The U.S. Lower 48 drilling market may finally be showing signs of stabilization and recovery — and Nabors Industries believes the cycle is beginning to shift in favor of high-spec drilling contractors.
During its Q1 2026 earnings call, Nabors executives outlined a noticeably more constructive outlook for U.S. land drilling activity, pointing to improving rig utilization, strengthening pricing dynamics, and increasing demand for advanced drilling technologies.
While operators remain cautious amid oil price volatility, Nabors made it clear that activity trends beneath the surface are improving.
Rig Count Momentum Returns
One of the most important takeaways from the earnings call was Nabors’ continued rig growth in the Lower 48 despite a relatively flat broader market.
The company added:
- 4 rigs during Q1 2026
- 8 rigs since November 2025
That pushed Nabors’ Lower 48 working rig count to 66 rigs, with management expecting the count to rise further to approximately 69 rigs during the second quarter.
What makes this more significant is that the broader U.S. rig market has not materially improved. Nabors noted that the Baker Hughes Lower 48 land rig count actually declined slightly during the same period, meaning the company is gaining market share through operational execution and technology differentiation.
The newly added rigs were spread across key shale basins:
- Permian Basin
- Haynesville
- Eagle Ford
Management described this geographic diversity as a healthy sign for the market.
Why Nabors Is Winning More Work
According to CEO Anthony Petrello, Nabors’ success is being driven by several competitive advantages:
- High-spec drilling rigs
- Advanced drilling automation
- Strong field performance
- Experienced crews
- Pricing discipline
- Integrated drilling technologies
The company emphasized that operators are increasingly prioritizing drilling efficiency and well performance over simply chasing the lowest dayrate.
This trend strongly favors contractors capable of delivering:
- Faster drilling times
- Longer lateral capability
- Automation integration
- High-pressure drilling systems
- Better overall well economics
Nabors believes this shift is becoming structural rather than temporary.
Pricing Outlook Turning Positive
Perhaps the biggest change in tone from prior quarters was management’s growing confidence in future rig pricing.
Nabors now expects Lower 48 rig pricing to continue improving through 2026 and into 2027, with leading-edge dayrates moving from the low-$30,000/day range into the mid-$30,000s.
The company identified several factors driving this trend.
1. Fewer Marketable Rigs Available
The U.S. land drilling market has undergone years of attrition:
- Older rigs have been retired
- Many rigs require upgrades
- Contractors have remained disciplined on reactivations
As a result, the supply of truly market-ready high-spec rigs has tightened considerably.
Nabors believes this shrinking supply base will continue supporting stronger pricing.
Longer Laterals Require Better Rigs
Another major driver is the evolution of shale well design.
Operators are increasingly drilling:
- 4- and 5-mile laterals
- Higher-pressure wells
- More technically demanding drilling programs
These wells require upgraded rigs with:
- Larger setback capacity
- More robust mud systems
- Advanced automation
- Enhanced power and torque capability
Nabors believes its fleet is uniquely positioned because many of its PACE-X rigs were originally designed to support these increasingly demanding applications.
According to management, “the market is finally catching up to the X rig.”
The Rise of Premium Technology Rigs
Nabors also highlighted growing demand for its next-generation PACE-X Ultra rigs.
These rigs include:
- 10,000 psi mud systems
- Integrated drilling automation
- Managed Pressure Drilling (MPD) systems
- Nabors Drilling Solutions (NDS) technology packages
The company said these integrated systems are generating daily revenues above $40,000/day and delivering strong performance for operators.
Two additional PACE-X Ultra rigs are expected to deploy later this year.
Importantly, Nabors sees technology becoming a larger component of future drilling economics. Operators increasingly want:
- Faster drilling performance
- Lower well costs
- Better EURs (Estimated Ultimate Recovery)
- Reduced nonproductive time
That creates opportunities for contractors that can combine rigs, software, automation, and drilling services into a single integrated offering.
Basin-by-Basin Market Trends
Nabors also provided useful insight into regional market conditions across the Lower 48.
