Nabors Industries Ltd.

and welcome to the Neighbors Industry's second quarter 2025 earnings conference call. 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. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad, and to enjoy your question, please press star then two. Please note, today's event is being recorded. I would now like to turn the conference over to William Conroy, Vice President, Corporate Development and Investment Relations. Please go ahead.

Good morning, everyone. Thank you for joining Naver's second quarter 2025 earnings conference call. Today, we will follow our custom 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 neighbors to perform in these markets. 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. Instructions for the replay of this call are posted on the website as well. With us today, in addition to Tony, William, and me, are other members of the senior management team. 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 1933 and the Securities Exchange Act of 1934. 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. As a result of these factors, our actual results may vary materially from those indicated or implied During the call, we may discuss certain non-GAAP financial measures, such as net debt, adjusted operating income, adjusted EBITDA, and adjusted free cash flow. 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 adjusted free cash flow, as that non-GAAP measure is defined in our earnings release. 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. With that, I will turn the call over to Tony to begin.

Good morning. Thank you for joining us today as we review our second quarter results. We will also comment on the Parker Well Board business that we acquired in March and on the current market environment. The second quarter had several positive developments. Adjusted EBITDA totaled $248 million. This performance was in line with our expectations. It includes a full quarter contribution from the Parker operations, improved results in our U.S. drilling business, and four rig deployments in the Middle East. The Parker businesses performed well. They made a meaningful contribution to our overall results. And we are on track to achieve our 40 million cost energy target for 2025. I also want to mention our legacy neighbors business, excluding Parker, improved in the quarter. This performance speaks to the strength of our portfolio. Next, I'll address the border market environment. A number of factors currently influence oil. Global oil demand remains strong and growing. U.S. trade policy, specifically tariffs, appears to be gaining clarity. At the same time, production is increasing in certain countries, particularly in offshore reservoirs, and U.S. production, especially from unconventionals, continues to benefit from efficiency gains. In sum, the global oil market appears stable. This backdrop is supportive. Along with our presence in most major producing countries, we are well positioned to capitalize on opportunities across the globe. As for natural gas, that market has proved resilient. In part, this is driven by increasing LNG exports. The gas-directed industry rig count in the lower 48 has increased thus far in 2025. Our own rig count in the gas basins has grown since February. Natural gas activity in the U.S. appears poised for further recovery over the upcoming quarters. We are prepared to act quickly to stand up rigs in that event. Next, I will elaborate on our results. In the second quarter, the U.S. offshore and Alaska drilling operations, in particular, demonstrated the value of our differentiated businesses. Together, these contributed more than $20 million in EBITDA in the second quarter. Neighbors Drilling Solutions' gross profit margin reached 53%. Margins increased most of the MDS product lines. EBITDA from NDS now accounts for approximately 25% of our total operational EBITDA. Our own lower 48 average rig count increased by nearly two rigs. Activity in natural gas spaces continued to improve. We entered the second quarter at 63 above our 61 rig average for the first quarter. We held at 63 to 64 until mid-June. We then finished the quarter at 60. Now our rig count stands at 59. The lower 48 market continues to feel some pressure from activity reductions in oil-focused basins as clients rationalize their operations. Next, I'll discuss the international markets. Let me start with Saudi Arabia. A significant transformation is underway in this market, one that has accelerated in the past two years. The kingdom has progressively shifted its drilling focus from oil to natural gas. Since the beginning of 2024, in line with those objectives, a substantial number of land rigs have been idled. The majority of those rigs were drilling for oil. Over the same time period, the equivalent of half that number has started operating. These are primarily in deep gas and unconventional gas basins. These actions have taken the land rig count from 207 to 178 over this time. During this period, Santa's own rig count has increased by four rigs. In the second quarter, Santa delivered strong results as two more new bills were deployed. Looking ahead, we are pleased to announce Santa has received awards for five more rigs. With the award of this fourth tranche, the new bill deployment schedule calls for two more in 2025, four in 2026, and two in 2027. Elsewhere in the Eastern Hemisphere, we see industry activity improving. We've identified more than 25 opportunities to add rigs. Markets where we currently operate account for approximately 40% of this total. This total opportunity set is healthy. The addition of that number of rigs would support both industry utilization and pricing. In Latin America, activity in Mexico remains uncertain. We currently have three offshore platform rigs working. Our fourth rig reached the end of its contract. Our customer has expressed interest in recontracting the rig. With their specifications and capabilities, Our rigs are ideally suited for the customer's offshore platform activity. They have a modular design which enables rapid moves between platforms. This provides us with a significant competitive advantage. However, with our customers' current initiatives to reduce costs, there could be some exposure to our rig count. Our receivables collections in Mexico were below our target for the quarter. The Mexican government recently announced a structured transaction designed to support our customers' vendor payments. We are encouraged by this development and anticipate progress during the third quarter. In Colombia, we now have seven rigs working following the previously announced release of one rig. The rig should be recontracted in the third quarter with another customer. In Argentina, one of our clients reduced this activity, impacting one of our rigs at the end of the second quarter. That rig has been committed to another customer with an early fourth