Leases

12 Months Ended

Dec. 31, 2025

Note 19 Leases

We have evaluated the provisions of ASC 842, including certain practical expedients allowed. The significant practical expedients we adopted include the following:

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We elected the practical expedient to apply the transition approach as of the beginning of the period of adoption and not restate comparative periods;

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We elected to utilize the “package of three” expedients, as defined in ASC 842, whereby we did not reassess whether contracts existing prior to the effective date contain leases, nor did we reassess lease classification determinations nor whether initial direct costs qualify for capitalization;

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We elected the practical expedient to not capitalize any leases with initial terms of twelve months or less on our condensed consolidated balance sheet;

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For all underlying classes of leased assets, we elected the practical expedient to not separate lease and non-lease components; and

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We elected the practical expedient to continue to account for land easements (also known as “rights of way”) that were not previously accounted for as leases consistent with prior accounting until such contracts are modified or replaced, at which time they would be assessed for lease classification under ASC 842.

Our leases primarily consist of office space and equipment used globally within our operations. We determine whether a contract is or contains a lease at inception of the contract based on answers to a series of questions that address whether an identified asset exists and whether we have the right to obtain substantially all the benefit of the assets and to control its use over the full term of the agreement. When available, we use the rate implicit in the lease to discount lease payments to present value; however, most of our leases do not provide a readily determinable implicit rate. Therefore, we must estimate our incremental borrowing rate using a credit notching approach to discount the lease payments based on information available at lease commencement. Certain of our lease agreements include options to extend and options to terminate the lease, which we do not include in our minimum lease terms unless management is reasonably certain to exercise. We do not separate lease and non-lease components of contracts. There are no material residual value guarantees nor any restrictions or covenants included in our lease agreements. Certain of our leases include provisions for variable payments. These variable payments are typically determined based on a measure of throughput or actual days or another measure of usage and are not included in the calculation of lease liabilities and right-of-use assets.

Lease Position

The table below presents the lease related assets and liabilities recorded on our condensed consolidated balance sheet:


			Year Ended December 31,
			2025		2024

	Classification on the Balance Sheet		(In thousands)
Assets
Operating lease assets	Other long-term assets		$	40,086	$	28,688
Total lease assets			$	40,086	$	28,688

Liabilities
Current liabilities:
Operating lease liabilities	Current lease liabilities		$	9,740	$	6,768
Noncurrent liabilities:
Operating lease liabilities	Other long-term liabilities		$	30,473	$	22,145
Total lease liabilities			$	40,213	$	28,913

Lease Costs

The table below presents certain information related to the lease costs for our operating leases:


	Year Ended December 31,
	2025			2024			2023

	(In thousands)
Operating lease cost		12,711			7,941			9,688
Short-term lease cost		3,864			763			150
Variable lease cost		168			25			39
Total lease cost	$	16,743		$	8,729		$	9,877

Other Information

The table below presents supplemental cash flow information related to leases:


		Year Ended December 31,
		2025			2024			2023

		(In thousands)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating leases		$	12,711		$	7,941		$	9,688

Lease Terms and Discount Rates

The table below presents certain information related to the weighted average remaining lease terms and weighted average discount rates for our operating leases:


		Year Ended December 31,
		2025		2024

Weighted-average remaining lease term - operating leases			5.55		5.57
Weighted-average discount rate - operating leases			7.49%		7.25%

Undiscounted Cash Flows

The table below reconciles the undiscounted cash flows for each of the first five years and the total remaining years to the operating lease liabilities recorded on the condensed consolidated balance sheet:


		December 31, 2025
		(In thousands)
2026		$	12,565
2027			10,394
2028			7,361
2029			6,047
2030			3,670
Thereafter			9,011
Total undiscounted lease liability			49,048
Less: amount of lease payments representing interest			(8,835)
Long-term lease obligations		$	40,213

NABORS INDUSTRIES LTD 10-K