NESR 10-K & 10-Q changes, risk factors and insider trading
National Energy Services Reunited Corp. · Nasdaq · Oil & Gas Field Services, Nec · CIK 1698514 · All filings on SEC.gov
At a glance
What changed in the latest 10-K
Risk Factors
New heading “An investment in our ordinary shares involves a high degree of risk. You should consider carefully the following risk factors, as well as the other information contained in this Annual Report, before making an investment in our ordinary shares. Any of the risk factors described below could significantly and negatively affect our financial position, results of operations or cash flows. In addition, these risks represent important factors that can cause our actual results to differ materially from those anticipated in our forward-looking statements.”
New heading “RISK FACTOR SUMMARY”
New heading “Financial, Regulatory, Legal and Compliance Risks”
New heading “Risks Related to Our Capital Structure”
New heading “Other Risks Associated with Our Business”
New heading “RISKS RELATING TO OUR BUSINESS AND OPERATIONS”
New heading “Trends in oil and natural gas prices affect the level of exploration, development, and production activity of our customers and the demand for our services and products, which could have a material adverse effect on our business, results of operations, and financial condition.”
New heading “Our business is dependent on capital spending by our customers, and reductions in capital spending could have a material adverse effect on our business, results of operations, and financial condition.”
New heading “Our assets require capital for maintenance, upgrades and refurbishment and we may require significant capital expenditures for new equipment.”
New heading “The geographic concentration of our operations and customers exposes us to the risks of the regional economy and other regional adverse conditions. The credit risks of our concentrated customer base in the energy industry could result in losses. In addition, we depend on a small number of customers for a significant portion of our revenues. Therefore, the loss of any of these customers could result in a decline in our revenues and adversely affect our financial condition, results of operations or cash flows.”
New heading “We operate in multiple countries across the Middle East, North Africa, and Asia. Therefore, our operations will be subject to political and economic instability and risk of government actions that could have a material adverse effect on our business, results of operations, and financial condition.”
New heading “Conditions in the Middle East, including current uncertainty and instability resulting from the conflict between the United States, Israel and Iran, as well as other regional hostilities could adversely affect our business.”
New heading “The Company is subject to various laws and regulations in the regions in which it operates, and changes in such laws and regulations, failure to comply with existing or future laws and regulations, and disputes regarding compliance with such laws and regulations could adversely affect the Company’s business.”
New heading “Physical dangers are inherent in our operations and may expose us to significant potential liability and losses. Personnel and property may be harmed during the process of drilling for oil and natural gas.”
New heading “If we do not effectively or efficiently integrate the operations of businesses or companies we acquire, our future growth will be limited.”
New heading “We operate in a highly competitive industry, and many of our competitors are larger than us and have greater resources than we do.”
New heading “If we are unable to keep pace with technology developments in the industry, including advancements in artificial intelligence, this could adversely affect our ability to maintain or grow market share.”
New heading “FINANCIAL, REGULATORY, LEGAL AND COMPLIANCE RISKS”
New heading “Impairment in the carrying value of goodwill could result in the incurrence of impairment charges.”
New heading “We may not be fully indemnified against financial losses in all circumstances where damage to or loss of property, personal injury, death or environmental harm occur.”
New heading “We operate in multiple countries and earn revenue in different currencies and as such may be exposed to risks arising from fluctuating exchange rates and currency control restrictions, which may limit our ability to reinvest earnings from operations in one country to fund the capital needs of our operations in other countries or to repatriate assets from some countries.”
New heading “Changes in international tax laws and the ongoing implementation of global minimum tax rules could increase our tax liabilities and compliance costs and adversely affect our results of operations.”
New heading “Lack of consolidation of our fiscal results in a taxpaying jurisdiction prevents offsetting some losses against taxable profits.”
New heading “The owners of NESR ordinary shares are subject to tax risks due to the possibility of changes in tax rules and regulations in foreign countries.”
New heading “If our subsidiaries are unable to comply with the restrictions and covenants in their debt agreements, they could default under the terms of such agreements, which could result in an acceleration of repayment.”
New heading “To service our indebtedness, we may require a significant amount of cash, and our ability to generate cash will depend on many factors beyond our control.”
New heading “Our borrowings under our various loan agreements and other financing arrangements expose us to interest rate risk and such arrangements also include restrictive covenants that may impact our subsidiaries’ ability to make distributions to us.”
New heading “We are exposed to the credit risk of our customers and counterparties, and delay, non-payment, and/or non-performance by our customers could have an adverse effect on our financial condition, results of operations, or cash flows.”
New heading “Limitations on our ability to protect our intellectual property rights, including our trade secrets, could cause a loss in revenue and any competitive advantage.”
New heading “We may be subject to litigation if another party claims that we have infringed upon such party’s intellectual property rights.”
New heading “Environmental compliance costs and liabilities could reduce our earnings and cash available for operations.”
New heading “We could be subject to substantial liability claims, which could adversely affect our financial condition, results of operations, and cash flows.”
New heading “Demand for our products and services could be reduced by existing and future legislation or regulations.”
New heading “Increased attention to climate change, ESG matters and conservation measures by regulators and investors may adversely impact our business.”
New heading “Some of our customers require bids for contracts in the form of long-term, fixed pricing contracts that require us to assume additional risks associated with cost over-runs, operating cost inflation, labor availability and productivity, supplier and contractor pricing and performance, and potential claims for liquidated damages.”
New heading “Our failure to comply with complex U.S. and foreign laws and regulations could have a material adverse effect on our operations.”
New heading “We are subject to sanctions and export control regimes adopted by the U.S. and other jurisdictions.”
New heading “Our operations in the Middle East and other countries could require us to incur additional costs in order to comply with U.S., UK and EU sanctions-related regulations restricting or prohibiting activities with certain individuals and entities or in certain jurisdictions.”
New heading “We are subject to litigation risks that may not be covered by insurance.”
New heading “We may be unable to obtain, maintain or renew permits necessary for our operations, which could inhibit our ability to do business.”
New heading “We might require additional equity or debt financing to fund operations and/or future acquisitions.”
New heading “As of January 1, 2026, we were no longer a foreign private issuer and we are required to comply with the provisions of the Exchange Act, and the rules of Nasdaq, applicable to U.S. domestic issuers, which will continue to require us to incur significant expenses and expend time and resources.”
New heading “RISKS RELATED TO OUR CAPITAL STRUCTURE”
New heading “The market price of our ordinary shares may decline.”
New heading “If securities or industry analysts do not publish or cease publishing research or reports about us, our business, or our market, or if they change their recommendations regarding our securities adversely, the price and trading volume of our ordinary shares could decline.”
New heading “We are a holding company. Our sole material asset is our equity interest in our subsidiaries and we are accordingly dependent upon distributions from them to cover our corporate and other overhead expenses.”
New heading “Future sales of our ordinary shares could reduce our stock price, and any additional capital raised by us through the sale of equity or convertible securities may dilute your ownership in us.”
New heading “Because we currently have no approved plans to pay cash dividends on our ordinary shares, you may not receive any return on investment unless you sell your ordinary shares for a price greater than what you paid for it.”
New heading “OTHER RISKS ASSOCIATED WITH OUR BUSINESS”
New heading “Cybersecurity risks and threats could adversely affect our business.”
New heading “We depend on our suppliers to provide services and equipment in a timely manner and any delays, interruptions or failures by suppliers could expose us to increased costs or inability to meet contractual obligations.”
New heading “We have engaged in related party transactions, the termination of which may inhibit business, and such transactions present possible conflicts of interest that could have an adverse effect on us.”
New heading “The loss or unavailability of any of our executive officers or other key employees could have a material adverse effect on our business.”
New heading “Our growth potential and ability to operate could be materially and adversely affected if we cannot employ and retain technical personnel at a competitive cost.”
Removed heading “You should carefully consider all of the risk factors described below and all of the other information contained in this report, before making a decision to invest in our securities. This report also contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those anticipated in the forward-looking statements as a result of specific factors, including the risks described below. Risks associated with the Business Combination, NPS and GES, are more fully discussed in the Proxy Statement.”
Removed heading “We are a recently formed blank check company with no operating history and no revenues and, accordingly, investors do not have any basis on which to evaluate our ability to achieve our business objective.”
Removed heading “Our independent registered public accounting firm’s report contains an explanatory paragraph that expresses substantial doubt about our ability to continue as a “going concern.””
Removed heading “Our public shareholders may not be afforded an opportunity to vote on our proposed business combination, which means we may complete our initial business combination even though a majority of our public shareholders do not support such a combination.”
Removed heading “According to our amended and restated memorandum and articles of association, our entire board of directors must approve our initial business combination, which may make it more difficult to bring such potential targets to our public shareholders for their vote.”
Removed heading “If we seek shareholder approval of our initial business combination, such as in connection with the Business Combination, our initial shareholders have agreed to vote in favor of such initial business combination, regardless of how our public shareholders vote.”
Removed heading “You will not be entitled to protections normally afforded to investors of blank check companies.”
Removed heading “We may issue shares of our stock to complete our initial business combination, which would reduce the equity interest of our shareholders and could cause a change in control of our ownership.”
Removed heading “We may incur significant indebtedness in order to consummate our initial business combination.”
Removed heading “The funds held in the trust account may not earn significant interest and, as a result, we may be limited to the funds held outside of the trust account to fund our search for target businesses, to pay our tax obligations and working capital and to complete our initial business combination.”
Removed heading “If we liquidate, distributions, or part of them, may be delayed while the liquidator determines the extent of potential creditor claims.”
Removed heading “If we do not maintain a current and effective prospectus relating to the ordinary shares issuable upon exercise of the warrants issued in our IPO, public holders will only be able to exercise such warrants on a “cashless basis.””
Removed heading “An investor will be able to exercise a warrant only if the issuance of ordinary shares upon such exercise has been registered or qualified or is deemed exempt under the securities laws of the state of residence of the holder of the warrants.”
Removed heading “We may amend the terms of the warrants in a way that may be adverse to holders with the approval by the holders of a majority of the then outstanding warrants.”
Removed heading “Since we are not limited to a particular industry or target business with which to complete our initial business combination, in the event that the Business Combination is not consummated, we are unable to ascertain the merits or risks of the industry or business in which we may ultimately operate.”
Removed heading “Our officers and directors may not have significant experience or knowledge regarding the jurisdiction or industry of the target business we may seek to acquire.”
Removed heading “The requirement that the target business or businesses that we acquire must collectively have a fair market value equal to at least 80% of the balance of the funds in the trust account at the time of the execution of a definitive agreement for our initial business combination may limit the type and number of companies that we may complete such a business combination with.”
Removed heading “Our management may not be able to maintain control of a target business after our initial business combination. We cannot provide assurance that, upon loss of control of a target business, new management will possess the skills, qualifications or abilities necessary to profitably operate such business.”
Removed heading “Our ability to successfully effect our initial business combination and to be successful thereafter will be totally dependent upon the efforts of our key personnel, some of whom may join us following our initial business combination. While we intend to closely scrutinize any individuals we engage after our initial business combination, our assessment of these individuals may not prove to be correct.”
