NABORS INDUSTRIES LTD

Previous wording

This section is intended to help you understand our results of operations and our financial condition. This information is provided as a supplement to, and should be read in conjunction with, our condensed consolidated financial statements and the accompanying notes thereto.

Current wording

This section is intended to help you understand our results of operations and our financial condition. The results of operations discussed below include amounts pertaining to Parker after the merger closed on March 11, 2025. This information is provided as a supplement to, and should be read in conjunction with, our condensed consolidated financial statements and the accompanying notes thereto.

Previous wording

Since late 2022 and continuing through the third quarter of 2024, global energy commodity markets have experienced high levels of volatility. In the U.S., operators generally reacted to these market conditions by reducing their drilling activity. Recent production actions announced by certain large international oil producers have been supportive of both oil prices and oil-focused activity broadly, especially in international markets. Natural gas prices, particularly in the United States, declined significantly through 2023 and into 2024, to levels which largely persisted through the third quarter of 2024 and which have caused operators to reduce natural gas directed activity.

Current wording

Since late 2022 and continuing through the fourth quarter of 2024, global energy commodity markets have experienced relatively high levels of volatility. In the U.S., operators generally reacted to these market conditions by reducing their drilling activity. Recent production actions announced by certain large international oil producers have been supportive of both oil prices and oil-focused activity broadly, especially in international markets. Natural gas prices, particularly in the United States, declined significantly through 2023 and into 2024, to levels which largely persisted into the fourth quarter of 2024 and which caused operators to reduce natural gas directed activity.

Previous wording

In early 2023 economic sentiment was overshadowed by a pervasive concern that a global recession would take hold. The U.S. Federal Reserve’s tightening of interest rates reduced capital availability in the U.S energy market. As these higher interest rates continued, rig counts in the U.S. Lower 48 continued to decline throughout the year. More recently, the U.S. Federal Reserve reduced interest rates. The impact of that decision should become evident in the coming quarters. Despite the reduction in rig count, rig pricing discipline remained intact, generally supportive of rig dayrates and daily rig margins.

Current wording

In early 2023 economic sentiment was overshadowed by a pervasive concern that a global recession would take hold. The U.S. Federal Reserve’s tightening of interest rates reduced capital availability in the U.S energy market. As these higher interest rates continued, rig counts in the U.S. Lower 48 continued to decline throughout the year. More recently in late 2024, the U.S. Federal Reserve reduced interest rates. The impact of that decision should become evident in the coming quarters. Despite the reduction in rig count, rig pricing discipline remained intact, generally supportive of rig dayrates and daily rig margins.

Previous wording

U.S. oil and gas production has proved resilient thus far in 2024 in the face of reduced drilling activity. Internationally, we generally see an expansion of production capacity as well as the widespread development of unconventional resources driving an expected increase in oilfield activity broadly across those markets.

Current wording

U.S. oil and gas production has proved resilient throughout 2024 in the face of reduced drilling activity. Internationally, we generally see an expansion of production capacity as well as the widespread development of unconventional resources driving an expected increase in oilfield activity broadly across those markets.

Previous wording

Operating revenues for the three months ended September 30, 2024 totaled $731.8 million, representing a decrease of $2.2 million, or 0%, compared to the three months ended September 30, 2023. For a more detailed description of operating results, see Segment Results of Operations below.

Current wording

Operating revenues for the three months ended March 31, 2025 totaled $736.2 million, representing a decrease of $2.5 million, compared to the three months ended March 31, 2024. For a more detailed description of operating results, see Segment Results of Operations below.

Previous wording

Net loss attributable to Nabors totaled $55.8 million ($6.86 per diluted share) for the three months ended September 30, 2024 compared to a net loss attributable to Nabors of $48.9 million ($6.26 per diluted share) for the three months ended September 30, 2023, or a $6.9 million increase in net loss. The increase in net loss is primarily related to higher interest expense of $11.3 million and higher other, net of $6.1 million offset by an improvement in adjusted

Current wording

Net income attributable to Nabors totaled $33.0 million ($2.18 per diluted share) for the three months ended March 31, 2025 compared to a net loss attributable to Nabors of $34.3 million ($4.54 per diluted share) for the three months ended March 31, 2024, or a $67.3 million increase in net income. $113.0 million of the increase is due to the gain on bargain purchase related to the Parker acquisition which was partially offset by $26.5 million of asset

Previous wording

General and administrative expenses for the three months ended September 30, 2024 totaled $64.0 million, representing an increase of $1.8 million, or 3%, compared to the three months ended September 30, 2023. This is reflective of increases in workforce costs, general operating costs and inflationary pressures as market conditions have improved.

