaker 2: helpful context. I mean if we could sort of stay...

That's helpful context, I mean, if we could sort of stay on this point.

Speaker 2: Is your view that the industry is sort of now out of whatever you want to call it, super spec, panoptimal capacity, and is there a reason to think that there will be meaningful rig upgrades occurring later this year?

Is it your view that the industry is sort of now out of.

Whatever you want to call it Super spec pad optimal capacity is.

Is there a reason to think that there will be meaningful rig upgrades occurring later this year.

Speaker 3: I still think there's some runway to go yet. I mean, we're at 75%. So.

I still think there's some runway to go yet I mean, we're at 75% so.

Speaker 3: You know, if things stay on track by the end of the year, then I think you can reassess that question. Right now there's still capacity to absorb and obviously at the numbers we're at, we're at 75% historically as you know, that's when the hockey stick of pricing starts kicking in a little bit. Uh, so it's hot and you can tell that from the operators today. Um, want a hot rig and got to have rigs even if they have a gap in their program to use the efforts to kind of.

If things stay on track by the end of the year and I think you can.

First that question right now there is still capacity to absorb and obviously at the numbers. We're at we're at 75% historically as you know that's where the hockey stick of pricing starts kicking in a little bit.

So it's hot and you can tell that from the operators operators today.

One of the hot rig and the guys that have rigs even if they have a gap in their program. They usually efforts to kind of hold on to the breakeven organic deals with other people to hold onto the rate because I wanted to let it loose all of which are constructive signs, but I think we're still it's still ways to get from calling that we have a new era of replacement pricing for new builds or even.

Speaker 3: hold on to the rig, even working out deals with other people, to hold on to the rig because they want to let it loose, all of which are constructive signs.

Speaker 3: But I think we're still a ways yet in calling that we're a new era of replacement pricing for new builds, right? Or even for significant upgrades, because obviously that depends on the long term curve and what things look like. And I think it's way too early to say that.

One significant upgrades, because obviously that depends on the long term curve and what things look like and I think it's way too early to say that.

In the meantime, it as pretty constructive.

Speaker 4: I'll make an additional comment. Connor, I think we're going to be adding somewhere in the range of 9 to 10 rigs in the first quarter. So by the end of the first quarter, we'll be in the low 80% kind of utilization, which is really as high as it's been a long time. And I think we're going to exit the year around the 100-rig mark so out of the 110 high-sped rigs that we have. So that's how hot the market is going to be.

I'll make an additional comment I think we're going to be adding somewhere in the range of 90 to 10 rigs in the first quarter. So by the end of the first quarter will be in the low 80% kind of utilization, which is really as high as it's been a long time and I think we're going to exit the year around the 100 rig Mark So how does the 110 high speed.

The rigs that we have so that somehow the market is going to be we think.

Speaker 2: Yeah, that's all helpful context. Maybe just to sneak one more in here. So, based on your comments there, it doesn't sound like we should really expect a lot of upgrade capital or anything like that. Really the only growth capital. It sounds like it's slated for the tier is the SNAW program. Is that a fair summary?

Yes, that's all helpful context, maybe just to sneak one more in here.

So.

Based on your comments there it doesn't sound like we should really expect a lot of upgrade capital or anything like that really the only growth capital. It sounds like it's slated for the tiers. What's not program is that is that a fair summary.

Speaker 3: Yeah, well, I mean, one of the things obviously, where we're different is that with our 111 rigs, they're all will have walking capability already. So unlike some of our leading competitors, we all have that as an issue now.

Yes, well I mean, one of the things, obviously, where we are different is that with our 111 rigs that wall, who will have walking capability already so unlike some of our leading competitors. We all have that as an issue now.

So I don't think for us to get to that one loved them of their significant growth capital beyond that 111 number then we have to address that issue, but as I said, we're not at that point yet. So the good news is we've got a pretty good runway here in front of us pretty clear runway and.

Speaker 3: So, I don't think for us to get to that 111 number, there's significant growth capital beyond that 111 number. Then we have to address that issue. But as I said, we're not we're not at that point yet. So the good news is we've got a pretty good runway here. In front of us pretty clear runway and that's what we're going to take advantage of.

That's where we can take advantage of.

Alright, thanks for all the color.

Speaker 1: The next question comes from Waqar Syed from ATP Capital Markets. Please go digitalk impacted drifting of body control.

The next question comes from Waqar Sayed from ATP capital markets. Please go ahead.

Thank you for taking my question and congrats on a great quarter.

Speaker 5: Thank you for taking my question and congrats on a great quarter.

Speaker 5: William, if you analyze...

William.

Annualized.

Speaker 5: Q4 EBITDA around $525 million. Now you have a target of $800 million EBITDA for 2023 that you highlighted. Could you remind us how you're gonna fill up that gap, like $275 million or so gap that exists from analyzing Q4 to getting to $800?

In Q4 EBITDA coming around.

Around $525 million now you have a target of $800 million EBITDA.