Removed heading “Our key personnel may negotiate employment or consulting agreements with a target business in connection with a particular business combination. These agreements may provide for them to receive compensation following our initial business combination and as a result, may cause them to have conflicts of interest in determining whether a particular business combination is the most advantageous.”
Removed heading “Our officers and directors will allocate their time to other businesses thereby causing conflicts of interest in their determination as to how much time to devote to our affairs. This conflict of interest could have a negative impact on our ability to consummate our initial business combination.”
Removed heading “Our officers and directors or their affiliates have pre-existing fiduciary and contractual obligations and, accordingly, may have conflicts of interest in determining to which entity a particular business opportunity should be presented.”
Removed heading “The shares beneficially owned by our Sponsor, officers and directors will not participate in liquidation distributions and, therefore, our officers and directors may have a conflict of interest in determining whether a particular target business is appropriate for our initial business combination.”
Removed heading “NASDAQ may delist our securities from quotation on its exchange which could limit investors’ ability to make transactions in our securities and subject us to additional trading restrictions.”
Removed heading “We may only be able to complete one business combination with the proceeds of our IPO, which will cause us to be solely dependent on a single business which may have a limited number of products, services or potential sources of revenue.”
Removed heading “The ability of our public shareholders to exercise their redemption rights or sell their shares to us in a tender offer may not allow us to effectuate the most desirable business combination or optimize our capital structure.”
Removed heading “We may be unable to consummate an initial business combination if a target business requires that we have a certain amount of cash at closing, in which case public shareholders may have to remain shareholders of our company and wait until our redemption of the public shares to receive a pro rata share of the trust account or attempt to sell their shares in the open market.”
Removed heading “If we hold a shareholder meeting to approve any initial business combination, we will offer each public shareholder the option to vote in favor of the proposed business combination and still seek redemption of his, her or its shares.”
Removed heading “Public shareholders that fail to vote either in favor of or against a proposed business combination will not be able to have their shares redeemed for cash.”
Removed heading “Public shareholders, together with any affiliates of theirs or any other person with whom they are acting in concert or as a “group,” will be restricted from seeking redemption rights with respect to more than 20% of the ordinary shares sold in our IPO.”
Removed heading “In connection with any shareholder meeting called to approve a proposed initial business combination, we may require public shareholders who wish to redeem their ordinary shares to comply with specific requirements for redemption that may make it more difficult for them to exercise their redemption rights prior to the deadline for exercising their rights.”
Removed heading “If, in connection with any shareholder meeting called to approve a proposed business combination, we require public shareholders who wish to redeem their ordinary shares to comply with the delivery requirements for redemption, such redeeming shareholders may be unable to sell their securities when they wish to in the event that the proposed business combination is not approved.”
Removed heading “Because of our structure, other companies may have a competitive advantage and we may not be able to consummate an attractive business combination.”
Removed heading “Our ability to consummate an attractive business combination may be impacted by the market for initial public offerings.”
Removed heading “We may be unable to obtain additional financing, if required, to complete our initial business combination or to fund the operations and growth of the target business, which could compel us to restructure or abandon a particular business combination.”
Removed heading “Our initial shareholder controls a substantial interest in us and thus may influence certain actions requiring a shareholder vote.”
Removed heading “If we do not hold an annual meeting of shareholders until after the consummation of our initial business combination, shareholders will not be afforded an opportunity to elect directors and to discuss company affairs with management until such time.”
Removed heading “Our outstanding warrants may have an adverse effect on the market price of ordinary shares and make it more difficult to effect a business combination.”
Removed heading “We may redeem the warrants at a time that is not beneficial to public investors.”
Removed heading “Our management’s ability to require holders of our warrants to exercise such warrants on a cashless basis will cause holders to receive fewer ordinary shares upon their exercise of the warrants than they would have received had they been able to exercise their warrants for cash.”
Removed heading “If our security holders exercise their registration rights, it may have an adverse effect on the market price of our ordinary shares and the existence of these rights may make it more difficult to effect our initial business combination.”
Removed heading “If we are deemed to be an investment company, we may be required to institute burdensome compliance requirements and our activities may be restricted, which may make it difficult for us to complete our initial business combination.”
Removed heading “If we are unable to consummate our initial business combination, our public shareholders may be forced to wait up to 24 months before redemption from our trust account.”
Removed heading “If we are deemed to be insolvent, distributions, or part of them, may be delayed while the insolvency liquidator determines the extent of potential creditor claims. In these circumstances, prior payments made by the company may be deemed “voidable transactions.””
Removed heading “If we are deemed to be insolvent, distributions made to public shareholders, or part of them, from our trust account may be subject to claw back in certain circumstances.”
Removed heading “The requirement that we complete our initial business combination within 24 months from the closing of our IPO may give potential target businesses leverage over us in negotiating our initial business combination.”
Removed heading “We may not obtain a fairness opinion with respect to the target business that we seek to acquire and therefore investors may be relying solely on the judgment of our board of directors in approving a proposed business combination.”
Removed heading “We may not be required to obtain an opinion from an independent investment banking firm as to the fair market value of the target business we are seeking to acquire.”
Removed heading “Resources could be spent researching acquisitions that are not consummated, which could materially adversely affect subsequent attempts to locate and acquire or merge with another business.”
Removed heading “We may qualify as a passive foreign investment company, or PFIC, which could result in adverse U.S. federal income tax consequences to U.S. investors.”
Removed heading “Compliance with the Sarbanes-Oxley Act of 2002 requires substantial financial and management resources and may increase the time and costs of completing an acquisition.”
Removed heading “We are an “emerging growth company” and we cannot be certain if the reduced disclosure requirements applicable to emerging growth companies will make our securities less attractive to investors.”
Removed heading “We may re-incorporate in another jurisdiction in connection with our initial business combination, and the laws of such jurisdiction will likely govern all of our material agreements and we may not be able to enforce our legal rights.”
Removed heading “Because we must furnish our shareholders with target business financial statements prepared in accordance with or reconciled to U.S. generally accepted accounting principles or international financial reporting standards as issued by the IASB, we will not be able to complete our initial business combination with prospective target businesses unless their financial statements are prepared in accordance with or reconciled to U.S. generally accepted accounting principles or international financial reporting standards as issued by the IASB.”
Removed heading “A market for our securities may not develop, which would adversely affect the liquidity and price of our securities.”
Removed heading “We may face risks related to oil and gas exploration and production companies.”
Removed heading “Risks Associated with Acquiring and Operating a Business Outside of the United States”
Removed heading “If we effect our initial business combination with a company located outside of the United States, we would be subject to a variety of additional risks that may negatively impact our operations.”
Removed heading “Because of the costs and difficulties inherent in managing cross-border business operations, our results of operations may be negatively impacted.”
Removed heading “If social unrest, acts of terrorism, regime changes, changes in laws and regulations, political upheaval, or policy changes or enactments occur in a country in which we may operate after we effect our initial business combination, it may result in a negative impact on our business.”
Removed heading “Many countries have difficult and unpredictable legal systems and underdeveloped laws and regulations that are unclear and subject to corruption and inexperience, which may adversely impact our results of operations and financial condition.”
Removed heading “If relations between the United States and foreign governments deteriorate, it could cause potential target businesses or their goods and services to become less attractive.”
Removed heading “If any dividend is declared in the future and paid in a foreign currency, investors may be taxed on a larger amount in U.S. dollars than the U.S. dollar amount that they will actually ultimately receive.”
Removed heading “If our management following our initial business combination is unfamiliar with United States securities laws, they may have to expend time and resources becoming familiar with such laws, which could lead to various regulatory issues.”
Removed heading “Currency policies may cause a target business’s ability to succeed in the international markets to be diminished.”
Removed heading “Because foreign law could govern almost all of our material agreements, we may not be able to enforce our rights within such jurisdiction or elsewhere, which could result in a significant loss of business, business opportunities or capital.”
Largest changes
“We are subject to complex U.S. and foreign jurisdictions’ laws and regulations, such as the U.S. Foreign Corrupt Practices Act and various other anti-bribery and anti-corruption laws. At this time, while the U.K. Bribery Act has not been adopted to apply to BVI companies, it applies to our employees and our subsidiaries that are U.K. citizens or residents, including any British overseas territory citizens, and any subsidiaries formed in the U.K. …”see in full comparison
“The legal risk of doing business in the MENA region and elsewhere could adversely affect the Company’s operations and earnings. Such risks include the impact of current laws and regulations, the effect of changes in laws or regulations, and the consequences of litigation relating to current or future laws and regulations, all of which could have an adverse impact on the Company’s results of operations. …”see in full comparison
“Due to the unsettled political conditions in many oil-producing countries, our operations, revenue, and profits may be subject to the adverse consequences of war, the effects of terrorism, civil unrest, strikes, currency controls, and governmental actions. …”see in full comparison
“If our subsidiaries are unable to generate sufficient cash flow and are otherwise unable to obtain funds necessary to meet required payments of principal, premium (if any), and interest on their indebtedness, or if they otherwise fail to comply with the various covenants, including financial and operating covenants in the instruments governing their indebtedness they could default under the terms of the agreements governing such indebtedness. …”see in full comparison
“If our subsidiaries are unable to comply with the restrictions and covenants in their debt agreements, they could default under the terms of such agreements, which could result in an acceleration of repayment.”see in full comparison
“Our operations in the Middle East and other countries could require us to incur additional costs in order to comply with U.S., UK and EU sanctions-related regulations restricting or prohibiting activities with certain individuals and entities or in certain jurisdictions.”see in full comparison
Full comparison: every changed paragraph (311)
An investment in our ordinary shares involves a high degree of risk. You should consider carefully the following risk factors, as well as the other information contained in this Annual Report, before making an investment in our ordinary shares. Any of the risk factors described below could significantly and negatively affect our financial position, results of operations or cash flows. In addition, these risks represent important factors that can cause our actual results to differ materially from those anticipated in our forward-looking statements.
RISK FACTOR SUMMARY
You
should carefully consider all of the risk factors described below and all of the other information contained in this report, before
making a decision to invest in our securities. This report also contains forward-looking statements that involve risks and uncertainties.
Our actual results could differ materially from those anticipated in the forward-looking statements as a result of specific factors,
including the risks described below. Risks associated with the Business Combination, NPS and GES, are more fully discussed in
the Proxy Statement.
Risks
AssociatedRelated withto Our Business and Operations
Financial, Regulatory, Legal and Compliance Risks
Risks Related to Our Capital Structure
Other Risks Associated with Our Business
RISKS RELATING TO OUR BUSINESS AND OPERATIONS
Trends in oil and natural gas prices affect the level of exploration, development, and production activity of our customers and the demand for our services and products, which could have a material adverse effect on our business, results of operations, and financial condition.
