National Energy Services Reunited Corp.

8. COMMITMENTS AND CONTINGENCIES

Capital expenditure commitments

The Company was committed to incur capital expenditures of $61.8 million and $45.6 million at September 30, 2026, and December 31, 2025, respectively. Substantially all of the commitments outstanding as of September 30, 2026, are expected to be settled during 2026 and 2027.

Off Balance Sheet Arrangements

The Company evaluates its obligations under these arrangements and recognizes liabilities when a loss is probable and reasonably estimable. Management does not expect these off-balance-sheet arrangements to have a material effect on the Company’s condensed consolidated financial statements.

Letters of Credit

The Company had outstanding letters of credit issued under the 2021 Secured Facilities Agreement totaling $7.4 million and $6.6 million as of September 30, 2026 and December 31, 2025, respectively.

Bank Guarantees

In the ordinary course of business, the Company enters into various off-balance-sheet guarantee arrangements with customers, vendors, and other counterparties, including bid bonds, performance bonds, and other bank-issued guarantees. These arrangements totaled $241.1 million and $187.1 million as of September 30, 2026, and December 31, 2025, respectively. In addition, the Company had outstanding cash margin guarantees totaling $15.9 million and $14.9 million as of the respective dates, of which $15.9 million and $7.5 million, respectively, were secured by restricted cash deposits. The majority of the Company’s bank guarantees are issued pursuant to the terms of the 2021 Secured Facilities Agreement.

Other Guarantee Arrangements

Separately, the Company maintains off-balance-sheet guarantee arrangements through a non-financial intermediary in Kuwait, primarily consisting of bid and performance bonds issued in the ordinary course of business. The Company pays contractual margins of 3.50% per annum on other guarantee arrangements. These arrangements totaled $33.2 million and $14.7 million as of September 30, 2026, and December 31, 2025, respectively. In addition, the Company had outstanding cash margin guarantees totaling $7.7 million and $3.5 million as of the respective dates, of which $3.7 million and $0.4 million, respectively, were secured by restricted cash deposits.

Legal proceedings

In the first quarter of 2024, the Company lost control (i.e., ceased to be the primary beneficiary) of a subsidiary in Qatar following a judgment from a lawsuit concerning the ownership and historical profits of this entity. Neither the deconsolidation event nor any potential losses associated with these historical profits were deemed material to the Company’s financial position or results of operations. Subsequent to the judgment, the plaintiff initiated similar actions against other unrelated Company entities in both Qatar and the United Arab Emirates. Based on the advice of legal counsel in each jurisdiction, the Company believes it has strong grounds to defend its positions in both jurisdictions; however, the ultimate outcome of these proceedings cannot be determined at this time. The Company currently estimates that a loss in the range of $1.2 million to $11.8 million (43.1 million Qatari Riyals), for which it is jointly and severally liable with a co-defendant, could be incurred in connection with these matters.

Additionally, the Company is involved in certain legal proceedings which arise in the ordinary course of business and the outcomes of which are currently subject to uncertainties and therefore the probability of a loss, if any, being sustained and an estimate of the amount of any loss are difficult to ascertain. Consequently, it is not possible to make a reasonable estimate of the expected financial effect, if any, that will result from ultimate resolution of these disputes. The Company is contesting these claims/disputes and the Company’s management currently believes that it is not required to recognize a provision because they are not probable or reasonably estimable and any impacts are not expected to have a material impact on the Company’s business, financial condition, results of operations, or liquidity.