Nabors Industries Ltd. (NYSE:NBR) Third Quarter 2022 Results Conference Call October 26, 2022 2:00 p. m. Eastern Time
Participating companies
William Conroy – Vice President of Investor Relations and Corporate Development
Tony Petrello – President, President and Chief Executive Officer
William Restrepo – Chief Financial Officer
Travis Purvis – Senior Vice President, Global Drilling Operations
Conference Call Participants
Karl Blunden-Goldman Sachs
Dan Kutz – Morgan Stanley
Derek Podhaizer – Barclays
Arun Jayaram – JPMorgan
David Smith – Pickering Energy Partners
Keith MacKey – RBC Capital Markets
Operator
Good morning and welcome to Nabors Industries’ third quarter 2022 earnings convention call. All participants will be in listen-only mode today. [Operator Instructions] After today’s presentation, you will have the opportunity to ask questions. [Operator Instructions] Please note that this occasion is recorded today.
Now I’d like to speak with William Conroy, Vice President of Investor Relations and Corporate Development. Keep going, sir.
William Conroy
Good afternoon, everyone. Thank you for joining the Nabors Third Quarter 2022 Earnings Convention call. Today, we will maintain our previous format with Tony Petrello, our president, president and chief executive officer; and William Restrepo, our Chief Financial Officer, offering his outlook on the effects of the quarter, as well as data on our markets and how we expect Nabors to perform in those markets.
In those comments, a slideshow can be downloaded in the webcast and investor relations segment of nabors. com. Instructions for relaying this call are also posted on the website.
With usArray, in addition to Tony, William, and me, there are other members of the control team. Because many of our comments will come with forward-looking expectations, they would possibly constitute forward-looking statements within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934.
These forward-looking statements are subject to certain risks and uncertainties, as disclosed through Nabors from time to time in our filings with the Securities and Exchange Commission. As a result of those factors, our actual effects could differ materially from those stated or implied by those forward-looking statements.
Also, on the call, we would possibly talk about certain non-GAAP monetary measures. Such as net debt, adjusted operating income, adjusted EBITDA and adjusted loose cash flow. All references to EBITDA made by Tony or William in their submissions, whether qualified through the word adjusted or otherwise, means adjusted EBITDA as that term is explained on our online page and in our press release.
Similarly, unless the context indicates otherwise, references to money refer to tight loose money, as that non-GAAP measure is explained in our earnings release. We have published in the Investor Relations segment of our online page a reconciliation of those to the maximum of recent comparable GAAP measures.
With that, I will pass the message to Tony to get him started.
Tony Petrello
Good afternoon. Register to present our third quarter 2022 effects. All our operating spaces once again behaved very well. We have the right strategy, our execution is strong and those effects demonstrate the earning capacity of our portfolio.
Adjusted EBITDA for the 3rd quarter totaled $191 million. A cumulative of 21% compared to the current quarter. Strong earnings expansion across all of our segments contributed to those results. Consolidated sales increased by 10. 2% sequentially. Our global average number of platforms for the third quarter increased by four platforms. United States and Saudi Arabia.
Drilling Solutions once again recorded double-digit EBITDA growth. In the third quarter, we continued to reduce our net debt. Our net debt increased to $2. 16 billion. The adjusted lost money was $35 million, much more than expected. I am pleased to report that we have once again made progress on our five keys to excellence.
These critical objectives are the investment thesis of the consulting firm Nabors. These come with our functionality and cutting-edge generation in the U. S. market, expanding and improving our overseas business, advancing generation and innovation with proven results, improving our capital design and deleveraging, and commitment to sustainability and the energy transition.
Let me update you starting with our functionality in the United States. We ended the quarter with 95 platforms in operation, 3 more platforms compared to the end of last quarter. Daily drilling margins in the Lower 48 have increased significantly. The highest average daily margin to nearly $2,500 in the third quarter. With this growth, our fleet’s average margin in the bottom 48 has crossed the $11,000 mark. These effects reflect our ability to reassess the fleet towards the upper end, which continues to grow.
Our strategy of staying short-term over the life of the contract and leveraging strong maximum value momentum boosted our performance. At those levels, daily rates are starting to reflect the cost of our platforms. Our order book. To this end, we have recently signed several platforms for multi-year contracts at those higher rates.