Demand for our services and products is sensitive to the level of exploration, development, and production activity of, and the corresponding capital spending by, oil and natural gas companies. The level of exploration, development, and production activity is directly affected by trends in oil and natural gas prices, which historically have been volatile and are likely to continue to be volatile. Prices for oil and natural gas are subject to large fluctuations in response to relatively minor changes in the supply of and demand for oil and natural gas, market uncertainty, and a variety of other economic factors that are beyond our control. The following table illustrates the high degree of variability in Europe Brent spot prices per barrel over the last three years:
A prolonged reduction in oil and natural gas prices could lead to depressed levels of exploration, development, and production activity and could have a material adverse effect on our business, results of operations and financial condition. Even the perception of longer-term lower oil and natural gas prices by oil and natural gas companies can result in the reduction or deferral of major expenditures given the long-term nature of many large-scale development projects.
Factors affecting the prices of oil and natural gas include:
Our business is dependent on capital spending by our customers, and reductions in capital spending could have a material adverse effect on our business, results of operations, and financial condition.
Our business is directly affected by changes in capital expenditures by our customers and reductions in our customers’ capital spending could reduce demand for our services and products and have a material adverse effect on our business, results of operations, and financial condition. Most of our contracts can be cancelled or renegotiated by our customers at any time. Some of the items that may impact our customers’ capital spending include:
The oil and natural gas industry has historically experienced periodic downturns, which have been characterized by diminished demand for our products and services and downward pressure on the prices that we are able to charge. Sustained market uncertainty can also result in lower demand and pricing for our products and services. A significant industry downturn, sustained market uncertainty, or increased availability of economical alternative energy sources could result in a reduction in demand for our products and services, which could adversely affect our business, financial condition, results of operations, cash flows and prospects. With respect to national oil company (“NOC”) customers, we are also subject to risk of policy, regime, currency and budgetary changes, all of which may affect our customers’ capital expenditures.
Our assets require capital for maintenance, upgrades and refurbishment and we may require significant capital expenditures for new equipment.
Our revenue is generated principally from providing services and related equipment as well as renting tools and equipment. Our tools and equipment require capital investment in maintenance, upgrades and refurbishment to maintain our competitiveness. To the extent we are unable to fund such projects, we may have less equipment available for service or our equipment may not be attractive to potential or current customers. Additionally, increased demand, competition, advances in technology within our industry, and/or new emissions control, safety or other regulatory requirements in the geographies that we operate in may require us to update or replace existing equipment. Such demands on our capital or reductions in demand for our equipment and the increase in cost to maintain labor necessary for such maintenance and improvement, in each case, could have a material adverse effect on our business, liquidity position, financial condition, prospects and results of operations.
The geographic concentration of our operations and customers exposes us to the risks of the regional economy and other regional adverse conditions. The credit risks of our concentrated customer base in the energy industry could result in losses. In addition, we depend on a small number of customers for a significant portion of our revenues. Therefore, the loss of any of these customers could result in a decline in our revenues and adversely affect our financial condition, results of operations or cash flows.
Our operations and our primary customers are located in the MENA region and all are in the energy industry. Most of our customers are national oil companies (“NOCs”). Given the importance of NOCs, which dominate the petroleum industry in our countries of operation, our business is more susceptible to regional economic, budgetary and political conditions than other, more geographically diversified competitors. Any changes in market conditions, unforeseen circumstances, or other events affecting the area in which our assets are located could have a material adverse effect on our business, operating result, and financial condition.
Revenues from four customers individually accounted for 49%, 9%, 8% and 7% of the Company’s consolidated revenues in the year ended December 31, 2025, 54%, 9%, 7% and 4% of the Company’s consolidated revenues in the year ended December 31, 2024, and 44%, 8%, 7% and 5% of the Company’s consolidated revenues in the year ended December 31, 2023. Under the terms of our customer contracts, there is a risk of termination of one or more of such contracts and/or a lack of engagement in the same manner, or to the same level, as has been the case historically. The loss of all or even a portion of the business from a major customer, the failure to extend or replace the contracts with a major customer, or the extension or replacement of such contracts on less favorable terms, as a result of competition or otherwise, could adversely affect our financial condition, results of operations or cash flows.
We operate in multiple countries across the Middle East, North Africa, and Asia. Therefore, our operations will be subject to political and economic instability and risk of government actions that could have a material adverse effect on our business, results of operations, and financial condition.
We are exposed to risks inherent in doing business in each of the countries in which we operate. Our operations are subject to various risks unique to each country that could have a material adverse effect on our business, results of operations, and financial condition. With respect to any particular country, these risks may include but are not limited to:
Due to the unsettled political conditions in many oil-producing countries, our operations, revenue, and profits may be subject to the adverse consequences of war, the effects of terrorism, civil unrest, strikes, currency controls, and governmental actions. These and other risks described above could result in the loss of our personnel or assets, cause us to evacuate our personnel from certain countries, cause us to increase spending on security, cause us to cease operating in certain countries, disrupt financial and commercial markets, including the supply of and pricing for oil and natural gas, disrupt the supply of equipment required to operate in a country, result in labor shortages and generate greater political and economic instability in some of the geographic areas in which we operate. In response to certain conflicts, governments may impose additional sanctions, export controls, embargoes, and other restrictive measures targeting countries and regions in which we conduct business. These measures may lead to further retaliatory actions by impacted jurisdictions and lead to higher operating costs or disruptions in the supply chain for our business. Additionally, any possible reprisals as a consequence of military or other action, such as acts of terrorism in the Middle East, could have a material adverse effect on our business, results of operations, and financial condition.
Conditions in the Middle East, including current uncertainty and instability resulting from the conflict between the United States, Israel and Iran, as well as other regional hostilities could adversely affect our business.
The majority of our operations and facilities are located in the Middle East. Accordingly, political, economic and military conditions in the Middle East and the surrounding region directly affect our business and could materially and adversely affect our business, operations, or personnel. Most recently, on February 28, 2026, the security situation escalated significantly with the commencement of a major military conflict involving the United States, Israel, and Iran. This situation has led to the closure of regional airspace and retaliatory strikes impacting multiple nations in the Middle East where we operate, including Saudi Arabia, the UAE and Qatar.
Such conflict has resulted in, and could continue to result in, supply disruptions, damage to energy infrastructure, increased shipping and insurance costs, delays or rerouting of oil and gas cargos, heightened security risks, and increased volatility in oil and gas prices, all of which could affect our customers and our ability to do business with them.
The intensity and duration of this active conflict are difficult to predict. Although the current hostilities have not materially impacted our business or operations as of the date of this Annual Report, the conflict is rapidly evolving and developing and it is not possible to predict its long-term consequences on us or our customers. Any escalation and expansion of this conflict could have a negative impact on both global and regional conditions and may adversely affect our business, financial condition and results of operations.
The Company is subject to various laws and regulations in the regions in which it operates, and changes in such laws and regulations, failure to comply with existing or future laws and regulations, and disputes regarding compliance with such laws and regulations could adversely affect the Company’s business.
The legal risk of doing business in the MENA region and elsewhere could adversely affect the Company’s operations and earnings. Such risks include the impact of current laws and regulations, the effect of changes in laws or regulations, and the consequences of litigation relating to current or future laws and regulations, all of which could have an adverse impact on the Company’s results of operations. In addition, laws in some countries the Company operates in can be vague, inconsistently administered, and retroactively applied, which can increase the Company’s exposure to litigation or governmental investigations or proceedings, which can be costly. For example, the Company is currently party to litigation in Qatar and the UAE regarding ownership and historical profits of operating subsidiaries acquired in the acquisition of NPS. See Note 13, Commitments and Contingencies, to the Company’s financial statements included in this Annual Report. Failure to comply with the laws and regulatory requirements of governmental or judicial authorities and rulings that go against the Company could result in, among other things, revocation of required licenses, changes in commercial registrations, administrative enforcement actions, effects on covenant compliance under the Company’s bank loans, fines, and civil and criminal liability, which could then have a material adverse impact on the Company’s operating results and financial position.
Physical dangers are inherent in our operations and may expose us to significant potential liability and losses. Personnel and property may be harmed during the process of drilling for oil and natural gas.
Drilling for and producing hydrocarbons, and the associated products and services that we provide, include inherent dangers that may lead to property damage or damage to geological formations, personal injury or loss of life, or the discharge of hazardous materials into the environment. Many of these events are outside our control. Typically, we provide products and services at a well site where our personnel and equipment are located together with personnel and equipment of our customer and third parties, such as other service providers. At many sites, we depend on other companies and personnel to conduct drilling operations in accordance with appropriate safety standards. From time to time, personnel are injured or equipment or property is damaged or destroyed as a result of accidents, failed equipment, faulty products or services, failure of safety measures, uncontained formation pressures or other dangers inherent in drilling for oil and natural gas. Any of these events can be the result of human error. With increasing frequency, our products and services are deployed on more challenging prospects both onshore and offshore, where the occurrence of the types of events mentioned above can have an even more catastrophic impact on people, equipment and the environment. These risks could expose us to substantial liability for personal injury, wrongful death, property damage, loss of oil and natural gas production, pollution and other environmental damages and could expose us to a variety of claims, losses and remedial obligations. In addition, interruption of customer activity as a result of such events could adversely affect our financial condition, results of operations and cash flows.
If we do not effectively or efficiently integrate the operations of businesses or companies we acquire, our future growth will be limited.
From time to time, we may evaluate and seek to acquire assets or businesses that we believe complement our existing business and related assets. We may not achieve expected returns and other benefits as a result of various factors, including integration and collaboration challenges. The success of any acquisition is subject to various risks, including:
The assessment by our management of these risks is inexact and may not reveal or resolve all existing and potential risks. Realization of any of these risks could adversely affect our financial condition, results of operations and cash flows.
We operate in a highly competitive industry, and many of our competitors are larger than us and have greater resources than we do.
Several of our primary competitors are diversified multinational companies with substantially larger operating staff and greater capital resources. These larger competitors’ greater resources could allow them to better withstand industry downturns and to compete more effectively on the basis of technology, geographic scope and retained skilled personnel.
If we are unable to keep pace with technology developments in the industry, including advancements in artificial intelligence, this could adversely affect our ability to maintain or grow market share.
The oilfield service industry is subject to the introduction of new drilling and completion techniques, services using new technologies, and emissions control requirements that could yield service innovations, some of which may be subject to patent or other intellectual property protections. Some of these new technologies may be disruptive and lead to the rapid replacement of existing technologies. If we do not invest promptly in emerging technology such as artificial intelligence or fail to manage these technological advancements appropriately, our business may be adversely affected. We intend to introduce and integrate new technologies and procedures used by North American and European based oilfield service companies; however, we cannot be certain that we will be able to develop and implement new technologies or services on a timely basis or at an acceptable cost. The oilfield service industry is highly competitive and dominated by a few large players that have resources to invest in new technologies. Our ability to continually provide competitive technology and services can impact our ability to maintain or increase prices for our services, maintain market share, and negotiate acceptable contract terms with our customers. If we are unable to continue to acquire or develop competitive technology or deliver it to our customers in a timely and cost-competitive manner in the various markets we serve, it could adversely affect our financial condition, results of operations, and cash flows.
