NBR US Equity☆

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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The following discussion and analysis of our financial condition and results of operations is based on, and should be read in conjunction with, our consolidated financial statements and the related notes thereto included under Part II, Item 8.—Financial Statements and Supplementary Data. This discussion and analysis contains forward-looking statements that involve risks and uncertainties. Actual results may differ materially from those anticipated in these forward-looking statements as a result of certain factors, including those set forth under Part I, Item 1A.—Risk Factors and elsewhere in this annual report. See “Forward-Looking Statements.”

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Management Overview

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We are a leading provider of advanced technology for the energy industry. With operations in over 15 countries, Nabors has established a global network of people, technology and equipment to deploy solutions that deliver safe, efficient and sustainable energy production. By leveraging its core competencies, particularly in drilling, engineering, automation, data science and manufacturing, Nabors aims to innovate the future of energy and enable the transition to a lower carbon world.

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Outlook

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The demand for our services and products is a function of spending by oil and gas companies for exploration, development and production activities. The level of exploration, development and production activities is to a large extent tied to the prices of oil and natural gas, which can fluctuate significantly, are highly volatile and tend to be highly sensitive to factors including supply and demand cycles and geopolitical uncertainties, particularly those impacting large hydrocarbon-producing countries. Certain oil and gas companies may also intentionally limit their capital spending as they focus on generating returns to shareholders as opposed to maximizing hydrocarbon production. Additionally, there has recently been an increasing number of customer consolidations within the industry especially in the United States. In some cases, these transactions may have an impact on overall rig demand, as the acquiring company may apply criteria that results in a different level of demand for drilling rigs than the previous two companies would have had on a stand-alone basis.

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Since late 2022 and continuing through the fourth 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 into the fourth quarter of 2024 and which have caused operators to reduce natural gas directed activity.

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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.

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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.

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Recent Developments

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2024 Credit Agreement

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On June 17, 2024, Nabors Delaware amended and restated its’ credit agreement (the “2024 Credit Agreement”). Under the 2024 Credit Agreement, the lenders have committed to provide to Nabors Delaware up to $350.0 million in revolving loans, 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 not in excess of $125.0 million. Letters of credit issued will 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. 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 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 90th day.

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8.875% Senior Guaranteed Notes due August 2031

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On July 22, 2024, Nabors issued $550.0 million in aggregate principal amount of 8.875% senior guaranteed notes, which are fully and unconditionally guaranteed by Nabors and certain of Nabors’ indirect wholly-owned subsidiaries. Interest on the notes is payable on February 15 and August 15 of each year. The notes have a maturity date of August 15, 2031. Nabors used the net proceeds, along with cash on hand, to redeem all of its 7.25% senior guaranteed notes due January 2026.

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Acquisition of Parker Drilling Company

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On October 14, 2024, we and certain subsidiaries of ours entered into a merger agreement (the “Merger Agreement”) to acquire Parker Drilling Company (“Parker”), pursuant to which, upon the terms and subject to the conditions set forth therein, we will acquire Parker for 4.8 million of our common shares, subject to a collar. The precise number of shares to be issued to Parker stockholders will be 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 is below $42.70, Parker stockholders will also receive a cash component for their shares of Parker stock. If the volume weighted average price is above $99.62, the merger consideration will consist of the number of shares equal to $478,176,000 divided by the Closing Price.

Parker provides drilling services across global energy markets. Through its Quail Tools subsidiary, Parker is the leading rental provider of high-performance downhole tubulars in the U.S. market. Internationally, Parker provides tubular rentals and repair services, with state-of-the-art facilities located in key geographies. Parker offers differentiated, casing and tubular running services in the U.S., the Middle East, Latin America, and Asia. Its portfolio also includes a fleet of 17 drilling rigs in the U.S. and international markets, as well as Operations & Maintenance services primarily in Canada and Alaska.

The transaction is expected to close in the first quarter of 2025, subject to customary closing conditions and receipt of required regulatory approvals.

