NBR 10-K & 10-Q changes, risk factors and insider trading

Accidents may occur, we may be unable to obtain desired contractual indemnities, and our insurance may prove inadequate in certain cases. The occurrence of an event for which we are not sufficiently insured or indemnified, or the failure or inability of a customer or insurer to meet its indemnification or insurance obligations, could result in substantial losses that could adversely affect our business, financial condition and liquidity. In addition, insurance may not be available to cover certain risks, including war and political risks. Even if available, insurance may be inadequate or insurance premiums or other costs may increase significantly in the future, making insurance prohibitively expensive. We expect to continue facing upward pressure in our insurance renewals, our premiums and deductibles may be higher, and some insurance coverage may either be unavailable or more expensive than it has been in the past. Moreover, our insurance coverage generally provides that we assume a portion of the risk in the form of a deductible or self-insured retention. We may choose to increase the levels of deductibles (and thus assume a greater degree of risk) from time to time in order to minimize our overall costs, which could exacerbate the effect of our losses on our financial condition and liquidity. In addition, our safety record is a competitive advantage for us and if one or more incidents were to occur it could significantly affect this advantage.

The initiation or escalation of conflicts in certain regions or by certain agitators,regions, including, but not limited to, the Russia invasion of Ukraine by Russia or the conflicts in the Middle East and around the Red Sea,East, can have an adverse effect on us should they become more intense or widespread. In addition, conflicts have led to and could lead to the imposition of sanctions that could limit our ability to operate in certain regions. See, for example, “—Our business may be affected by changes in applicable sanctions or export controls laws and regulations, including those targeting Russia.”

Much of the world’s oil and natural gas reserves are controlled by NOCs, which may require their contractors to meet local content requirements or other local standards, such as conducting our operations through joint ventures with local partners, that could be difficult or undesirable for us to meet. The failure to meet the local content requirements and other local standards may adversely affect our operations in those countries. In addition, while we do not control the actions of our joint venture partners, including, but not limited to Saudi Aramco, their actions could have an effect on our investment in the joint ventures and more generally our overall reputation. In addition, our ability to work with NOCs is subject to our ability to negotiate and agree upon acceptable contract terms.

We undertake from time-to-time acquisitions, divestitures, investments, joint ventures, alliances and other strategic transactions that we expect to further our business objectives. The anticipated benefits of acquisitions, divestitures, investments, joint ventures and other strategic transactions may not be fully realized, or may be realized more slowly than expected, and may result in operational and financial consequences, including, but not limited to, the loss of key customers, suppliers or employees, or the disposition of certain assets or operations, which may have an adverse effect on our business, financial condition and results of operations. See “Risks Related to Our Merger with Parker Drilling Company—The failure to integrate successfully the businesses of Nabors and Parker or to effectively managed the consolidated company post-Merger could adversely affect the combined company’s future results.”

Similar considerations exist with respect to our non-controlled equity investments. For example, our priorinitial SPAC, Nabors Energy Transition Corporation, consummated a merger with Vast Renewables Limited, an Australian development-stage company specializing in the design and manufacturing of concentrated solar thermal power (CSP) systems,systems. which,Subsequent upon completion ofto the merger, was listed on Nasdaq. Despite the successful listing, we recognized a $15.4 million impairment as Vast’s fair value waswent below carrying value.value and Vast entered into voluntary administration, we recognized impairments of $7.5 million and $15.4 million for the years ended December 31, 2025 and 2024, respectively.

The 2024 Credit Agreement (as defined below) is secured with a first lien security interest on all land drilling rigs and related equipment, spare parts and inventory in the contiguous United States. As of December 31, 2024,2025, we had no borrowings under this facility. Under the facility, we are required to maintain an “interest coverage ratio” of no less than 2.75:1.00. We are also required to maintain a “minimum guarantor value” of no less than 90% at all times. The interest coverage ratio is defined to mean the ratio of (i) EBITDA for the latest four fiscal quarters for which financial statements are required to have been delivered to (ii) the interest expense for the latest four fiscal quarters for which financial statements are required to have been delivered. The minimum guarantor value is defined to mean the percentage of book value of, minus depreciation and amortization on, property, plant and equipment owned by Nabors and its subsidiaries, that is directly or indirectly owned by the guarantors of the 2024 Credit Agreement (other than Nabors) and their wholly owned subsidiaries. The interest coverage ratio and the minimum guarantor value requirement are not measures of operating performance or liquidity defined by U.S. GAAP and may not be comparable to similarly titled measures presented by other companies. The 2024 Credit Agreement also carries negative covenants customary for such a facility. The maintenance and negative covenants in the 2024 Credit Agreement could limit our operational and financial flexibility.

Throughout 2022 and 2023, in an effort to combat inflation, central banks throughout the world have raised, and may further raise, interest rates in response to concerns about inflation. While the global inflation rate stabilized in 2023 and 2024 and, in some cased,cases, declined and inflationary pressures eased in 2024, we cannot be sure that this trend will continue. Many factors could jeopardize efforts to stem inflationary pressures in the United States and other jurisdictions where we operate, and such factors could ultimately lead to further inflationary pressures on foreign goods. We expect these inflationary pressures to continue to impact our margins and more generally, our business in 2025.2026.

