Nabors Industries Ltd.

Good day and welcome to the second quarter 2026 Neighbors Industries Ltd. earnings conference call. All participants will be in a listen-only mode. Should you need assistance, please signal conference specialists 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 touchtone phone. And to withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Mr. William Conroy, Vice President of Investor Relations. Please go ahead, sir.

Good morning, everyone. Thank you for joining Naver's second quarter 2026 earnings conference call. Today, we will follow our customary format with Tony Petrello, our Chairman, President, and Chief Executive Officer, and Miguel Rodriguez, our Chief Financial Officer, providing their perspectives on the quarter's results, along with insights into our markets and how we expect Navers 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 Navers.com. Instructions for the replay of this call are posted on the website as well. With us today, in addition to Tony, Miguel 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 exchange commission. As a result of these factors, our actual results may vary materially from those indicated or implied by such forward-looking statements. 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 Miguel 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. 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 to review our second quarter results. Once again, we delivered strong operational execution and achieved several strategic milestones. Let's start with our financial results. Adjusted EBITDA totaled $222 million, well above our expectations. We exceeded the guidance we provided last quarter across all four reporting segments. Daily margins were especially strong in our lower 48 and international drilling businesses. This metric expanded sequentially in both operations, outperforming our guidance. Those gains reflect disciplined commercial execution, operational excellence, and outstanding work by our teams around the world. The quarter also included several significant milestones. First, our San Antonio Venture placed another new build rig into service its 16th. Sanit also returned one previously suspended rig to work. Two of Sanit's three suspended rigs are now back on contract. We also began drilling on Quaze Energy's Project Obsidian in Oregon. This project represents the first commercial application of super hot enhanced geothermal systems. The project is ultimately targeted to deliver gigawatt scale geothermal power. Additionally, we commissioned two of our highest specification PACEX Ultra Rigs for Catarists, one in South Texas and the other in East Texas. In our Rig Technologies business, CanRig introduced its first advanced, fully automated Titan Rig Floor Wrench into commercial service. Early field results have been exceptional. Titan combines superior torque accuracy, faster connection time, consistent make-up in one bite, and lower cost of ownership in a simpler machine. That is an unmatched combination in a rig floor wrench today. Finally, NDS's Rocket Drill String Oscillation Software secured an important competitive win. Rocket displaced an incumbent competitor on multiple third-party rigs. This win demonstrates Rocket's technology leadership and compelling value proposition. Next, I'll discuss our key international markets. I'll also outline why Neighbors is strongly positioned to gain share and grow earnings in each of them. Our international footprint focuses on key markets across the Middle East and Latin America. Saudi Arabia remains the cornerstone of this business. The Saudi land rig market continues to recover. Approximately 196 land rigs are currently operating in the Kingdom. That number is up by four compared to last quarter. is up by 35 from this market's recent low in the third quarter of 2025. The current count still stands 28 rigs below the peak in early 2024. Our standard joint venture currently operates 55 rigs in the kingdom. That number includes 16 rigs delivered through the new build program and two previously suspended rigs that have returned to service. With a 28% market share, Sanad is the largest land drilling contractor in Saudi Arabia. In addition to this scale, our fleet aligns well with the Kingdom's strategic priorities. Of the industry's land rigs running currently in the Kingdom, approximately two-thirds work in natural gas. Sanad's gas exposure is even greater, with nearly three-quarters in gas. This positions Sanad at the center of Saudi Aramco's investment in expanding natural gas production. Despite regional geopolitical tensions, SANA's operations have continued without interruption, and the growth ahead is substantial. 34 rigs remain to be delivered under the 50-rig new-build program. SANA has a clear runway for additional earnings growth over the next several years. Beyond Saudi Arabia, our Gulf business continues to perform exceptionally well. In both Kuwait and Oman, our rigs have operated continuously since the commencement of the conflict. In Kuwait, we have three deep gas exploration rigs running. They are on long-term contracts that commenced in 2025. The opportunity extends well beyond today's fleet. Kuwait continues investing in gas development. Current tender activity for additional high specification rigs supports our expectation that this market will expand. In Oman, we have four rigs running. They continue to perform well. Multiple tenders are now underway, which could create additional opportunities across several operators. Taken together, Saudi Arabia, Kuwait, and Oman provide a strong growth corridor in our international portfolio. Our high specification fleet and long-standing customer relationships position us well to capture incremental work. On top of our rigged businesses in the region, NDS has established significant market positions in Saudi Arabia and the UAE. NDS holds the number one market share in casing running in both countries. These two geographies already rank as the second and third largest international contributors to NDS's EBITDA. Next, I'll shift over to Latin America, starting with Argentina. Argentina continues to be one of NABIR's most compelling international success stories. We are currently operating 13 rigs in the country. Another is earning revenue under an O&M contract. The client base is well diversified. Our fleet currently works for five different operators. With a 30% market share, Neighbors holds the largest position in the country. We are now mobilizing another rig to Argentina. That will bring the Neighbors total to 14 rigs, further extending our leadership in this market. Of our working fleet in Argentina, at the end of the quarter, five were formerly idle units in the lower 48. This demonstrates our ability to optimize assets globally under long-term contracts. We can generate attractive returns without incurring incremental new-build capital. The value of Argentina extends beyond drilling. Our drilling solutions business has become deeply embedded in the development of the Vaca Morta. The client base there has widely adopted the NDS technology portfolio. NDS accounts for approximately 46% of our EBITDA in Argentina in the first half of 2026. This marks the highest contribution of any country in our