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Financial Results

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Comparison of the years ended December 31, 2024 and 2023

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Operating revenues in 2024 totaled $2.9 billion, representing a decrease of $75.9 million, or 3%, from 2023. For a more detailed description of operating results see Segment Results of Operations, below.

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Net loss from continuing operations attributable to Nabors common shareholders totaled $176.1 million for 2024 ($22.37 loss per diluted share) compared to a net loss from continuing operations attributable to Nabors common shareholders of $11.8 million ($5.49 loss per diluted share) in 2023, or a $164.3 million increase in the net loss. Adjusted operating income (loss) across our operating segments, declined by $16.9 million, or 2%. A decline in U.S. activity was largely offset by increased activity in international markets, benefiting both our International Drilling and Drilling Solutions segments. Approximately $78.0 million of the increase in net loss is attributable to lower mark-to-market gains related to the common share warrants, which decreased from $54.7 million in 2023 to $16.9 million in 2024, and the impact from gains or losses from debt repurchases, which resulted in a gain of $25.3 million in 2023 and losses of $14.9 million in 2024. In addition, interest expense increased by approximately $25.6 million due to increasing interest rates. See Segment Results of Operations and Other Financial Information below for additional discussion.

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General and administrative expenses in 2024 totaled $249.3 million, representing an increase of $5.2 million, or 2% from 2023. This is reflective of increases in workforce costs, general operating costs and inflationary pressures as market conditions have changed.

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Depreciation and amortization expense in 2024 was $633.4 million, representing a decrease of $11.9 million, or 2%, from 2023. The decrease is a result of a higher amount of older assets reaching the end of their useful lives.

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Segment Results of Operations

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During the years ended December 31, 2024 and 2023, our business consisted of four reportable segments: U.S. Drilling, International Drilling, Drilling Solutions and Rig Technologies.

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Management evaluates the performance of our reportable segments using adjusted operating income (loss), which is our segment performance measure, because we believe that this financial measure reflects our ongoing profitability and performance. In addition, securities analysts and investors use this measure as one of the metrics on which they analyze our performance. Adjusted operating income (loss) represents income (loss) before income taxes, interest expense, earnings (losses) from unconsolidated affiliates, investment income (loss), and other, net. A reconciliation of adjusted operating income to net income (loss) from continuing operations before income taxes can be found in Note 17—Segment Information in Part II, Item 8.—Financial Statements and Supplementary Data.

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The following tables set forth certain information with respect to our reportable segments and rig activity:

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​ Year Ended December 31, ​ Increase/(Decrease)

​ ​ (In thousands, except percentages and rig activity) ​

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U.S. Drilling ​ ​ ​

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International Drilling ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

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Drilling Solutions ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

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Rig Technologies ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

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U.S. Drilling

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Operating revenues decreased by $179.5 million or 15% in 2024 compared to 2023 primarily due to a decrease in activity as reflected by an 13% decrease in the average number of rigs working, while pricing remained stable.

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International Drilling

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Operating revenues increased by $100.8 million or 7% in 2024 compared to 2023. The increase is primarily attributable to an 8% 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.

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Drilling Solutions

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Operating revenues increased by $12.3 million or 4% in 2024 compared to 2023 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.

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Rig Technologies

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Operating revenues decreased by $41.1 million or 17% in 2024 compared to 2023 due to the overall decline in activity in the U.S. as mentioned previously. Adjusted operating income was relatively flat despite the 17% drop in operating revenues, due to a change in mix of business focusing more on the higher margin product lines.

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Other Financial Information

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Interest expense

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Interest expense for 2024 was $210.9 million, representing an increase of $25.6 million, or 14%, compared to 2023. The increase was primarily due to an increase in our effective interest rate levels on our outstanding debt throughout 2024 as compared to 2023.