As a result, the interest rates on our borrowings we are charged may be significantly higher than our interest rates in prior years, which increases our cost to operate our business. For example, the Federal Reserve raised interest rates, with total increases of 450 basis points from March 2022 through early 2024. Beginning in the second half of 2024, as inflation decreased, the Federal Reserve decreased interest rates by 75 basis points, although it has indicated that it is unlikely such rate cuts will continue in 2025.rates. There can be no assurances that the Federal Reserve will continue to decrease interest rates or that it will maintain current interest rates.

We presently maintain insurance coverage to protect against some types of cybersecurity risks; howeverhowever, there can be no assurance that it will be sufficient in scope or amount to cover any particular losses we may experience as a result of such cyberattacks. Any breach in the security of our information systems or those of our service providers could lead to an interruption in the operation of our systems or loss, disclosure or misappropriation of our business information or other unintended consequences. Such cyber incidents could have a material adverse effect on our business, financial condition and results of operations.

Our international business (including our participation in joint ventures, requirements for local content, and our global supply chain) is subject to numerous political and economic factors, legal requirements, cross-cultural considerations and other risks associated with doing business globally. Our international business is generally subject to both U.S. and foreign laws and regulations, including, without limitation, laws and regulations relating to export/import controls, sanctions, technology transfers, government contracts and procurement, data privacy and protection, investment, exchange rates and controls, the U.S. Foreign Corrupt Practices Act (the “FCPA”), the Bermuda Bribery Act (2016) and other anti-corruption laws, anti-boycott provisions, securities laws, labor and employment, works councils and other labor groups, anti-human trafficking, taxes, environment, immunity, security restrictions and intellectual property. TheWe SEChave implemented policies, procedures, and U.S.controls Department of Justice have continueddesigned to focuspromote, onachieve, enforcementand activitiesmaintain compliance by us and our representatives with respectthe FCPA and other applicable anti-corruption laws. Nevertheless, there are no guarantees that our policies, procedures and controls will prevent non-compliance or exposure to thecorruption, FCPA.or Whilethat our employeesrepresentatives and agents are required towill comply with such policies, procedures, and controls or applicable anti-corruption laws, andat all times. If we havedo adoptednot policiesmaintain compliance with the anti-corruption and proceduresanti-bribery laws to which we are subject, we may face civil and relatedcriminal trainingpenalties programsor designedother to promote and achieve compliance, we cannot ensure that our internal policies, procedures and programs will always protect us from riskscosts associated with unlawful acts carried out by our employees or agents.remediation.

The Paris Agreement requires set GHG emission reduction goals every five years beginning in 2020. Stronger GHG emission targets were set at the Conference of Parties in Glasgow (“COP 26”) in November 2021 and were reaffirmed at the Conference of Parties in Dubai (“COP 28”) in December 2023 and2023, the Conference of Parties in Baku (“COP 29”) in November 2024.2024 and the Conference of Parties in Belem (“COP 30”) in November 2025. The United States’s frequent withdrawal and rejoining of the Paris Agreement in recent years has created uncertainty around the evolution of the Unites States’ regulatory regime with regards to regulating GHGs and climate change issues, making it increasing difficult to plan for future developments.

Further, the federal government and certain state governments have enacted, and are expected to continue to enact, laws and regulations that mandate or provide economic incentives for the development of technologies and sources of energy other than oil and gas, such as wind and solar. Such legislation incentivizes the development, use and investment in these technologies and alternative energy sources and could accelerate the shift away from traditional oil and gas. For example, prior to its partial repeal, the Inflation Reduction Act (“IRA”) of 2022 contains tax inducements and other provisions that incentivize investment, development, and deployment of alternative energy sources and technologies. Also, in 2022, California mandated that all new passenger cars and light trucks sold in the state be electric vehicles or other emissions-free models by 2035. If these future laws and regulations result in customers reducing their production of oil and gas, they could ultimately have an adverse effect on our business and prospects.

Our international operations expose us to compliance obligations and risks under applicable economic sanctions, export controls and trade embargoes, such as those imposed, administered and enforced by the United States and the United Kingdom and other relevant sanctions authorities (collectively, “Sanctions”). In response to ongoing military hostilities between Russia and Ukraine, the United States, the United Kingdom, the European Union, and other jurisdictions imposed new and additional economic sanctions, export controls and other trade restrictions (collectively, “Sanctions Measures”) targeting Russia, Belarus and certain regions of Ukraine, including Sanctions Measures that impose: (i) restrictions on engaging in specified activities or transactions, or any and all activities and transactions, with, involving or for the benefit of certain designated Russian and Belarusian entities or individuals (collectively, “Sanctions Targets”); (ii) a specific prohibition on new investment in the Russian energy sector, broadly defined to include the procurement, exploration, extraction, drilling, mining, harvesting, production, refinement, liquefaction, gasification, regasification, conversion, enrichment, fabrication or transport of petroleum, natural gas, liquified natural gas, natural gas liquids, or petroleum products or other products capable of producing energy; and (iii) a broad prohibition on new investment in Russia.restrictions.

Pursuant to applicable Sanctions, we may be obliged to limit our business activities, may incur costs in order to implement and maintain compliance programs, and may be subject to investigations, enforcement actions or penalties relating to actual or alleged instances of noncompliance with the Sanctions Measures. It may also be necessary for us to take certain actions,actions. includingFor suspendingexample, ordue windingto downconflict and related sanctions and export control laws and regulations, we have suspended our operations in Russia, in order to maintain compliance with, or satisfy obligations under, applicable Sanctions.Russia.