For 2023 that you highlighted.

Could you remind us how you're going to fill up that gap like $275 million or so gap that exists from annualizing.

Q4, two to getting to 800.

Speaker 4: You want to go that far out how a car just just we got a question this question again. So I just, you know, I think everybody. I'll just give it give you a bit of a 10,000 foot. Analysis, but we think that keep in mind that we run rate is about. 520 right now, so let's call it a 300Million dollar.

When you want to go that far out with have Waqar.

Yes.

And we got a question. This question again, so I just have.

I think it will be.

Everybody.

Just give it give you a bit of a 10000 foot.

Analysis, but we think that.

Keep in mind that we have run rate is about $5 20, right now so let's call it.

$300 million.

Speaker 4: gap to get us to the 800 in 2023. So if you look at the growth, the rigs where we were in the fourth quarter, which were roughly 74 rigs in world 48, and you get us to about 105 average say in 2023, that growth.

The app to get us to the 800 in the in 2023.

So if you look at the growth the rigs, where we were in the fourth quarter, which would be roughly 74 rigs to move 48.

And.

And you'll get us to about 105 average seen in 2023.

That growth in rigs.

Speaker 4: represents roughly about 110 million dollars of incremental EBITDA.

<unk> represents roughly about $110 million of incremental EBITDA.

Speaker 4: And if then you take our margins from 7,000 to 10,000, which you think will be the case by the end of, by the year 2023, we're looking at another $90 million. So that's $200 million on top of what we had in the fourth quarter annual line.

And then you take our margins from 7000 to 10000, which we think will be the case by the end by the.

The year 2023, we're looking at another $90 million, so thats $200 million on top of what we had in the fourth quarter annualized and then if you look at <unk>, we were looking at another $56 million of incremental increments.

Speaker 4: Then if you look at Sanad, we're looking at another 50, 60 million dollars of incremental capex from the rig additions that we have on the JV with the new bills that are coming out at 10 million a year. And then our drilling solutions, I can't...

Incremental capex from the rig additions that we have on the on the on the JV with new builds that are coming out at 10 million in EBITDA per year, and then are you.

Drilling solutions I can't tell you how.

Speaker 4: Optimistic and positive and bullish we are about neighbors learning solutions. That's going to be our strongest growing segment overall.

Optimistic and positive and bullish we are about nabors lending solutions, that's going to be our strongest growing segment overall.

Speaker 4: I have full confidence that we're going to be giving positive news all the time going forward with drilling solutions. I think it's somewhere in the range of 50 to 50 million dollars in that business alone. So that's how we get there.

I have full confidence that we're going to be giving positive moves all the time going forward and building solutions I think is somewhere in the range of $50 million to $60 million growth in that business alone. So so thats, how we get there.

Speaker 5: That's very helpful. In terms of you seeing very strong momentum in rig rates, do you see over the next three years or so rig rates getting to levels that would get into new build type economics in the US? Again, what would be the day rate at which new building would be justified?

That's very helpful.

Now in terms of you're seeing very strong momentum in obviously rig rates.

Do you see over the next three years or so rig rates getting to levels that would.

And youre getting to Newbuild type economics in the U S.

And again, what would be the day rate at which new.

New building would be justified.

Speaker 3: Yeah, I think at a minimum that's the 3030 plus in terms of the day rate. And

Yes.

At a minimum that would be 30 30, plus in terms of the day rate.

Speaker 3: Again, it depends on the outlook, what the real future's curve is going to look like so that people can actually plan accordingly programs that will justify paying those incremental numbers. I think the other question is going to be what those rigs are going to look like. As you know, our thesis is that the industry has to move to automated rigs that have a new level of automation and that could help drive that move, but I think it's still too early to say that and obviously the economics, they don't support it. So, but...

Again, it depends on the outlook with what the real for the futures curve is going to look like so that people can actually plan accordingly programs that will justify paying those incremental numbers I think the other question is going to be what those rigs look like as you know our thesis is that.

The industry has to move to automated rigs of a new level of automation and that could help drive that move but I think it's still too early to say that and obviously the economic data.

Supported so.

But.

Speaker 3: Yeah, it is a possibility again. I think it's too early to call, but you need at least a 30,000 day rate to get there.

Yes. It is a possibility again I think it's too early to call, but you need at least a $30000 day rate to get there.

Okay.

Great. Thank you very much thanks for your answers.

Speaker 1: The next question comes from Carl Bluntin from Goldman Sachs. Please go ahead.

The next question comes from Karl Blunden from Goldman Sachs. Please go ahead.

Hi, good afternoon, thanks, very much for the time.

Speaker 6: On the distribution from SONOD, I was wondering if you could provide just a bit more context around that 18 million number in 4Q.

On the distribution from <unk> I was wondering if you could provide just a bit more context around that 18 million number in <unk>.

Speaker 6: I realize it's small, but the context would be helpful. And then just bigger picture, taking a look at the Sonnard RIG program and new build program you have in place, it does look like the JV is positioned to turn cashflow positive in 2024. Just be interested in your expectations around when you would start receiving consistent cash distributions from the JV program.