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Other, net

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Other, net for the year ended December 31, 2024 was a loss of $106.8 million, compared to a gain of $0.7 million during 2023. During 2024, this loss was from $28.1 million in foreign currency losses, $14.9 million for losses on debt buybacks, $26.4 million from loss on sale of assets and $26.1 million from other than temporary impairment of securities. This loss was offset by $16.9 million of gain from mark-to-market gains related to the common share warrants. In comparison, during 2023, $54.7 million of the gain was from mark-to-market gains related to the common share warrants and $25.3 million was from gains on debt repurchases. The 2023 gain was offset by $37.3 million in foreign currency losses, $26.5 million for litigation reserves and $13.9 million from loss on sale of assets. (See Note 11 — Shareholders’ Equity in Part II, Item 8.—Financial Statements and Supplementary Data for discussion of the common stock warrants).

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Income taxes

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Our worldwide income tax expense for 2024 was $56.9 million compared to $79.2 million for 2023. The decrease in tax expense was primarily attributable to tax expense of $11.8 million in 2023 related to an audit settlement, as well as changes in the amount and the geographic mix of our pre-tax earnings (losses) in the jurisdictions in which we operate.

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Liquidity and Capital Resources

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Financial Condition and Sources of Liquidity

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

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At December 31, 2024, we had no borrowings outstanding and $51.6 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 $125.0 million. Letters of credit issued will not affect revolving loan capacity and vice versa.

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The 2024 Credit Agreement requires us 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. Additionally, the Company is subject to certain 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, among other exceptions), (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 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 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 90th day.

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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 4.40:1.00 and 99.79%, respectively, as of December 31, 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. However, we can make no assurance of continued compliance if our

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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.

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Our ability to access capital markets or to otherwise obtain sufficient financing may be affected by our senior unsecured debt ratings as provided by the major credit rating agencies in the United States and our historical ability to access these markets as needed. While there can be no assurances that we will be able to access these markets in the future, we believe that we will be able to access capital markets or otherwise obtain financing in order to satisfy any payment obligation that might arise upon maturity, exchange or purchase of our notes and our debt facilities, loss of availability of our revolving credit facilities and our A/R Agreements (see—Accounts Receivable Purchase and Sales Agreements, below), and that any cash payment due, in addition to our other cash obligations, would not ultimately have a material adverse impact on our liquidity or financial position. The major U.S. credit rating agencies have previously downgraded our senior unsecured debt rating to non-investment grade. These and any further ratings downgrades could adversely impact our ability to access debt markets in the future, increase the cost of future debt, and potentially require us to post letters of credit for certain obligations. See Part I, Item 1A.—Risk Factors—A downgrade in our credit rating could negatively impact our cost of and ability to access capital markets or other financing sources.

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We had seven letter-of-credit facilities with various banks outstanding as of December 31, 2024. Availability under these facilities was as follows:

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​ December 31,

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Remaining availability ​ $ 174,144

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We are a holding company and therefore rely exclusively on repayments of interest and principal on intercompany loans that we have made to our operating subsidiaries and income from dividends and other cash flows from our operating subsidiaries. There can be no assurance that our operating subsidiaries will generate sufficient net income to pay us dividends or sufficient cash flows to make payments of interest and principal to us. See Part I., Item 1A.—Risk Factors—As a holding company, we depend on our operating subsidiaries and investments to meet our financial obligations.

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Accounts Receivable Purchase and Sales Agreements

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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.

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Over the term of the facility, we entered into a number of amendments. Most recently, on April 1, 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.

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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 December 31, 2024 was $130.0 million.

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The originators, Nabors Delaware, the SPE, and the Company provide representations, warranties, covenants and indemnities under the A/R Agreements and the Indemnification Guarantee. See further details at Note 3—Accounts Receivable Purchase and Sales Agreements.

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Other Indebtedness

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See Note 9—Debt,in Part II, Item 8.—Financial Statements and Supplementary Data, for further details about our financing arrangements, including our debt securities.

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Future Cash Requirements

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Our current cash and investments, projected cash flows from operations, proceeds from equity or debt issuances, the A/R Agreements and the facilities under our 2024 Credit Agreement are expected to adequately finance our purchase commitments, capital expenditures, acquisitions, scheduled debt service requirements, and all other expected cash requirements for at least the next 12 months. However, we can make no assurances that our current operational and financial projections will prove to be correct. A sustained period of highly depressed oil and natural gas prices could have a significant effect on our customers’ capital expenditure spending and therefore our operations, cash flows and liquidity.

