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UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended September 30, 2025

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number: 001-32657

NABORS INDUSTRIES LTD.

(Exact name of registrant as specified in its charter)


Bermuda		98-0363970
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

Crown House

Second Floor

4 Par-la-Ville Road

Hamilton, HM08

Bermuda

(Address of principal executive office)

(441) 292-1510

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:



Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common shares, $.05 par value per share	NBR	NYSE

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large Accelerated Filer ☒		Accelerated Filer ☐

Non-accelerated Filer ☐		Smaller reporting company ☐
	Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The number of common shares, par value $.05 per share, outstanding as of October 27, 2025 was 14,561,171, excluding 1,161,283 common shares held by our subsidiaries, or 15,722,454 in the aggregate.

Table of Contents

NABORS INDUSTRIES LTD. AND SUBSIDIARIES

Index


PART I FINANCIAL INFORMATION

Item 1.	Financial Statements

	Condensed Consolidated Balance Sheets as of September 30, 2025 and December 31, 2024	3

	Condensed Consolidated Statements of Income (Loss) for the Three and Nine Months Ended September 30, 2025 and 2024	4

	Condensed Consolidated Statements of Comprehensive Income (Loss) for the Three and Nine Months Ended September 30, 2025 and 2024	5

	Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2025 and 2024	6

	Condensed Consolidated Statements of Changes in Equity for the Three and Nine Months Ended September 30, 2025 and 2024	7

	Notes to Condensed Consolidated Financial Statements	9

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	28

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	39

Item 4.	Controls and Procedures	39

PART II OTHER INFORMATION

Item 1.	Legal Proceedings	39

Item 1A.	Risk Factors	39

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	40

Item 3.	Defaults Upon Senior Securities	41

Item 4.	Mine Safety Disclosures	41

Item 5.	Other Information	41

Item 6.	Exhibits	42

Signatures		43

Table of Contents

NABORS INDUSTRIES LTD. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)


	September 30,		December 31,
	2025		2024

	(In thousands, except for
	share amounts)
ASSETS
Current assets:
Cash and cash equivalents	$	428,051	$	389,652
Short-term investments		28		7,647
Notes receivable		250,035		—
Accounts receivable, net of allowance of $58,497 and $57,225, respectively		487,062		387,970
Inventory, net		108,303		129,979
Other current assets		150,948		84,289
Total current assets		1,424,427		999,537
Property, plant and equipment, net		2,931,290		2,830,957
Restricted cash held in trust		154,159		331,781
Deferred income taxes		180,091		216,296
Other long-term assets		143,537		125,730
Total assets (1)	$	4,833,504	$	4,504,301
LIABILITIES AND EQUITY
Current liabilities:
Trade accounts payable	$	352,415	$	321,030
Accrued liabilities		290,751		223,759
Income taxes payable		25,618		20,360
Current lease liabilities		11,430		6,768
Total current liabilities		680,214		571,917
Long-term debt		2,347,984		2,505,217
Other long-term liabilities		233,455		218,343
Deferred income taxes		3,681		2,486
Total liabilities (1)		3,265,334		3,297,963
Commitments and contingencies (Note 9)
Redeemable noncontrolling interest in subsidiary		629,261		785,091

Shareholders’ equity:
Common shares, par value $0.05 per share:
Authorized common shares 32,000; issued 15,718 and 10,661, respectively		787		533
Capital in excess of par value		3,744,970		3,552,756
Accumulated other comprehensive income (loss)		(10,962)		(10,414)
Retained earnings (accumulated deficit)		(1,839,268)		(2,092,128)
Less: treasury shares, at cost, 1,161 and 1,161 common shares, respectively		(1,315,751)		(1,315,751)
Total shareholders’ equity		579,776		134,996
Noncontrolling interest		359,133		286,251
Total equity		938,909		421,247
Total liabilities and equity	$	4,833,504	$	4,504,301

(1)	The condensed consolidated balance sheets as of September 30, 2025 and December 31, 2024 include assets and liabilities of variable interest entities. See Note 4—Joint Ventures and Note 14—Special Purpose Acquisition Company for additional information.

The accompanying notes are an integral part of these condensed consolidated financial statements.

Table of Contents

NABORS INDUSTRIES LTD. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS)

(Unaudited)


		Three Months Ended				Nine Months Ended
		September 30,				September 30,
		2025		2024		2025		2024

	(In thousands, except per share amounts)
Revenues and other income:
Operating revenues		$	818,190	$	731,805	$	2,387,164	$	2,200,307
Investment income (loss)			7,323		11,503		20,048		29,885
Total revenues and other income			825,513		743,308		2,407,212		2,230,192

Costs and other deductions:
Direct costs			491,828		431,705		1,428,009		1,309,007
General and administrative expenses			77,076		63,976		228,308		187,881
Research and engineering			12,978		14,404		39,735		42,629
Depreciation and amortization			160,347		159,234		490,046		477,060
Interest expense			54,334		55,350		164,741		157,222
Gain on disposition of Quail Tools			(415,557)		—		(415,557)		—
Gain on bargain purchase			—		—		(116,499)		—
Other, net			24,470		41,608		75,334		69,795
Total costs and other deductions			405,476		766,277		1,894,117		2,243,594
Income (loss) before income taxes			420,037		(22,969)		513,095		(13,402)
Income tax expense (benefit):
Current			26,250		10,581		52,089		30,940
Deferred			91,321		(463)		103,566		10,776
Total income tax expense (benefit)			117,571		10,118		155,655		41,716
Net income (loss)			302,466		(33,087)		357,440		(55,118)
Less: Net (income) loss attributable to noncontrolling interest			(28,268)		(22,738)		(81,164)		(67,295)
Net income (loss) attributable to Nabors		$	274,198	$	(55,825)	$	276,276	$	(122,413)

Earnings (losses) per share:
Basic		$	18.25	$	(6.86)	$	18.99	$	(15.69)
Diluted		$	16.85	$	(6.86)	$	17.54	$	(15.69)

Weighted-average number of common shares outstanding:
Basic			14,098		9,213		12,880		9,199
Diluted			15,321		9,213		14,092		9,199

The accompanying notes are an integral part of these condensed consolidated financial statements.

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NABORS INDUSTRIES LTD. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Unaudited)


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2025		2024		2025		2024

	(in thousands)
Net income (loss) attributable to Nabors	$	274,198	$	(55,825)	$	276,276	$	(122,413)
Other comprehensive income (loss), before tax:
Translation adjustment attributable to Nabors		(334)		48		(669)		(133)
Pension liability amortization and adjustment		52		52		157		157
Other comprehensive income (loss), before tax		(282)		100		(512)		24
Income tax expense (benefit) related to items of other comprehensive income (loss)		12		12		36		36
Other comprehensive income (loss), net of tax		(294)		88		(548)		(12)
Comprehensive income (loss) attributable to Nabors		273,904		(55,737)		275,728		(122,425)
Comprehensive income (loss) attributable to noncontrolling interest		28,268		22,738		81,164		67,295
Comprehensive income (loss)	$	302,172	$	(32,999)	$	356,892	$	(55,130)

The accompanying notes are an integral part of these condensed consolidated financial statements.