I realize it's small but the context would be helpful. And then just bigger picture, taking a look at the cyanide rig program and Newbuild program you have in place does it does look like the JV is positioned to turn cash flow positive in 2024, just be interested in your expectations around when you would start receiving consistent.

Cash distributions from the JV.

Speaker 3: Well, from a initial comment I'd just like to make is when this deal was first announced, I think there was some concern about our partner's willingness to actually cause their recast distributions. And with the 2 distributions that were made this year, I hope those concerns have allayed. That shows that Aramco is also a partner that's looking at things practically and businesslike. So, I think it's really a a testament to the partnership we have that you actually see that because that was 1 of the concerns.

Well from a from a initial comment I would just like to make is when this deal was first announced I think there was some concern about our partners' willingness to actually cause there to be cash distributions and with the two distribution that made this year I hope those concerns of late that shows that Aramco is also a partner is looking at things practically in business like.

So I think it's really.

A testament to the partnership we have that you actually see that because that was one of the concerns. The other point is you make is yes. There comes a point, where the newbuild what to what.

Speaker 4: The other point as you make is yes, there comes a point where the new bill wants to get to in stream, then it should be self funding in a way. And I'll let William talk about the exact timing of that. Yeah, I'll give you what our forecast and our projections are. And by the way, the reason we distributed $59 million.

In stream then it should be self funding in a way.

<unk>.

I'll, let wound up.

But the exact timing of that yet.

I'll give you what our forecast and our projections are and by the way. The reason, we distribute we distributed $59 million to each partner, which is roughly about 120 I would have spent this year is because we have.

Speaker 4: to each partner which is roughly about 120 out of Sanad this year is because we have we accumulated some excess cash in Sanad. We still have more but obviously we didn't want to take too much out of Sanad at this point. So at the year end we reviewed our forecast.

We accumulated some excess cash and incentives, we still have more but but obviously we didn't want to.

To take too much on incentive at this point.

So at year end, we reviewed our and for our forecast are consumption over the next several years and Theres two conclusions one of the conclusions and we had a bit too much cash.

Speaker 4: our consumption over the next several years. And there's two conclusions. One of the conclusions is that we had a bit too much cash.

Speaker 4: So we continue to distribute in addition to the $100 million we did early in the year. And the second one is that we estimate somewhere in the 2024 timeframe, we reach balance sometime in that year. So from that point onwards, you could expect to see significant cash coming out of SANA on a yearly basis.

We continued to distribute in addition to the 100 million. We did early in the year and the second one is that we estimate somewhere in the 2024 timeframe, we reached balance sometime in that year, so from that point onwards.

You you could expect to see significant cash coming out of China on a yearly basis.

Speaker 6: very helpful. Also took note of the comments that you made around debt reduction in December and January of the 89 million across the 23s and the 25s. I don't know if it's possible to provide more specifics around which of those 25s you took out and then just some context on

That's very helpful.

We also took note of the comment that you made around debt reduction in December and January of the $89 million.

That's a 23% 25%.

Possible to provide more specifics around which of those 20 fives you took out and then just some some context on.

Speaker 6: addressing more of the 25s now you know one step at a time and you did outline very clearly you plan to use cash flow through the 2024 bonds but just thinking around those 25s it's a bit of a larger maturity wall is that something that you would plan to address primarily with cash flow for a while or is there a larger plan to just extend that and then not worry about the maturity

Addressing more of the 20 fives now one step at a time and you did outline very clearly you plan to use cash flow through the 2024 bonds, but just thinking around the 25, it's a bit of a larger maturity wall is that something that you would plan to address primarily with cash flow for a while or is there a larger plan to just extend that.

And they're not worried about the maturities for some time.

Speaker 4: Well, we do have to 2 sets of 2025, right? We have the exchange notes. 218 million dollars of those and the rest are the the.

While we do have two sets of 2025 strategy, we have the exchange notes to $118 million of those in the rest of the.

<unk>.

The non guaranteed and let's call them that way 2025.

Speaker 4: Then non guaranteed, let's call them that way 2025. So, our plans are to first apply our free cash flow to the remaining 2023s and 2024s, convertible bonds. And in answer to your question about 80% of what we bought was in the 2025s.

So our plans are to first apply our free cash flow to the remaining 2020 threes in 2020 for the convertible bonds.

In answer to your question about 80% of what we bought was into 2020 clients by the way.

Speaker 4: So, our plans for the wall, as you described it, is to start making a dent also on the 2025. But at some point, when that number in the 2025 reaches somewhere in the range of $500 million.

So our plans for the wall as you described it is to start making event also on the 2020 fives.

But at some point when that number into 2025 reached somewhere in the range of $500 million.

I think that would that could be refinanced away though.

