Nabors Industries Ltd. has announced the sale of its subsidiary, Quail Tools, LLC, to Superior Energy Services, Inc. for a total consideration of $600 million. The net consideration for the sale amounts to $600 million plus adjustments for net working capital. The transaction is comprised of cash of $375 million and a seller note of $250 million. The company also expects to incur cash taxes on the sale of approximately $5 million, after using net operating loss carryforwards.
Quail, a leading provider of high-performance downhole tubulars to the U.S. oil and gas drilling market, has exceeded Nabors' expectations since the close of the Parker transaction. Nabors estimates that Quail will generate adjusted EBITDA of approximately $150 million in 2025, excluding any synergies that Superior may realize.
Upon full realization of the net proceeds from this transaction, Nabors will be accelerating more than five years of anticipated free cash flow from the combined Parker businesses. The sale of Quail will also result in a reduction of net debt by more than 25%, with annual interest savings in excess of $50 million, thereby enhancing Nabors' financial flexibility.
Following the divestiture, Nabors will retain the drilling rig, O&M, and tubular running services operations acquired from Parker. The company expects these retained businesses to generate full-year 2025 adjusted EBITDA at a run rate of at least $55 million, including realized 2025 post-closing synergies.
The combined net effect of the Parker and Quail transactions to Nabors' legacy business is summarized as follows: attributing proceeds of $625 million to the 4.8 million Nabors common shares issued would result in a share issuance value of approximately $130 per share. Additionally, the retained businesses are expected to contribute more than $55 million annual run-rate adjusted EBITDA, which translates into an additional $22 per issued share.
Upon the close of the transaction, Nabors expects net debt to decline by $625 million. As of June 30, 2025, Nabors reported long-term debt of $2.7 billion and net debt of $2.3 billion. This transaction is expected to facilitate a reduction in net debt of more than 25%, and deliver annual interest savings in excess of $50 million, enhancing Nabors' financial flexibility.
Anthony Petrello, Chairman, President, and CEO of Nabors, commented, "We are retaining the balance of the portfolio that we acquired from Parker Wellbore, which includes tubular running services in the U.S. and Middle East, drilling rigs, and rig operations and management contracts. This portfolio is already making a solid contribution to our results, and we expect further improvement as we realize targeted cost synergies."
Petrello further noted, "We would like to recognize the talented and dedicated Quail Tools team. They have built the leading franchise in the space. Their outstanding record of performance and strong customer base position them well for the future. These attributes made our decision to sell Quail a difficult one. However, the metrics of this transaction are clear. This divestiture creates significant value for our shareholders."
Following these announcements, the company's shares moved 7.61%, and are now trading at a price of $36.05. If you want to know more, read the company's complete 8-K report here.