The full scale of the impact of the Sanctions Measures and Russia’s responses to the Sanctions Measures (such as counter-sanctions and the potential nationalization of assets in Russia) is currently unclear but such developments could adversely affect our operations and the oil and gas sector generally, which could have a material adverse effect on our business, results of operations, financial condition and cash flow. In addition, U.S. and other governments have increased their oversight and enforcement activities with respect to Sanctions laws and regulations and it is expected that the relevant agencies will continue to increase these investigative and enforcement activities. A violation of Sanctions could result in severe criminal or civil penalties and reputational harm, which could separately adversely affect our business and results of operations.

On December 18, 2023, Bermuda enacted a 15% corporate income tax regime (the “Bermuda CIT”) that applies to Bermuda businesses that are part of multinational enterprise groups with annual revenue of €750 million or more and is effective for tax years beginning on or after January 1, 2025. As a result of the Bermuda CIT, the Company’s exemption from Bermuda corporate income taxes will ceaseceased in 2025. With the enactment of the Bermuda CIT in 2023, the Company underwent an analysis to determine the tax impacts to its consolidated financial statements. Bermuda CIT allows for a beginning net operating loss balance related to the five years preceding the effective date of Bermuda CIT. As of December 31, 2024,2025, we have recorded a deferred tax asset of $206.9 million for the Bermuda net operating losses generated from 2020 through 2024 with an offsetting valuation allowance of $206.9 million.

As of December 31, 2024,2025, the Company reported consolidated U.S. federal net operating loss (“NOL”) carryforwards of approximately $599.5$355.4 million and certain other favorable federal income tax attributes. The Company’s ability to use its legacy Nabors’ NOL carryforwards of $213.7 million and certain other attributes may be limited if it experiences an “ownership change” as defined in Section 382 (“Section 382”) of the Internal Revenue Code of 1986, as amended (the “Code”). An ownership change generally occurs if there is a more than 50 percentage point increase in the aggregate equity ownership of the Company by one or more “5 percent shareholders” (as that term is defined for purposes of Sections 382 and 383 of the Code) in any testing period, which is generally the three-year period preceding any potential ownership change, measured against their lowest percentage ownership at any time during such period. NOL carryforwards of $141.7 million and other tax attributes acquired through the Parker acquisition are already subject to Section 382 limitations.

Regulators, investor advocacy groups, investment funds, and other stakeholders are increasingly focused on environmental, social, and governance (“ESG”) matters and have placed increasing importance on the non-financial impacts of their investments.investments, Investorwith sentimentsome andinvestors the public perception of fossil fuels have led to callscalling to limit investment and lending to businesses in our industry. As a service provider to energy companies in the fossil fuel industry, if any of these efforts continue or increase, our ability to raise capital could be negatively affected, which could lead to a reduction in our stock price.

Similarly, there are calls by certain investors for companies to increase their ESG initiatives, and for more robust reporting on such initiatives. The European Union has implemented ESG reporting requirements on EU market participants, and similar regulations are pending in various states in the United States. Standards for tracking and reporting ESG matters continue to evolve, and our business may be impacted by new laws and regulations or investor criteria in the U.S., the European Union, and around the world, related to ESG. Members of the investment community and lenders have also begun establishing standards required of companies in which they invest or to which they provide credit. Certain of our institutional investors use third-party benchmarks or scores to measure a company’s ESG practices in an increasingly broad set of matters including but not limited to, environmental sustainability (including climate change), human capital, labor, product certification and risk oversight. Such scoring and examination may expand the nature, scope and complexity of matters that we are required to control, assess and report. In addition to potential impacts on our operations, the cost of complying with such scrutiny by institutional investors, as well as any new laws and regulations, including building appropriate compliance and reporting functions within our company, could be significant and may increase our costs of operations and thereby negatively affect our financial condition. In addition, if we are unable to meet the requirements of our investors or our lenders, our cost of capital may increase and our stock price may be negatively affected. Conversely, other investors (including regulators in some states in which we have operations) have expressed their opposition to use of ESG considerations, including through the advancement of “anti-ESG” proposals and litigation. The divergent views held by our various stakeholders may subject us to pressure regarding our ESG practices and disclosures, could increase our legal and regulatory costs and may expose us to reputational harm.

Our business, results of operations and financial condition have previously been (and may continuein tothe future be) adversely affected by global public health epidemicsepidemics, andwith future adverse effects could bepotentially material and difficult to predict.

The global2020 spreadoutbreak of the strain of coronavirus known as COVID-19 and its variants, which was declared a global pandemic by the World Health Organization on March 11, 2020, impacted our operations and the operations of our customers and suppliers. The outbreakvariants triggered a sharp sell-off in energy commodities markets during the first quarter of 2020, as economic activity tumbled as a result of government impositions of mandatory closures, quarantines and other restrictions on, or advisories with respect to, travel, business operations and public gatherings or interactions. Other effects of the COVID-19 pandemic included significant volatility and disruption of the global financial markets; adverse revenue and net income effects; disruptions to our operations, including suspension or deferral of drilling activities; customer shutdowns of oil and gas exploration and production; downward revisions to customer budgets; supply chain disruptions; inflation and other decreases in purchasing power, limitations on access to raw materials; employee impacts from illness, school closures and other community response measures; and temporary closures of our facilities or the facilities of our customers and suppliers. TheA extentresurgence toof whichCOVID-19 and its variants or the spread of a new pandemic could have a material adverse effect on our operatingbusiness and financial results will continue to be affected will depend on various factors beyond our control.operations.