quarter start. At the same time, we have two more rigs preparing to start in the Vaca Muerta Basin for the same customer, one in the fourth quarter and the second early next year. These deployments will bring our rig count in Argentina to 13 in early 2026. We see a number of opportunities to add rigs in Latin America. These are primarily in both Argentina and Colombia. Now let me comment on the U.S. market. The Baker Hughes weekly lower 48 rig count declined by 7 percent from the end of March through the end of June. As this overall rig count declined, we noted a small shift in mix towards larger operators. Our own mix in this market is approximately 80 percent public and 20 percent privates. Operator consolidation continues to impact drilling activity predominantly in oil basins. While the pace of merger announcements has slowed, the activity rationalization process takes time. That continued through the first half. Once again, we surveyed the expected drilling activity of the largest lower 48 operators. This group accounted for approximately 44% of the lower 48 industry's working rig count at the end of the quarter. This most recent iteration indicates a slight decline in the group's rig count through the end of the year. 70% of the operators expect no change in activity. The rest are a mix of up and down. The expected aggregate change for the group in total is down around 1%. The pace of decline in the lower 48 rig count for the industry has diminished. We see stability in our own rig count through the remainder of the year. Now, I will make some comments on the key drivers of our results. I'll start with our international drilling business. This segment is a core contributor to our long-term success. Currently, we are deploying previously awarded rigs. We started five in the Middle East since the beginning of the second quarter. Several attractive markets are growing. Our advanced technology gives us an advantage as we tender rigs. Importantly, we are able to propose currently idle assets. This is a capital-efficient path to growth. Next, I'll highlight the recent developments in our international drilling business. First, Kuwait. This is a very important market. It offers opportunities for the highly capable rigs in our fleet. In the second quarter, we deployed two of our three previously awarded units on multi-year contracts. Early this quarter, we deployed the third. These additions should help fuel the sequential stock growth we expect in our international segment. Second, Saudi Arabia. Our standard joint venture deployed two new build rigs in the second quarter. These are the 11th and 12th in the new build program. The total program calls for 50 rigs over 10 years. Sanad is on track to deploy the next two bills before the end of 2025. Also in Saudi Arabia, Sanad has been awarded the next tranche of five rigs. Deployment of these rigs is scheduled to begin in 2026, with the final one starting in early 2027. This tranche will take the number of new bills to 20. Let me add a few more remarks regarding Sanad. The new build program is a unique opportunity in the global land drilling industry. It was a key factor in our decision to pursue the opportunity to partner with Sally Aramco 10 years ago. The addition of new build rigs creates an embedded growth trajectory for several years to come. Those rigs have 10 years of expected initial utilization. That visibility is unmatched in our industry. With this robust anticipated growth, Standard shareholders are committed to realizing the value that is building in the joint venture. Now I'll discuss our performance in the U.S. We are the only drilling contractor with operations in all three of the major markets in the U.S., the Lower 48, the Gulf of America, and Alaska. Our offshore and Alaska businesses combined contribute nearly 30% of our U.S. adjusted EBITDA. These businesses benefited from the addition of assets from Parker Wellbore. In Alaska, we now have seven rigs working, including two units that came from Parker. Last year at this time, we had four rigs running. This market is improving. Future large projects may strengthen the market even further. As expected, lower 48 daily rig margins in the second quarter declined. Rigs continue to recontract at leading-edge day rates below the fleet average. However, rig count increased more than offsetting the impact from margins. Looking to the third quarter, we expect some continued pressure on pricing. In this environment, we will continue our efforts to ensure that our operational expenses remain under control. We will also align our support structure and capital expenditures to our activity. Next, let me discuss our technology and innovation. Second quarter results for drilling solutions reflect the contribution of a full quarter from the Parker operations. Gross margin for this segment was 53%. The improvement over the first quarter was broad, spread across most of the NDS product lines. Quail Tools is now the largest revenue contributor in the NDS portfolio. I want to highlight Quail's lower 48 penetration in the second quarter. Running counter to the overall market, Quail added rigs in the second quarter. It has added even more early in the third quarter. I'll finish with a comment on NDS's geographical mix. In the second quarter, international operations accounted for nearly 40% of the segment total. On a comparable basis, including the Parker operations for the full first quarter, NDS international revenue increased sequentially by 8%. This result demonstrates the growing demand for NDS's advanced technology in markets around the globe. Next, let me make some comments on our capital structure. Our highest priority remains the reduction of our debt. During the second quarter, we repurchased approximately $14 million base value of notes at a significant discount. Fall of 2025, we expect to generate free cash flow. We intend to allocate that towards debt reduction. Before turning the call over to William for his review of our results and outlook, I would like to take a moment to acknowledge his many contributions to neighbors. William joined us in 2014, just before the sharp downturn that began later that year. Through his leadership and financial discipline, we significantly reduced net debt during that challenging time. As the market recovered, he was instrumental in the formation of our San Antonio venture, an important milestone for our company. During the unprecedented disruption of COVID, William once again demonstrated his leadership. We successfully navigated a difficult period that forced several companies in our industry to restructure. In summary, William has helped neighbors steer through some of the most challenging times. We have benefited from his many contributions, and we wish him all the best as he moves into the next phase of his career. Now let me turn the call over to William, who will discuss our financial results.