At Lower 48, traders remain very focused on leading platforms and cash execution. The pricing of our technologies in the Drilling Solutions business is a key driving force of our industry-leading drilling performance. For Nabors, this portfolio is a differentiator. I’ll talk about NDS in more detail in a moment.
Next, let’s talk about our activities abroad. Daily margins in this segment increased further in the third quarter. This accumulation reflects higher profitability in certain foreign markets, especially in the Latin American and Middle East regions. We also benefit from the implementation of our platform suitable for use in Papua. New Guinea.
During our last earnings conference call, I announced that the first new structure platform in the SANAD Kingdom dug its first well in early July. Since then, our team has done a wonderful job of getting the platform the functionality expected in a very short time. We look forward to the time when the new structure is implemented in the existing quarter. Three more new versions of the initial rewards will be rolled out in early 2023.
Everything will be for initial terms of six years followed by a full-year renewal. We expect more rewards at a rate of five consistent with the year. In addition, SANAD recently agreed to renew 24 platforms on 4-year contracts at existing market rates. This means that more than a part of the fleet in Saudi Arabia now has contracts with a remaining duration of more than 4 years.
Now let’s talk about our generation and innovation. Momentum generation is once again our main matrix. Our spaces come with automation, digitalization and robotization. In the third quarter, Drilling Solutions’ financial functionality advanced significantly. Quarterly EBITDA increased sequentially by 13% and exceeded $25 million.
At this rate, NDS is now a company with an EBITDA of $100 million a year. Most sensitively, the combined average margin in the bottom 48 of our drilling and drilling services industry approached $13,600, NDS contributing more than $2,400 a day. The typical Nabors platform in the bottom 48 runs more than six NDS services. This measure rose in the third quarter and reflects the strong price proposition of the portfolio.
Between automation and virtualArray, we saw a 16% expansion for SmartSLIDE and SmartNAV, an 11% increase for SmartDRILL, and early good fortune with SmartPLAN. Our digitalization and automation of procedures accounted for more than 60% of the segment’s gross margin. In the third quarter, NDS continued to grow its business on third-party platforms. The 48% decrease in the profits of this clientele increased up to 9% sequentially.
Earlier, we discussed our plans to implement robot modules to modernize existing platforms. This strategy is based on our experience with our fully automated R801 robot platform. During the third quarter, we installed the first robot module on one of our own existing platforms running for a superprimary in the Permian. This module addresses the long-awaited desire for an unmanned red zone on the platform floor. This safer operating environment also delivers consistent superior performance. The unit has already successfully drilled several additional wells. units.
Next, let’s talk about our progress in improving our capital structure. In the third quarter, we cut net debt further, basically due to a strong flow of loose money. As you know, we have prioritized the generation of loose cash flow and the deleveraging of the capital structure. As William will do in more detail, we continue to make progress on any of those goals. I will end this component of the talk with comments on ESG and the transition of power.
Our commitment to environmental stewardship is unwavering. We have 3 focus spaces. Reduce our own environmental footprint, capitalize on adjacent opportunities, and strategically invest in cutting-edge corporations obviously adjacent to our core business while accelerating their large-scale development.
Our efforts to decrease our carbon intensity are paying off. In the U. S. , we are introducing technologies that accelerate emissions reductions. First, Canrig developed the PowerTap module, which allows us to connect platforms directly to the network temporarily. of the 8 sets recently installed and operational in the Lower 48 fleet, we are in the process of implementing seven more by the end of the year. We plan to load another 10 sets in Lower 48 in 2023. In charging, we have evolved a solution for the overseas market that will be commercialized in 2023.
Secondly, we are testing a new battery garage concept on the platform running in Bakken. As you know, several competitors use containerized lithium battery garages to balance the load and look for load spikes. Our differentiated solution uses lithium ultracapacitors. This ultracapacitor-based generation accelerates charging times and reduces the threat of explosion or fire.
We are also testing a hydrogen injection formula. This formula reduces fuel intake and emissions have been installed in diesel engines. This solution will find applications in the broader oil sector as well as in the shipping and heavy truck industries. Finally, our efforts in complex tissue science can lead to new products. for battery storage, electrolysis and hydrogen fuel cells. We hope to have greater visibility of all this in 2023.
Now, I’m going to spend a few minutes on the macro environment. WTI is currently in the mid-80s, the value of 24-month futures is about 10% higher than the value of December last year. This perspective supports the continued increase in drilling activity. The final touch of the existing budget cycle.