The demand for our services and products is a function of the level of spending by oil and gas companies for exploration, development and production activities. The level of exploration, development and production activities is to a large extent tied to the prices of oil and natural gas, which can fluctuate significantly, are highly volatile and tend to be highly sensitive to factors including supply and demand cycles and geopolitical uncertainties,uncertainties particularly those impacting large hydrocarbon-producing countries. Certain oil and gas companies may also intentionally limit their capital spending as they focus on generating returns to shareholders as opposed to maximizing hydrocarbon production. Additionally, therein recent years significant consolidation among oil and gas companies has recentlytaken been an increasing number of customer consolidations within the industryplace, especially in the United States. In some cases, these transactions may have an impact on overall rig demand, as the acquiring company may apply criteria that results in a different level of demand for drilling rigs than the previous two companies would have had on a stand-alone basis.

U.S. oil and gas production has proved resilient throughout 2024 in the face of reduced drilling activity. Internationally, we generally see an expansion of production capacity as well as the widespread development of unconventional resources driving an expected increase in oilfield activity broadly across those markets. In Saudi Arabia specifically, the operating rig fleet has begun to rebound following the activity suspensions in 2024 of a large number of rigs.

Operating revenues in 20242025 totaled $2.9$3.2 billion, representing aan decreaseincrease of $75.9$254.6 million, or 3%,9%, from 2023.2024. For a more detailed description of operating results see Segment Results of Operations, below.

Net loss from continuing operationsincome attributable to Nabors common shareholders totaled $176.1$286.6 million for 20242025 ($22.37 loss$17.39 per diluted share) compared to a net loss from continuing operations attributable to Nabors common shareholders of $11.8$176.1 million ($5.49 loss$22.37 per diluted share) in 2023,2024, or a $164.3$462.7 million increase in the net loss.income. Adjusted operating income (loss) across our operating segments, declinedincreased by $16.9$54.3 million, or 2%.13%. A decline in U.S. activity was largely offset by increased activity in international markets, benefiting both our International Drilling and Drilling Solutions segments. Approximately $78.0$113.7 million of the increase in net loss is attributabledue to lowerthe mark-to-marketgain gainson bargain purchase related to the commonParker shareacquisition warrants,and which decreased from $54.7$414.0 million in 2023 to $16.9 million in 2024, and the impact from gains or losses from debt repurchases, which resulted in a gain of $25.3 million in 2023 and losses of $14.9 million in 2024. In addition, interest expense increased by approximately $25.6 millionwas due to increasingthe interestgain rates.on the disposition of Quail Tools. These gains were partially offset by $26.5 million of asset impairments related to assets held in Russia, $24.6 million related to severance and reorganization costs and $19.9 million of transaction related costs. See Segment Results of Operations and Other Financial Information below for additional discussion.

General and administrative expenses in 20242025 totaled $249.3$304.6 million, representing an increase of $5.2$55.3 million, or 2%22% from 2023.2024. This is reflective of increases in workforce costs,costs and general operating costs andas a result of the Parker acquisition, along with inflationary pressures as market conditions have changed.

Depreciation and amortization expense in 20242025 was $633.4$649.2 million, representing aan decreaseincrease of $11.9$15.8 million, or 2%, from 2023.2024. The decreaseincrease is a result of athe higher amount of olderadditional assets reachingobtained in the endParker of their useful lives.acquisition.

Management evaluates the performance of our reportable segments using adjusted operating income (loss), which is our segment performance measure, because we believe that this financial measure reflects our ongoing profitability and performance. In addition, securities analysts and investors use this measure as one of the metrics on which they analyze our performance. Adjusted operating income (loss) represents income (loss) before income taxes, interest expense, earnings (losses) from unconsolidated affiliates, investment income (loss), gain on disposition of Quail Tools, gain on bargain purchase and other, net. A reconciliation of adjusted operating income to net income (loss) from continuing operations before income taxes can be found in Note 17—Segment Information in Part II, Item 8.—Financial Statements and Supplementary Data.

Operating revenues decreased by $179.5$51.5 million or 15%5% in 20242025 compared to 20232024. primarily due to a decrease in activity as reflected by an 13% decreaseDecreases in the Lower 48 land rig market for both average number of rigs working,working whileand pricingdayrates, remainedmore stable.than offset the incremental revenue from acquired Parker rig operations in the Alaska and U.S. Offshore markets.

Operating revenues increased by $100.8$151.7 million or 7%10% in 20242025 compared to 2023.2024. TheIncremental increaserevenue isfrom primarilyacquired attributableParker torig an 8% increaseoperations in international markets and the averagecontribution of recently deployed rigs working,in reflecting increased drilling activity as market conditions and demand for ourother international drillingmarkets services have increased sincecomprise the priormajority year.of the increase.

Operating revenues increased by $12.3$199.2 million or 4%63% in 20242025 compared to 20232024. as anThe increase in demandrevenue foris ourrelated internationalto andacquired third-partyParker servicesoperations. This increase from Parker operations was slightly offset by a decline in results in the U.S. markets, which was driven by the reduction in drilling activity.

