What happened
Shares of Nabors Industries (NYSE: NBR) had surged more than 20% by 10:30 a.m. ET on Wednesday. The primary catalyst fueling the oil stock's rally was its third-quarter report.
So what
"We had an outstanding third quarter," CEO Anthony Petrello said in the earnings release. Revenue rose 10% sequentially to $694 million. Meanwhile, its adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) jumped 21% to $158 million, putting it back at pre-pandemic levels.
Petrello said that "all our operating segments grew sequentially...and that the U.S. drilling segment once again delivered strong growth, largely driven by continued dayrate increases in the lower 48 [states]." The company also delivered improving daily margins and EBITDA in its international segment. Meanwhile, its drilling solutions segment's annual EBITDA run rate exceeded $100 million, while its gross margin achieved another all-time high.
The company expects the good times to continue to roll. Petrello said that drilling activity in the lower 48 states "remains robust." Daily revenue has been higher than its quarterly average, while utilization remains strong.
The company's discussions with customers lead it to believe it can reach 100% utilization of its high-specification fleet next year. The company also sees solid growth in its international markets, continued strength in drilling solutions, and encouraging progress in its energy transition initiatives.
Now what
Higher oil prices are incentivizing oil and gas companies to drill more wells and boost their output. That's driving demand for the oilfield equipment and services Nabors provides. Given the current strength in market conditions, the company expects 2023 to be another strong year. That could give its stock more fuel to continue rallying.
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Matthew DiLallo has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