In the existing macroeconomic environment, we keep an eye out for points that may have an effect on the market. Among them, we see a credit crunch and the possibility of a recession. Even in light of those points, commodity markets have remained constructive, giving us confidence in our outlook through 2023. In the United States, the availability of manpower to assist our operations remains a challenge, those that are surmountable.
We remain confident in our ability to deploy more platforms as we continue to meet developing market demand. In terms of the broader supply chain, we continue to see some upward strain on prices. only about 14% of operating expenses. In addition, long lead times persist for some parts. However, we were able to navigate these demanding situations thanks to our in-house production operation.
Next, I will take a few moments to the rates. The worthwhile platform around the bottom 48 remains as optimistic as ever. Our average source of profit in the bottom 48 increased through over $3,600 sequentially or 14% and exceeded $29,000. We recently signed contracts with consistent earnings the next day at $40,000 and that’s before the addition of NDS content. The use of high-specification drilling rigs across the industry continues to decline. Lately we are in talks for more platforms in 2023. With this mix and assuming constructive commodity values in 2023, we expect continued increases in maximum values.
At the same time, the cost of reactivating high-specification incremental platforms continues to rise. For our high-spec idle platforms, we see reactivation CapEx and spfinish range from an average of $2 million for the first 8 games or so to $6 million for the next 8. We expect all of our high-specification platforms to be deployed by the end of 2023. Our plans for 2023 include unit upgrades beyond our existing fleet of 111 high-specification platforms. We still have more than 40 M550s stacked, those rigs can be upgraded to high-specification capacity at a cost of around $13 million to $15 million each, still less than part of the cost of new construction.
We finished seven upgrades to the M550 a few years ago, and all the sets are working lately. International activity is expanding in all markets. This expansion had a positive effect on daily rates. Recently, we revamped several platforms and added more games in various markets, all with price increases.
Once again, we surveyed the largest consumers in the bottom 48 at the end of the third quarter. This organisation accounts for 31% of the number of painting platforms. Our survey indicates a projected 4% growth in the activity of this organization at the end of the year. In our foreign markets, several operators have expressed their objective of strengthening their point of activity. In turn, we plan to upload platforms in several markets.
Of course, we have an exclusive opportunity for more new construction in Saudi Arabia. Beyond that, bidding activity is highest in several markets in the Middle East. We also see tangible opportunities for more platforms in various markets in Latin America. In summary, unlike against the backdrop of favorable commodity markets, we expect U. S. drilling demand to be in the U. S. to be in the past. U. S. costs continue to improve. continue to increase and we see strong customer expansion in Saudi Arabia and Latin America, as well as other foreign markets. We are confident that we will meet or exceed the expectations we have set for 2023.
Now, let me pass the floor to William, who will talk about our monetary effects and directions.
Guillermo Restrepo
Thank you, Tony, and good afternoon everyone. The effects of the third quarter were particularly greater than expected. Across the company, we continue to benefit from strong price momentum coupled with higher levels of activity, which more than offset the stress of charges in some markets.
Prices and business trends continue around the world. We expect the fourth quarter effects for all segments to increase particularly compared to the third quarter. Third quarter revenue was $694 million, compared to $631 million in the current quarter, up 10%. Usa. U. S. drilling revenue increased 17% to $287 million, Lower 48 revenue increased more than 19%, reflecting a higher number of rigs and a daily revenue accumulation of more than $3600 or 14%.
Average earnings reached $29,200 and we expect them to continue to rise in the coming quarters. We recently began signing contracts with consistent earnings with the next day of $40,000. This is before generating more profit for Drilling Solutions. Clearly, our resolve to stay the maximum of our fleet on short-term contracts has paid off.
While costs will continue to rise, we are now ahead in our contract portfolio. With those maximum daily rates, we think it makes sense to outsource a component of our fleet over the long term. Revenue from our overseas segment also exceeds $306 million or approximately 3% for the quarter across a solid number of platforms. The improvement was driven by higher revenues in Saudi Arabia and Latin America.
Drilling Solutions and Rig Technologies revenue also increased, each improving by more than 10%. Total EBITDA for the quarter was $191 million compared to $158 million in the current quarter, an increase of $33 million or 21%. our segments recorded strong growth, resulting in EBITDA margins of just 28%, an improvement of more than 240 basis points.