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Purchase commitments outstanding on December 31, 2024 totaled approximately $323.8 million, primarily for rig-related enhancements, sustaining capital expenditures, operating expenses, and purchases of inventory. $323.6 million of the outstanding commitments are expected to be paid in 2025. Purchase commitments include agreements to purchase goods or services that are enforceable and legally binding and that specify all significant terms, including fixed or minimum quantities to be purchased; fixed, minimum or variable pricing provisions; and the approximate timing of the transaction. 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 for 2024 represent a number of capital programs that are currently underway or planned.

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As of December 31, 2024, we had approximately $2.5 billion of net book value of long-term debt outstanding with $2.5 billion in aggregate principal. We have expected aggregate future interest payments of $894.5 million related to the outstanding debt with $193.3 million due in the next twelve months. See Note 9—Debt in Part II, Item 8.—Financial Statements and Supplementary Data for additional details. Our obligations for operating leases total $34.6 million with $8.6 million of the obligations coming due in the upcoming year. See Note 19—Leases in Part II, Item 8.—Financial Statements and Supplementary Data for additional details.

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We may from time to time seek to retire or purchase our outstanding debt through cash purchases or exchanges for equity or debt 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.

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We are a party to 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 Agreements (see —Accounts Receivable Purchase and Sales Agreements, above) 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 us 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, if any. 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.

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The following table summarizes the total maximum amount of financial guarantees issued by Nabors:

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​ ​ Maximum Amount

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Cash Flows

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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, 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 2024 and 2023 cash flows below.

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Operating Activities. Net cash provided by operating activities totaled $581.4 million during 2024, compared to net cash provided of $637.9 million during 2023. Operating cash flows are our primary source of capital and liquidity. Cash from operating results (before working capital changes) totaled $682.7 million during 2024, a decrease of $27.8 million when compared to $710.5 million in 2023. This was due to the decrease in activity across our business in 2024 compared to 2023. Changes in working capital items such as collection of receivables, other deferred revenue arrangements and payments of operating payables are significant factors affecting operating cash flows and can be volatile in periods of increasing or decreasing activity levels. Changes in working capital items used $101.2 million in cash flows during 2024 and used $72.6 million in cash flows during 2023.

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Investing Activities. Net cash used for investing activities totaled $555.5 million during 2024 compared to net cash used of $570.4 million in 2023. Our primary use of cash for investing activities is for capital expenditures related to rig-related enhancements, new construction and equipment, and sustaining capital expenditures. During 2024 and 2023, we used cash for capital expenditures totaling $567.9 million and $540.9 million, respectively. We received $15.5 million in proceeds from sales of assets during 2024 compared to $14.1 million in 2023. We also invested $7.7 million in companies that focus on energy transition related technologies in 2024 compared to $21.3 million in 2023.

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Financing Activities. Net cash used for financing activities totaled $662.1 million during 2024. During 2024, we received net proceeds of $539.0 million from issuance of long-term debt and repaid $1.2 billion of outstanding long-term debt.

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Net cash provided by financing activities totaled $592.6 million during 2023. During 2023, we received net proceeds of $881.7 million from issuance of long-term debt and repaid $298.5 million of outstanding long-term debt. We received $305.0 million from the public offering of NETC II and made distributions of $286.4 million from the Trust Account to NETC stockholders. Cash in these trusts can only be used in connection to the business combination or winding down of the SPAC and is not available to us for general operations.

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Other Matters

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Recent Accounting Pronouncements

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See Note 2—Summary of Significant Accounting Policies in Part II, Item 8.—Financial Statements and

Supplementary Data.

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Critical Accounting Estimates

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The preparation of our financial statements in conformity with U.S. GAAP requires management to make certain estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities, the disclosures of contingent assets and liabilities at the balance sheet date and the amounts of revenues and expenses recognized during the reporting period. We analyze our estimates based on our historical experience and various other assumptions that we believe to be reasonable under the circumstances. However, actual results could differ from our estimates. The following is a discussion of our critical accounting estimates. Management considers an accounting estimate to be critical if:

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For a summary of all our significant accounting policies, see Note 2—Summary of Significant Accounting Policies in Part II, Item 8.—Financial Statements and Supplementary Data.