Current wording

General and administrative expenses for the three months ended March 31, 2025 totaled $68.5 million, representing an increase of $6.8 million, or 11%, compared to the three months ended March 31, 2024. This is reflective of increases in workforce costs and general operating costs as a result of the Parker acquisition, along with inflationary pressures as market conditions have changed.

Previous wording

Depreciation and amortization expense for the three months ended September 30, 2024 was $159.2 million, representing a decrease of $2.1 million compared to the three months ended September 30, 2023. The decrease is a result of lower capital expenditures over recent years coupled with a higher amount of older assets reaching the end of their useful lives.

Current wording

Depreciation and amortization expense for the three months ended March 31, 2025 was $154.6 million, representing a decrease of $3.0 million compared to the three months ended March 31, 2024. The decrease is a result of a higher amount of older assets reaching the end of their useful lives.

Previous wording

Operating revenues for our U.S. Drilling segment decreased by $155.4 million or 16% duringthe nine months ended September 30, 2024 compared to the corresponding prior year period primarily due to a decrease in activity as reflected by a 15% decrease in the average number of rigs working, while pricing remained stable.

Current wording

Operating revenues for our U.S. Drilling segment decreased by $41.2 million or 15% duringthe three months ended March 31, 2025 compared to the corresponding prior year period primarily due to a decrease in activity as reflected by a 13% decrease in the average number of rigs working, while pricing remained stable.

Previous wording

Operating revenues for our International Drilling segment during thethree months ended September 30, 2024 increased by $23.8 million or 7% compared to the corresponding prior year period. The increase is primarily attributable to a 10% increase in the average rigs working, reflecting increased drilling activity as market conditions and demand for our international drilling services have increased since the prior year.

Current wording

Operating revenues for our International Drilling segment during thethree months ended March 31, 2025 increased by $32.4 million or 9% compared to the corresponding prior year period. The increase is attributable to a 5% increase in the average rigs working, reflecting increased drilling activity, along with improved pricing, as market conditions and demand for our international drilling services have increased since the prior year.

Previous wording

Operating revenues for this segment increased by $6.7 million or 9% duringthe three months ended September 30, 2024 compared to the corresponding prior year period as an increase in demand for our international and third-party services offset a decline in results in the U.S. markets, which was driven by the reduction in drilling activity.

Current wording

Operating revenues for this segment increased by $17.6 million or 23% duringthe three months ended March 31, 2025 compared to the corresponding prior year period. $21.7 million of the increase in revenue is related to acquired Parker operations offset by a decline in results in the U.S. markets, which was driven by the reduction in drilling activity.

Previous wording

Operating revenues for our Rig Technologies segment decreased by $15.6 million or 25% duringthe three months ended September 30, 2024 compared to the corresponding prior year period due to the overall decline in activity in the U.S. as mentioned previously. Adjusted operating income was relatively flat despite the 25% drop in operating revenues, due to a change in mix of business focusing more on the higher margin product lines.

Current wording

Operating revenues for our Rig Technologies segment decreased by $6.0 million or 12% duringthe three months ended March 31, 2025 compared to the corresponding prior year period due to the overall decline in activity in the U.S. as mentioned previously. Adjusted operating income was relatively flat despite the 12% drop in operating revenues, due to a change in mix of business focusing more on the higher margin product lines.

Previous wording

Interest expense for the three months ended September 30, 2024 was $55.4 million, representing an increase of $11.3 million, or 26%, compared to three months ended September 30, 2023. The increase was primarily due to an increase in our effective interest rate levels on our outstanding debt throughout the three months ended September 30, 2024 as compared to the three months ended September 30, 2023.

Current wording

Interest expense for the three months ended March 31, 2025 was $54.3 million, representing an increase of $3.9 million, or 8%, compared to three months ended March 31, 2024. The increase was primarily due to an increase in our effective interest rate levels on our outstanding debt throughout the three months ended March 31, 2025 as compared to the three months ended March 31, 2024.