Drilling EBITDA of $EE. UU. de 114. 5 million increased to $27 million or 31% compared to the prior quarter. All three parts of our U. S. drilling segmentU. S. growth grew sequentially, and activity on lower platform 48 contributed the most. About $24 million, a 37% improvement. The number of rigs that were built increased to 92 rigs, approximately 3 rigs more than in the current quarter. Daily margin of $11,155, almost $2,500 more than the day, a rollover of 28%.
On the other hand, expenses consistent with the platform deteriorated by approximately $1,100 per day, basically due to charges consistent with reimbursement. While the repair and maintenance charge consistent with the platform has also increased, its weight in our overall charge is much lower. The number of 48 platforms continues to expand thanks to better commodity prices. Daily rates continue to increase due to the increased use of high-specification platforms. The use of Nabors is now 86% and we expect it to succeed at 90% by the end of the year.
The industry is essentially sold from readily available high-specification platforms. Therefore, any significant expansion of the number of platforms will require recovering stack sets. Platforms that have been idle for more than two years require at least 3 months to redeploy. For the fourth quarter, we expect a 48 reduction margin between $13,400 and $13,600 consistent with the day, while we continue to roll out our platforms on consistently priced contracts, we expect an increase from 4 to five platforms in the fourth quarter.
Our international segment generated EBITDA of $86 million, revenue of $3. 5 million or 4% over current quarter results. The number of foreign platforms increased slightly, with additions in Saudi Arabia and Colombia partially offset by the relief of a platform in Kazakhstan. Gross margin d to almost $14,600 per day. The number of devices in the fourth quarter is expected to be through one device.
The first sign of the new structure commissioned in the third quarter. We plan to implement some other new structure and an old Saudi platform before the end of the year. We expect the daily margin for the fourth quarter to increase to approximately $14,900, reflecting margin innovations in Latin America and higher daily rates in the Middle East.
In addition, during the fourth quarter, our platform in Papua New Guinea is expected to generate a fourth quarter of operating revenue. Drilling Solutions generated EBITDA of $25. 6 million, approximately 13% more than the current quarter. All of our businesses experienced sequential expansion, namely counterfeit effects in our software and virtual offerings.
We expect Drilling Solutions’ fourth-quarter EBITDA to increase by approximately 15% to the third quarter level. $13,600 consistent with the day. We expect this move to succeed by approximately $16,200 in the fourth quarter, adding approximately $2,700 from Drilling Solutions.
For the third quarter, Rig Technologies generated EBITDA of $4. 8 million, an increase of 43%. This improvement basically reflects higher sales of capital goods. The existing update cycle appears to be accelerating. For the fourth quarter, we expect EBITDA of approximately $7 million, reflecting building upgrade and recertification activity. Free money for the quarter was $35 million, well above our equilibrium expectations.
This improvement is due to better-than-expected functionality in visitor collections and superior EBITDA, as well as strong CapEx as we adjust our field in capital expenditures. Capital expenditures in the third quarter were $95. 5 million, adding $13. 7 million for the new structure at SANAD For the fourth quarter, we have capital expenditures of $100 million to $120 million, depending on the timing of our year-end projects. SANAD’s newly built CapEx is worth between $60 million and $70 million.
As we discussed last quarter, we have staggered tariff inflation throughout our supply chain. To mitigate the effect of those rate increases, we are reevaluating non-critical projects budgeted for this year. We continue to expect a loose cash flow comfortably above $100 million for the full year 2022. Our goal is a loose cash flow in the fourth quarter of approximately $80 million.
The expected sequential improvement reflects higher EBITDA and lower interest expense, offset by higher capital expenditures. Net debt fell to $2. 16 billion, with additional discounts expected in the fourth quarter. At the end of the third quarter, our money and short-term investments were $425 million, and our $350 million credit facility was unutilized.
During the quarter, we repurchased $60 million of our 2025 Notes at a 5. 75% reduction. We will continue opportunistic purchases of in-flow banknotes with long-term money generation. Looking ahead to next year, we expect the favorable winds experienced in 2022 to continue. Last December, we provided projections for 2023. Given our recent awards in the U. S. In the U. S. and abroad, it is clear that we have underestimated our pricing dynamics in an increasingly limited and global drilling market.
At Lower 48, we point to contracts that come with $40,000 in profits consistent with the day. With our existing OpEx of around $18,000 consistent with the day, those high margins exceed what we’ve noticed in a long time, ever. In this kind of environment, it is even more vital that we are disciplined. Our trading strategy remains unchanged. We continue to prioritize value over global market share.