FINANCIAL, REGULATORY, LEGAL AND COMPLIANCE RISKS
Impairment in the carrying value of goodwill could result in the incurrence of impairment charges.
As of December 31, 2025, we had goodwill of $645.1 million. We review the carrying value of our goodwill for impairment annually or more frequently if certain indicators are present. In the event we determine that the value of goodwill has become impaired, an accounting charge for the amount of the impairment during the period in which the determination is made may be recognized. While we have not recorded any impairment charge for goodwill for the periods presented in this Annual Report, future changes in our business and operations or external market conditions, among other factors, could require us to record an impairment charge for goodwill, which could lead to decreased assets and reduced income. If a significant write-down is required, the charge could have a material adverse effect on our financial condition and results of operations.
We may not be fully indemnified against financial losses in all circumstances where damage to or loss of property, personal injury, death or environmental harm occur.
As is customary in our industry, our contracts typically require that our customers indemnify us for claims arising from the injury or death of their employees (and those of their other contractors), the loss or damage of their equipment (and that of their other contractors), damage to the well or reservoir and environmental impacts originating from the customer’s equipment or from the reservoir (including uncontained oil flow from a reservoir) and claims arising from catastrophic events, such as a well blowout, fire, explosion and from environmental impacts below the surface. Conversely, we typically indemnify our customers for claims arising from the injury or death of our employees, the loss or damage of our equipment (other than equipment lost in the hole) or environmental impacts originating from our equipment above the surface of the earth or water.
Our indemnification arrangements may not protect us in every case. For example, from time to time we may enter into contracts with less favorable indemnities or perform work without a contract that protects us. Our indemnity arrangements may also be held to be overly broad in some courts and/or contrary to public policy in some jurisdictions, and to that extent unenforceable. Additionally, some jurisdictions which permit indemnification nonetheless limit its scope by statute. We may be subject to claims brought by third parties or government agencies with respect to which we are not indemnified. Furthermore, the parties from which we seek indemnity may not be solvent, may become bankrupt, may lack resources or insurance to honor their indemnities or may not otherwise be able to satisfy their indemnity obligations to us. The lack of enforceable indemnification could expose us to significant potential liability and losses.
Further, our assets generally are not insured against loss from political violence such as war, terrorism or civil unrest. If any of our assets are damaged or destroyed as a result of an uninsured cause, we could recognize a loss of those assets.
We operate in multiple countries and earn revenue in different currencies and as such may be exposed to risks arising from fluctuating exchange rates and currency control restrictions, which may limit our ability to reinvest earnings from operations in one country to fund the capital needs of our operations in other countries or to repatriate assets from some countries.
A portion of our consolidated revenue and consolidated operating expenses is in foreign currencies. As a result, we will be subject to risks, including:
In the future, we may enter into foreign currency hedging contracts to reduce foreign currency volatility. However, we currently do not maintain foreign currency hedging contracts with respect to our foreign currencies, and any contracts we may enter into may not fully mitigate our foreign currency risk, may prove disadvantageous or may create additional risks.
Changes in international tax laws and the ongoing implementation of global minimum tax rules could increase our tax liabilities and compliance costs and adversely affect our results of operations.
We have a presence in over 16 countries. Consequently, we are subject to the jurisdiction of a significant number of taxing authorities. The income earned in these various jurisdictions is taxed on differing bases, including income actually earned, income deemed earned, and revenue-based tax withholding. The final determination of our income tax liabilities involves the interpretation of local tax laws, tax treaties, and related regulations in each jurisdiction, as well as the significant use of estimates and assumptions regarding the scope of future operations and the nature of income earned and expenditures incurred. Changes in the operating environment, including changes in or new interpretations of tax laws, could impact the determination of our income tax liabilities for the year.
The Organization for Economic Co-operation and Development (“OECD”) has issued a series of reports and guidance addressing base erosion and profit shifting (“BEPS”), which are intended to limit perceived tax avoidance by multinational enterprises. These initiatives have driven significant changes in tax laws and regulations in many of the jurisdictions in which we operate, increased scrutiny by tax authorities, and reduced the ability of multinational enterprises to engage in tax planning strategies historically available to them.
A central component of the OECD’s BEPS initiative is the global minimum tax framework, commonly referred to as Pillar Two, which is intended to ensure that large multinational groups are subject to a minimum effective tax rate of 15% on a jurisdiction-by-jurisdiction basis. In October 2021, more than 130 jurisdictions agreed in principle to the Pillar Two framework, and a growing number of countries have enacted, or are in the process of enacting, legislation to implement these rules.
During 2025, certain jurisdictions in which we operate, including the UAE, Kuwait, Bahrain, and Qatar, introduced Domestic Minimum Top-Up Taxes (“DMTT”), which are designed to ensure that income earned locally is subject to a minimum effective tax rate. In addition, Qatar and Oman have implemented Income Inclusion Rules (“IIR”), which permit tax authorities to impose top-up tax at the level of a parent entity where the effective tax rate of constituent entities in other jurisdictions falls below the minimum threshold. Further, other jurisdictions in which we have a presence, including the UK, the Netherlands, and Indonesia, have implemented Undertaxed Profits Rules (“UTPR”), which may result in additional top-up taxes being allocated to those jurisdictions where income is not otherwise subject to tax under a qualified IIR or DMTT.
The implementation of these rules significantly increases the complexity of our global tax structure and may result in increased current tax liabilities, reduced cash flows, higher compliance and administrative costs, and increased volatility in our effective tax rate. The application of the Pillar Two framework involves complex calculations, significant judgments, and reliance on financial information from multiple jurisdictions, which increases the risk of errors, inconsistent interpretations, and disputes with tax authorities. In addition, differences in how jurisdictions interpret, enact, and administer these rules, as well as changes in guidance over time, may result in unexpected tax exposures, double taxation, and/or additional top-up taxes that we may not be able to mitigate through tax credits or other relief mechanisms.
We continue to evaluate the potential impact of these developments; however, we cannot predict with certainty the manner, or the full extent to which Pillar Two rules will apply to us. As a result, these developments could materially increase the amount of taxes we are required to pay and adversely affect our results of operations, financial condition, and cash flows.
Lack of consolidation of our fiscal results in a taxpaying jurisdiction prevents offsetting some losses against taxable profits.
As a result of our legal entity structure, annual fiscal losses in one of our subsidiaries may not be eligible to be offset against profits in another subsidiary within the same jurisdiction to reduce consolidated tax liabilities.
The owners of NESR ordinary shares are subject to tax risks due to the possibility of changes in tax rules and regulations in foreign countries.
Holders of our ordinary shares may be subject to taxation in multiple jurisdictions, including the jurisdictions in which we operate and in which our subsidiaries are organized. Changes in tax laws, regulations, treaties, or administrative interpretations in any relevant jurisdiction, including changes in the tax treatment of dividends, capital gains, withholding taxes, or other distributions, could adversely affect the tax consequences of an investment in our ordinary shares. In addition, changes to cross-border tax rules, anti-avoidance measures, minimum tax regimes, or information-reporting requirements could increase compliance burdens or result in additional taxes for shareholders. These developments may reduce the after-tax return on an investment in our ordinary shares and could adversely affect the market price of our shares. Prospective investors are urged to consult their own tax advisors regarding the tax consequences of an investment in our ordinary shares in light of their particular circumstances.
If our subsidiaries are unable to comply with the restrictions and covenants in their debt agreements, they could default under the terms of such agreements, which could result in an acceleration of repayment.
Management's Discussion & Analysis (MD&A)
New heading “Drivers of Our Financial Condition and Results of Operations”
New heading “Key Performance Indicators”
New heading “Key Components of Revenues and Expenses”
New heading “Cost of services”
New heading “Selling, general and administrative (excluding Amortization) (“SG&A”) expense”
New heading “Interest expense, net”
New heading “Other income / (expense), net”
New heading “Fiscal Year 2025 compared to Fiscal Year 2024”
New heading “Supplemental Segment Operating Income Discussion”
New heading “Fiscal Year 2024 compared to Fiscal Year 2023”
New heading “Supplemental Segment Operating Income Discussion”
New heading “Operating Activities”
New heading “Investing Activities”
New heading “Financing Activities”
New heading “Credit Facilities”
New heading “2021 Secured Facilities Agreement”
New heading “Other Working Capital Facilities”
New heading “Capital Requirements”
New heading “Other Factors Affecting Liquidity”
New heading “Intangible assets”
New heading “RELATED PARTY TRANSACTIONS”
New heading “FORWARD-LOOKING STATEMENTS”
Removed heading “Special Note Regarding Forward-Looking Statements”
Removed heading “Ordinary shares subject to possible redemption”
Largest changes
“Goodwill is the excess cost of an acquired entity over the amounts assigned to assets acquired and liabilities assumed in a business combination. Goodwill is evaluated for impairment on an annual basis as of October 1, or more frequently if circumstances indicate an impairment may exist at the reporting unit level. …”see in full comparison
“This Annual Report contains forward-looking statements (as such term is defined in Section 27A of the Securities Act of 1933, as amended, (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)). Any and all statements contained in this Annual Report that are not statements of historical fact may be deemed forward-looking statements. …”see in full comparison
“As of December 31, 2017, we had $741,096 in cash and a working capital deficit of $2,605,984. We have not generated operating revenues, nor do we expect to generate operating revenues until the consummation of an initial business combination. Our Sponsor or certain of our officers and directors are not under any obligation to advance us funds, or to invest in us. Accordingly, we may not be able to obtain additional financing. …”see in full comparison
“Other (expense) / income, net. Other (expense) / income, net, was ($2.3) million for the year ended December 31, 2024, compared to ($5.0) million for the year ended December 31, 2023. The difference between periods is primarily due to a decrease in the amount of the other-than-temporary impairment recorded on the WDVGE Investment during 2024 as compared to 2023 (see Note 8, Goodwill, Intangible, and Other Assets, to the consolidated financial statements included in Item 8, “Financial Statements and Supplementary Data,” of this Annual Report for further discussion).”see in full comparison
“Other (expense) / income, net. Other (expense) / income, net, was ($5.4) million for the year ended December 31, 2025, compared to ($2.3) million for the year ended December 31, 2024. The difference between periods is primarily due to increased equity investment impairments recorded in 2025 as compared to 2024 (see Note 8, Goodwill, Intangible, and Other Assets, to the consolidated financial statements included in Item 8, “Financial Statements and Supplementary Data,” of this Annual Report for further discussion).”see in full comparison
Full comparison: every changed paragraph (156)
The
following discussion and analysis of the Company’s financial condition and results of operations should be read in conjunction
with the financial statements and the notes thereto contained elsewhere in this report.
References
to the “Company,” “us” or “we” refer to National Energy Services Reunited Corp.