Speaker 4: I think that could be refinanced with the $1 billion in capacity we have now to issue no guaranteed debt. So that's more or less the plan. When that will be, at this point I can't tell you. If our cash flow is a little bit stronger and we can reduce it even more then the refinancing can be delayed. But you know usually I like to look at and the company has done that in the past but somewhere...

The $1 billion in capacity, we have now to issue.

No guaranteed debt, so thats more or less the plan when that will be at this point I can tell you.

If it's if our cash flow is a little bit stronger.

And we can reduce it even more than the refinancing can be delayed, but usually I would like to look at then the company has done that in the past.

Somewhere.

Speaker 4: within a two-year period we start looking at refinancing opportunities.

Within within a two year period, we start looking at refinancing opportunities.

That's helpful.

Speaker 4: and definitely recommend this. We are a period of maturity, right? Before maturity we start looking at opportunities. So that's something that we're looking at.

Rocky Erika we are period of maturity before maturity you start looking at opportunities.

Is that.

And that's something you can expect to see in the future.

Speaker 6: That's very helpful. We definitely recognize the flexibility you have there with the guaranteed capacity. Thanks very much for the time.

That's very helpful and we definitely recognize the flexibility you have there with those.

The guaranteed capacity. Thanks, thanks, very much for the time.

Thanks, Paul.

Speaker 1: The next question comes from Arun Jayaram from JP Morgan. Please go ahead.

The next question comes from Arun <unk> from Jpmorgan. Please go ahead.

Speaker 7: Yeah, good afternoon. I'd say one of the key called early themes from earning season has been, you know, punchy spending increases for the majors in the US lower 48 Exxon Chevron, Conoco.

Hey, good afternoon, I'd say one of the key called early themes.

From earning season has been punch.

Punchy spending increases for the majors.

In the U S lower 48, Exxon Chevron Conoco.

Speaker 7: Historically, this has been a pretty important customer group for neighbors. Tony, you mentioned more recently that you've kind of been capturing about 15 percent...

Historically, that's been a pretty important customer group for Nabors Tony.

Tony You mentioned more recently that you've kind of been capturing about 15%.

Speaker 7: of some of the incremental rig count additions per what you've reported versus what you're seeing in Envara. I was wondering if you could maybe comment on what you're seeing from the separate customer groups and would some increases by the majors, what would that mean to neighbors?

Of.

Some of the incremental <unk>.

Rig count additions per.

What you reported versus what Youre seeing in Edinburgh I was wondering if you could maybe comment on.

What youre seeing from the separate customer groups and wood.

Some increases by the majors, what would that mean to nabors.

Speaker 3: So obviously I think we have a pretty good position with the majors and any increase there will get our fair share Hopefully I think in terms of the move that has occurred so far However, if you look at our tier one customer group, it's actually the large independents have been driving that and

So obviously.

I think we have a pretty good position with the majors and any increase there we'll get our fair share hopefully.

In terms of the move that has occurred so far however, if you look at our tier one customer group, it's actually the large independents have been driving that and.

And obviously in the market as a whole I think the private to really play a great role in pushing it. So the supermajors have not yet stepped up and notwithstanding the prices they haven't yet put the foot on the pedal and I'd also comment even though the large independents I think the increases have been tempered a little bit by even by them.

Speaker 3: Obviously in the market as a whole I think the privates have really played a great role in pushing it So the super majors have not yet stepped up

Speaker 3: and notwithstanding the prices, they haven't yet put the foot on the pedal. I'd also comment that even the large independent...

Speaker 3: I think the increases have been tempered a little bit, even by them, given the fact that we've seen a large amount of consolidation in the sector. Obviously, Pioneer, Conoco, and Devon have well done deals and when they're digesting those deals, they don't put the foot to the pedal as aggressively either. So, whether that will change as they get more into integration, that's an open question. But right now, at least in our customer base, the tier 1s, those tier 1s have been a bit more responsible for the charge rather than our historical super majors.

The fact that we've seen a large amount of consolidation in the sector, obviously pioneer conoco and debit will done deals in that when they are digesting those deals as they don't put the foot to.

The pedal as aggressively either so whether that will change as they get more into integration. That's an open question, but right now at least our customer base to tier ones those tier ones have been a bit more of responses with the charge rather than our historical supermajors.

Great Great and just my follow up.

Speaker 7: You guided to $380 million in capex in 2020, $250 for the Sanaa JV. So for the $230 million in capital outside of the Sanaa JV, can you give us a sense of how much of that is maintenance capex versus maybe some upgrades in that? So just a little bit more flavor on the capex program.

You guided to $380 million in Capex in 2020 250.

For the Synod JV.

So for the $230 million.

And capital outside of the Salon JV can you give us a sense of how much of that is.

Is maintenance capex versus maybe some some upgrades in that in that total just a little bit more flavor on the Capex program.

Speaker 4: I, I'll give I'll take a whack at that 1. I think.

I'll I'll give I'll take that.

Back at that one I think.

Speaker 4: I would say virtually all the money that's being spent outside China is for sustaining graphics. So that includes

I would say virtually all the money thats being spent outside China is sustaining capex.