Operating revenues decreased by $41.1$47.6 million or 17%24% in 20242025 compared to 20232024 due to the overall decline in activity in the U.S. as mentioned previously. Adjusted operating income was relatively flat despite the 17% drop in operating revenues, due to a change in mix of business focusing more on the higher margin product lines.

Interest expense for 20242025 was $210.9$215.4 million, representing an increase of $25.6$4.5 million, or 14%,2%, compared to 2023.2024. The increase was primarily due to an increase in our effective interest rate levels onand an increase in our average outstanding debt balance throughout 20242025 as compared to 2023.2024.

Our worldwide income tax expense for 20242025 was $56.9$163.1 million compared to $79.2$56.9 million for 2023.2024. The decreaseincrease in tax expense was primarily attributable to taxthe expenseParker acquisition and sale of $11.8Quail million in 2023 related to an audit settlement,Tools, as well as changesthe change in the amount and the geographic mix of our pre-tax earnings (losses) in the jurisdictions in which we operate..

Our primary sources of liquidity are cash and investments, availability under the 2024 Credit Agreement and cash generated from operations. As of December 31, 2025, we had cash and short-term investments of $940.7 million and working capital of $558.6 million. As of December 31, 2024, we had cash and short-term investments of $397.3 million and working capital of $427.6 million. As of December 31, 2023, we had cash and short-term investments of $1.1 billion, which included proceeds from our offering of $650.0 million in aggregate principal of 9.125% senior priority guaranteed notes due 2030 that were used primarily to retire certain outstanding indebtedness during the first quarter of 2024 and working capital of $431.7 million.

The 2024 Credit Agreement requires us to maintain an interest coverage ratio (EBITDA/interest expense of 2.75:1.00) and a minimum guarantor value, requiring the guarantors (other than the Company) and their subsidiaries to own at least 90% of the consolidated property, plant and equipment of the Company. Additionally, the Company is subject to certain covenants (which are subject to certain exceptions) and include, among others, (a) a covenant restricting our ability to incur liens (subject to the additional liens basket of up to $150.0 million, among other exceptions), (b) a covenant restricting its ability to pay dividends or make other distributions with respect to its capital stock and to repurchase certain indebtedness, and (c) a covenant restricting the ability of the Company’s subsidiaries to incur debt (subject to the grower debt basket of up to $100.0 million). The facility matures on the earlier of (a) June 17, 2029 and (b) to the extent 10% or more of the respective principal amount of any of the 7.375% Senior Priority Guaranteed Notes due May 2027 or 7.50% Senior Guaranteed Notes due January 2028 or 50% or more of the principal amount of the 1.75% Senior Exchangeable Notes due June 2029 remains outstanding on the date that is 90 days prior to the applicable maturity date for such Indebtedness,indebtedness, then such 90th day.

We are a holding company and therefore rely exclusively on repayments of interest and principal on intercompany loans that we have made to our operating subsidiaries and income from dividends and other cash flows from our operating subsidiaries. There can be no assurance that our operating subsidiaries will generate sufficient net income to pay us dividends or sufficient cash flows to make payments of interest and principal to us. See Part I., Item 1A.—Risk Factors—As a holding company, we depend on our operating subsidiaries and investments to meet our financial obligations.

As of December 31, 2024,2025, we had approximately $2.5 billion of net book value of long-term debt outstanding with $2.5 billion in aggregate principal.principal with $379.1 million in aggregate principal to be repaid in the next twelve months. We have expected aggregate future interest payments of $894.5$911.8 million related to the outstanding debt with $193.3$180.1 million due in the next twelve months. See Note 9—Debt in Part II, Item 8.—Financial Statements and Supplementary Data for additional details. Our obligations for operating leases total $34.6$49.0 million with $8.6$12.6 million of the obligations coming due in the upcoming year. See Note 19—Leases in Part II, Item 8.—Financial Statements and Supplementary Data for additional details.

Operating Activities. Net cash provided by operating activities totaled $581.4$693.3 million during 2024,2025, compared to net cash provided of $637.9$581.4 million during 2023.2024. Operating cash flows are our primary source of capital and liquidity. Cash from operating results (before working capital changes) totaled $682.7$620.7 million during 2024,2025, a decrease of $27.8$61.9 million when compared to $710.5$682.7 million in 2023.2024. This was due to the decrease in activity across our business in 20242025 compared to 2023.2024. Changes in working capital items such as collection of receivables, other deferred revenue arrangements and payments of operating payables are significant factors affecting operating cash flows and can be volatile in periods of increasing or decreasing activity levels. Changes in working capital items provided $72.5 million in cash flows during 2025 and used $101.2 million in cash flows during 2024 and used $72.6 million in cash flows during 2023.2024.

Investing Activities. Net cash usedprovided forby investing activities totaled $555.5$97.1 million during 20242025 compared to net cash used of $570.4$555.5 million in 2023.2024. Our primary use of cash for investing activities is for capital expenditures related to rig-related enhancements, new construction and equipment, and sustaining capital expenditures. During 20242025 and 2023,2024, we used cash for capital expenditures totaling $567.9$715.9 million and $540.9$567.9 million, respectively. We received $15.5$98.6 million in proceeds from sales of assets and insurance proceeds during 20242025 compared to $14.1$15.5 million in 2023.2024. WeDuring also2025, investedwe $7.7received $84.4 million in companiescash that focus on energy transition related technologiesacquired in 2024the comparedParker toacquisition, $21.3net of cash paid and $622.9 million infrom 2023.the sale of Quail Tools.