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NABORS INDUSTRIES LTD. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


	Nine Months Ended September 30,
	2025		2024

	(In thousands)
Cash flows from operating activities:
Net income (loss)	$	357,440	$	(55,118)
Adjustments to net income (loss):
Depreciation and amortization		490,046		477,060
Deferred income tax expense (benefit)		103,566		10,776
Impairments and other charges		31,102		15,379
Amortization of debt discount and deferred financing costs		6,681		6,757
Bargain purchase gain		(116,499)		—
Losses (gains) on debt buyback		1,948		14,857
Losses (gains) on sale of long-lived assets, net		(13,362)		17,109
Share-based compensation		14,623		11,825
Foreign currency transaction losses (gains), net		5,347		21,317
Mark-to-market (gain) loss on warrants		(7,424)		(12,538)
Gain on disposition of Quail Tools		(415,557)		—
Other		3,974		5,445
Changes in operating assets and liabilities, net of effects from acquisitions:
Accounts receivable		(15,813)		(38,163)
Inventory		19,904		4,337
Other current assets		(22,651)		(6,900)
Other long-term assets		15,596		(1,311)
Trade accounts payable and accrued liabilities		(4,553)		583
Income taxes payable		1,980		(24,912)
Other long-term liabilities		(8,923)		(13,990)
Net cash provided by (used for) operating activities		447,425		432,513
Cash flows from investing activities:
Purchase of investments		(4,336)		(7,681)
Cash acquired in stock based business combination, net of cash paid		84,429		—
Proceeds from disposition of Quail Tools		371,319		—
Capital expenditures		(553,886)		(359,873)
Proceeds from sales of assets		50,609		9,667
Other		7,502		4,671
Net cash (used for) provided by investing activities		(44,363)		(353,216)
Cash flows from financing activities:
Proceeds from issuance of long-term debt		—		550,000
Reduction in debt		(343,036)		(1,197,024)
Debt issuance costs		—		(11,045)
Proceeds from revolving credit facilities		398,000		225,000
Reduction in revolving credit facilities		(398,000)		(225,000)
Payment of dividend to former Parker shareholders		(6,052)		—
Payments for employee taxes on net settlement of equity awards		(2,151)		(2,634)
Dividends to common and preferred shareholders		—		(87)
Distributions to noncontrolling interest		(1,625)		(950)
Special purpose acquisition company redemptions by non-controlling redeemable shareholders		(186,655)		—
Other		—		(282)
Net cash (used for) provided by financing activities		(539,519)		(662,022)
Effect of exchange rate changes on cash and cash equivalents		(2,669)		(10,446)
Net increase (decrease) in cash and cash equivalents and restricted cash		(139,126)		(593,171)
Cash and cash equivalents and restricted cash, beginning of period		722,960		1,374,182
Cash and cash equivalents and restricted cash, end of period	$	583,834	$	781,011

RECONCILIATION OF CASH AND CASH EQUIVALENTS AND RESTRICTED CASH
Cash and cash equivalents, beginning of period		389,652		1,057,487
Restricted cash, beginning of period		333,308		316,695
Cash and cash equivalents and restricted cash, beginning of period	$	722,960	$	1,374,182

Cash and cash equivalents, end of period		428,051		451,649
Restricted cash, end of period		155,783		329,362
Cash and cash equivalents and restricted cash, end of period	$	583,834	$	781,011

The accompanying notes are an integral part of these condensed consolidated financial statements.

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NABORS INDUSTRIES LTD. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(Unaudited)


				Capital		Accumulated		Retained
	Common Shares			in Excess		Other		Earnings				Non-
		Par		of Par		Comprehensive		(Accumulated		Treasury		controlling		Total
(In thousands)	Shares	Value		Value		Income (Loss)		Loss)		Shares		Interest		Equity
As of June 30, 2024	10,711	$	535	$	3,543,986	$	(10,932)	$	(1,967,467)	$	(1,315,751)	$	251,229	$	501,600
Net income (loss)	—		—		—		—		(55,825)		—		22,738		(33,087)
Other comprehensive income (loss), net of tax	—		—		—		88		—		—		—		88
Share-based compensation	(2)		—		4,093		—		—		—		—		4,093
Noncontrolling interest contributions (distributions)	—		—		—		—		—		—		(4,746)		(4,746)
Accrued distribution on redeemable noncontrolling interest in subsidiary	—		—		—		—		(7,363)		—		—		(7,363)
Other	—		—		—		—		(1)		—		—		(1)
As of September 30, 2024	10,709	$	535	$	3,548,079	$	(10,844)	$	(2,030,656)	$	(1,315,751)	$	269,221	$	460,584

As of June 30, 2025	15,733	$	787	$	3,738,989	$	(10,668)	$	(2,105,373)	$	(1,315,751)	$	332,344	$	640,328
Net income (loss)	—		—		—		—		274,198		—		28,268		302,466
Other comprehensive income (loss), net of tax	—		—		—		(294)		—		—		—		(294)
Share-based compensation	11		—		5,981		—		—		—		—		5,981
Noncontrolling interest contributions (distributions)	—		—		—		—		—		—		(1,479)		(1,479)
Accrued distribution on redeemable noncontrolling interest in subsidiary	—		—		—		—		(7,344)		—		—		(7,344)
Other	(26)		—		—		—		(749)		—		—		(749)
As of September 30, 2025	15,718	$	787	$	3,744,970	$	(10,962)	$	(1,839,268)	$	(1,315,751)	$	359,133	$	938,909

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				Capital		Accumulated		Retained
	Common Shares			in Excess		Other		Earnings				Non-
		Par		of Par		Comprehensive		(Accumulated		Treasury		controlling		Total
(In thousands)	Shares	Value		Value		Income (Loss)		Loss)		Shares		Interest		Equity
As of December 31, 2023	10,556	$	527	$	3,538,896	$	(10,832)	$	(1,886,226)	$	(1,315,751)	$	215,396	$	542,010
Net income (loss)	—		—		—		—		(122,413)		—		67,295		(55,118)
Other comprehensive income (loss), net of tax	—		—		—		(12)		—		—		—		(12)
Share-based compensation	185		9		11,825		—		—		—		—		11,834
Noncontrolling interest contributions (distributions)	—		—		—		—		—		—		(13,470)		(13,470)
Accrued distribution on redeemable noncontrolling interest in subsidiary	—		—		—		—		(21,929)		—		—		(21,929)
Other	(32)		(1)		(2,642)		—		(88)		—		—		(2,731)
As of September 30, 2024	10,709	$	535	$	3,548,079	$	(10,844)	$	(2,030,656)	$	(1,315,751)	$	269,221	$	460,584

As of December 31, 2024	10,661	$	533	$	3,552,756	$	(10,414)	$	(2,092,128)	$	(1,315,751)	$	286,251	$	421,247
Net income (loss)	—		—		—		—		276,276		—		81,164		357,440
Share issuance related to Parker acquisition	4,800		239		179,741		—		—		—		—		179,980
Other comprehensive income (loss), net of tax	—		—		—		(548)		—		—		—		(548)
Noncontrolling interest contributions (distributions)	—		—		—		—		—		—		(8,282)		(8,282)
Share-based compensation	328		16		14,623		—		—		—		—		14,639
Accrued distribution on redeemable noncontrolling interest in subsidiary	—		—		—		—		(21,792)		—		—		(21,792)
Other	(71)		(1)		(2,150)		—		(1,624)		—		—		(3,775)
As of September 30, 2025	15,718	$	787	$	3,744,970	$	(10,962)	$	(1,839,268)	$	(1,315,751)	$	359,133	$	938,909

The accompanying notes are an integral part of these condensed consolidated financial statements.

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Nabors Industries Ltd. and Subsidiaries

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 1 General

Unless the context requires otherwise, references in this report to “we,” “us,” “our,” “the Company,” or “Nabors” mean Nabors Industries Ltd., together with our subsidiaries. References in this report to “Nabors Delaware” mean Nabors Industries, Inc., a wholly owned subsidiary of Nabors.

Our business portfolio is comprised of our global land-based and offshore drilling rig operations and other rig related services and technologies. We provide performance tools, tubular running services, directional drilling services, and innovative technologies for our own rig fleet and those operated by third parties. In addition, we design and manufacture advanced drilling equipment and provide drilling rig instrumentation. Also, we have a portfolio of technologies designed to drive energy efficiency and emissions reductions for both ourselves and third-party customers.