That includes.

Speaker 4: Maintenance, which is most of that we do have some.

Maintenance, which is most of that we do have.

Some.

Speaker 4: I would call some some capex in the in the budget for bringing rigs back. But again, we had a lot of rigs brought back in 2021. And that was absorbed in our capex numbers. We didn't really have a huge numbers for that. And we do have some maybe $9 million goes to our facility in Saudi Arabia.

I would call some some capex in the budget for bringing rigs back, but again, we had a lot of rigs brought back in 2021 and that was absorbed in our capex numbers.

We didn't really have.

Huge numbers.

For that and we do have some maybe $9 million goes toward facility in Saudi Arabia.

Speaker 4: We have a big rig in Papua New Guinea that we signed five years ago, so maybe some $10 million for that. Anything else is maintenance slash sustaining capital.

We have a big rig in Papua New Guinea that we signed five years ago. Since then maybe some $10 million for that everything else is maintenance maintenance slash sustaining capex.

Speaker 4: We're going to spend some money, a little bit more money in NDS, but it just doesn't move the needle. I told you multiple times before that NDS is very light, capex light, so in reality what moves the needle are the rigs. And the rigs, as the fee goes up, there's a certain amount of dollars per rig per year that need to be spent on the maintenance of those rigs. So that's where you see lean free.

We're going to spend some money on little bit more money in India, but it's just it just doesn't move the needle.

Told you multiple times before that <unk> is very light capex light. So so in reality what moves the needle on the rigs and the rigs as the fee goes up there is a certain amount of dollars per rig per year that needs to be spent on.

On the on that on the maintenance of those rigs. So that's that's where you see the increase.

Speaker 7: Great. I just had one maybe quick housekeeping question. In the other long-term assets section of the balance sheet, it moved kind of almost $275 million sequentially from $408 million to $675 million. What is in that? I believe there's some detail on that increase.

Great I just had one quick housekeeping question.

And the other long term assets section of the balance sheet and it moved kind of almost $275 million sequentially.

From $4 8 million to 675, what is then that could you give us some detail on that increase.

It's just this back money.

Speaker 4: Okay, got it. Got it. Makes sense. Investment in the SPAC, right? So that's what you see there. Great, thanks a lot.

Okay got it got it makes sense investment in this bank so thats, what you see there.

Great. Thanks, a lot.

Yeah.

Again, if you have a question. Please press Star then one.

Speaker 1: Our next question comes from Taylor Zircher from Tudor Pickering and Holt. Please go ahead.

Our next question comes from Taylor Zurcher from Tudor Pickering and Holt. Please go ahead.

Speaker 8: Tony and William, thanks for taking my question. My first one's on international pricing.

Hey, Tony William Thanks for taking my question first one is on international pricing, Tony I think you talked about some tendering opportunities in Latin America for the first half of the year end.

Speaker 8: about some entering opportunities in Latin America for the first half of the year and some Middle East opportunities above and beyond Saudi, where you think you might be able to get some pricing in 2022. And I guess I'm just curious for more color on the pricing outlook. Just looking at your rig count, you're at roughly 70 rigs today. And exiting 2019, you were closer to 90. So if we just extrapolate that out.

Some some middle east opportunities above and beyond Saudi.

Where you think you might be able to get some pricing in 2022, and I guess I'm just curious.

For more color on the pricing outlook when just looking at your rig count here at roughly 70 rigs today and exiting.

<unk> 2019 year closer to 90, so if we just extrapolate that out it would suggest that that capacity is not actually.

Speaker 8: capacity is not actually super soaked up right now. And maybe there's some mixed issues underneath the surface that I can't really see very well from my seat, but long winded way of asking, I'm just curious how you're thinking about international pricing over the course of 2022.

Super soaked up right now and maybe there were some mix issues underneath the surface that I can't really see very well from my seat along the way of asking I'm, just curious how youre thinking about international pricing over the course of 2022 outside of Saudi.

Speaker 3: Personally comment on activity, so in terms of activity, obviously, we have visibility on the Saudi rates, which are are 4 for this year. In total, we have good visibility on 8 rates, including Saudi for this year, 3 in the 2nd quarter, and the other 5 in the back half.

Personally comment on activity. So in terms of activity, obviously, we have visibility on the Saudi rigs, which are our four for this year.

In total we have good visibility on eight rigs, including Saudi for for this year of three in the second quarter and the other five in the back half and the other the other rigs that will be flat in America in terms of bidding activity I think Oman, Kuwait or other areas that are out there and there is some activity there as well, although we're not yet willing to call.

Speaker 3: and the other region will be Latin America. In terms of bidding activity, I think Oman, Kuwait, or other areas that are out there, and there is some activity there as well, although we're not yet willing to call actual visibility on it, but it's in our runway. And in terms of pricing, I think it's fair to say that

Actual visibility on it but it's.

It's in our runway and in terms of pricing I think it's fair to say that that.