Financing Activities. Net cash used for financing activities totaled $566.8 million during 2025. During 2025, we received net proceeds of $700.0 million from issuance of long-term debt, repaid $0.9 billion of outstanding long-term debt. Also, we made distributions of $342.4 million from the Trust Account to NETC II stockholders. Cash in the Trust Account can only be used in connection to the SPAC and is not available to use for general operations. Net cash used for financing activities totaled $662.1 million during 2024. During 2024, we received net proceeds of $539.0 million from issuance of long-term debt and repaid $1.2 billion of outstanding long-term debt.

Our business depends, to a large degree, on the level of spending by oil and gas companies for exploration, development and production activities. Therefore, a sustained increase or decrease in the price of oil or natural gas,gas that has a material impact on exploration, development and production activities,activities could also materially affect our financial position, results of operations and cash flows.

We are a leading provider of advanced technology for the energy industry. With operations in overapproximately 20 countries, Nabors has established a global network of people, technology and equipment to deploy solutions that deliver safe, efficient and sustainable energy production. By leveraging its core competencies, particularly in drilling, engineering, automation, data science and manufacturing, Nabors aims to innovate the future of energy and enable the transition to a lower carbon world.

Demand for our services and products is subject to a complex setcombination of macroeconomic, industry and company-specific factors that influence customer’sour clients’ decisions to drill and invest in exploration, development and production activities. The volume of exploration,these development and production activityactivities is significantly influenced by the prices of crude oil and natural gas, which can fluctuate widely, are inherently volatile and tend to be highly sensitive to a range of factors. These factors include global supply and demand dynamics, production decisions and actions taken by major oil-producing countries, as well as geopolitical developments impacting large hydrocarbon-producing regions.

In addition to commodity price dynamics, certainclient capital allocation priorities can materially influence drilling activity. Certain oil and gas companiesproducers may intentionally limit their capital spending as they focus on capital discipline anddiscipline, shareholder returns and other priorities over production growth,growth. whichThese actions can moderate activity levels even during periods of favorable pricing.commodity prices. Further, significant industry consolidation, particularly among U.S. operators has occurred in recent years. In certain cases, these transactions have impacted overalldemand rigfor demand,drilling services, as the combined operators reassess activitydevelopment levelsplans and fleetrationalize drilling rig requirements.

Since late 2022 and through the fourth quarter of 2025,2022, global energy commodity markets have experienced sustained volatility driven by evolving geopolitical dynamics, and more recently, domestic policy changes. Beginning inDuring the first quarterhalf of 2026, the conflict in the Middle East resulted in damage to oil and gas production facilities in several producing countries and a very significant curtailment in oil and gas exports from the region. The near-term impact of these events has beenwas a dramatic increase in global crude oil prices and elevated natural gas prices in certain markets.

Operator responses to the conflict have varied by region. In the Middle East, a number of offshore rigs have been placed on standby or had operations suspended. In contrast, land drilling activity in the markets where we operate has continued,remained resilient, and in our case, has increased modestly.

In the United States, operators generally maintained or increased their prior drilling activity, even as oil prices havestrengthened. increased. Although futures market pricing reflects theHowever, most pronounced increases in the near-term months,larger U.S. operators have largely remainedremain committed to their prior spending plans and have not increased drilling activity levels in response to the recent movement in oil prices.

InAlso in the United States, leading-edge rig pricing disciplinehas forbegun drillingto rigs remains intact,increase, supporting stable rig dayrates andwidening daily rig margins. At the same time, continued gains in drilling efficiency have enabled U.S. oil and gas producers to sustain production levels with fewer rigs. As a result, while rig pricing dynamics haveare remained relatively stable,improving, these efficiency gains have reduced the number of rigs required.

Internationally, we continue to see constructive medium- to longer-term fundamentals supported by production-capacityproduction capacity expansion and the development of unconventional resources in a number of key markets. In many of these regions, drilling activity is supported by longer-term contractual agreements, which tend to moderate near-term volatility. Nevertheless, activity levels may be affected by near-term geopolitical developments, supply-chain disruptions and customer-specific capital allocation decisions.

Comparison of the three months ended MarchJune 31,30, 2026 and 2025

Operating revenues for the three months ended MarchJune 31,30, 2026 totaled $783.5$814.8 million, representing ana increasedecrease of $47.4$18.0 million, compared to the three months ended MarchJune 31,30, 2025. For a more detailed description of operating results, see Segment Results of Operations below.

Net loss attributable to Nabors totaled $15.2$22.3 million ($1.54$2.04 per diluted share) for the three months ended MarchJune 31,30, 2026 compared to net incomeloss attributable to Nabors of $33.0$30.9 million ($2.18$2.71 per diluted share) for the three months ended MarchJune 31,30, 2025, or aan $48.2$8.6 million decreaseincrease in net income. See Segment Results of Operations and Other Financial Information below for additional discussion.

General and administrative expenses for the three months ended MarchJune 31,30, 2026 totaled $71.8$71.4 million, representing ana increasedecrease of $3.3$11.4 million, or 5%,14%, compared to the three months ended MarchJune 31,30, 2025. This is reflective of increasesdecreases in workforce costs and general operating costs asrelated ato resultQuail ofTools, theLLC, Parkerwhich acquisition,was sold on August 20, 2025 along with inflationarya pressuresreduction asin marketstaffing conditionslevels haveand changed.general-cost-reduction effects in our corporate offices subsequent to the acquisition of Parker Drilling.