In the bottom 48, this would possibly mean moving some platforms to consumers who value our generation and can afford the highest daily rates. We also recognize that we would possibly miss some opportunities internationally. Finally, we will continue to be disciplined and reactivate platforms with our long-term visitor engagements.
Given the environment I just talked about and assuming a positive oil value environment for 2023, we are now targeting an EBITDA of over $1 billion for next year and losing money of about $400 million.
With that, I will forward the call to Tony for his final remarks.
Tony Petrello
Thank you, Guillaume. Je will now conclude my remarks this afternoon. First, let me summarize our highlights from the third quarter. Quarterly adjusted EBITDA increased by 21%. We generated loose money while reducing net debt. The lowest 48 margins exceeded $11,000 with customers for significant additional increases and NDS achieved annualized EBITDA of $100 million.
The strong implementation of our strategic projects contributed to those effects. In addition to the expansion resulting from those projects and as we look at the fourth quarter, we also expect our effects to reflect physically powerful market conditions. At Lower 48, we see drilling rates and margins better reflect the enabling generation we provide. This perspective is motivated in part by increased activity. Lower 48 operators continue to plan to load platforms until the end of 2022 and increase activity in 2023.
In our overseas segment, additional new structures at SANAD, such as recent contract renewals, are expected to lead to higher monetary returns. NDS’s momentum remains strong. We see prospects for further penetration of Nabors platforms as an expansion into the third-party business.
Since the beginning of the pandemic, we have reduced our net debt by more than $700 million. Our achievements in this area are noteworthy, and we are surely committed to continuing our progress. I’ve been saying for a while that the productive peak is yet to come. For all our financial, technological and ESG achievements and functionalities, this is still the case today. With maximum talent and commitment in the industry, in fact, the productive maximum is yet to come.
Before I ask questions, I would like to thank Jim Crane and our board member and owner of the Houston Astros for building an exceptional, world-class organization for Houston. Thank you for your time and attention.
With that, let’s get to your questions.
Q&A session
Operator
[Operator Instructions] And our first here will come from Karl Blunden of Goldman Sachs. Continue.
Karl Blunden
Good morning, good afternoon. Thank you for your time. I’m interested in feedback on how to get more time for some of the contracts you’re signing now. Could you give us an understanding of the type of time limit you are targeting?And what part of the e-book can move to longer-term contracts??
Guillermo Restrepo
Listen, I mean generally the afterlife and since I’ve been here, and we’ve stuck to a 20% to 30% ratio of COVID terms, we’ve been debating what we deserve to do, and we’ve made a decision to stay in the very short term, because we think it’s going to be a strong rebound and a brief slowdown. So this has been exceptional for Nabors. We have never had such a short term in the afterlife. And it was worth it. We did very well because much more than we expected.
We think about those types of prices, which are quite close to giving us a very clever return on capital. I still have other people or other increases. But at this kind of price, we think we can go back to a general range, which is 20 to 30%. And we’ll try to do that in the fourth trimester. We believe our goal is to be around 20% until the end. of the year, I think, is reasonable.
Karl Blunden
It is ok. It’s useful. It had impressive forecasts for net debt relief of $400 million next year. Should we expect gross debt relief to maintain a similar trend, perhaps with a bit of a delay?It’s just that it doesn’t have many valueswhich can be easily redeemed in advance. I would be interested in a mirrored picture of the mechanisms for targeting gross debt relief as well. Do you feel like you want more than just the flow of money, if there are other levers you’re contemplating?
Guillermo Restrepo
So we have about $210 million in convertibles, sorry, expenses that are due in 2025, the 9% expenses. And those that we can pay as an au pair at any time. pay before. So we have significant debt that we can pay off and yes, the purpose is to bring down our overall gross debt in line with net debt.
Karl Blunden
Thank you so much.
Operator
The next one will be by Morgan Stanley’s Dan Kutz. Continue.
Dan Kutz
Hey thanks. Good afternoon.
Guillermo Restrepo
good afternoon.
Dan Kutz
So, I just wanted to ask and sorry, if I missed if you made any comments and made comments about this, but I was wondering if you could reach out about what the US macro source looks like. U. S. and foreign markets maybe. I’m just wondering if he has any. I appreciate all the detailed color about the idle capacity that Nabors has no activation cost. But I wonder if you can make general comments about the offer in the markets in which you operate.
