What Could Happen to Nabors Industries’ Debt in 2017



Nabors Industries’ net debt

Net debt for NBR’s peers

Nabors Industries’ larger-market-cap peer National Oilwell Varco’s (NOV) net debt at the end of 3Q17 was $1.48 billion. Weatherford International’s (WFT) net debt was $7.4 billion on September 30. Nabors Industries is 2.6% of the SPDR S&P Oil & Gas Equipment & Services ETF (XES). Since September 29, XES fell 8% compared to a 28% fall in NBR’s stock price.

Nabors Industries’ debt

Nabors Industries’ net debt to adjusted TTM (or trailing-12-month) EBITDA rose from 3Q16 through 3Q17. In 3Q17, Nabors Industries’ net debt to adjusted EBITDA multiple (or indebtedness) was ~6.7x, 54% higher than a year ago. Lower EBITDA and higher net debt led to higher indebtedness in 3Q17.

Will Nabors Industries’ debt fall in 2017?

NBR’s management plans to use free cash flow to reduce debt. In the 3Q17 earnings conference call, William J. Restrepo, NBR’s CFO, commented, “Our free cash flow will be allocated primarily to debt reduction. Finally are available revolver capacity and our cash balances give a significant flexibility to address our 2018 maturity, which currently stands at about $460 million.”

Next, we will discuss Nabors Industries’ free cash flows.

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