Depreciation and amortization expense for the three months ended MarchJune 31,30, 2026 was $156.2$160.5 million, representing ana increasedecrease of $1.5$14.5 million, or 1%,8%, compared to the three months ended MarchJune 31,30, 2025. The increasedecrease is a result of the additional assets obtainedsold inas part of the Parkersale acquisitionof andQuail capitalTools, expenditures.LLC on August 20, 2025.

Operating revenues for our U.S. Drilling segment increaseddecreased by $10.4$3.0 million or 5%1% during the three months ended MarchJune 31,30, 2026 compared to the corresponding prior year period. The increasedecrease is primarily attributable to a 10%decline in day rates partially offset by a 7% increase in the average rigs working, reflecting increased drilling activity which was partially offset by a decline in day rates.working.

Operating revenues for our International Drilling segment during the three months ended MarchJune 31,30, 2026 increased by $37.8$47.5 million or 10%12% compared to the corresponding prior year period. The increase is primarily attributable to a 9% increase in the average rigs working, reflecting increased drilling activity, along with improved pricing, as market conditions and demand for our international drilling services have increased since the prior year.

Operating revenues for this segment increaseddecreased by $13.0$59.6 million or 14%35% during the three months ended MarchJune 31,30, 2026 compared to the corresponding prior year period. The increasedecrease is primarily attributable to aoperating fullrevenue quarterfrom ofQuail Tools, LLC, which is included in the activity for the three months ended MarchJune 31,30, 20262025. fromQuail ourTools, Parker Drilling acquisition whichLLC was completedsold on MarchAugust 11,20, 2025.

Operating revenues for our Rig Technologies segment decreasedincreased by $16.9$1.0 million or 38%3% during the three months ended MarchJune 31,30, 2026 compared to the corresponding prior year period due to the overall declineincrease in activity.

Interest expense for the three months ended MarchJune 31,30, 2026 was $43.8$42.7 million, representing a decrease of $10.6$13.4 million, or 19%,24%, compared to the three months ended MarchJune 31,30, 2025. The decrease was primarily due to a decrease in our average outstanding debt balance throughout the three months ended MarchJune 31,30, 2026 as compared to the three months ended MarchJune 31,30, 2025.

Other, net for the three months ended MarchJune 31,30, 2026 was a gainloss of $13.4$5.7 million compared to $44.8$6.1 million loss for the three months ended MarchJune 31,30, 2025 representing a $58.2$0.4 million increasedecrease in income.loss. During the three months ended MarchJune 31,30, 2026, the amount primarily consisted of $16.4$5.2 million fromrelated decreasedto severance and reorganization costs, $1.1 million related to increases in litigation reserves and a favorable settlement related to litigation which was offset by $1.7 million in loss recognized for debt buybacks and $1.3$0.8 million in foreign currency transaction losses.losses, which was offset by $1.0 million of mark-to-market gains on the common share warrants. In comparison, the amount during the three months ended MarchJune 31,30, 2025 primarily consisted of $26.5$2.1 million in assetforeign impairmentscurrency relatedtransaction tolosses, assets held in Russia, $17.2$3.8 million of transactionother relatedthan coststemporary impairment on securities and $5.0$7.1 million related to severance and reorganization costscosts, which was offset by $4.2$3.2 million of mark-to-market gains on the common share warrants and $4.1$11.7 million in gain on sales of assets.

Our worldwide tax expense for the three months ended MarchJune 31,30, 2026 was $16.9$16.4 million compared to $15.0$23.1 million for the three months ended MarchJune 31,30, 2025. The increasedecrease in tax expense was primarily attributable to the change in amount and geographic mix of our pre-tax earnings (losses).

Our primary sources of liquidity are cash and investments, availability under the 2024 Credit Agreement and cash generated from operations. As of MarchJune 31,30, 2026, we had cash and short-term investments of $500.9$509.8 million and working capital of $567.4$563.5 million. As of December 31, 2025, we had cash and short-term investments of $940.7 million and working capital of $558.6 million.

On MarchJune 31,30, 2026, we had no borrowings and $67.5$69.7 million of letters of credit outstanding under the 2024 Credit Agreement, which had a total borrowing capacity of $350.0 million and a separate letter of credit tranche that permits us to issue letters of credit with total reimbursement obligations not to exceed $125 million, which was, on April 4, 2026, increased to $150.0 million by the Joinder, with letters of credit not affecting revolving loan capacity and vice versa.

As of the date of this report, we were in compliance with all covenants under the 2024 Credit Agreement, including those regarding the required interest coverage ratio and minimum guarantor value, which were 4.404.69:1.00 and 99.8%, respectively, as of MarchJune 31,30, 2026. If we fail to perform our obligations under the covenants, the revolving credit commitments under the 2024 Credit Agreement could be terminated, and any outstanding borrowings under the facilities could be declared immediately due and payable. If necessary, we have the ability to manage our covenant compliance by taking certain actions including reductions in discretionary capital or other types of controllable expenditures, monetization of assets, amending or renegotiating the revolving credit agreement, accessing capital markets through a variety of alternative methods, or any combination of these alternatives. We expect to remain in compliance with all covenants under the 2024 Credit Agreement during the twelve-month period following the date of this report based on our current operational and financial projections, including after giving effect to the Parker acquisition. However, we can make no assurance of continued compliance if our current projections or material underlying assumptions prove to be incorrect. If we fail to comply with the covenants, the revolving credit commitment could be terminated, and any outstanding borrowings under the facility could be declared immediately due and payable.