With operations in over 20 countries, we are a global provider of drilling and drilling-related services for land-based and offshore oil and natural gas wells, with a fleet of rigs and drilling-related equipment which, as of September 30, 2025 included:

●

283 actively marketed rigs for land-based drilling operations in the United States and various countries throughout the world; and

●

26 actively marketed rigs for offshore platform drilling operations in the United States and multiple international markets.

The short- and long-term implications of the military hostilities between Russia and Ukraine, which began in early 2022, remain difficult to predict. We continue to actively monitor this dynamic situation and evaluate the potential impact to our operations from sanctions that have been imposed against Russia by the United States, United Kingdom, the European Union, and other governments. As of September 30, 2025 and December 31, 2024, 0.0% and 0.7% of our property, plant and equipment, net was located in Russia, respectively. For the three months ending September 30, 2025 and 2024, 0.0% and 1.1% of our operating revenues were from operations in Russia, respectively. For the nine months ending September 30, 2025 and 2024, 0.2% and 0.9% of our operating revenues were from operations in Russia, respectively. During the nine months ended September 30, 2025, we recognized impairment charges of approximately $26.5 million related to the net carrying value of International Drilling and Rig Technologies assets located in Russia. The impairment charges are included in Other, net in our consolidated statements of income (loss). We currently have no assets or operations in Ukraine.

Note 2 Summary of Significant Accounting Policies

Interim Financial Information

The accompanying unaudited condensed consolidated financial statements of Nabors have been prepared in conformity with generally accepted accounting principles in the United States (“U.S. GAAP”) applicable to interim reporting. Pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC” or “Commission”), certain information and footnote disclosures normally included in annual financial statements prepared in accordance with U.S. GAAP have been omitted. Therefore, these financial statements should be read together with our annual report on Form 10-K for the year ended December 31, 2024 (“2024 Annual Report”). In management’s opinion, the unaudited condensed consolidated financial statements contain all adjustments (consisting of normal recurring adjustments) necessary to state fairly our financial position as of September 30, 2025 and the results of operations, comprehensive income (loss), cash flows and changes in equity for the periods presented herein. Interim results for the nine months ended September 30, 2025 may not be indicative of results that will be realized for the full year ending December 31, 2025. Certain prior period amounts have been reclassified to conform to the current period’s presentation.

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Principles of Consolidation

Our condensed consolidated financial statements include the accounts of Nabors, as well as all majority-owned and non-majority owned subsidiaries consolidated in accordance with U.S. GAAP. All significant intercompany accounts and transactions are eliminated in consolidation.

In addition to the consolidation of our majority owned subsidiaries, we also consolidate variable interest entities (“VIE”) when we are determined to be the primary beneficiary of a VIE. Determination of the primary beneficiary of a VIE is based on whether an entity has (a) the power to direct activities that most significantly impact the economic performance of the VIE and (b) the obligation to absorb losses or the right to receive benefits of the VIE that could potentially be significant to the VIE. Our determination of the primary beneficiary of a VIE considers all relationships between us and the VIE. Our joint venture, SANAD, which is equally owned by Saudi Aramco and Nabors, has been consolidated. As we have the power to direct activities that most significantly impact SANAD’s economic performance, including operations, maintenance and certain sourcing and procurement, we have determined Nabors to be the primary beneficiary. See Note 4—Joint Ventures. Also, we are the co-sponsor of a special purpose acquisition company (the “SPAC”) and have determined it is a VIE. Nabors is the primary beneficiary of the SPAC as we have the power to direct activities, the right to receive benefits and the obligation to absorb losses. Therefore, the SPAC has been consolidated. See Note 14—Special Purpose Acquisition Company.

On March 11, 2025, we completed our acquisition (the “Parker acquisition”) of Parker Drilling Company (“Parker”) resulting in Parker becoming a wholly owned subsidiary of Nabors. Parker provides drilling services across global energy markets. The unaudited condensed consolidated financial statements include the results of Parker from March 12, 2025 to September 30, 2025. On August 20, 2025, we sold Quail Tools, LLC (“Quail Tools”), a subsidiary of the Company, to Superior Energy Services, Inc. Quail Tools was part of the Company’s acquisition of Parker. See Note 3—Acquisitions and Dispositions for additional details on the acquisition and merger.

Inventory

Inventory is stated at the lower of cost or net realizable value. Cost is determined using the first-in, first-out or weighted-average cost methods and includes the cost of materials, labor and manufacturing overhead. Inventory included the following:


	September 30,		December 31,
	2025		2024

	(In thousands)
Raw materials	$	98,996	$	124,711
Work-in-progress		8,905		2,768
Finished goods		402		2,500
	$	108,303	$	129,979

Recent accounting pronouncements

Adopted

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280), which enhances prior reportable segment disclosure requirements in part by requiring entities to disclose significant expenses related to their reportable segments that are regularly provided to the chief operation decision maker (“CODM”) and included within each reported measure of segment profit or loss, an amount and description of its composition for other segment items to reconcile to segment profit or loss. The guidance also requires disclosure of the CODM’s position for each segment and detail of how the CODM uses financial reporting to access their segment’s performance. The new guidance is effective for fiscal years beginning after December 15, 2023. We adopted this ASU as required for the year ended December 31, 2024. The adoption requires us to provide additional disclosures related to our segments, but otherwise it does not materially impact our financial statements.

Not Yet Adopted

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvement to Income Tax Disclosures, to enhance the transparency and decision usefulness of income tax disclosures. This provides qualitative and

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quantitative updates to the rate reconciliation and income taxes paid disclosures, including consistent categories and greater disaggregation of information in the rate reconciliation and disaggregation by jurisdiction of income taxes paid. The new guidance is effective for fiscal years beginning after December 15, 2024. We are currently evaluating the impact of this accounting standard update on our financial statements and related disclosures.

In November 2024, the FASB issued ASU 2024-03, Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. The amendments in this update require disclosure, in the notes to financial statements, of specified information about certain costs and expenses including purchases of inventory, employee compensation, depreciation, intangible asset amortization and depreciation, depletion and amortization recognized as part of oil and gas producing activities. This ASU is effective for fiscal years beginning after December 15, 2026. The adoption of ASU 2024-03 requires us to provide additional disclosures but will otherwise not materially impact our financial statements.

We consider the applicability and impact of all ASUs. We assessed ASUs not listed above and determined that they either were not applicable or do not have a material impact on our financial statements.

Note 3 Acquisitions and Dispositions

Parker Acquisition

As discussed in Note 2—Summary of Significant Accounting Policies, on March 11, 2025, we completed the Parker acquisition. Total consideration for the acquisition included cash consideration of $0.6 million and the issuance of 4.8 million shares of our common stock, which based on the closing price of our common stock of $37.50 on March 11, 2025, valued the purchase price consideration of the transaction at approximately $180.6 million.

The acquisition has been accounted for as a business combination using the acquisition method. Under the acquisition method of accounting, the fair value of the consideration transferred is allocated to the tangible and intangible assets acquired and the liabilities assumed based on their estimated fair values as of the acquisition date. The fair value of the net assets acquired amounted to approximately $297.1 million at the date of acquisition, and as a result, we recorded a gain of $116.5 million related to the excess of the fair value of the net assets acquired over the acquisition price. The excess is referred to as a “bargain purchase gain.” This bargain purchase gain indicated that the fair value of the net assets acquired (which represents the price at which the assets would be exchanged between a willing buyer and seller) was in excess of the amount for which we acquired such net assets. Before recognizing the bargain purchase gain, we reassessed the methods used in the acquisition accounting and verified that we had identified all of the assets acquired and all of the liabilities assumed, and that there were no additional assets or liabilities to be considered. We also reassessed the process used to measure amounts recognized on the closing date of the merger to ensure that the measurements reflected all consideration transferred based on available information.