Permian Basin
- Utilization tightening
- Churn declining
- Pricing moving higher
Eagle Ford / South Texas
- Strong market improvement
- Faster tightening conditions
- Significant reduction in rig churn
Bakken / North Dakota
- Moderate improvement
- Operators planning acceleration into 2027
East Texas
- Activity relatively flat
- Natural gas weakness weighing on utilization
Northeast Appalachia
- Stable but constrained
- Pipeline limitations continue to restrict growth
Overall, management believes the strongest pricing momentum is currently occurring in oil-weighted basins and technically demanding drilling programs.
Operators Still Remain Disciplined
Despite the improving outlook, Nabors stressed that operators are not aggressively ramping activity.
Several factors continue to limit rapid growth:
- Oil price volatility
- Backwardated futures curves
- Capital discipline among public E&Ps
- Investor pressure to prioritize returns over growth
This means the market recovery is likely to remain gradual rather than explosive.
However, Nabors believes this disciplined environment may actually help contractors by preventing oversupply and supporting sustainable pricing gains.
A More Constructive Cycle Emerging
The overall message from Nabors was clear:
- The Lower 48 market is improving
- High-spec rigs are becoming more valuable
- Technology is driving differentiation
- Pricing momentum is returning
- Contractors with premium fleets are positioned to outperform
For Nabors, the company believes its combination of advanced rig technology, automation, and operational execution is allowing it to gain share even before a full industry recovery takes hold.
If oil prices remain supportive and operator confidence improves, Nabors appears positioned to benefit from both higher activity and stronger pricing through 2026 and beyond.
Nabors Industries YTD Wells Spud Summary
Total Record Count
- Total Wells Spud YTD: 481 records
Wells Spud by Play / Basin
(Using County-level grouping)
Play / Basin Record Count Permian Basin 194 Bakken / Williston 122 Eagle Ford 73 Alaska North Slope 32 Haynesville 25 Powder River Basin 17 Gulf of Mexico 6 Uinta / Piceance 6 Appalachia 3 Other 2 San Juan Basin 1
Top Account Names by Play / Basin
Permian Basin (194 Wells)
| Account Name | Record Count |
|---|---|
| ConocoPhillips Company | 57 |
| Exxon (XTO) | 48 |
| EOG Resources, Inc. | 27 |
| Diamondback Energy, Inc. | 26 |
| BPX | 20 |
Bakken / Williston (122 Wells)
| Account Name | Record Count |
|---|---|
| Chevron U.S.A. Inc. | 26 |
| Devon Energy Corporation | 24 |
| ConocoPhillips Company | 21 |
| Kraken Resources | 15 |
| Formentera Operations LLC | 10 |
Eagle Ford (73 Wells)
| Account Name | Record Count |
|---|---|
| EOG Resources, Inc. | 16 |
| BPX | 15 |
| Caturus (Kimmeridge Energy) | 12 |
| SM Energy Companyn (Civitas) | 9 |
| ConocoPhillips Company | 7 |
Alaska North Slope (32 Wells)
| Account Name | Record Count |
|---|---|
| Hilcorp Energy Company | 19 |
| ConocoPhillips Company | 9 |
| OIL SANDS ONE LIMITED | 4 |
Haynesville (25 Wells)
| Account Name | Record Count |
|---|---|
| Comstock Resources Inc. | 12 |
| Rockcliff Energy III LLC | 10 |
| Pine Wave Energy Partners | 2 |
| ENSIGHT IV ENERGY MANAGEMENT, LLC | 1 |
Powder River Basin (17 Wells)
| Account Name | Record Count |
|---|---|
| EOG Resources, Inc. | 15 |
| ROCKIES RESOURCES HOLDINGS LLC | 2 |
Gulf of Mexico (6 Wells)
| Account Name | Record Count |
|---|---|
| LLOX, L.L.C. | 3 |
| Chevron U.S.A. Inc. | 2 |
| ENI PETROLEUM CO., INC. | 1 |
Uinta / Piceance (6 Wells)
| Account Name | Record Count |
|---|---|
| QB ENERGY OPERATING LLC | 3 |
| CAERUS OIL & GAS | 3 |
Appalachia (3 Wells)
| Account Name | Record Count |
|---|---|
| Hilcorp Energy Company | 2 |
| Devon Energy Corporation | 1 |
San Juan Basin (1 Well)
| Account Name | Record Count |
|---|---|
| Hilcorp Energy Company | 1 |
Author: phinds