Previous wording

Other, net for the three months ended September 30, 2024 was a loss of $41.6 million compared to $35.5 million loss for the three months ended September 30, 2023 representing a $6.1 million decrease in income. During the three months ended September 30, 2024, the amount consisted of $3.4 million in foreign currency transaction losses, $6.0 million in loss on sales of assets, $15.4 million in other than temporary impairment on securities and $12.3 million of loss recognized for debt buybacks which was offset by $2.9 million of mark-to-market gains on the common share warrants. In comparison, the amount during the three months ended September 30, 2023 primarily consisted of $13.7 million from increases in litigation reserves, $7.6 million from mark-to-market losses on the common share warrants, $7.1 million in losses on sales and disposals of long-lived assets and $4.9 million in foreign currency transaction losses.

Current wording

Other, net for the three months ended March 31, 2025 was a loss of $44.8 million compared to $16.1 million loss for the three months ended March 31, 2024 representing a $19.7 million increase in loss. During the three months ended March 31, 2025, the amount primarily consisted of $26.5 million in asset impairments related to assets held in Russia, $17.2 million of transaction related costs and $5.0 million related to severance and reorganization costs which was offset by $4.2 million of mark-to-market gains on the common share warrants and $4.1 million in gain on sales of assets. In comparison, the amount during the three months ended March 31, 2024 primarily consisted of $11.4 million in foreign currency transaction losses, $4.6 million in losses on sales of assets, $2.6 million from increases in litigation reserves and $2.6 million of loss recognized for debt buybacks which was offset by $5.7 million of mark-to-market gains on the common share warrants.

Previous wording

Our worldwide tax expense for the three months ended September 30, 2024 was $10.1 million compared to $10.5 million for the three months ended September 30, 2023. The decrease in tax expense was primarily attributable to the change in amount and geographic mix of our pre-tax earnings (losses).

Current wording

Our worldwide tax expense for the three months ended March 31, 2025 was $15.0 million compared to $16.0 million for the three months ended March 31, 2024. The decrease in tax expense was primarily attributable to the change in amount and geographic mix of our pre-tax earnings (losses).

Previous wording

Our primary sources of liquidity are cash and investments, availability under the 2024 Credit Agreement and cash generated from operations. As of September 30, 2024, we had cash and short-term investments of $459.3 million and working capital of $500.7 million. As of December 31, 2023, we had cash and short-term investments of $1.1 billion, which included proceeds from our offering of $650.0 million in aggregate principal of 9.125% senior priority guaranteed notes due 2030 that were used primarily to retire certain outstanding indebtedness during the first quarter of 2024 and working capital of $431.7 million.

Current wording

Our primary sources of liquidity are cash and investments, availability under the 2024 Credit Agreement and cash generated from operations. As of March 31, 2025, we had cash and short-term investments of $404.1 million and working capital of $531.2 million. As of December 31, 2024, we had cash and short-term investments of $397.3 million and working capital of $427.6 million.

Previous wording

On September 30, 2024, we had no borrowings and $51.7 million of letters of credit outstanding under the 2024 Credit Agreement, which has a total borrowing capacity of $350.0 million and a separate letter of credit tranche that permits us to issue letters of credit with total reimbursement obligations not to exceed $125 million. Letters of credit issued do not affect revolving loan capacity and vice versa.

Current wording

On March 31, 2025, we had borrowings of $178.0 million and $68.2 million of letters of credit outstanding under the 2024 Credit Agreement, which has a total borrowing capacity of $350.0 million and a separate letter of credit tranche

Previous wording

As of the date of this report, we were in compliance with all covenants under the 2024 Credit Agreement, including those regarding the required interest coverage ratio and minimum guarantor value, which were 4.65:1.00 and 99.77%, respectively, as of September 30, 2024. If we fail to perform our obligations under the covenants, the revolving credit commitments under the 2024 Credit Agreement could be terminated, and any outstanding borrowings under the facilities could be declared immediately due and payable. If necessary, we have the ability to manage our covenant compliance by taking certain actions including reductions in discretionary capital or other types of controllable expenditures, monetization of assets, amending or renegotiating the revolving credit agreement, accessing capital markets through a variety of alternative methods, or any combination of these alternatives. We expect to remain in compliance with all covenants under the 2024 Credit Agreement during the twelve-month period following the date of this report based on our current operational and financial projections, including after giving effect to the Merger. 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.