portfolio, illustrating our strategy of the rig as a platform in action. We combine premium drilling rigs with differentiated technology to optimize performance, increase margins, deepen customer relationships, and expand returns beyond the rig itself. We believe Argentina is one of the most attractive international growth markets. Our view is supported by world-class resources compelling project economics, and an increasingly stable operating environment. I'll wrap up the international market discussion with Venezuela. The outlook there has improved materially this year. Today's drilling activity remains limited, with less than a handful of rigs running. By comparison, in 2013, more than 85 rigs were operating. Given the large resource base in the country and the proximity to suitable refining capacity, Venezuela holds enormous potential. Neighbors has a long history in Venezuela. One of our predecessor companies, Laughlin Brothers, started there nearly 70 years ago. Today, we have five vital rigs in the country. We are well positioned should activity resume. Several large operators have expressed interest in restarting drilling programs. Under the right commercial conditions, Venezuela has the potential to become another meaningful contributor to our international business over time. To summarize the international environment, the broader picture is encouraging. Across our existing international footprint, we are tracking opportunities representing more than 40 incremental rigs. This number, spread among 10 countries, indicates a robust market for additional rigs. That opportunity set reflects the strength of our customer relationships, the quality of our rig fleet, and the increasing demand for high-performance drilling and technology solutions. As always, our approach remains disciplined and selective. We will pursue only those opportunities that meet our return thresholds and strengthen long-term shareholder value. I'll conclude my remarks on the international markets with the following. Our Arabian Gulf operations continue without interruption, demonstrating the resilience of our people, infrastructure and customer relationships. Saned continues to strengthen its leadership position in Saudi Arabia through new-build deliveries and returning suspended rigs to service. Argentina showcases the power of our integrated strategy, combining drilling and technology to deliver industry-leading returns. Venezuela presents an improving long-term opportunity where our fleet and technology positions us to capture additional upside. Next, let me turn to the U.S. Lower 48. The industry strengthened during the second quarter. From the end of the first quarter to the end of the second quarter, the Baker Hughes lower 48 land rig count increased by 31 rigs or 6%. This marks a notable upward turn after the modest decline in the first quarter. This compares to the most recent high of 568 set in February 2025. The Baker quarterly average rig count increased by 5 rigs or 1% in the second quarter. Looking a bit deeper at the lower 48 industry in the second quarter, the Baker end-to-end oil rig count increased by 8%, the gas rig count declined slightly. By region, the oil directed increase was concentrated in the Permian, the Austin Chalk, and the Granite Wash. And in terms of operator type, per Inverness, public operators held flat while private operator activity increased sequentially by 17%. To sum up, the growth in the lower 48 rig market during the quarter, it was oil, it was in Texas, and it was generally smaller operators. Our experience, however, looked different, and we believed better. We had a five-rig store count during the second quarter. These were a mix of oil, gas, and geothermal. Our activity was diversified across regions. Importantly, two of those contracts came from a supermajor. That distinction matters. larger operators tend to run longer duration drilling programs. They adopt advanced technologies earlier and provide greater earnings visibility than smaller independents. By quarter end, nearly 70% of our working lower 48 fleet served publicly traded operators. That customer mix continues to differentiate neighbors. Let me conclude with a few comments on this market's economics. The improving utilization environment is beginning to translate into stronger financial performance. During the quarter, our lower 48 daily revenue improved by more than $900 sequentially. At the same time, we added a term to our lower 48 contract backlog. By quarter end, more than 45% of our rigs in this market had at least six months of remaining duration. We expect to be at approximately 50% in the third quarter. Looking ahead, Our quarterly survey of large lower 48 operators indicates a constructive outlook. This group accounted for approximately 43% of this market's working rig count. They increased their rig count by 12 rigs during the second quarter. This increase was concentrated among four operators. A quarter ago, the survey indicated a 15-rig addition through the end of the year. Those were mainly in just two operators. In the second quarter, these two operators accounted for just a few of the group's increased rig count. Also, a quarter ago, we mentioned that the sentiment reflected in the survey favored incremental activity above the expected rig count. Some of this positive sentiment translated into actual rig additions during the quarter. Now, looking through the end of 2026, the survey reveals another 11 rigs expected to be added, concentrated in two operators, taken together Customer plans, improving utilization, and stronger commercial conditions all support our confidence in continued activity and pricing momentum through the balance of this year and into 2027. Next, I will make a few remarks about our technology and innovation. Technology remains one of the neighbor's most important competitive advantages. Our strategy is straightforward. Develop technologies that improve drilling performance, expand customer returns and increase the earnings power of every rig we operate. The second quarter again demonstrated that strategy at work. On neighbors own lower 48 rigs, NDS revenue increased sequentially by 11%, outpacing fleet growth. Growth was led by MPD and RigCloud, demonstrating continued customer adoption of higher value software and automation solutions. The same pattern is evident on third party rigs. While third-party average rig count increased only 1%, NDS revenue grew 12%. Strong demand for our software products produced this result. That spread illustrates an important point. Our technology business is growing because customers are adopting more of our solutions. Earlier, I mentioned the deployment of two PACE-X Ultra rigs. Those rigs entered service fully equipped with the NDS technology suite. including technology offerings, daily revenue meaningfully exceeds $40,000 per rig. That demonstrates the economic power of integrating premium rigs with premium technology and highlights our rig-as-a-platform strategy at work. It creates higher revenue, stronger margins, deeper customer relationships, and greater differentiation than either business could achieve independently. That remains one of NABRA's clearest competitive advantages. Now let me turn to Miguel to discuss our financial results in detail.