Special
Note Regarding Forward-Looking Statements
All
statements other than statements of historical fact included in this Form 10-K including, without limitation, statements under
“Management’s Discussion and Analysis of Financial Condition and Results of Operations” regarding the Company’s
financial position, business strategy and the plans and objectives of management for future operations, are forward-looking statements.
When used in this Form 10-K, words such as “anticipate,” “believe,” “estimate,” “expect,”
“intend” and similar expressions, as they relate to us or the Company’s management, identify forward-looking
statements. Such forward-looking statements are based on the beliefs of management, as well as assumptions made by, and information
currently available to, the Company’s management. Actual results could differ materially from those contemplated by the
forward-looking statements as a result of certain factors detailed in our filings with the SEC.
The
following discussion and analysis ofis ourprovided financialto conditionincrease the understanding of, and results of operations should be read in conjunction with the
accompanying consolidated financial statements and related notes. In addition, see Item 1A, “Risk Factors” and the notes“Forward-Looking
Statements” thereto contained elsewhereincluded in this report.Annual CertainReport. informationfor containeda indiscussion of the
discussion risks, uncertainties and analysisassumptions setassociated forthwith belowthese includesstatements.
Unless forward-lookingotherwise statementsnoted, thatall involveamounts risksdiscussed andherein uncertainties.are consolidated.
OverviewEXECUTIVE OVERVIEW
Drivers of Our Financial Condition and Results of Operations
We are a provider of services to the oil and natural gas industry primarily in the MENA region. We currently operate in 16 countries, with a strong presence in Saudi Arabia, Oman, Kuwait, UAE, Iraq, Egypt, Libya, and Algeria. Our company was founded with a vision of creating a regional provider for oilfield services that offers a full portfolio of solutions for our customers with a focus on supporting the economies in which we operate. ESG considerations are central to our Company, and we believe that employing local staff and fully integrating with regional economies is a critical part of the social component of our ESG philosophy. In addition, we have found that promoting high local content in our operations optimizes our cost structure, enhancing our ability to generate free cash flow in various commodity price environments.
Customer investment in oil and natural gas exploration, field development, and production is driven by multiple factors, including global energy supply and demand forecasts, geopolitical and economic conditions in key operating regions, and expectations for future oil and natural gas prices.
During the years ended December 31, 2025, 2024, and 2023, approximately 99%, 99%, and 99%, respectively, of our revenue was generated from operations in the MENA region. According to the Energy Institute Statistical Review of World Energy 2025 (74th edition), the Middle East accounts for nearly one-third of global oil production, underscoring the region’s critical role in global energy supply. NESR’s strong presence in these markets provides a unique competitive advantage. Many MENA economies are structurally dependent on the energy sector as their primary source of national revenue and therefore maintain consistent production and development activity, even in periods of lower commodity prices. With some of the lowest break-even costs of production globally, Middle Eastern producers continue to invest through cycles, enabling NESR to benefit from a stable demand base and long-term customer relationships. This strategic geographic focus positions NESR to deliver resilient financial performance and sustainable growth, even amid broader market volatility.
Key Performance Indicators
Historically, we have monitored two principal non-financial performance indicators that serve as key drivers of our results of operations: oil prices and rig count.
Oil price trends are significant because the level of spending by our customers is heavily influenced by expectations of future oil prices, which reflect anticipated global supply and demand dynamics. Fluctuations in spending directly affect the demand for our services.
Rig count, particularly in the regions where we operate, serves as an indicator of the level of drilling activity and capital investment. Historically, changes in rig count have correlated closely with our financial performance and operational activity levels.
In recent years, our customers, particularly in certain parts of the MENA region, have increased their focus on natural gas development, including the commercialization of unconventional gas resources. Over time, we expect the natural gas market to become an additional key performance indicator for the Company, reflecting its growing importance in regional energy strategies and our expanding participation in that segment.
The following table shows rig count (Source: Baker Hughes Published Rig Count Data) and oil prices (Source: U.S. Energy Information Administration - Brent – Europe) as of the dates indicated:
We
are a blank check company incorporated on January 23, 2017 in the British Virgin Islands and formed for the purpose of entering
into a merger, share exchange, asset acquisition, stock purchase, recapitalization, reorganization or other similar business combination
with one or more target businesses. We intend to effectuate our initial business combination using cash from the proceeds of our
IPO and the sale of the private warrants that occurred simultaneously with the completion of our IPO, our capital stock, debt
or a combination of cash, stock and debt.
The
issuance of additional ordinary shares or preferred stock:
Similarly,
if we issue debt securities, it could result in:
We
expect to continue to incur significant costs in the pursuit of our acquisition plans. We cannot assure you that our plans to
raise capital or to complete a business combination will be successful.
Recent
Events
On
November 12, 2017, we announced that we had entered into definitive agreements to acquire GES and NPS, leading regional oilfield
services companies offering a mix of drilling, completion and production services and equipment in the Middle East and North Africa
(“MENA”) and Asia Pacific regions. Following closing, our primary operating locations will be in Dammam, Saudi Arabia,
Muscat, Oman and Dubai, UAE with local headquarters in Houston, Texas. We will employ more than 3,000 people in more than a dozen
countries across the region. The transaction is subject to stockholder approval and other customary closing conditions. See our
Current Report on Form 8-K filed with the SEC on November 16, 2017 for further information.
We operate our business through two operating segments and report our results of operations through two reporting segments, Production Services and Drilling and Evaluation Services, which aggregate services performed during distinct stages of a typical life cycle of an oil and gas well.
Production Services. Our Production Services segment includes the results of operations from services that are generally offered and performed during the completion and production stages of a well’s lifecycle. These services mainly include hydraulic fracturing, coiled tubing, stimulation and pumping, cementing, nitrogen services, filtration services, pipelines and industrial services, production assurance, artificial lift services, completions and integrated production management. Our Production Services segment accounted for 62%, 67%, and 69%, of our revenues for the years ended December 31, 2025, 2024, and 2023, respectively.
Drilling and Evaluation Services. Our Drilling and Evaluation Services segment includes the results of operations from services that are generally offered and performed during the well construction stage of a well’s lifecycle and related mainly to the operation of drilling rigs. The services mainly include rigs and integrated services, fishing and downhole tools, thru-tubing intervention, tubular running services, directional drilling, drilling and completion fluids, pressure control, well testing services, wireline logging services and slickline services. Our Drilling and Evaluation Services accounted for 38%, 33%, and 31%, of our revenues for the years ended December 31, 2025, 2024, and 2023, respectively. Please see “Principal Activities” within Item 1, “Business” in this Annual Report for additional description of our reportable segments.
Key Components of Revenues and Expenses
Revenues
We earn revenue from our broad suite of oilfield services, including coiled tubing, hydraulic fracturing, cementing, stimulation and pumping, well testing services, drilling services and rental, fishing and remediation, drilling and workover rigs, nitrogen services, wireline logging services, turbines drilling, directional drilling, filtration services and slickline services, among others. Revenues are recognized when performance obligations are satisfied in accordance with contractual terms, in an amount that reflects the consideration the Company expects to be entitled to in exchange for services rendered or rentals provided. A performance obligation arises under contracts with customers to render services or provide rentals and is the unit of account under Accounting Standards Update (ASU) 2014-09, Revenue from Contracts with Customers. The Company accounts for services rendered and rentals provided separately if they are distinct, and the service or rental is separately identifiable from other items provided to a customer and if a customer can benefit from the services rendered or rentals provided on its own or with other resources that are readily available to the customer. A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. A contract’s standalone selling prices are determined based on the prices that the Company charges for its services rendered and rentals provided. Most of the Company’s performance obligations are satisfied over time, which is generally represented by a period of 30 days or less. The Company’s payment terms vary by the type of products or services offered. The term between invoicing and when the payment is due is typically 30-60 days per contract.
Cost of services
Cost of services primarily includes staff costs for service personnel, purchase of non-capitalized material, equipment and supplies (such as tools and rental equipment), depreciation relating to capital assets used in our operations, vehicle and equipment rental and maintenance and repair.
Selling, general and administrative (excluding Amortization) (“SG&A”) expense
SG&A expense, excluding Amortization, which is presented separately, primarily includes salary and employee benefits for non-production personnel (primarily management and administrative personnel), professional service fees, office facilities and equipment, office supplies and non-capitalized office equipment and depreciation of office furniture and fixtures.
Amortization
Amortization expense primarily includes amortization of intangible assets associated with acquired customer contracts, trademarks and tradenames.
Interest expense, net
Interest expense primarily consists of interest on outstanding debt, net of interest income.
Other income / (expense), net
Other income / (expense), net primarily consists of inventory scrap sales, bank charges and foreign exchange gains and losses.
The discussions below relating to significant line items from our consolidated statements of operations are based on available information and represent our analysis of significant changes or events that impact the fluctuations in or comparability of reported amounts. Where appropriate, we have identified specific events and changes that affect comparability or trends. In addition, the discussions below for revenues are on an aggregate basis for each fiscal period, as the business drivers for all services are similar. All amounts in tables are in US$ thousands, except share data and per share amounts.
Fiscal Year 2025 compared to Fiscal Year 2024
The following table presents our Consolidated Statements of Operations data for the periods indicated:
Revenue. Revenue was $1,324 million for the year ended December 31, 2025, compared to $1,301.7 million for the year ended December 31, 2024.
The table below presents our revenue by segment for the periods indicated:
Production Services revenue was $816.0 million for the year ended December 31, 2025, compared to $878.1 million for the year ended December 31, 2024. The change in revenue was primarily due to reduced hydraulic fracturing stages upon contract transition coupled with reduced coiled tubing activity in Saudi Arabia, and offset in part by higher specialty chemical sales in Egypt.
Drilling and Evaluation Services revenue was $508.0 million for the year ended December 31, 2025, compared to $423.6 million for the year ended December 31, 2024. The change in revenue was primarily due to increased business activity in Saudi Arabia and Kuwait. The change in revenue was primarily due to additional well testing activity due to increased rig assignments and sites in Saudi Arabia and higher period-over-period contribution from the Roya™ advanced directional drilling technology platform.
Cost of services. Cost of services was $1,159.3 million for the year ended December 31, 2025, compared to $1,093.0 million for the year ended December 31, 2024. On a percentage basis, cost of services was 87.6% of revenue during the year ended December 31, 2025, as compared to 84.0% of revenue for the year ended December 31, 2024, a 359-basis point increase. The change in cost of services as a percentage of total revenue is mainly due to an elevated cost structure expected to support higher activity levels going forward, particularly in Saudi Arabia. Cost of services included depreciation expense of $118.5 million and $111.7 million for the year ended December 31, 2025, and the year ended December 31, 2024, respectively.
Gross profit. Gross profit was $164.7 million for the year ended December 31, 2025, compared to $208.7 million for the year ended December 31, 2024. Gross profit as a percentage of total revenue was 12.4% and 16.0% for the year ended December 31, 2025, and the year ended December 31, 2024, respectively. The reason for the change is described under “Revenue” and “Cost of services.”