Current wording

As of the date of this report, we were in compliance with all covenants under the 2024 Credit Agreement, including those regarding the required interest coverage ratio and minimum guarantor value, which were 4.20:1.00 and 99.8%, respectively, as of March 31, 2025. If we fail to perform our obligations under the covenants, the revolving credit commitments under the 2024 Credit Agreement could be terminated, and any outstanding borrowings under the facilities could be declared immediately due and payable. If necessary, we have the ability to manage our covenant compliance by taking certain actions including reductions in discretionary capital or other types of controllable expenditures, monetization of assets, amending or renegotiating the revolving credit agreement, accessing capital markets through a variety of alternative methods, or any combination of these alternatives. We expect to remain in compliance with all covenants under the 2024 Credit Agreement during the twelve-month period following the date of this report based on our current operational and financial projections, including after giving effect to the Parker acquisition. However, we can make no assurance of continued compliance if our current projections or material underlying assumptions prove to be incorrect. If we fail to comply with the covenants, the revolving credit commitment could be terminated, and any outstanding borrowings under the facility could be declared immediately due and payable.

Previous wording

We had 9 letter-of-credit facilities with various banks as of September 30, 2024. Availability under these facilities as of September 30, 2024 was as follows:

Current wording

We had seven letter-of-credit facilities with various banks as of March 31, 2025. Availability under these facilities as of March 31, 2025 was as follows:

Previous wording

will on an ongoing basis continue to sell or contribute, certain of their domestic trade accounts receivables to a wholly-owned, bankruptcy-remote special purpose entity (“SPE”). The SPE in turn, sells, transfers, conveys and assigns to third-party financial institutions (“Purchasers”), all the rights, title and interest in and to its pool of eligible receivables.

Current wording

On September 13, 2019, we entered into an accounts receivables sales agreement (the “A/R Sales Agreement”) and an accounts receivables purchase agreement (the “A/R Purchase Agreement” and, together with the A/R Sales Agreement, the “A/R Agreements”), whereby the originators, all of whom are our subsidiaries, sold or contributed, and will on an ongoing basis continue to sell or contribute, certain of their domestic trade accounts receivables to a wholly-owned, bankruptcy-remote special purpose entity (“SPE”). The SPE in turn, sells, transfers, conveys and assigns to third-party financial institutions (“Purchasers”), all the rights, title and interest in and to its pool of eligible receivables.

Previous wording

The amount available for purchase under the A/R Agreements fluctuates over time based on the total amount of eligible receivables generated during the normal course of business after excluding excess concentrations and certain other ineligible receivables. The maximum purchase commitment of the Purchasers under the A/R Agreements is $250.0 million and the amount of receivables purchased by the third-party Purchasers as of September 30, 2024 was $146.0 million.

Current wording

The amount available for purchase under the A/R Agreements fluctuates over time based on the total amount of eligible receivables generated during the normal course of business after excluding excess concentrations and certain other ineligible receivables. The maximum purchase commitment of the Purchasers under the A/R Agreements is $250.0 million and the amount of receivables purchased by the third-party Purchasers as of March 31, 2025 was $121.0 million.

Previous wording

Purchase commitments outstanding at September 30, 2024 totaled approximately $269.3 million, primarily for capital expenditures, other operating expenses and purchases of inventory. We can reduce planned expenditures if necessary or increase them if market conditions and new business opportunities warrant it. The level of our outstanding purchase commitments and our expected level of capital expenditures over the next 12 months represent a number of capital programs that are currently underway or planned.

Current wording

Purchase commitments outstanding at March 31, 2025 totaled approximately $328.3 million, primarily for capital expenditures, other operating expenses and purchases of inventory. We can reduce planned expenditures if necessary or increase them if market conditions and new business opportunities warrant it. The level of our outstanding purchase commitments and our expected level of capital expenditures over the next 12 months represent a number of capital programs that are currently underway or planned.

Previous wording

We may from time to time seek to retire or purchase our outstanding debt through cash purchases and/or exchanges for equity securities, both in open-market purchases, privately negotiated transactions or otherwise. Such repurchases or exchanges, if any, will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors and may involve material amounts.

Current wording

We may from time to time seek to retire or purchase our outstanding debt through cash purchases or exchanges for equity securities, both in open-market purchases, privately negotiated transactions or otherwise. Such repurchases or exchanges, if any, will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors and may involve material amounts.