Speaker 3: Depends on the type of rates. If it's oil stuff, then...

It depends on the type of rigs if its oil if it's oil stuff then.

Speaker 3: you're not looking at that big of increases. If it's deep gas, those rigs don't exist today.

You are not looking at that big increases if a deep gas those rigs don't exist today and even in our fleet, we have to dig deeper in terms of meeting the requirements because that has a lot of <unk> and heavy pressure equipment, all that kind of stuff and that stuff is not really off the shelf. So if those if you land one of those things.

Speaker 3: And even in our fleet, we have to dig deeper in terms of meeting the requirements because that has a lot of BOPs and heavy pressure equipment all that kind of stuff.

Speaker 3: And that stuff is not readily off the shelf. So if those, if you land on one of those things, those are going to be, they're going to require additional capex that has been planned for. But there will also be.

Those are going to be.

They're going to require additional capex, that's been planned for but they'll also be at replacement cost margins because the rigs don't exist. So that is a great opportunity out there.

Speaker 3: at replacement cost margins because the rings don't exist. So that is a great opportunity out there.

Speaker 3: one that can get it. And obviously that stuff we're on the hunt for as well.

Once you get it so that's and obviously that stuff we're on the hunt for as well.

Speaker 8: Got it, thanks for that and follow up on free cash flow for 2022. I don't think I might have missed this in prepared remarks, but question is at the recent analyst day presentation, you outlined a plan for 200 million of free cash flow in 2022. I imagine this outlook only gotten better since then or neutral at worst, but I just curious if 200 million. Let me correct that in the analyst day we outlined 300 million for. 2023.

Got it thanks for that and a follow up on free cash flow for 2022, I don't think I might have missed this in prepared remarks, but.

My question is at the recent analyst day presentation, you outlined the plan for $200 million of free cash flow in 2022, I imagine this outlook only gotten better since then or neutral at worst, but I'm. Just curious if 200 million, let me correct that in the analyst day, we outlined $300 million for two.

2023.

Speaker 4: Yeah, I'm talking about 200 million for 2022. That must be your interpolation between numbers.

Yes.

Yes.

I'm talking about 200 million for 2020.

And most of the year interpolation.

Between the two numbers, but.

What.

Speaker 4: I mean, it's early in the year and at this point the best I can give is some sort of range. So, I'll give you a wide range because it's early in the year. So, I think somewhere between $100 and $200 million. It'll be positive, it'll be meaningful, and of course it will depend on what year end collections are that always affect the number. I'll give you an example. In the fourth quarter of this year, we had a pricing increase with our largest client.

I mean, it's early in the year end at this point.

The best I can give us some sort of range. So I'll give you a wide range.

It's early in the year, so I think somewhere between 100 $200 million.

It'll be positive it will be meaningful.

And of course, it will depend on what year end collections, our that's always a factor a number.

Give you an example in the fourth quarter of this year.

We had a pricing increase.

Our largest client.

Speaker 4: Late in the year, and they could, they didn't have the time to put it in the systems. So, about 20M dollars of collections that should have come in the 4th quarter ended up in the 1st quarter. So that can happen at year end. So, at this point, I can give you a wide range. But it just my range just tells you the confidence we have that we're going to be. Meaningfully positive, we'll continue using all that money to reduce our net debt. Thank you.

Late in the year end.

They could they didn't have the time to put it in the systems.

So about $20 million of collections that should have come in the fourth quarter ended up in the first quarter. So that can happen at year end at this point I can give you a wide range on it.

My range just tells you the confidence we have that we're going to be.

Meaningfully positive, we'll continue using all of that money to reduce our net debt.

Got it thanks for the clarification I'll turn it back.

The next question comes from Keith Mackey from RBC capital markets. Please go ahead.

Speaker 1: The next question comes from Keith Mackey from RBC Capital Markets. Please go ahead.

Hi, there and thanks for taking my questions.

Speaker 3: Just wanted to start off maybe on NDS and I heard your commentary about the growth implied to get to your 2023 targets of 800 for the corporate and 50 to 60 in NDS. Can you just give us a sense of...

Just wanted to start off maybe on an NDS.

I heard your commentary about the the growth implied to get to your 2023 target 800 for the corporate.

$50 to $60 in Mds can you just give us a sense of how much.

Speaker 9: third party or additional third party penetration that implies or is most of that growth on the neighbors' kits on neighbors...

Third party or additional third party penetration that implies or is most of that growth on the neighbors neighbors kits on nabors ratio.

Speaker 3: Yeah, I can't give you an exact breakdown, but it's a two step process. One is to go deeper. I mean, we're up to 75% on five or more services in neighbors rates and to get make sure that all the high margin stuff is part of that parcel. To extract more content from neighbors rates and then the 2nd point is to do the 3rd party. And right now the 3rd party is.

Yes, I can't give you an exact breakdown, but it's a two step process. One is to go deeper and we were up 75% on fiber more services in nabors rigs and to get make sure all the high margin stuff is part of it that parcel.