SG&A expenses. SG&A expenses, which represent costs associated with managing and supporting our operations, were $47.6 million for the year ended December 31, 2025, compared to $52.2 million for the year ended December 31, 2024. SG&A as a percentage of total revenue was 3.6% and 4.0% for the year ended December 31, 2025, and the year ended December 31, 2024, respectively. The decrease in SG&A period over period is primarily due to lower spending on activities designed to facilitate remediation of the Company’s previously existing material weaknesses.
Amortization expense. Amortization expense was $18.8 million for the year ended December 31, 2025, compared to $18.8 million for the year ended December 31, 2024. Amortization expense is driven mainly by acquired intangible assets resulting from the acquisitions of GES and NPS in 2018, SAPESCO in 2020, and Action in 2021.
Interest expense, net. Interest expense, net, was $32.5 million for the year ended December 31, 2025, compared to $39.9 million for the year ended December 31, 2024. Interest expense, net, decreased period-over-period, due to lower debt levels during the year ended December 31, 2025, as compared to the year ended December 31, 2024.
Other (expense) / income, net. Other (expense) / income, net, was ($5.4) million for the year ended December 31, 2025, compared to ($2.3) million for the year ended December 31, 2024. The difference between periods is primarily due to increased equity investment impairments recorded in 2025 as compared to 2024 (see Note 8, Goodwill, Intangible, and Other Assets, to the consolidated financial statements included in Item 8, “Financial Statements and Supplementary Data,” of this Annual Report for further discussion).
Income tax expense. Income tax expense was $9.3 million for the year ended December 31, 2025, compared to $19.2 million for the year ended December 31, 2024. The decrease between periods is primarily due to a net release of our provisions for uncertain tax positions and unrecognized tax benefits. See Note 12, Income Taxes, to our consolidated financial statements included in Item 8, “Financial Statements and Supplementary Data,” of this Annual Report.
Net income. As a result of the foregoing, net income was $51.1 million for the year ended December 31, 2025, compared to a net income of $76.3 million for the year ended December 31, 2024.
Supplemental Segment Operating Income Discussion
Production Services segment operating income was $100.3 million for the year ended December 31, 2025, compared to $146.9 million for the year ended December 31, 2024. The change in Supplemental Segment Operating Income was primarily due to reduced hydraulic fracturing stages upon contract transition coupled reduced coiled tubing activity in Saudi Arabia.
Drilling and Evaluation segment operating income was $69.1 million for the year ended December 31, 2025, compared to $63.1 million for the year ended December 31, 2024. The change in Supplemental Segment Operating Income was primarily due to additional well testing activity due to increased rig assignments and sites in Saudi Arabia.
Fiscal Year 2024 compared to Fiscal Year 2023
The following table presents our Consolidated Statements of Operations data for the periods indicated:
Revenue. Revenue was $1,301.7 million for the year ended December 31, 2024, compared to $1,145.9 million for the year ended December 31, 2023.
The table below presents our revenue by segment for the periods indicated:
What changed in the latest 10-Q
Risk Factors
As of June 30, 2026, there have been no material changes in risk factors previously disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025.
Largest changes
“There are several factors that affect our business and operations, many of which are beyond our control. In addition to information set forth in this Quarterly Report, careful consideration should be given to the risk factors discussed under the caption “Risk Factors” in Part I, Item IA of our 2025 Annual Report, which could have a material impact on our business, financial condition or results of operations and are hereby incorporated by reference into this Quarterly Report. Such risks are not the only risks we face. …”see in full comparison
“As of June 30, 2026, there have been no material changes in risk factors previously disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025.”see in full comparison
Full comparison: every changed paragraph (2)
As of June 30, 2026, there have been no material changes in risk factors previously disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025.
There are several factors that affect our business and operations, many
of which are beyond our control. In addition to information set forth in this Quarterly Report, careful consideration should be given
to the risk factors discussed under the caption “Risk Factors” in Part I, Item IA of our 2025 Annual Report, which
could have a material impact on our business, financial condition or results of operations and are hereby incorporated by reference into
this Quarterly Report. Such risks are not the only risks we face. Additional risks and uncertainties not presently known to us or that
we currently believe to be immaterial may also have a material impact on our business, financial condition or results of operations.
Management's Discussion & Analysis (MD&A)
Largest changes
Our objective in financing our business is to maintain sufficient liquidity, adequate financial resources and financial flexibility to fund the requirements of our business. We had cash and cash equivalents ofsee in full comparison$93.0$175.0 million as ofMarchJune31,30, 2026, and $124.8 million as of December 31, 2025. Our outstanding borrowings were$287.4$274.6 million as ofMarchJune31,30, 2026, and $310.1 million as of December 31, 2025. Current available borrowing capacity totaled$21.7$21.3 million and $146.9 million, as ofMarchJune31,30, 2026, and December 31, 2025, respectively. Borrowing capacity decreased in thequartersix-month period endedMarchJune31,30, 2026, reflecting the Company’s decision not to extend its $59.2 million Secured Revolving Credit Facility beyond February 4, 2026, given sufficient operating cash flow and liquidity, as well as a$66.0$41.2 million reduction in theworkingWorkingcapital facilityCapital Facility following the scheduled expiration of one tranche of availability within the lendersyndicate.syndicate as partially offset by new commitments. Subsequent to June 30, 2026, the Company received additional working capital commitments totaling $18.0 million, further increasing available liquidity. The Company is currently working with its lenders to refinance and extend the 2021 Secured Facilities Agreement. We believe that our cash on hand, cash flows generated from operations, and liquidity available through our credit facilities will provide sufficient liquidity to manage our global cash needs. See “Capital Requirements” below.
“Cost of services. Cost of services was $439.5 million for the three-month period ended June 30, 2026, compared to $283.5 million for the three-month period ended June 30, 2025, and $792.2 million for the six-month period ended June 30, 2026, compared to $549.1 million for the six-month period ended June 30, 2025. Cost of services as a percentage of total revenue was 84.4%, 86.6%, 85.6% and 87.1% for the three-month period ended June 30, 2026, the three-month period ended June 30, 2025, the six-month period ended June 30, 2026, and the six-month period ended June 30, 2025, respectively. …”see in full comparison
“Cost of services. Cost of services was $352.8 million for the three-month period ended March 31, 2026, compared to $265.6 million for the three-month period ended March 31, 2025. Cost of services as a percentage of total revenue was 87.2% and 87.6% for the three-month periods ended March 31, 2026, and March 31, 2025, respectively. The change in cost of services as a percentage of total revenue is mainly due to increased activity levels in the period ended March 31, 2026, as compared to the prior year period, reflecting improved cost absorption as revenue scaled. …”see in full comparison
As of the end of the three-monthsee in full comparisonperiodand six-month periods covered by this Quarterly Report, theongoingconflictbetweeninvolving the United States, Israel andIran has contributed to heightened volatility in global crude oil marketsIran, andincreased upstream activity acrosstheMENAassociatedregion, as reflected in the increasevolatility in Brent crudepricesoiland the regional rig count discussedprices,below. While these conditionshavefavorablynotimpactedhadcustomerademandmaterial adverse impact on our results of operations or financial condition. Demand for our servicesduringhas remained resilient, supported in large part by continued customer investment in Saudi Arabia, including theperiod,Jufurah unconventional field, as well as sustained activity in certain of our other operating locations. However, the duration, scope and ultimate trajectory of the conflict remain uncertain, andaanyde-escalation,de-escalationaor furtherescalation,escalationorof the conflict, as well as related sanctions, supply disruptions or other geopolitical developments,responsescould materially affect commodity prices, customer capitalspendingspending, and our results of operations and financial condition in future periods. For a full discussion of the drivers of our financial condition and results of operations, see the section entitled “Drivers of Our Financial Condition and Results of Operations” in Part II, Item 7 of our 2025 Annual Report.
“Income tax expense. Income tax expense was $14.9 million for the three-month period ended June 30, 2026, compared to $4.3 million for the three-month period ended June 30, 2025, and $22.0 million for the six-month period ended June 30, 2026, compared to $7.6 million for the six-month period ended June 30, 2025. The period-on-period increase in the effective tax rate is primarily driven by changes in geographic earnings mix, as well as higher pre-tax income relative to adjustments related to the Company’s uncertain tax positions and unrecognized tax benefits. …”see in full comparison
“Shelf registration statement. On May 26, 2026, the Company filed a shelf registration statement on Form S-3 with the SEC that automatically became effective the same day. The shelf registration statement gives the Company the ability to sell the ordinary shares from time to time in one or more offerings. The specific terms, including the amount, of any ordinary shares to be sold in any such offering, if it does occur, would be described in supplemental filings with the SEC. …”see in full comparison
Full comparison: every changed paragraph (39)
The
following discussion and analysis should be read in conjunction with the condensed consolidated financial statements
and related
notes included in this Quarterly Report on Form 10-Q (“Quarterly Report”). In addition, such analysis should
be read in
conjunction with the audited condensed consolidated financial statements, the related notes, and the other information included in
the the
Company’s Annual Report on Form 10-K for the year ended December 31, 2025 (“2025 Annual Report”). The
following discussion and
analysis contain forward-looking statements that reflect our future plans, estimates, beliefs and expected
performance. Please read “Cautionary
Note Regarding Forward-Looking Statements” below.
National
Energy Services Reunited Corp. (the “Company,” “NESR,” “we,” “our,” “us”
or similar terms) is one of the largest oilfield services providers in the Middle East and North Africa (“MENA”) region.
The Company’s business consists primarily of upstream and midstream oilfield services with oil and natural gas companies as customers.
customers. NESR’s revenues are primarily derived by providing production services (“Production Services”) such as
hydraulic fracturing,
coiled tubing, stimulation and pumping, cementing, nitrogen services, filtration services, pipelines and
industrial services, production
assurance, artificial lift services, completions and integrated production management. NESR also
provides drilling and evaluation services
(“Drilling and Evaluation Services”) such as rigs and integrated services,
fishing and downhole tools, thru-tubing intervention,
tubular running services, directional drilling, drilling and completion
fluids, pressure control, well testing services, wireline logging
services, and slickline services. NESR has significant operations
throughout the MENA region including Saudi Arabia, Oman, Kuwait, United
Arab Emirates (“UAE”),Emirates, Iraq, Algeria, Egypt and
Libya.
As of the end of the three-month periodand six-month periods covered by this
Quarterly Report,
the ongoing conflict betweeninvolving the United States, Israel and Iran has contributed to heightened volatility in global crude oil marketsIran, and
increased upstream activity across the MENAassociated region, as reflected in the increasevolatility in Brent crude pricesoil and the regional rig count discussedprices,
below. While these conditions have favorablynot impactedhad customera demandmaterial adverse impact on our results of operations or financial condition. Demand for our services duringhas remained resilient,
supported in large part by continued customer investment in Saudi Arabia, including the period,Jufurah unconventional field, as well as sustained
activity in certain of our other operating locations. However, the duration, scope and ultimate
trajectory of the conflict remain uncertain,
and aany de-escalation,de-escalation aor further escalation,escalation orof the conflict, as well as related sanctions, supply disruptions or other geopolitical developments,
responses could materially affect commodity prices, customer capital spendingspending, and our results of operations and financial condition in
future periods. For a full discussion
of the drivers of our financial condition and results
of operations, see the section entitled “Drivers of Our Financial Condition
and Results of Operations” in Part II,
Item 7 of our 2025 Annual Report.
