Will This Company’s Strategic Approach be Enough to Transcend Global Volatility in the Oil Industry?

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Written By Kris Enyinnaya

Throughout 2023, Nabors Industries faced formidable challenges alongside other onshore oilfield services (OFS) providers, stemming from dwindling rig counts in U.S. oil and gas basins.

This decline, amounting to approximately 20% year-on-year, reflected the broader trend of subdued activity in the domestic market, triggered by prevailing lower prices.

The company’s U.S. rig counts experienced a significant 20% year-on-year decline in 2023, mirroring the industry-wide trend.

Read More: Is This Oil and Gas Producer Flying Under the Radar?

Thriving in International Markets

Despite the domestic downturn, Nabors Industries distinguished itself with its substantial international exposure. While the U.S. market experienced stagnation or decline, international markets remained relatively stable.

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Credits: ATFX

This diversification shielded Nabors from the full impact of challenges faced by its domestic counterparts, making it an attractive investment proposition amidst industry turbulence.

Nabors’ international segment contributed significantly to its EBITDA, nearly matching contributions from the U.S.

Saudi Arabia’s Policy Shift

Recent developments in Saudi Arabia, particularly the announcement by Saudi Aramco regarding its maximum sustainable capacity, reverberated across the global energy sector.

The directive to maintain production levels at 12 million barrels per day (bpd) triggered market volatility, prompting a reassessment of investment strategies among OFS companies like Nabors.

The announcement by Saudi Aramco to maintain production levels at 12 million bpd had a notable impact on market sentiment and Nabors’ stock price.

Cornerstone of Middle East Operations

Despite market turbulence, Nabors Industries’ joint venture in Saudi Arabia, SANAD, emerged as a cornerstone of its international operations.

With 48 rigs in operation and prospects for further expansion, Nabors has solidified its position in the lucrative Middle Eastern market, offering stability and growth potential for investors amidst uncertainty.

Nabors’ SANAD joint venture in Saudi Arabia operates 48 rigs, showcasing the company’s strong presence in the Middle East.

Also Read: Unilever Initiates Share Buyback Amidst Calls for Enhanced Performance

Growth Prospects and Adaptability

Looking ahead, Nabors Industries remains cautiously optimistic about its growth prospects, both in international markets and its traditional stronghold of the U.S.

Nabors Industries Completes Its Most Impactful Energy Transition Investment to Date - ROGTEC
Credits: ROGTEC

While challenges persist, particularly amidst ongoing market volatility and geopolitical uncertainties, Nabors demonstrates resilience and adaptability.

By leveraging its international presence, investing in technological advancements, and maintaining a robust market position, Nabors is well-positioned to weather the storm and emerge stronger in the long run.

Nabors remains optimistic about its growth prospects, with double-digit international revenue growth expected in 2024 and a potential recovery in the U.S. market throughout the year.

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