Extract more content from neighbors rates and then the second point is to do the third party and right now the third party is relatively.

Speaker 3: small, but we've made a lot of investment this past year in re-architecting our portfolio so that we can more easily put these services on third-party rates.

Small but.

Yes.

$50 million in revenue with Dominion revenue.

But we've made a lot of investments this past year and re architect our portfolio. So that we can more easily put these services on third party rigs obviously, a third party, we will not get all the benefits of being on a nabors rig, but we think we have a way now very cost effectively introduced in services on third party rigs and we're going to do that not just in the U S. But internationally is.

Speaker 3: Obviously, a third party will not get all the benefits of being on the neighbors rig, but we think we have a way now very cost effectively to introduce the services on third party.

Speaker 3: And we're going to do that not just in the US, but internationally as well. And also, we've also said that we're willing to put them on what you might view as competitor links as well that people...

Well and also we've also said that we're willing to put them on.

What you might view as competitor competitive rigs as well.

People don't normally think of working together, but.

Speaker 3: don't normally think of working together, but we're trying to make the value proposition that this helps the customer and it will help you as well if you do it and do it on this path. We think the CD is out of the bottle on this automation and so therefore it's in everyone's interest. For example, our performance software and performance tools, our RIG operating system would

Try to make the value proposition that this helps the customer and it will help you as well if you do it if you go down this path, we think the skus out of the bottle on the on this automation and so therefore, it's in everyone's interest for example, or our performance software and performance tools, our rig operating system, which I think is unmatched in the industry now with <unk>.

Speaker 3: I think is unmatched in the industry now with the re-sequency engine which...

Frequency engine, which you saw the benefits of the vacuum opinion rate that is now available on.

Speaker 3: You saw the benefits of in the rack opinion rate that is now available as a on every rate on neighbors rigs as well. 3rd party rigs will be available as well. If you go to the website neighbors website today, you'll see under insights on the landing page a video of direct opinion. It gives you an idea how automated it is. You'll see it's stabbing into a hole without a person on the rig for that level of automation is available now. To be transported on our competitor rate.

On every rig on nabors rigs as well as third party rigs will be available as well. If you go to the website Nabors website today Youll see under insights on the landing page of video of the recommended makes it gives you an idea how automated is you'll see it staffing into a hole without a person on the rig floor that level of automation is available now to be transported on.

Our competitor rigs.

As easily.

Speaker 3: not as easily, but pretty easily, and we're going to try to make that accessible, which helps the operator because...

Not as easily but pretty easily in and we're going to try and make that accessible which helps the operator because this allows the operators well planned to be executed digitally which is the real value prop you can't get to automation you can't get the factory drilling today unless you are out in the path of both automation and mechanization and we think that that that path.

Speaker 3: This allows the operators world plans to be executed digitally, which is the real value prop.

Speaker 3: You can't get to automation, you can't get the factory drilling today unless you go down the path of both automation and mechanization. And we think that that path has now been opened, that Pandora's box is open, and we think it's only going to continue. So our position is to try to take advantage of it by exporting some of this technology out to third party rates.

We hope that that.

That Pandora's box to open and we think it's only going to continue so our position is to try to take advantage of it by <unk>. Some of this technology out to third party weeks Chipotle anything yet.

Speaker 5: Mr. Bode, anything to add? Yeah, I guess the key thing that we are focusing on NDS is to target the underserved markets that we have, where technology is really required to lower the cost per foot drill. And the other key market are the LSTK markets.

I guess the the key thing too that we are focusing on NDS is to target the underserved markets that we have.

That technology is really required to lower the cost per foot drilled and the other key market. The LST care markets. So aligning because those customers, which are operating those lump sum turnkey projects are really looking for a step change in their performance.

Speaker 10: So aligning because those customers which are operating those lump sum turnkey projects are really looking for a step change in their performance. So our focus on third party is focused not just on lower 48, but also internationally to ensure that we work with the customers to grow the performance levels that are possible today in lower 48. I'll make an additional comment.

Our focus on third party is is focused not just on lower 48, but also internationally to ensure that we work with our customers to grow.

The performance levels that are possible today in lower 48.

I'll make an additional comment.

Keith.

Speaker 4: I think it wasn't missed by our competitors that one of the large independent decided to give us all their work almost 12 rigs.

I think it wasn't missed by our competitors that one of the large independent decided to give us all their work.

Most 12 rigs.

Speaker 4: They were getting good performance from their supplier at the time.

They were getting good performance from their supplier at the time.

Speaker 4: but they just wanted to go a step further in technology implementation and using some of the techniques that have been very successful with our clients. So because of that they gave us all the work and this won't be missed by our competitors. I think this will be something that will allow us to start introducing those technologies with our peers as well.

But they just wanted to go a step further and technology implementation and using some of the techniques that have been very successful with our clients. So because of that they gave us all the work.

And this won't be missed by our competitors I think this will be something that will allow us to.

Start introducing those technologies with our peers as well.