As
of the end of the three-month periodand six-month periods covered by this Quarterly Report,
there have been no material changes regarding our
key performance indicatorsindicators. except as provided in theThe following table which shows rig
count (Source: Baker Hughes Published Rig Count
Data) and oil prices (Source: U.S. Energy Information Administration - Brent – Europe)
as of the dates indicated. For a full discussion
of our key performance indicators, see the section entitled “Key Performance
Indicators” in Part II, Item 7 of our
2025 Annual Report.
We
operate our business through two operating segments and report our results of operations through two reporting segments, Production Services
and Drilling and Evaluation Services, which aggregate services performed during distinct stages of a typical life cyclelife-cycle of an oil well.
Production
Services. Our Production Services segment includes the results of operations from services that are generally offered and performed
during the production stage of a well’s lifecycle. These services mainly include hydraulic fracturing, coiled tubing, stimulation
and pumping, cementing, nitrogen services, filtration services, pipelines and industrial services, production assurance, artificial lift
services, completions and integrated production management. Our Production Services accounted for 60%63%, 63%, 62%, and 62% of our revenues
for the
three-month periodsperiod ended MarchJune 31,30, 2026, the three-month period ended June 30, 2025, the six-month period ended June 30, 2026,
and Marchthe 31,six-month period ended June 30, 2025, respectively.
Drilling
and Evaluation Services. Our Drilling and Evaluation Services segment includes the results of operations from services that are generally
offered and performed during pre-production stages of a well’s lifecycle and related mainly to the operation of oil rigs. The services
mainly include rigs and integrated services, fishing and downhole tools, thru-tubing intervention, tubular running services, directional
drilling, drilling and completion fluids, pressure control, well testing services, wireline logging services and slickline services.
Our Drilling and Evaluation Services accounted for 40%37%, 37%, 38%, and 38%38%, of our revenues for the three-month periodsperiod ended MarchJune 31,30,
2026, the three-month period ended June 30, 2025, the six-month period ended June 30, 2026, and
March 31,the six-month period ended June 30, 2025,
respectively.
As
of the end of the three-month periodand six-month periods covered by this Quarterly Report,
there have been no material changes to our key
components of revenues and expenses. See the section entitled “Key Components
of Revenues and Expenses” in Part II,
Item 7 of our 2025 Annual Report for more information.
The following table presents our Condensed Consolidated Statements of Operations (Unaudited) data for the periods indicated (in US$ thousands):
Revenue.
Revenue was $404.6$520.8 million for the three-month period ended MarchJune 31,30, 2026, compared to $303.1$327.4 million for the three-month period
ended June 30, 2025, and $925.3 million for the six-month period ended June 30, 2026, compared to $630.5 million for the six-month period
Marchended 31,June 30, 2025.
Production
Services revenue
was $241.0$329.7 million for the three-month period ended MarchJune 31,30, 2026, compared to $188.1$205.1 million for the three-month period
ended June 30, 2025, and $570.8 million for the six-month period ended MarchJune 30, 2026, compared to $393.1 million for the six-month period
31,ended June 30, 2025. The change in revenue was primarily due to increased hydraulic fracturing stages in Saudi Arabia.
Drilling and Evaluation Services
revenue was $163.5 million for the three-month period ended March 31, 2026, compared to $115.0 million for the three-month period ended
March 31, 2025. The change in revenue
was primarily due to increased well testing activity in Saudi Arabia.
Cost of services. Cost
of services was $352.8 million for the three-month period ended March 31, 2026, compared to $265.6 million for the three-month period
ended March 31, 2025. Cost of services as a percentage of total revenue was 87.2% and 87.6% for the three-month periods ended March 31,
2026, and March 31, 2025, respectively. The change in cost of services as a percentage of total revenue is mainly due to increased activity
levels in the period ended March 31, 2026, as compared to the prior year period, reflecting improved cost absorption as revenue scaled. Cost of services included depreciation expense of $29.1
million, and $29.5 million for the three-month period ended March 31, 2026, and March 31, 2025, respectively.
GrossDrilling
and profit.
GrossEvaluation profitServices revenue was $51.8$191.0 million for the three-month period ended MarchJune 31,30, 2026, compared to $37.5$122.3 million for the
three-month period ended June 30, 2025, and $354.6 million for the three-month period ended
March 31, 2025. Gross profit as a percentage of total revenue was 12.8% and 12.4% for the three-monthsix-month period ended MarchJune 31,30, 2026, andcompared to $237.3 million for
the three-monthsix-month period ended MarchJune 31,30, 2025, respectively.2025. The change in trendrevenue iswas describedprimarily underdue “Revenue”to increased well testing and “Costto a lesser extent, wireline
oflogging services.”activity in Saudi Arabia.
Cost of services. Cost of services was $439.5 million for the three-month period ended June 30, 2026, compared to $283.5 million for the three-month period ended June 30, 2025, and $792.2 million for the six-month period ended June 30, 2026, compared to $549.1 million for the six-month period ended June 30, 2025. Cost of services as a percentage of total revenue was 84.4%, 86.6%, 85.6% and 87.1% for the three-month period ended June 30, 2026, the three-month period ended June 30, 2025, the six-month period ended June 30, 2026, and the six-month period ended June 30, 2025, respectively. The change in cost of services as a percentage of total revenue is mainly due to increased activity levels in the period ended June 30, 2026, as compared to the prior year period, reflecting improved cost absorption as revenue scaled. Cost of services included depreciation expense of $31.7 million, $29.3 million, $60.8 million and $58.8 million for the three-month period ended June 30, 2026, the three-month period ended June 30, 2025, the six-month period ended June 30, 2026, and the six-month period ended June 30, 2025, respectively.
Gross profit. Gross profit was $81.3 million for the three-month period ended June 30, 2026, compared to $43.9 million for the three-month period ended June 30, 2025, and $133.1 million for the six-month period ended June 30, 2026, compared to $81.3 million for the six-month period ended June 30, 2025. Gross profit as a percentage of total revenue was 15.6%, 13.4%, 14.4% and 12.9% for the three-month period ended June 30, 2026, the three-month period ended June 30, 2025, the six-month period ended June 30, 2026, and the six-month period ended June 30, 2025, respectively. The change in trend is described under “Revenue” and “Cost of services.”
SG&A
expense. SG&A expense, which represents costs associated with managing and supporting our operations, was $11.1$12.0 million for
for the three-month period ended MarchJune 31,30, 2026, compared to $11.8$12.1 million for the three-month period ended MarchJune 31,30, 2025, and $23.1 million
for the six-month period ended June 30, 2026, compared to $23.9 million for the six-month period ended June 30, 2025. SG&A expense
expense as a percentage of total revenue was 2.7%2.3%, 3.7%, 2.5% and 3.9%3.8% for the three-month period ended MarchJune 31,30, 2026, the three-month period
ended June 30, 2025, the six-month period ended June 30, 2026, and Marchthe 31,six-month period ended June 30, 2025,
respectively. The period-over-period decrease
in SG&A expense in the six months ended June 30, 2026, was primarily attributable to lower spending on activities related
to the
remediation of the Company’s material weakness, as the Company completed remediation as of June 30, 20252025, and therefore incurred
significant remediation-related costs during the quartersix-month period ended MarchJune 31,30, 2025.
Amortization
expense. Amortization expense was $4.7$4.4 million for the three-month period ended MarchJune 31,30, 2026, compared to $4.7 million for the
the three-month period ended MarchJune 31,30, 2025, and $9.1 million for the six-month period ended June 30, 2026, compared to $9.4 million for the
six-month period ended June 30, 2025. Amortization expense is driven mainly by acquired intangible assets resulting from
acquisitions.
Interest
expense, net. Interest expense, net, was $6.5$7.0 million for the three-month period ended MarchJune 31,30, 2026, compared to $8.3$8.6 million
for the three-month period ended MarchJune 31,30, 2025, and $13.6 million for the six-month period ended June 30, 2026, compared to $16.8 million
for the six-month period ended June 30, 2025. Interest expense, net, decreased period-over-period, due to lower debt levels during 2026
2026 as compared to 2025.
Other income, net.
Other income, net, was $1.4 million for the three-month period ended March 31, 2026, compared to $1.1 million for the three-month period
ended March 31, 2025.
Income tax expense.
Income tax expense was $7.1 million for the three-month period ended March 31, 2026, compared to $3.3 million for the three-month period
ended March 31, 2025. The decrease in effective tax rate period-on-period is primarily attributable to changes in geographic earnings
mix, as well as higher pre-tax income relative to adjustments related to the Company’s uncertain tax positions and unrecognized
tax benefits. See Note 7, Income Taxes, to our consolidated financial statements included in Item 1,
“Financial Statements,” of this Quarterly Report.
NetOther
income, income.
Netnet. incomeOther income, net, was $23.8$1.1 million for the three-month period ended MarchJune 31,30, 2026, compared to $10.4$0.9 million for
the three-month period ended June 30, 2025, and $2.6 million for the three-monthsix-month period ended June 30, 2026, compared to $2.0 million for
Marchthe 31,six-month period ended June 30, 2025.
Income tax expense. Income tax expense was $14.9 million for the three-month period ended June 30, 2026, compared to $4.3 million for the three-month period ended June 30, 2025, and $22.0 million for the six-month period ended June 30, 2026, compared to $7.6 million for the six-month period ended June 30, 2025. The period-on-period increase in the effective tax rate is primarily driven by changes in geographic earnings mix, as well as higher pre-tax income relative to adjustments related to the Company’s uncertain tax positions and unrecognized tax benefits. See Note 7, Income Taxes, to our condensed consolidated financial statements included in Item 1, “Financial Statements,” of this Quarterly Report.
Net income. Net income was $44.0 million for the three-month period ended June 30, 2026, compared to $15.2 million for the three-month period ended June 30, 2025, and $67.8 million for the six-month period ended June 30, 2026, compared to $25.6 million for the six-month period ended June 30, 2025.
Production
Services operating income was $32.7$60.2 million for the three-month period ended MarchJune 31,30, 2026, compared to $20.0$22.7 million for the three-month
three-monthperiod ended June 30, 2025, and $93.0 million for the six-month period ended MarchJune 31,30, 2026, compared to $42.7 million for the six-month
period ended June 30, 2025. The change in Supplementalsupplemental Segmentsegment Operatingoperating Incomeincome was primarily due to increased hydraulic
fracturing stages
in Saudi Arabia with a significant portion of incremental revenue translating into segment operating income.
