NABORS INDUSTRIES LTD (NBR) stock intrinsic value fair value estimate & owner earnings analysis

Nabors is a global drilling contractor operating in four lines of business: U.S. land drilling (concentrated in shale basins such as the Permian Basin in Texas/New Mexico), international drilling (principally Saudi Arabia, through its 50/50 SANAD joint venture with Saudi Aramco, plus other Middle East and Latin American markets), Drilling Solutions (rig-site technology and rental tools), and Rig Technologies (equipment manufacturing). In March 2025 Nabors acquired Parker Drilling Company at a modest price relative to the value of assets received, and five months later sold Parker's rental-tools unit, Quail Tools, for a substantial gain — a pair of one-time transactions that boosted reported 2025 net income but do not reflect the ongoing earnings power of the business, so they were excluded from our normalized earnings figure. What the shares appear to be worth depends heavily on which of three paths the business takes. In our base case, cash generation recovers in 2026 as a record 2025 capital-spending program (largely tied to expanding the Saudi Arabia rig fleet and integrating Parker) steps down toward levels the company has already committed to, and modest growth continues over the next decade as the international, Aramco-linked business — which grew revenue 10% and segment profit 52% in 2025 — gradually offsets a slowly shrinking U.S. land-rig count (down 7% in 2025 as shale operators do more with fewer rigs). On that path, we estimate the shares are worth roughly $276. In a bull case, the international expansion continues at its recent pace and margins keep improving without any assumption of an oil-price windfall, supporting a value near $377. In a bear case, the U.S. rig-count decline continues, growth in the Saudi Arabia relationship stalls, and Nabors experiences another stretch resembling 2017–2021 — a period in which normalized cash earnings were flat to negative for several years running. Combined with roughly $2.1–2.5 billion of long-term debt, that scenario supports a value of only about $97 per share. A meaningful risk worth flagging plainly: Saudi Aramco, through the SANAD joint venture, now accounts for about 30% of consolidated revenue and has been growing as a share of the business — a concentration that magnifies the downside if that relationship or Saudi drilling activity ever slows. The margin-of-safety price is set well below our base-case estimate to allow for that concentration, the company's debt load, and its inherent sensitivity to oil and gas prices; the margin-of-safety price reflects roughly a 40% discount to the base-case value for that reason.