Got it thanks for that and maybe just one follow up on that on that topic. How do you see the economic model changing at all I know NDS is certainly very high margin as it is.

Speaker 9: Got it. Thanks for that. And maybe just one follow up on that on that topic. How do you see the economic model changing at all? I know NDS is certainly very high margin as it is.

Speaker 9: But how do you see the economic model changing as you increase the amount of mechanization on rigs and adding value in the per-foot drilled? Is it strictly a day-rate model that you'll prefer, or is there a way to get a larger piece of the pie as you prove the benefits?

But how do you see maybe the economic model changing as you increase the amount of mechanization on rigs and <unk>.

And adding value in the per foot drilled is it strictly a day rate model that youll prefer or or is there a way to get.

Larger piece of the pie as you as you prove the benefits.

Speaker 3: Obviously, it's a work in process. I mean, this has been the age old question in the sector. When you look at today, you know, virtually all the of the pricing is based on a value pricing. So. When you talk with other operators talking about their performance contract.

Obviously, it's a work in process I mean this has been the age old question of the sector. When you look at Mds today.

Virtually all of the MBS pricing is based on a value pricing. So when you talk with other operators talk about their performance contracts.

Speaker 3: To me there's nothing revolutionary about those kind of contracts. They're just KPI, you do a KPI that, you give the operator KPI that you can't perform, I mean that you think you can beat, and then you call that a performance contract. That's nothing innovative.

To me, there's nothing revolutionary about those kind of contracts. They are just kpis you do have kpis that you give the operator kpis that you can't perform.

You think you can be and then you called out a performance contract.

Innovative.

Speaker 3: as far as I can see. What we're trying to do with MDS is deliver a service.

As far as I can see what we're trying to do with Mds is deliver a service.

Speaker 3: that he needs on the weldboard but to deliver it with a quality level and in a way that unlocks additional value and on that additional value we take a proportionate share. And that's the way the pricing on the NDS products work which is why they're so they've been so successful right now. And we intend to continue that. And as the rig gets more integrated with this automation stuff I think there will be more opportunities to do exactly the same thing. And by the way I think with our automationeeeeeeeeeeeeeeeeeeeeee

That he needs on the world on the Wellbore, but deliberate with a quality level and in a way that unlocks additional value and on that additional value, we take our proportionate share and thats the way the pricing on the MBS plants work, which is why they are so.

They've been so successful right now and and we intend to continue that and Thats. The rig gets more integrated with this automation stuff I think there'll be more opportunities to do exactly the same thing and by the way I think.

With our automation platform I think.

Speaker 3: Well, we have this concept of using the rig as a platform. It will also be the case that we can use the rig as a service where other. Service providers like the big, the big 3 or big 4 that have.

We have this concept of using the rig as a platform. It will also be the case that we can use the rig as a service where other service providers like the big the Big three are big four that have.

Speaker 3: technology or apps they want to run on a rig, we can actually enable that onto our rig, which will allow them to be successful, but also we get our fair share of that pie as well because we're creating an ecosystem that allows us collaborative sharing. That's part of the mission as well. So in that sense, we are going to change the sector a little bit if we're successful making inroads on that.

Technology, our apps they want to run a rig we can actually enable that onto our rate, which will allow them to be successful, but also we get our fair share of that pie as well because we're creating an ecosystem that allows us collaborative sharing that's part of the mission as well so in that sense, we arent going to change the sector a little bit if we're successful in making inroads on that.

So both yes.

Speaker 10: the board guys here that yeah come just to complement what Tony said our approach is to be flexible in our commercial terms but the key thing that we are trying to drive a stickiness that comes either as

Yes.

Just to complement what Tony is that our approach is to be flexible in our commercial terms, but the key thing that we're trying to drive a stickiness that comes either as.

Speaker 10: service as a subscription model, platform as a service model. So the idea is to generate continuous revenue streams going forward, which helps in meaningful discounted cash flow for today. So I think that's our approach to ensure that what we provide is going to be sticking around for a long period of time.

Service as a subscription model platform as a service model. So the idea is to generate continuous revenue streams going forward, which helps and meaningful discounted cash flow for today. So I think that's that's our approach to ensure that what we provide.

Is going to be sticking around for a long period of time.

Okay. Thanks very much.

Speaker 1: This concludes our question and answer session. I'd like to turn the conference back over to William Conroy for any closing remarks.

This concludes our question and answer session I would like to turn the conference back over to William Conroy.

Any closing remarks.

Speaker 2: Thank you for joining us this afternoon. If you have any additional questions or wish to follow up, please contact us. We'll end the call there. Jason, thank you very much. Our conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

Thank you for joining us. This afternoon, if you have any additional questions or wish to follow up please contact us.

We will end the call there Jason Thank you very much.

The conference has now concluded. Thank you for attending today's presentation you may now disconnect.

Speaker 11: The C.

Okay.

[music].

Yes.

Okay.

Yes.

Okay.

Yes.

[music].

Sure.

[music].