Drilling
and Evaluation operating income was $18.2$21.7 million for the three-month period ended MarchJune 31,30, 2026, compared to $16.1$20.7 million for the three-month
period ended June 30, 2025, and $39.9 million for the six-month period
ended MarchJune 31,30, 2026, compared to $36.9 million for the six-month
period ended June 30, 2025. The change in Supplementalsupplemental Segmentsegment Operatingoperating Incomeincome was primarily due to additional well testingtesting, and to
a lesser extent, wireline logging, activity in Saudi
Arabia with a share of incremental revenue contributing to segment operating income.
Our
objective in financing
our business is to maintain sufficient liquidity, adequate financial resources and financial flexibility to fund
the requirements of our
business. We had cash and cash equivalents of $93.0$175.0 million as of MarchJune 31,30, 2026, and $124.8 million as of December
31, 2025. Our outstanding
borrowings were $287.4$274.6 million as of MarchJune 31,30, 2026, and $310.1 million as of December 31, 2025. Current available
borrowing capacity
totaled $21.7$21.3 million and $146.9 million, as of MarchJune 31,30, 2026, and December 31, 2025, respectively. Borrowing capacity
decreased in the
quarter six-month period ended MarchJune 31,30, 2026, reflecting the Company’s decision not to extend its $59.2 million Secured
Revolving Credit Facility
beyond February 4, 2026, given sufficient operating cash flow and liquidity, as well as a $66.0$41.2 million reduction
in the workingWorking capital
facilityCapital Facility following the scheduled expiration of one tranche of availability within the lender syndicate.syndicate as partially
offset by new commitments. Subsequent to June 30, 2026, the Company received additional working capital commitments totaling $18.0 million,
further increasing available liquidity. The Company is currently working with its lenders to refinance
and extend the 2021 Secured Facilities
Agreement. We believe that our cash on hand, cash flows generated from operations, and liquidity
available through our credit facilities
will provide sufficient liquidity to manage our global cash needs. See “Capital Requirements”
below.
Cash
flows provided by operating activities were $30.7$204.8 million for the
three-month six-month period ended MarchJune 31,30, 2026, compared to cash flows provided
by operating activities of $20.5$119.0 million for the three-month
six-month period ended MarchJune 31,30, 2025. The difference between periods was primarily
driven by improvedhigher net income,income and partially offset by increases
inimproved working capital tomanagement fundyear-over-year, higher activity levelsand in theparticular business.more closely controlling timing
of payments on Accounts payable and accrued expenses in relation to payment terms.
Cash
flows used in investing
activities were $36.4$109.6 million for the three-monthsix-month period ended MarchJune 31,30, 2026, compared to cash flows used in investing
activities of
$31.5 $62.4 million for the three-monthsix-month period ended MarchJune 31,30, 2025. The difference between periods was primarily due to higher
cash paid for
capital expenditures period-over-period.period-over-period to support growth in our operations. Our principal recurring investing activity
is the funding of capital expenditures to ensure that
we have the appropriate levels and types of machinery and equipment in place to
generate revenue from operations.
Cash
flows used in financing activities were $25.3$43.6 million for the three-month
six-month period ended MarchJune 31,30, 2026, compared to cash flows used in financing
activities of $18.3$32.7 million for the three-monthsix-month period ended March
31,June 30, 2025. The difference between periods was primarily attributable to
lower short-term borrowings, as seasonal working capital requirements
were funded internally.borrowings.
Our
principal credit facilities and instruments outstanding or available
as of MarchJune 31,30, 2026, are discussed in Note 6, Debt, to
the thecondensed consolidated financial statements included in Item 1, “Financial
Statements,” of this Quarterly
Report.
As
of the end of the three-month periodand six-month periods covered by this Quarterly Report,
there have been no material changes to our capital
requirements. See the section entitled “Capital Requirements” in
Part II, Item 7 of our 2025 Annual Report for more
information.
Our off-balance sheet arrangements, including letters of credit and guarantees, are discussed in Note 8, Commitments and Contingencies, to the condensed consolidated financial statements included in Item 1, “Financial Statements,” of this Quarterly Report.
As
of the end of the three-month periodand six-month periods covered by this Quarterly Report,
there have been no material changes to our contractual
obligations. See the section entitled “Contractual Obligations and Commitments”
in Part II, Item 7 of our 2025 Annual
Report for more information.
Shelf registration statement. On May 26, 2026, the Company filed a shelf registration statement on Form S-3 with the SEC that automatically became effective the same day. The shelf registration statement gives the Company the ability to sell the ordinary shares from time to time in one or more offerings. The specific terms, including the amount, of any ordinary shares to be sold in any such offering, if it does occur, would be described in supplemental filings with the SEC. The shelf registration statement currently provides flexibility for strategic opportunities, financing initiatives, and other corporate purposes. The shelf registration statement will expire in 2029.
Shelf
registration statement. The Company does not have any effective shelf registration statements as of March 31, 2026.
Capital
expenditure expenditure
commitments. The Company was committed to incur capital expenditures of $75.8$70.6 million and $45.6 million at MarchJune 31, 30,
2026, and
December 31, 2025, respectively. Substantially all of the commitments outstanding as of DecemberJune 31,30, 2025,2026, are expected to be settled
during 2026.2026 and 2027.
As
of the end of the three-month periodand six-month periods covered by this Quarterly Report,
there have been no material changes to other factors
affecting our liquidity except as described above. See the section entitled “Other
Factors Affecting Liquidity” in
Part II, Item 7 of our 2025 Annual Report for more information.
As
of the end of the three-month periodand six-month periods covered by this Quarterly Report,
there have been no material changes to our critical
accounting policies and estimates. See the section entitled “Critical Accounting
Policies and Estimates” in Part II,
Item 7 of our 2025 Annual Report for more information.
NESR insider buying and selling (Form 4)
Since 2026-04-11, insiders reported open-market purchases in 0 Form 4 filings and open-market sales in 10 filings (4 insiders, 15 trade dates, 5,306,092 shares, about $142.0M). Net open-market shares: -5,306,092 (purchases minus sales); net value about -$142.0M.Totals add up every open-market (code P and S) line in those filings, using the prices reported in the filings. Awards, option exercises, tax withholding and gifts are listed below but not counted.
| Trade date | Insider | Transaction | Shares | Price | Value |
|---|---|---|---|---|---|
| 2026-09-09 | Campo Mejia Antonio J |
Open-market sale | 63,324 | $35.45 | $2.2M |
| 2026-09-02 | Foda Sherif |
Gift | 675,000 | — | — |
| 2026-09-02 | Foda Sherif |
Gift | 675,000 | — | — |
| 2026-08-31 | Foda Sherif |
Open-market sale | 100,000 | $35.00 | $3.5M |
| 2026-08-18 | Angeli Stefan |
Open-market sale | 13,570 | $35.12 | $476.6K |
| 2026-08-14 | Razouqi Maen |
Grant/award | 2,800 | — | — |
| 2026-08-14 | Pollina Lisa A |
Grant/award | 2,800 | — | — |
| 2026-08-14 | Pollina Lisa A |
Grant/award | 5,000 | — | — |
| 2026-08-14 | Chase Anthony R |
Grant/award | 2,800 | — | — |
| 2026-08-14 | Chase Anthony R |
Grant/award | 15,000 | — | — |
| 2026-08-14 | Campo Mejia Antonio J |
Grant/award | 10,000 | — | — |
| 2026-08-14 | Campo Mejia Antonio J |
Grant/award | 2,800 | — | — |
| 2026-08-14 | Angeli Stefan |
Grant/award | 30,000 | — | — |
| 2026-08-14 | Angeli Stefan |
Grant/award | 33,333 | — | — |
| 2026-06-25 | Al-Nowais Yousif Mohammed Ali Nasser |
Open-market sale | 1,919,594 | $26.80 | $51.4M |
| 2026-06-13 | Al-Nowais Yousif Mohammed Ali Nasser |
Open-market sale | 326,386 | $26.89 | $8.8M |
| 2026-06-13 | Al-Nowais Yousif Mohammed Ali Nasser |
Open-market sale | 6,471 | $27.61 | $178.7K |
| 2026-06-12 | Al-Nowais Yousif Mohammed Ali Nasser |
Open-market sale | 950,831 | $26.08 | $24.8M |
| 2026-06-12 | Al-Nowais Yousif Mohammed Ali Nasser |
Open-market sale | 117,762 | $26.54 | $3.1M |
| 2026-06-09 | Al-Nowais Yousif Mohammed Ali Nasser |
Open-market sale | 200 | $25.55 | $5.1K |
| 2026-06-08 | Al-Nowais Yousif Mohammed Ali Nasser |
Open-market sale | 5,526 | $25.53 | $141.1K |
| 2026-05-26 | Al-Nowais Yousif Mohammed Ali Nasser |
Open-market sale | 457,391 | $26.12 | $11.9M |
| 2026-05-22 | Al-Nowais Yousif Mohammed Ali Nasser |
Open-market sale | 242,497 | $26.14 | $6.3M |
| 2026-05-20 | Al-Nowais Yousif Mohammed Ali Nasser |
Open-market sale | 573,544 | $26.14 | $15.0M |
| 2026-05-19 | Al-Nowais Yousif Mohammed Ali Nasser |
Open-market sale | 3,500 | $26.13 | $91.5K |
| 2026-05-18 | Al-Nowais Yousif Mohammed Ali Nasser |
Open-market sale | 220,568 | $26.06 | $5.7M |
| 2026-05-14 | Al-Nowais Yousif Mohammed Ali Nasser |
Open-market sale | 81,302 | $26.35 | $2.1M |
| 2026-05-13 | Al-Nowais Yousif Mohammed Ali Nasser |
Open-market sale | 223,626 | $26.85 | $6.0M |
| 2026-03-16 | Angeli Stefan |
Grant/award | 33,334 | — | — |
Well-known investors holding NESR (13F)
| Investor | Quarter | Shares | Reported value | % of their 13F | Change vs prior quarter |
|---|---|---|---|---|---|
| Dodge & Cox | 2026-06-30 | 1,595,994 | $47.8M | 0.03% | No change |
| Citadel Advisors (Ken Griffin) | 2026-06-30 | 1,540,888 | $46.1M | 0.03% | Added 55% |
| Millennium Management (Israel Englander) | 2026-06-30 | 1,227,885 | $36.8M | 0.02% | Added 51% |
| AQR Capital Management (Cliff Asness) | 2026-06-30 | 775,990 | $23.2M | 0.01% | Added 20% |
| D. E. Shaw & Co. | 2026-06-30 | 394,921 | $8.5M | — | Sold out |
| Renaissance Technologies | 2026-06-30 | 239,139 | $7.2M | 0.01% | New position |
| Point72 Asset Management (Steve Cohen) | 2026-06-30 | 214,147 | $6.4M | 0.01% | Reduced 78% |
| Two Sigma Investments | 2026-06-30 | 100,753 | $3.0M | 0.0% | Reduced 74% |
| Polen Capital Management | 2026-06-30 | 38,252 | $1.1M | 0.01% | New position |