Tony Petrello
Well, I think overall, probably in terms of platforms that can come back to market, you look at a number, potentially around 150 platforms with the challenge with that number, however, it’s as you go in, back-end, more halfway, I think you’ve ended up with a very significant amount of CapEx. And I think the question will be asked of other people in this position at some point, will you get those platforms back?Or does it make more sense to verify doing something different. And so, yet, that would be the order of magnitude of the number, something like that.
Dan Kutz
They gave it to me Genial. Es useful. And then I just wanted to ask you: your last thought was about recession risk, is it just a little bit how you think it would translate into implications for activity and costs if we go into recession?And maybe you can just analyze what you think of U. S. markets versus global markets, given that those cycles are at other times or that the recovery of those markets is at other times. Thank you.
Tony Petrello
So obviously the big elephant in the room is the macro environment in terms of recession and interest rates don’t help either. I think, obviously, being in the U. S. In the U. S. in the short term it is a negative thing for us, but we are autonomous. -Insured in today’s constructive environment. I believe OPEC Plus will do everything possible to maintain a strong environment for commodities. Located to cope with everything.
If you take a look at the last cycle, when each and every one went to COVID, I think Nabors’ EBITDA was more than two big competitors combined. So the resilience and planned structure of our portfolio, I think, is a genuine advantage that it doesn’t have. It has not been appreciated. If you take a look at what we’ve been through. So I have each and every lecture [ph] where we can resist whatever is discarded that we just did, and we’ve shown you that over the last few years.
Dan Kutz
It’s useful. Thank you guys very much.
Guillermo Restrepo
Fast charge to that. We think and think Tony and I have discussed this many times in ourselves, and we are looking to make plans for next year. But we believe that there is or will not be a recession, the effect on energy consumption will not be as dramatic as we have noticed in the afterlife and, in fact, not the fact that the source is well requested at this level in the very medium and long term.
So I think consumers have learned that and they’re getting started: We’re seeing panic symptoms around the world where consumers know they’re at the bottom, the curve and they’re looking to catch up now. So we think there’s likely to be a recession. , however, we believe the oil sector will be: the oil and fuels sector will gain a bit of an advantage from the fact that it is so far and so far from its investment over the past decade.
Dan Kutz
Super. Thanks again.
Operator
The next one will be from Derek Podhaizer of Barclays.
Derek Podhaizer
Good afternoon. So I tried to ask him about the trajectory of value and the other catalysts. So, to get to 40,000 at the forefront of the market, he talked about the CapEx required for his next date and the date [ph] that will follow. What brings the market to the mid-40s and peak of the 40s?Do we want to start talking about their non-high-end platforms to upgrade and this has helped increase the rate compared to the new versions?
I think a little more color about the price trajectory, what moves would be helpful in helping frame the discussion of why adding capacity wouldn’t lead to price degradation, because I think that’s largely what other people see in the industry now. . So some help around that would be great.
Tony Petrello
Well, I think, first of all, when you look at the maximum prices, you have to look at them across the region. And across the region, I would say Northeast and East Texas are the strongest, along with North Dakota. . West Texas, there’s a bit of turmoil there. So it’s not that fast, however, the gap between all of them is very small at this point, which is a very smart signal. That is the first point. Secondly, as William has just observed, I want to say that we are at 86% usage at the moment. Therefore, there is no more capacity.
And if you look at where the operators have been talking right now, obviously, the plans are a bit early at this time for next year. But I think, and there’s also a bit of dancing with a lot of customers. But I think the party line would be to be flat at modest increases at least and it would be at least 50 more platforms, that way. And therefore, when that happens, it will also increase the pressure on rates.
And it also deserves to note that we’re far from replacing charge-based pricing, which everyone would be involved in. They are still a long way from that. And until you get to the price of the replacement charge, there will be, there’s still room to raise the rate of money toward that.
So I think we still have a long way to go. And I think the question is what’s going to happen in the game. But the party, I think at the moment, if you’re talking about the resolution to concentrate on the camp of capital. Virtually every single visitor we’ve spoken to is moving in that direction. Therefore, I don’t see the prestige quo in this superior utilization being disrupted smoothly, and I only see benefits in terms of modest increases before us.