The bargain purchase gain was due to the decrease in the share price of our stock from the date the merger agreement was signed, to the closing date while the agreed upon purchase price of 4.8 million of our common shares, as stipulated in the merger agreement, remained the same. On October 14, 2024, the date the merger agreement was signed, and on March 11, 2025, the closing date of the merger, the closing prices of our common stock were $77.52 and $37.50, respectively. Pursuant to the merger agreement, the precise number of shares to be issued to Parker stockholders was determined based upon the volume weighted average price of Nabors common shares on the NYSE for the 15 trading days ending the fifth day before the closing of the merger (“Closing Price”) and, if that Closing Price was below $42.70, Parker stockholders would also receive a cash component as consideration for their shares of Parker stock. This resulted in a $0.6 million aggregate cash payment.

The aggregate purchase price noted above was allocated to the major categories of assets acquired and liabilities assumed based on preliminary estimated fair values as of the date of the business combination. We applied significant judgement in estimating the fair value of assets acquired and liabilities assumed. The carrying amounts of cash and cash equivalents, accounts receivable, other assets, accounts payable and accrued liabilities approximate their fair values due to their nature or the short-term maturity of instruments. The fair value of property and equipment was determined using the cost approach which includes assumptions related to replacement cost, physical deterioration, economic obsolescence, and floor value. The remaining assets acquired and liabilities assumed are based on inputs that are not observable in the market, such as unobservable lease terms, and thus represent Level 3 inputs. Assessing the overall business enterprise value, which was compared to market multiples for market participants, involved the use of

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assumptions with respect to future rig counts, operation and capital cost estimates and a weighted average cost of capital reflecting the cost of capital for market participants. Certain data necessary to complete the purchase price allocation is not yet available, including final tax returns that provide the underlying tax basis of Parker’s assets and liabilities. We will complete the purchase price allocation during the 12-month period following the acquisition date.

We recorded the preliminary allocation of the purchase price consideration during the three months ended March 31, 2025. During the three months ended June 30, 2025, the Company recorded a measurement period adjustment which resulted in a decrease in property, plant and equipment, an increase in net lease assets and an increase in bargain purchase gain of $3.5 million. The adjustment primarily related to additional information obtained about facts and circumstances that existed as of the acquisition date.

The table below presents the allocation of the estimated fair value of identifiable assets acquired and liabilities assumed, and the resulting gain on bargain purchase as of the closing date:


	Fair Value
(In thousands)	at Acquisition
Assets:
Cash and cash equivalents	$	84,995
Accounts receivable		132,084
Inventory		4,576
Other current assets		37,664
Property, plant and equipment		264,500
Deferred income taxes		66,828
Other assets		43,910
Total assets acquired		634,557

Liabilities:
Trade accounts payable	$	43,774
Accrued liabilities		66,808
Income taxes payable		4,027
Other short-term liabilities		6,462
Long-term debt		177,755
Deferred income taxes		2,594
Other liabilities		36,076
Total liabilities assumed		337,496
Net assets acquired		297,061
Gain on bargain purchase		116,499
Total consideration transferred	$	180,562

Approximately $126.3 million of revenue and $337.3 million of net income attributable to Parker are included in the consolidated statements of operations for the three months ended September 30, 2025. Approximately $303.6 million of revenue and $359.8 million of net income attributable to Parker are included in the consolidated statements of operations for the period from the closing date on March 12, 2025 through September 30, 2025. The net income attributable to Parker is primarily related to the sale of Quail Tools which is discussed below. During the nine months ended September 30, 2025, we incurred costs related to the Parker acquisition totaling $19.1 million, which are included in Other, net in our consolidated statements of income (loss), respectively.

Pro Forma

The following pro forma condensed combined financial information was derived from our and Parker’s historical financial statements and gives effect to the acquisition as if it had occurred on January 1, 2024. The below information reflects pro forma adjustments based on available information and certain assumptions we believe are reasonable, including the estimated tax impact of the pro forma adjustments.

The pro forma results of operations do not include any anticipated cost savings or other synergies that may result from the Parker acquisition nor do they include any estimated costs that will be incurred to integrate Parker operations.

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The pro forma results of operations include our merger and acquisition expenses of $25.9 million as if they had been incurred in the first quarter of 2024.

The pro forma condensed combined financial information has been included for comparative purposes and is not necessarily indicative of the results that might have actually occurred had the Parker acquisition taken place on January 1, 2024. Furthermore, the financial information is not intended to be a projection of future results. The following table summarizes our selected financial information on a pro forma basis:


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2025		2024		2025		2024

	(In thousands)
Operating revenues (1)	$	818,190	$	874,410	$	2,490,283	$	2,659,395
Net income (loss) (2)		302,466		(23,815)		270,034		53,737

(1)	Includes operating revenue from Quail Tools of $34.2 million and $154.8 million for the three and nine months ended September 30, 2025 respectively, and $64.4 million and $193.5 million for the three and nine months ended September 30, 2024 respectively.

(2)	Net income (loss) for the three and nine months ended September 30, 2025 includes the gain on disposition of Quail Tools of $415.6 million.

Quail Tools Disposition

On August 20, 2025, Nabors entered into a definitive agreement to sell Quail Tools to Superior Energy Services, Inc. Quail Tools was part of the Company’s acquisition of Parker. Net consideration for the sale totaled $600.0 million plus adjustments for net working capital. Consideration comprised of cash of $375.0 million and a seller note of $250.0 million. The seller note is included in notes receivable in our consolidated balance sheet as of September 30, 2025. On October 9, 2025, Nabors received prepayment in full of the $250.0 million seller note, including accrued and unpaid interest.

In connection with the sale, we recognized a gain of $415.6 million which is included in Gain on disposition of Quail Tools in our consolidated statements of income (loss). The gain on disposition of Quail Tools resulted in an increase of $101.1 million to the provision for income taxes during the three and nine months ended September 30, 2025.

This transaction did not represent a strategic shift in our operations and will not have a major effect on our operations and financial results going forward.

Note 4 Joint Ventures

During 2016, we entered into an agreement with Saudi Aramco to form a joint venture known as SANAD to own, manage and operate onshore drilling rigs in the Kingdom of Saudi Arabia. SANAD is equally owned by Saudi Aramco and Nabors.

During 2017, Nabors and Saudi Aramco each contributed $20 million in cash for the purpose of capitalizing the joint venture upon formation. In addition, since inception Nabors and Saudi Aramco have each contributed a combination of drilling rigs, drilling rig equipment and other assets, including cash, with each of the party’s contributions having a value of approximately $394 million to the joint venture. The contributions were received in exchange for redeemable ownership interests that accrue interest annually, have a twenty-five year maturity and are required to be converted to authorized capital should certain events occur, including the accumulation of specified losses. In the accompanying condensed consolidated balance sheet, Nabors has reported Saudi Aramco’s share of authorized capital as a component of noncontrolling interest in equity and Saudi Aramco’s share of the redeemable ownership interests as redeemable noncontrolling interest in subsidiary, classified as mezzanine equity. As of September 30, 2025 and December 31, 2024, the amount included in redeemable noncontrolling interest was $475.1 million and $453.3 million, respectively. The accrued interest on the redeemable ownership interest is a non-cash financing activity and is reported as an increase in the redeemable noncontrolling interest in subsidiary line in our condensed consolidated balance sheet. The assets and liabilities included in the condensed balance sheet below are (a) assets that can either be used to settle obligations of the VIE or be made available in the future to the equity owners through dividends,

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distributions or in exchange of the redeemable ownership interests (upon mutual agreement of the owners) or (b) liabilities for which creditors do not have recourse to other assets of Nabors.

The condensed balance sheet of SANAD, as included in our condensed consolidated balance sheet, is presented below.


