Nabors Divests Quail Tools Business to Superior Energy for $600M

Nabors Industries Ltd. NBR has finalized the sale of Quail Tools, its high-performance tubulars subsidiary, to Superior Energy Services for net consideration of $600 million and adjustments for net working capital. The deal combines $375 million in cash and a $250 million seller note. The transaction also includes a deal where Superior Energy will become Nabors’ preferred supplier of rental drill pipe and related products.

Unlocking Shareholder Value

The transaction is expected to accelerate more than five years of anticipated free cash flow from Nabors’ combined business, post Parker acquisition. The company expects that the Quail Tools unit, a leader in high-performance tubular rentals, which has always exceeded its expectations even in challenging market conditions, will continue to generate approximately $150 million in adjusted EBITDA in 2025 under the leadership of Superior Energy, while Nabors will leverage the deal proceeds to strengthen its financial position.

Balance Sheet Transformation

Nabors expects net debt reduction of more than 25%, or $625 million, along with $50 million in annual interest savings. With long-term debt standing at $2.7 billion as of June 2025, the divestiture enhances flexibility for growth and operational resilience.

Focus on Core Growth Businesses

Following the sale, Nabors will retain the balance of the portfolio that it acquired after the close of the Parker transaction, including drilling rigs, rig operations and management contracts, and tubular running services. These operations are expected to contribute at least $55 million in annual EBITDA, further boosting shareholder returns. Combined, the Parker acquisition and Quail disposition create a net positive impact for Nabors’ legacy business and position it for sustained value creation.

How Will the Deal Benefit Superior Energy?

For Superior Energy, acquiring Quail Tools nearly doubles its tubular inventory and significantly broadens the operational footprint, especially in the U.S. land market. Its leadership highlighted that Quail’s best-in-class facilities and experienced team will enable enhanced service for all major U.S. energy regions, while also supporting international expansion. The deal includes a Preferred Supplier Agreement, making Superior Energy the preferred rental drill pipe supplier for Nabors projects.

Consolidation and Industry Outlook

The transaction underscores a wave of ongoing consolidation in oilfield services, as companies shore up balance sheets and reposition for long-term growth amid volatile market conditions. Both leaders from Nabors and Superior Energy expressed optimism about harnessing new synergies and providing even stronger support for exploration and production customers across the globe.

NBR’s Zacks Rank and Key Picks

Hamilton-based Nabors is one of the largest land-drilling contractors in the world, conducting oil, gas, and geothermal land drilling operations. Currently, NBR has a Zacks Rank #3 (Hold).

Investors interested in the energy sector might look at some better-ranked stocks like Vitesse Energy, Inc. VTS, Global Partners LP GLP and Enbridge Inc. ENB.WhileVitesse Energy and Global Partners currently sport a Zacks Rank #1 (Strong Buy) each, Enbridge carries a Zacks Rank #2 (Buy).You can see the complete list of today’s Zacks #1 Rank stocks here.

New York-based Vitesse Energy is an independent energy company, engaged in the acquisition, development and production of non-operated oil and natural gas properties. The Zacks Consensus Estimate for VTS’ 2025 revenues indicates 15.3% year-over-year growth.

Global Partners is a Delaware limited partnership formed by affiliates of the Slifka family. It is one of the largest wholesale distributors of distillates. The Zacks Consensus Estimate for GLP’s 2025 earnings indicates 23.24% year-over-year growth.

Calgary, Alberta-based Enbridge is a leading energy infrastructure company. One of its businesses is the transportation of energy through the most extensive and advanced crude and liquids pipeline system. The Zacks Consensus Estimate for ENB’s 2025 earnings indicates 9.50% year-over-year growth.

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This article originally published on Zacks Investment Research (zacks.com).

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