Derek Podhaizer
they gave it to me It’s useful. I appreciate the comments. I just need to go international, just communicate about your number of national platforms. Right on the bridge, it indicates that it is at 56% use. Obviously, Saudi Arabia, Latin America, very strong points calling. Reactive platforms, waivers of fees.
Is there an opportunity to move some platforms from underperforming regions to countries with higher demand, Saudi Arabia, the Middle East and Latin America?What drives that 56% and what levers can it operate? And then, secondly, what would be the capital for Do that?
Tony Petrello
Unfortunately, when we communicate about international, it is not a homogeneous market. Therefore, a country’s platforms through the type do not necessarily translate smoothly to a country. So, there is friction between countries, but we have done it.
In fact, we’ve moved some platforms from the U. S. to Latin America because operators there need to have world-class operations similar to shale progression here and, as a result, we have sold the concept of upgrading their technology. And so it is in betting. This will continue. As we look to the future, we see other opportunities in this direction.
The set of opportunities we’re thinking about is pretty broad right now. You discussed away from Saudi Arabia, that, as you know, the number of platforms will increase, as I mentioned in my comments, and there is a possibility later in the year. of an additional value to return to a rate of five per year for Saudi Arabian Aramco.
At our most sensible, I think we have: we see Mexico, Argentina, Kuwait, the United Arab Emirates, Algeria and India. And you mix all that with where we are and what appears to us in Saudi Arabia, we’re seeing at least 10% visibility of the number of platforms for us right now next year.
Guillermo Restrepo
And we can move about 10 platforms between countries. Obviously, we want the right opportunity, the right client, however, around 10 platforms can move seamlessly between 10 inactive platforms, there may be more seamlessly between countries. And we’re looking for opportunities to position the platforms, right now.
Tony Petrello
Yes, the other factor here is to keep in mind that the foreign market is in some tactics for five years in the US market. In the U. S. and even on existing platforms, there are opportunities with existing platforms for greater profitability encouraging operators to think about upgrading them because they do transfer to a similar technology. We think it’s a smart investment for them.
And we’ve really developed packages where we’ve found platform upgrade weights quite cost-effective to be more types of platforms with more of the AC generation than you hear in the US. The U. S. government is available abroadwhere sometimes a giant component of the foreign market is not yet there.
So there is this opportunity to increase the profitability of the number of platforms through only the platforms, which is another purpose for us. And most importantly of that, we also focus on NDS. We have made some progress abroad, but we still have a long way to go abroad. And they see the effects they’ve had on us in the United States. And so we very much hope that we can also do something similar abroad.
So all this is a raised profit, not necessarily due to an absolute replacement in the number of platforms, but simply higher returns than what we do, but they are significant. And if you repeat the effects today, you need to raise our NDS and our drill margin number to get to a number like 13, almost 13. 6 margins consistent with the consistent day with the rig, which is literally very smart in the United States.
Derek Podhaizer
they gave it to me Very useful. Enjoy all the colors. ‘Ll.
Operator
The next one will come from JPMorgan’s Arun Jayaram. Please continue.
Arun Jayaram
Hello, Tony. Me would like to know if you can give us more information about SANAD contract renewals. You advertised 24 platforms over 4 years at existing market rates. Give us a concept of how it works: how do the new price lists compare to existing rates?And what kind of impact, how do we sharpen our pencils in 2023 and 2024 our models?
Tony Petrello
You are hunting for choice. So obviously, out of respect, we can’t communicate about a single operator, a single visitor rate. So I’m not going to go down that road here. What I will say is that the rates there combined with new construction, combined with what I just discussed in terms of activity, if you look at the whole process, at the end of the day, we think that when you look at margin and internationally, we’re on a trajectory of $16,000 to $17,000 worldwide.
That’s it: for 75 platforms today, plus additional platforms. So I think that’s the way to think. So you’re in a very smart healthy building on the margin for foreigners until 2023.
Guillermo Restrepo
By the way, 75% of our platforms in Saudi Arabia have recently been renewed or the new deployed platforms that had deployed and built the kingdom have been signed, right?For example, more than 75% of the fleet has recently been expanded for 4 or six years.
Arun Jayaram
Interessant. Il it turns out that they are making plans to increase their production capacity.
Tony Petrello
And if you’re more aware of that, you have clear visibility of the build margin based on the platform because new builds are coming in at a rate of five a year-on-year, and those new builds make up a platform-based EBITDA of $10 million. So if you do the math, you can see that there is smart planned construction for many years, which I think is an unprecedented opportunity compared to what you are seeing in the current market. And who it is now – it is going down if the program is active now.