	September 30,		December 31,
	2025		2024

	(In thousands)
Assets:
Cash and cash equivalents	$	216,686	$	229,442
Accounts receivable		106,468		111,497
Other current assets		12,821		12,122
Property, plant and equipment, net		1,044,566		862,031
Other long-term assets		14,569		12,404
Total assets	$	1,395,110	$	1,227,496
Liabilities:
Accounts payable	$	117,224	$	112,373
Accrued liabilities		31,093		12,447
Other liabilities		60,318		47,254
Total liabilities	$	208,635	$	172,074

Note 5 Accounts Receivable Purchase and Sales Agreements

The Company entered into an accounts receivable sales agreement (the “A/R Sales Agreement”) and an accounts receivable purchase agreement (the “A/R Purchase Agreement,” and, together with the A/R Sales Agreement, the “A/R Agreements”). As part of the A/R Agreements, the Company continuously sells designated eligible pools of receivables as they are originated by it and certain of its U.S. subsidiaries to a separate, bankruptcy-remote, special purpose entity (“SPE”) pursuant to the A/R Sales Agreement. Pursuant to the A/R Purchase Agreement, the SPE in turn sells, transfers, conveys and assigns to unaffiliated third-party financial institutions (the “Purchasers”) all the rights, title and interest in and to its pool of eligible receivables (the “Eligible Receivables”). The sale of the Eligible Receivables qualifies for sale accounting treatment in accordance with ASC 860 – Transfers and Servicing. During the period of this program, cash receipts from the Purchasers at the time of the sale are classified as operating activities in our consolidated statement of cash flows and the associated receivables are derecognized from the Company’s consolidated balance sheet at the time of the sale. The remaining receivables held by the SPE were pledged to secure the collectability of the sold Eligible Receivables. Subsequent collections on the pledged receivables, which have not been sold, will be classified as operating cash flows in our consolidated statement of cash flows at the time of collection. The amount of receivables pledged as collateral as of September 30, 2025 and December 31, 2024 is approximately $62.9 million and $44.6 million, respectively.

In June 2022, we entered into the Third Amendment to the A/R Purchase Agreement, which extended the term of the A/R Purchase Agreement to August 13, 2024 and increased the commitments of the Purchasers under the A/R Purchase Agreement from $150 million to $250 million. Subject to Purchaser approval, the commitments of the Purchasers may be increased to $300 million.

In April 2024, we entered into the Fourth Amendment to the A/R Purchase Agreement, which, among other things, extended the term of the A/R Purchase Agreement to the earliest of (i) April 1, 2027 and (ii) the date that is ninety (90) calendar days prior to the occurrence of the maturity date under and as defined in the 2024 Credit Agreement.

In August 2025, we entered into the First Amendment to the A/R Sales Agreement and the Fifth Amendment to the A/R Purchase Agreement. The First Amendment to the A/R Sales Agreement amends the agreement to, among other things, add certain subsidiaries of Parker, an indirect wholly-owned subsidiary of the Company, as originators (the “Additional Originators”). The Fifth Amendment to the A/R Purchase Agreement amends the agreement to make changes to reflect the joinder of the Additional Originators.

The amount available for sale to the Purchasers under the A/R Purchase Agreement fluctuates over time based on the total amount of Eligible Receivables generated during the normal course of business after excluding excess

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concentrations and certain other ineligible receivables. As of September 30, 2025 and December 31, 2024, approximately $137.0 million and $130.0 million had been sold to and as yet uncollected by the Purchasers, respectively.

Note 6 Debt

Debt consisted of the following:


	September 30,		December 31,
	2025		2024

	(In thousands)
7.375% senior priority guaranteed notes due May 2027	$	546,050	$	700,000
7.50% senior guaranteed notes due January 2028		379,146		389,609
1.75% senior exchangeable notes due June 2029		250,000		250,000
9.125% senior priority guaranteed notes due January 2030		650,000		650,000
8.875% senior guaranteed notes due August 2031		550,000		550,000
	$	2,375,196	$	2,539,609
Less: deferred financing costs		27,212		34,392
Long-term debt	$	2,347,984	$	2,505,217

During the nine months ended September 30, 2025, we repurchased $164.4 million aggregate principal amount of outstanding Nabors Delaware’s notes for approximately $169.7 million in cash, including $4.5 million in accrued and unpaid interest. In connection with these repurchases, we recognized a $1.9 million loss for the nine months ended September 30, 2025 which is included in Other, net in our condensed consolidated statement of income (loss).

Parker Term Loan

On March 11, 2025, the Parker acquisition was completed. Prior to the acquisition, Parker was a party to a Second Lien Term Loan Credit Agreement (“Parker Term Loan”), dated March 26, 2019 (as amended in March 2021 and January 2023). The Parker Term Loan bears interest at a rate of 13% per annum, payable quarterly and matures on September 26, 2025.

The Parker Term Loan carries a customary change of control provision, which was triggered by the closing of the Parker acquisition. The change of control, when triggered, required that the Parker Term Loan be repaid or refinanced within 30 days of the Closing Date or that Parker make a change of control repayment offer pursuant to which it will offer to repurchase the term loans outstanding under the facility at 101% of the principal amount of such term loans. On March 25, 2025, the outstanding balance of $177.8 million was repaid utilizing our credit agreement, which is discussed below.

Credit Agreement

On June 17, 2024, Nabors Delaware amended and restated its existing credit agreement (as amended and restated, the “2024 Credit Agreement”). Under the 2024 Credit Agreement, the lenders have committed to provide to Nabors Delaware an aggregate principal amount of revolving loans at any time outstanding not in excess of $350.0 million, and the issuing banks have committed to provide a standalone letter of credit tranche that permits Nabors Delaware to issue reimbursement obligations under letters of credit in an aggregate principal amount at any time outstanding not in excess of $125.0 million. Letters of credit issued do not affect revolving loan capacity and vice versa. The 2024 Credit Agreement contains a $200.0 million uncommitted accordion feature that can be applied to increase the commitments under either the revolving loans or the letter of credit tranche, or both.

On September 4, 2025, Nabors Delaware entered into the first amendment to the 2024 Credit Agreement to revise the restricted payments covenant to permit Nabors Delaware to repurchase up to $100.0 million of equity of either Nabors Delaware or any parent entity in any fiscal year. Usage of this provision will reduce Nabors Delaware’s ability to make dividends on a dollar-for-dollar basis; any dividends distributed by Nabors Delaware will likewise reduce Nabors Delaware’s ability to make buybacks of equity on a dollar-for-dollar basis.

The Company is required to maintain an interest coverage ratio (EBITDA/interest expense) of 2.75:1.00, and a minimum guarantor value, requiring the guarantors (other than the Company) and their subsidiaries to own at least 90% of the consolidated property, plant and equipment of the Company. The facility matures on the earlier of (a) June 17, 2029 and (b) to the extent 10% or more of the respective principal amount of any of the 7.375% Senior Priority

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Guaranteed Notes due May 2027 or 7.50% Senior Guaranteed Notes due January 2028 or 50% or more of the principal amount of the 1.75% Senior Exchangeable Notes due June 2029 remains outstanding on the date that is 90 days prior to the applicable maturity date for such indebtedness, then such 90^th day.

Additionally, the Company is subject to covenants, which are subject to certain exceptions and include, among others, (a) a covenant restricting our ability to incur liens (subject to the additional liens basket of up to $150.0 million), (b) a covenant restricting its ability to pay dividends or make other distributions with respect to its capital stock and to repurchase certain indebtedness and (c) a covenant restricting the ability of the Company’s subsidiaries to incur debt (subject to the grower debt basket of up to $100.0 million). The agreement also includes a collateral coverage requirement that the collateral rig fair value is to be no less than the collateral coverage threshold, as defined in the agreement. This requirement includes an independent appraisal report to be delivered every six months following the closing date.

As of September 30, 2025, we had no borrowings and $75.2 million of letters of credit outstanding under our 2024 Credit Agreement. The weighted average interest rate on borrowings under the 2024 Credit Agreement at September 30, 2025 was 7.21%. In order to make any future borrowings under the 2024 Credit Agreement, Nabors and certain of its wholly owned subsidiaries are subject to compliance with the conditions and covenants contained therein, including compliance with applicable financial ratios.