We had seven letter-of-credit facilities with various banks as of MarchJune 31,30, 2026. Availability under these facilities as of MarchJune 31,30, 2026 was as follows:

As of MarchJune 31,30, 2026, approximately 33%,29%, 14%15% and 10%14% of our net accounts receivable balance was related to our operations in Saudi Arabia, U.S. and Mexico, respectively. Our largest customer in Mexico has a history of making late payments and, in more recent periods, has utilized third-party financial institutions to pay certain of our receivables. The balances due are not in dispute,dispute; however, additional or continued delays in customer payments in the future could differ from historical practice and management’s current expectations.

The amount available for purchase under the A/R Agreements fluctuates over time based on the total amount of eligible receivables generated during the normal course of business after excluding excess concentrations and certain other ineligible receivables. The maximum purchase commitment of the Purchasers under the A/R Agreements is $250.0 million and the amount of receivables purchased by the third-party Purchasers as of MarchJune 31,30, 2026 was $147.0$138.0 million.

Purchase commitments outstanding at MarchJune 31,30, 2026 totaled approximately $368.1$335.2 million, primarily for capital expenditures, other operating expenses and purchases of inventory. We can reduce planned expenditures if necessary or increase them if market conditions and new business opportunities warrant it. The level of our outstanding purchase commitments and our expected level of capital expenditures over the next 12 months represent a number of capital programs that are currently underway or planned.

Our cash flows depend, to a large degree, on the level of spending by oil and gas companies for exploration, development and production activities. Sustained decreases in the price of oil or natural gas could have a material impact on these activities and could also materially affect our cash flows. Certain sources and uses of cash, such as the level of discretionary capital expenditures or acquisitions, purchases and sales of investments, dividends, loans, issuances and repurchases of debt and of our common shares are within our control and are adjusted as necessary based on market conditions. We discuss our cash flows for the threesix months ended MarchJune 31,30, 2026 and 2025 below.

Operating Activities. Net cash provided by operating activities totaled $113.3$248.6 million during the threesix months ended MarchJune 31,30, 2026, compared to net cash provided of $87.7$239.5 million during the corresponding 2025 period. Operating cash flows are our primary source of capital and liquidity. Cash from operating results (before working capital changes) was $174.5$342.2 million for the threesix months ended MarchJune 31,30, 2026, an increase of $44.7$38.5 million when compared to $129.7$303.7 million in the corresponding 2025 period. This was due to the increase in activity across our business for the threesix months ended MarchJune 31,30, 2026 compared to the threesix months ended MarchJune 31,30, 2025. Changes in working capital items such as collection of receivables, other deferred revenue arrangements and payments of operating payables are also significant factors affecting operating cash flows and can be highly volatile in periods of increasing or decreasing activity levels. Changes in working capital items used $61.1$93.6 million in cash flows during the threesix months ended MarchJune 31,30, 2026, a $19.1$29.4 million unfavorablefavorable change as compared to the $42.0$64.2 million in cash flows used by working capital in the corresponding 2025 period.

Investing Activities. Net cash used by investing activities totaled $169.5$292.3 million during the threesix months ended MarchJune 31,30, 2026 compared to net cash used of $74.9$210.9 million during the corresponding 2025 period. Our primary use of cash for investing activities is capital expenditures for rig-related enhancements, new construction and equipment, and sustaining capital expenditures. During the threesix months ended MarchJune 31,30, 2026 and 2025, we used cash for capital expenditures totaling $165.0$290.6 million and $165.0$343.9 million, respectively. During the threesix months ended MarchJune 31,30, 2025, we received $84.4 million in cash acquired in the Parker acquisition, net of cash paid.

Financing Activities. Net cash used by financing activities totaled $383.2$385.1 million during the threesix months ended MarchJune 31,30, 2026. During the threesix months ended MarchJune 31,30, 2026, we repaid $379.1 million of outstanding long-term debt.

Net cash used by financing activities totaled $2.0$21.3 million during the threesix months ended MarchJune 31,30, 2025. During the threesix months ended MarchJune 31,30, 2025, we paid off the Parker term loan of $177.8 million and received proceeds from the Credit Agreement of $178.0 million.

We are a party to transactions, agreements or other contractual arrangements defined as “off-balance sheet arrangements” that could have a material future effect on our financial position, results of operations, liquidity and capital resources. The most significant of these off-balance sheet arrangements include the A/R Agreements (see —Accounts Receivable Purchase and Sales Agreements, above) and certain agreements and obligations under which we provide financial or performance assurance to third parties. Certain of these financial or performance assurances serve as guarantees, including standby letters of credit issued on behalf of insurance carriers in conjunction with our workers’ compensation insurance program and other financial surety instruments such as bonds. In addition, we have provided indemnifications,indemnifications whichthat serve as guarantees,guarantees to some third parties. These guarantees include indemnification provided by us to our share transfer agent and our insurance carriers. We are not able to estimate the potential future maximum payments that might be due under our indemnification guarantees. Management believes the likelihood that we would be required to perform or otherwise incur any material losses associated with any of these guarantees is remote.