Arun Jayaram
Super. Et just my follow-up, a sort of review of your loose cash flow outlook for 2023 of, call it, $400 million. Is it fair to say that CapEx could have a tendency to call itself 450 anything in that range, would it be fair with more than $1 billion in EBITDA next year?
Guillermo Restrepo
Listen, we’re finalizing our budget and we’re not yet in a percentage position of the numbers. All I can say is that it will be somewhere above what we were in 2023 because, first, we have more platforms and second, spending in Saudi Arabia will be a little higher. That’s all I can say.
Arun Jayaram
What do you think of your CapEx maintenance through the trading platform in the Lower 48 today?
Guillermo Restrepo
About $1 million.
Arun Jayaram
$1 million Okay. Super. Thank you so much.
Operator
Next up will be David Smith of Pickering Energy Partners. Continue.
David Smith
Hello, good afternoon. Thank you for answering my question. Most of them have already been interviewed. I tried to get back to the comment about their foreign platforms. I tried to make sure I heard correctly. I think I heard that their number of foreign platforms can increase up to 10%. I also think I heard that it can load 10 idle platforms. So I just need to do I’m sure if I understand correctly, and I’m not asking for definitive advice. But if I’m paraphrasing, I think I heard that we could see 10 inactive foreign platforms deployed by the end of 2023, and then have the new SANAD built on top.
Guillermo Restrepo
Tony just commented that a number of platforms, the average number of platforms next year, can increase up to 10%. That’s what he said. And that’s a global number. And the 10 idle platforms I mentioned is that we have the ability to move top platforms between markets to accommodate some of that expansion.
And up to 10 platforms can move smoothly compared to any market, right?That’s all we say. And SANAD buildings are included in that 10%. But they are not completely eliminated. We expect Saudi Arabia’s annual average to increase across approximately 4 platforms. That doesn’t come with the potential, more Aramco rewards we expect to get over five years: five platforms, and some of them can just be implemented. It comes out at the moment part of 2023. No comes with the number we gave it.
David Smith
is very clear And a quick follow-up of foreign fleet maintenance, that margin of $16,000 to $17,000 per day, I searched to check, is this kind of year-end goal for 2030 or how about an average?
Tony Petrello
An average.
Guillermo Restrepo
For the year.
Tony Petrello
For the year.
David Smith
It’s great. Hello, congratulations on the quarter and the outlook. Thank you.
Tony Petrello
gracias.
Operator
[Operator Instructions] Next up here will be Keith MacKey of RBC Capital Markets. Continue.
Keith Mackey
Hello, hello and thank you for answering my questions. I just sought to ask; Hi, I just wanted to ask you about the timeline – your possible timeline for bringing in the rest, approximately 17 platforms in the US. U. S. in the fleet. So to have compatibility with your entire fleet of 111 high-spec platforms in the fleet, what’s pretty much the speed you can expect based on the queries you see?And I know he discussed that it takes about 3 months for a platform to be in a position to return to the field.
Tony Petrello
Oui. Je, about three-quarters or four-quarters is the approximate number right now.
Guillermo Restrepo
We think we’re going to be somewhere between 99 and 100 this year. So it only reaches 11 more next year. And again, we’re looking to increase the measured speed of our number of platforms. I mean we’re prioritizing value over market share, and we’ll continue to do that.
Price is number one right now. And obviously, if we try to launch into 11 platforms in the first part of next year, we will encounter problems of higher prices and quality of service, and so on. Therefore, we expect it to be elegant during the next year, the other platforms.
Keith Mackey
Could you give us a little more detail about the point of the requests you see and the platforms you have left?What percentage of requests could you satisfy?Are you seeing customers?
Tony Petrello
Travis, do you want to comment?
Travis Purvis
Oui. Je I think right now, as William said, I want to say again, price is definitely going to be the catalyst for how and when we implement a platform. But I would say that part of the demands that we can easily meet, again, will be geography and price.
Keith Mackey
Perfect. Thank you so much.
Operator
This concludes our question and answer session. I would like to call back William Conroy for any final comments.
William Conroy
Thank you all for joining us this afternoon. If you have further questions or would like to contact us, please contact us. Joe will end the call there. Thank you so much.
Operator
The convention is now closed. Thank you for today’s presentation. You can now disconnect your lines.