As of the date of this report, we were in compliance with all covenants under the 2024 Credit Agreement. We expect to remain in compliance with all covenants under the 2024 Credit Agreement during the twelve-month period following the date of this report based on our current operational and financial projections. However, we can make no assurance of continued compliance if our current projections or material underlying assumptions prove to be incorrect. If we fail to comply with the covenants, the revolving credit commitment could be terminated, and any outstanding borrowings under the facility could be declared immediately due and payable.

Note 7 Shareholders’ Equity

Common share issuance

On March 11, 2025, in connection with the completion of the Parker acquisition, we issued 4.8 million common shares to the former stockholders of Parker. See further discussion on the transaction in Note 3—Acquisitions and Dispositions.

Common share warrants

On May 27, 2021, the Board declared a distribution of warrants to purchase its common shares (the “Warrants”) to holders of the Company’s common shares. Holders of Nabors common shares received two-fifths of a warrant per common share held as of the record date (rounded down for any fractional warrant). Nabors issued approximately 3.2 million Warrants on June 11, 2021 to shareholders of record as of June 4, 2021. As of September 30, 2025, 2.5 million Warrants remain outstanding and 1.1 million common shares have been issued as a result of exercises of Warrants.

Each Warrant represents the right to purchase one common share at an initial exercise price of $166.66667 per Warrant, subject to certain adjustments (the “Exercise Price”). Payment of the exercise price may be in cash at this time. The Exercise Price and the number of common shares issuable upon exercise are subject to anti-dilution adjustments, including for share dividends, splits, subdivisions, spin-offs, consolidations, reclassifications, combinations, noncash distributions, cash dividends (other than regular quarterly cash dividends not exceeding a permitted threshold amount), certain pro rata shares repurchases, and similar transactions, including certain issuances of common shares (or securities exercisable or convertible into or exchangeable for common shares) at a price (or having a conversion price) that is less than 95% of the market price of the common shares. The Warrants expire on June 11, 2026, but the expiration date may be accelerated at any time by the Company upon 20-days’ prior notice. The Warrants are traded on the over-the-counter market.

The Warrants are recognized as derivative liabilities in accordance with ASC 815-40. Accordingly, the Company recognizes the Warrant instruments as liabilities at fair value and adjusts the instruments to fair value at each reporting period. The liabilities are subject to re-measurement at each balance sheet date until exercised, and any change in fair value is recognized in the Company’s statement of operations. On September 30, 2025 and December 31, 2024, the fair

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value of the Warrants was approximately $1.6 million and $9.0 million, respectively. During the three months and nine months ended September 30, 2025, approximately $25 thousand and $7.4 million of gain has been recognized for the change in the liability and included in Other, net in our consolidated statements of income (loss), respectively. During the three months and nine months ended September 30, 2024, approximately $2.9 million and $12.5 million of gain has been recognized for the change in the liability and included in Other, net in our consolidated statements of income (loss), respectively.

Note 8 Fair Value Measurements

Fair value is the price that would be received upon sale of an asset or paid upon transfer of a liability in an orderly transaction between market participants at the measurement date (exit price). We utilize market data or assumptions that market participants would use in pricing the asset or liability, including assumptions about risk and the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market-corroborated, or generally unobservable. We primarily apply the market approach for recurring fair value measurements and endeavor to utilize the best information available. Accordingly, we employ valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs.

The use of unobservable inputs is intended to allow for fair value determinations in situations where there is little, if any, market activity for the asset or liability at the measurement date. We are able to classify fair value balances utilizing a fair value hierarchy based on the observability of those inputs.

Under the fair value hierarchy:

●

Level 1 measurements include unadjusted quoted market prices for identical assets or liabilities in an active market;

●

Level 2 measurements include quoted market prices for identical assets or liabilities in an active market that have been adjusted for items such as effects of restrictions for transferability and those that are not quoted but are observable through corroboration with observable market data, including quoted market prices for similar assets; and

●

Level 3 measurements include those that are unobservable and of a subjective nature.

Recurring Fair Value Measurements

Our financial assets that are accounted for at fair value on a recurring basis as of September 30, 2025 and December 31, 2024 consisted of short-term investments and restricted cash held in trust. During the nine months ended September 30, 2025, there were no transfers of our financial assets between Level 1 and Level 2 measures. Our financial assets are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. As of September 30, 2025 and December 31, 2024, our restricted cash held in trust was carried at fair market value and totaled $154.2 million and $331.8 million, respectively, and consisted of Level 1 measurements. Our short-term investments were primarily held at fair market value and totaled $28 thousand and $7.6 million, respectively and primarily consisted of Level 2 measurements. No material Level 3 measurements existed for our financial assets for any of the periods presented.

Our financial liabilities that are accounted for at fair value on a recurring basis as of September 30, 2025 and December 31, 2024 consisted of the Warrants which are included in other short-term liabilities as of September 30, 2025 and other long-term liabilities as of December 31, 2024 in the accompanying consolidated financial statements. As of September 30, 2025 and December 31, 2024, the Warrants were carried at fair market value using their trading price and totaled $1.6 million and $9.0 million, respectively.

Nonrecurring Fair Value Measurements

We applied fair value measurements to our nonfinancial assets and liabilities measured on a nonrecurring basis, which consist of measurements primarily related to equity method investments, other long-lived assets and assets acquired and liabilities assumed in a business combination. Based upon our review of the fair value hierarchy, the inputs used in these fair value measurements generally include Level 3 inputs but could include Level 1 and 2 inputs.

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Fair Value of Debt Instruments

We estimate the fair value of our debt financial instruments in accordance with U.S. GAAP. The fair value of our long-term debt and revolving credit facilities is estimated based on quoted market prices or prices quoted from third-party financial institutions. The fair value of our debt instruments is determined using Level 2 measurements. The carrying and fair values of these liabilities were as follows:



		September 30, 2025				December 31, 2024
		Carrying		Fair		Carrying		Fair
		Value		Value		Value		Value

	(In thousands)
7.375% senior priority guaranteed notes due May 2027		$	546,050	$	555,049	$	700,000	$	699,916
7.50% senior guaranteed notes due January 2028			379,146		379,529		389,609		362,823
1.75% senior exchangeable notes due June 2029			250,000		193,560		250,000		179,548
9.125% senior priority guaranteed notes due January 2030			650,000		676,715		650,000		661,401
8.875% senior guaranteed notes due August 2031			550,000		512,644		550,000		511,104
		$	2,375,196	$	2,317,497	$	2,539,609	$	2,414,792
Less: deferred financing costs			27,212				34,392
		$	2,347,984			$	2,505,217

The fair values of our cash equivalents, notes receivables, trade receivables and trade payables approximate their carrying values due to the short-term nature of these instruments.

Note 9 Commitments and Contingencies

Contingencies

Income Tax

We operate in a number of countries and our tax returns filed in those jurisdictions are subject to review and examination by tax authorities within those jurisdictions. We do not recognize the benefit of income tax positions we believe are more likely than not to be disallowed upon challenge by a tax authority. If any tax authority successfully challenges our operational structure, intercompany pricing policies or the taxable presence of our subsidiaries in certain countries, if the terms of certain income tax treaties are interpreted in a manner that is adverse to our structure, or if we lose a material tax dispute in any country, our effective tax rate on our worldwide earnings could change substantially.