Previous wording

Our cash flows depend, to a large degree, on the level of spending by oil and gas companies for exploration, development and production activities. Sustained decreases in the price of oil or natural gas could have a material impact on these activities and could also materially affect our cash flows. Certain sources and uses of cash, such as the level of discretionary capital expenditures or acquisitions, purchases and sales of investments, dividends, loans, issuances and

Current wording

Our cash flows depend, to a large degree, on the level of spending by oil and gas companies for exploration, development and production activities. Sustained decreases in the price of oil or natural gas could have a material impact on these activities and could also materially affect our cash flows. Certain sources and uses of cash, such as the level of discretionary capital expenditures or acquisitions, purchases and sales of investments, dividends, loans, issuances and repurchases of debt and of our common shares are within our control and are adjusted as necessary based on market conditions. We discuss our cash flows for the three months ended March 31, 2025 and 2024 below.

Previous wording

Operating Activities**.**Net cash provided by operating activities totaled $432.5 million during the nine months ended September 30, 2024, compared to net cash provided of $455.9 million during the corresponding 2023 period. Operating cash flows are our primary source of capital and liquidity. Cash from operating results (before working capital changes) was $512.9 million for the nine months ended September 30, 2024, a decrease of $17.3 million when compared to $530.1 million in the corresponding 2023 period. This was due to the decrease in activity across our business for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023. Changes in working capital items such as collection of receivables, other deferred revenue arrangements and payments of operating payables are also significant factors affecting operating cash flows and can be highly volatile in periods of increasing or decreasing activity levels. Changes in working capital items used $80.4 million in cash flows during the nine months ended September 30, 2024, a $6.2 million unfavorable change as compared to the $74.2 million in cash flows used by working capital in the corresponding 2023 period.

Current wording

Operating Activities**.**Net cash provided by operating activities totaled $87.7 million during the three months ended March 31, 2025, compared to net cash provided of $107.2 million during the corresponding 2024 period. Operating cash flows are our primary source of capital and liquidity. Cash from operating results (before working capital changes) was $129.7 million for the three months ended March 31, 2025, a decrease of $45.2 million when compared to $174.9 million in the corresponding 2024 period. This was due to the decrease in activity across our business for the three months ended March 31, 2025 compared to the three months ended March 31, 2024. Changes in working capital items such as collection of receivables, other deferred revenue arrangements and payments of operating payables are also significant factors affecting operating cash flows and can be highly volatile in periods of increasing or decreasing activity levels. Changes in working capital items used $42.0 million in cash flows during the three months ended March 31, 2025, a $25.7 million favorable change as compared to the $67.7 million in cash flows used by working capital in the corresponding 2024 period.

Previous wording

Investing Activities**.**Net cash used for investing activities totaled $353.2 million during the nine months ended September 30, 2024 compared to net cash used of $429.0 million during the corresponding 2023 period. Our primary use of cash for investing activities is capital expenditures for rig-related enhancements, new construction and equipment, and sustaining capital expenditures. During the nine months ended September 30, 2024 and 2023, we used cash for capital expenditures totaling $359.9 million and $406.7 million, respectively.

Current wording

Investing Activities**.**Net cash used for investing activities totaled $74.9 million during the three months ended March 31, 2025 compared to net cash used of $106.6 million during the corresponding 2024 period. Our primary use of cash for investing activities is capital expenditures for rig-related enhancements, new construction and equipment, and sustaining capital expenditures. During the three months ended March 31, 2025 and 2024, we used cash for capital expenditures totaling $165.0 million and $104.6 million, respectively. During the three months ended March 31, 2025, we received $84.4 million in cash acquired in the Parker acquisition, net of cash paid.

Previous wording

Financing Activities**.**Net cash used by financing activities totaled $662.0 million during the nine months ended September 30, 2024. During the nine months ended September 30, 2024, we repaid $1.2 billion of outstanding long-term debt and received proceeds of $550.0 million from the issuance of the 8.875% Senior Guaranteed Notes due August 2031.

Current wording

Financing Activities**.**Net cash used by financing activities totaled $2.0 million during the three months ended March 31, 2025. During the three months ended March 31, 2025, we paid off the Parker term loan of $177.8 million and received proceeds from the Credit Agreement of $178.0 million.