In certain jurisdictions we have recognized deferred tax assets and liabilities. Judgment and assumptions are required in determining whether deferred tax assets will be fully or partially utilized. When we estimate that all or some portion of certain deferred tax assets such as net operating loss carryforwards will not be utilized, we establish a valuation allowance for the amount we determine to be more likely than not unrealizable. We continually evaluate strategies that could allow for future utilization of our deferred assets. Any change in the ability to utilize such deferred assets will be accounted for in the period of the event affecting the valuation allowance. If facts and circumstances cause us to change our expectations regarding future tax consequences, the resulting adjustments could have a material effect on our financial results or cash flow. At this time, we consider it more likely than not that we will have sufficient taxable income in the future that will allow us to realize the deferred tax assets that we have recognized. However, it is possible that some of our recognized deferred tax assets, relating to net operating loss carryforwards and tax credits, could expire unused or could carryforward indefinitely without utilization. Therefore, unless we are able to generate sufficient taxable income from our component operations, a substantial valuation allowance to reduce our deferred tax assets may be required, which would materially increase our tax expense in the period the allowance is recognized and materially adversely affect our results of operations and statement of financial condition.

The One Big Beautiful Bill Act was signed into law in the United States on July 4, 2025. We are currently evaluating the income tax impacts of the law, but we do not expect it to have a material impact on our financial statements.

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Litigation

Nabors and its subsidiaries are defendants or otherwise involved in a number of lawsuits in the ordinary course of business. We estimate the range of our liability related to pending litigation when we believe the amount and range of loss can be estimated. We record our best estimate of a loss when the loss is considered probable. When a liability is probable and there is a range of estimated loss with no best estimate in the range, we record the minimum estimated liability related to the lawsuits or claims. As additional information becomes available, we assess the potential liability related to our pending litigation and claims and revise our estimates. Due to uncertainties related to the resolution of lawsuits and claims, the ultimate outcome may differ from our estimates. For matters where an unfavorable outcome is reasonably possible and significant, we disclose the nature of the matter and a range of potential exposure, unless an estimate cannot be made at the time of disclosure. In the opinion of management and based on liability accruals provided, our ultimate exposure with respect to these pending lawsuits and claims is not expected to have a material adverse effect on our consolidated financial position or cash flows, although they could have a material adverse effect on our results of operations for a particular reporting period.

In March 2011, the Court of Ouargla entered a judgment of approximately $21.8 million (at September 30, 2025 exchange rates) against us relating to alleged violations of Algeria’s foreign currency exchange controls, which require that goods and services provided locally be invoiced and paid in local currency. The case relates to certain foreign currency payments made to us by CEPSA, a Spanish operator, for wells drilled in 2006. Approximately $7.5 million of the total contract amount was paid offshore in foreign currency, and approximately $3.2 million was paid in local currency. The judgment includes fines and penalties of approximately four times the amount at issue. We have appealed the ruling based on our understanding that the law in question applies only to resident entities incorporated under Algerian law. An intermediate court of appeals upheld the lower court’s ruling, and we appealed the matter to the Supreme Court. On September 25, 2014, the Supreme Court overturned the verdict against us, and the case was reheard by the Ouargla Court of Appeals on March 22, 2015 in light of the Supreme Court’s opinion. On March 29, 2015, the Ouargla Court of Appeals reinstated the initial judgment against us. We appealed this decision again to the Supreme Court, which again overturned the appeals court’s decision. The case was moved back to the court of appeals, which, once again, reinstated the verdict, failing to abide by the Supreme Court’s ruling. Accordingly, we appealed once more to the Supreme Court to try to get a final ruling on the matter. On April 10, 2025, the Supreme Court cancelled the judgment of the Ouargla Court of Appeals, ruled in our favor and sent the case back to a different court, the Algiers Court of Appeals. While our payments were consistent with our historical operations in the country, and, we believe, those of other multinational corporations there, as well as interpretations of the law by the Central Bank of Algeria, the ultimate resolution of this matter could result in a loss of up to $13.8 million in excess of amounts accrued.

Off-Balance Sheet Arrangements (Including Guarantees)

We are a party to some transactions, agreements or other contractual arrangements defined as “off-balance sheet arrangements” that could have a material future effect on our financial position, results of operations, liquidity and capital resources. The most significant of these off-balance sheet arrangements include the A/R Facility (see Note 5—Accounts Receivable Purchase and Sales Agreements) and certain agreements and obligations under which we provide financial or performance assurance to third parties. Certain of these financial or performance assurances serve as guarantees, including standby letters of credit issued on behalf of insurance carriers in conjunction with our workers’ compensation insurance program and other financial surety instruments such as bonds. In addition, we have provided indemnifications, which serve as guarantees, to some third parties. These guarantees include indemnification provided by Nabors to our share transfer agent and our insurance carriers. We are not able to estimate the potential future maximum payments that might be due under our indemnification guarantees.

Management believes the likelihood that we would be required to perform or otherwise incur any material losses associated with any of these guarantees is remote. The following table summarizes the total maximum amount of financial guarantees issued by Nabors:


	Maximum Amount
	2025		2026	2027	Thereafter	Total

	(In thousands)
Financial standby letters of credit and other financial surety instruments	$	8,094	28,967	20	14,525	$	51,606

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Note 10 Earnings (Losses) Per Share

ASC 260, Earnings per Share, requires companies to treat unvested share-based payment awards that have nonforfeitable rights to dividends or dividend equivalents as a separate class of securities in calculating earnings (losses) per share. We have granted and expect to continue to grant to employees restricted stock grants that contain nonforfeitable rights to dividends. Such grants are considered participating securities under ASC 260. As such, we are required to include these grants in the calculation of our basic earnings (losses) per share and calculate basic earnings (losses) per share using the two-class method. The two-class method of computing earnings per share is an earnings allocation formula that determines earnings per share for each class of common stock and participating security according to dividends declared and participation rights in undistributed earnings. The participating security holders are not contractually obligated to share in losses. Therefore, losses are not allocated to the participating security holders.

Basic earnings (losses) per share is computed utilizing the two-class method and is calculated based on the weighted-average number of common shares outstanding during the periods presented.

Diluted earnings (losses) per share is computed using the weighted-average number of common and common equivalent shares outstanding during the periods utilizing the two-class method for stock options and unvested restricted shares and the if-converted method for the 1.75% senior exchangeable notes due June 2029 as the instrument contains a provision for share settlement.

A reconciliation of the numerators and denominators of the basic and diluted earnings (losses) per share computations is as follows:


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2025		2024		2025		2024

	(In thousands, except per share amounts)
BASIC EPS:
Net income (loss) (numerator):
Income (loss), net of tax	$	302,466	$	(33,087)	$	357,440	$	(55,118)
Less: net (income) loss attributable to noncontrolling interest		(28,268)		(22,738)		(81,164)		(67,295)
Less: deemed dividends to SPAC public shareholders		(750)		—		(750)		—
Less: accrued distribution on redeemable noncontrolling interest in subsidiary		(7,344)		(7,363)		(21,792)		(21,929)
Less: distributed and undistributed earnings allocated to unvested shareholders		(8,828)		—		(9,106)		—
Numerator for basic earnings per share:
Adjusted income (loss), net of tax - basic	$	257,276	$	(63,188)	$	244,628	$	(144,342)

Weighted-average number of shares outstanding - basic		14,098		9,213		12,880		9,199
Earnings (losses) per share:
Total Basic	$	18.25	$	(6.86)	$	18.99	$	(15.69)
DILUTED EPS:
Adjusted income (loss), net of tax - basic	$	257,276	$	(63,188)	$	244,628	$	(144,342)
Add: after tax interest expense of convertible notes		848		—		2,544		—
Add: effect of reallocating undistributed earnings of unvested shareholders		28		—		24		—
Adjusted income (loss), net of tax - diluted	$	258,152	$	(63,188)	$	247,196	$	(144,342)

Weighted-average number of shares outstanding - basic		14,098		9,213		12,880		9,199
Add: if converted dilutive effect of convertible notes		1,176		—		1,176		—
Add: dilutive effect of potential common shares		47		—		36		—
Weighted-average number of shares outstanding - diluted		15,321		9,213		14,092		9,199
Earnings (losses) per share:
Total Diluted	$	16.85	$	(6.86)	$	17.54	$	(15.69)

For all periods presented, the computation of diluted earnings (losses) per share excludes shares related to outstanding stock options with exercise prices greater than the average market price of Nabors’ common shares and shares related to the outstanding Warrants when their exercise price or exchange price is higher than the average market price of Nabors’ common shares, because their inclusion would be anti-dilutive and because they are not considered participating securities.

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In any period during which the average market price of Nabors’ common shares exceeds the exercise prices of the stock options, such stock options or warrants will be included in our diluted earnings (losses) per share computation using the if-converted method of accounting. Restricted stock is included in our basic and diluted earnings (losses) per share computation using the two-class method of accounting in all periods because such stock is considered participating securities. For periods in which we experience a net loss, all potential common shares have been excluded from the calculation of weighted-average shares outstanding, because their inclusion would be anti-dilutive.

The average number of shares from options and shares related to outstanding Warrants that were excluded from diluted earnings (losses) per share that would potentially dilute earnings per share in the future were as follows (in thousands):

Three Months Ended

Nine Months Ended

September 30,

2025

2024

2025

2024

Potentially dilutive securities excluded as anti-dilutive

3,477

3,383

3,500

3,390

Additionally, for the three and nine months ended September 30, 2024, we excluded 1.2 million common shares from the computation of diluted shares related to the conversion of the 1.75% senior exchangeable notes due June 2029, because their effect would be anti-dilutive under the if-converted method.

Note 11 Supplemental Balance Sheet and Income Statement Information

Accrued liabilities included the following:


	September 30,		December 31,
	2025		2024

	(In thousands)
Accrued compensation	$	87,231	$	68,776
Deferred revenue		67,408		30,902
Other taxes payable		32,856		33,446
Workers’ compensation liabilities		8,146		6,588
Interest payable		38,073		66,300
Litigation reserves		11,295		10,493
Accrued professional fees		2,900		2,490
Accrued transaction related costs		15,000		—
Other accrued liabilities		27,842		4,764
	$	290,751	$	223,759

Investment income (loss) includes the following:


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2025		2024		2025		2024

	(In thousands)
Interest and dividend income	$	7,325	$	11,479	$	20,317	$	30,265
Gains (losses) on marketable securities		(2)		24		(269)		(380)
	$	7,323	$	11,503	$	20,048	$	29,885

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Other, net included the following:


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2025		2024		2025		2024

	(In thousands)
(Gains) losses on sales, disposals and involuntary conversions of long-lived assets	$	2,469	$	6,000	$	(13,360)	$	15,542
Asset impairment		—		—		26,456		—
Transaction related costs		743		1,194		19,858		1,194
Other than temporary impairment on securities		—		15,380		3,847		15,380
Severance and reorganization costs		9,823		1,734		21,978		2,882
Warrant and derivative valuation		(25)		(2,944)		(7,424)		(12,538)
Litigation expenses and reserves		2,389		879		3,768		5,197
Foreign currency transaction losses		3,260		3,423		5,395		21,317
Loss (gain) on debt buyback		3,863		12,281		1,948		14,857
Other losses (gains)		1,948		3,661		12,868		5,964
	$	24,470	$	41,608	$	75,334	$	69,795

The changes in accumulated other comprehensive income (loss), by component, included the following:



	Gains		Defined
	(losses) on		benefit		Foreign
	cash flow		pension plan		currency
	hedges		items		items		Total

	(In thousands (1) )
As of January 1, 2024	$	2	$	(3,606)	$	(7,228)	$	(10,832)
Other comprehensive income (loss) before reclassifications		—		—		(133)		(133)
Amounts reclassified from accumulated other comprehensive income (loss)		—		121		—		121
Net other comprehensive income (loss)		—		121		(133)		(12)
As of September 30, 2024	$	2	$	(3,485)	$	(7,361)	$	(10,844)

(1)	All amounts are net of tax.



	Gains		Defined
	(losses) on		benefit		Foreign
	cash flow		pension plan		currency
	hedges		items		items		Total

	(In thousands (1) )
As of January 1, 2025	$	2	$	(3,444)	$	(6,972)	$	(10,414)
Other comprehensive income (loss) before reclassifications		—		—		(669)		(669)
Amounts reclassified from accumulated other comprehensive income (loss)		—		121		—		121
Net other comprehensive income (loss)		—		121		(669)		(548)
As of September 30, 2025	$	2	$	(3,323)	$	(7,641)	$	(10,962)

(1)	All amounts are net of tax.

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The line items that were reclassified to net income included the following:


		Three Months Ended				Nine Months Ended
		September 30,				September 30,
		2025		2024		2025		2024

	(In thousands)
General and administrative expenses		$	52	$	52	$	157	$	157
Total income (loss) before income tax			(52)		(52)		(157)		(157)
Tax expense (benefit)			(12)		(12)		(36)		(36)
Reclassification adjustment for (gains)/ losses included in net income (loss)		$	(40)	$	(40)	$	(121)	$	(121)

Note 12 Segment Information

Our business consists of four reportable segments: U.S. Drilling, International Drilling, Drilling Solutions and Rig Technologies. Our reportable segments include operating segments that have been aggregated based on the nature of the products and services provided. Results of Parker’s operations have been included within U.S. Drilling, International Drilling and Drilling Solutions segments. Prior to its sale, Quail Tools’ operations were included within the Drilling Solutions segment. The accounting policies of the segments are the same as those described in Note 2—Summary of Significant Accounting Policies. Inter-segment sales are recorded at cost or cost plus a profit margin. Management’s determination of our reporting segments was made on the basis of our strategic priorities within each segment and the differences in the products and services we provide. The reportable segments results are reviewed regularly by the chief operating decision maker (“CODM”), who is our Chairman and Chief Executive Officer, in deciding how to allocate resources and assess performance. Our CODM evaluates the segments’ operating performance based on adjusted operating income (loss), defined as net income (loss) before income taxes, interest expense, earnings (losses) from unconsolidated affiliates, investment income (loss), gain on disposition of Quail Tools, gain on bargain purchase and other, net.

The following table sets forth financial information with respect to our reportable operating segments:


	Three Months Ended
	September 30, 2025
		U.S. Drilling		International Drilling		Drilling Solutions		Rig Technologies		Total Reportable Segments		Other items (1)		Total

	(In thousands)
Operating revenues	$	249,836	$	407,235	$	141,942	$	35,597	$	834,610	$	(16,420)	$	818,190
Direct costs		(149,156)		(260,004)		(69,186)		(25,449)		(503,795)		11,967		(491,828)
Depreciation and amortization		(62,732)		(82,075)		(10,684)		(2,893)		(158,384)		(1,963)		(160,347)
Other segment expenses (2)		(6,519)		(19,680)		(12,090)		(6,378)		(44,667)		(45,387)		(90,054)
Total adjusted operating income (loss)	$	31,429	$	45,476	$	49,982	$	877	$	127,764

Capital expenditures	$	39,238	$	132,678	$	16,186	$	517	$	188,619	$	(566)	$	188,053

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	Nine Months Ended
	September 30, 2025
		U.S. Drilling		International Drilling		Drilling Solutions		Rig Technologies		Total Reportable Segments		Other items (1)		Total

	(In thousands)
Operating revenues	$	736,020	$	1,173,923	$	405,404	$	116,289	$	2,431,636	$	(44,472)	$	2,387,164
Direct costs		(428,372)		(756,390)		(193,891)		(81,478)		(1,460,131)		32,122		(1,428,009)
Depreciation and amortization		(185,877)		(246,210)		(44,760)		(7,574)		(484,421)		(5,625)		(490,046)
Other segment expenses (2)		(18,955)		(56,838)		(33,493)		(20,304)		(129,590)		(138,453)		(268,043)
Total adjusted operating income (loss) (2)	$	102,816	$	114,485	$	133,260	$	6,933	$	357,494

Capital expenditures	$	107,137	$	368,189	$	57,772	$	1,268	$	534,366	$

NABORS INDUSTRIES LTD 10-Q