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Depreciation of Property, Plant and Equipment. The drilling and drilling services industries are very capital intensive. Property, plant and equipment represented 63% of our total assets as of December 31, 2024, and depreciation and amortization constituted 21% of our total costs and other deductions in 2024.

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Depreciation for our primary operating assets, drilling rigs, is calculated based on the units-of-production method. For each day a rig is operating, we depreciate it over an approximate 4,927-day period, with the exception of our jackup rigs which are depreciated over an 8,030-day period, in each case after provision for salvage value. For each day a rig asset is not operating, it is depreciated over an assumed depreciable life of 20 years, with the exception of our jackup rigs, where a 30-year depreciable life is typically used, after provision for salvage value.

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Depreciation on our buildings, oilfield hauling and mobile equipment, aircraft equipment, and other machinery and equipment is computed using the straight-line method over the estimated useful life of the asset after provision for salvage value (buildings—10 to 30 years; aircraft equipment—5 to 20 years; oilfield hauling and mobile equipment and other machinery and equipment—3 to 10 years).

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These depreciation periods and the salvage values of our property, plant and equipment were determined through an analysis of the useful lives of our assets and based on our experience with the salvage values of these assets. Periodically, we review our depreciation periods and salvage values for reasonableness given current conditions. Depreciation of property, plant and equipment is therefore based upon estimates of the useful lives and salvage value of those assets. Estimation of these items requires significant management judgment. Accordingly, management believes that accounting estimates related to depreciation expense recorded on property, plant and equipment are critical.

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There have been no factors related to the performance of our portfolio of assets, changes in technology or other factors indicating that these estimates do not continue to be appropriate. Accordingly, for the years ended December 31, 2024, 2023 and 2022, no significant changes have been made to the depreciation rates applied to property, plant and equipment, the underlying assumptions related to estimates of depreciation, or the methodology applied. However, certain events could occur that would materially affect our estimates and assumptions related to depreciation. Unforeseen changes in operations or technology could substantially alter management’s assumptions regarding our ability to realize the return on our investment in operating assets and therefore affect the useful lives and salvage values of our assets.

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Impairment of Long-Lived Assets. As discussed above, the drilling and drilling services industries are very capital intensive. We review our assets for impairment when events or changes in circumstances indicate that their carrying amounts may not be recoverable. If the estimated undiscounted future cash flows are not sufficient to support the asset’s recorded value, an impairment charge is recognized to the extent the carrying amount of the long-lived asset exceeds its estimated fair value determined utilizing either a discounted cash flows or market approach model. Management considers a number of factors such as estimated future cash flows from the assets, appraisals and current market value analysis in determining fair value. The determination of future cash flows requires the estimation of utilization, dayrates, operating margins, sustaining capital and remaining economic life. Such estimates can change based on market conditions, technological advances in the industry or changes in regulations governing the industry. The appraisals require estimation based on location, working status, asset condition and market conditions. Significant and unanticipated changes to the assumptions could result in future impairments. A significantly prolonged period of lower oil and natural gas prices could continue to adversely affect the demand for and prices of our services, which could result in future impairment charges. As the determination of whether impairment charges should be recorded on our long-lived assets is subject to significant management judgment, and an impairment of these assets could result in a material charge on our consolidated statements of income (loss), management believes that accounting estimates related to impairment of long-lived assets are critical.

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Assumptions in the determination of future cash flows are made with the involvement of management personnel at the operational level where the most specific knowledge of market conditions and other operating factors exists. For 2024, 2023 and 2022, no significant changes have been made to the methodology utilized to determine future cash flows.

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For an asset classified as held for sale, we consider the asset impaired when its carrying amount exceeds fair value less its cost to sell. Fair value is determined by calculating the expected sales price less any costs to sell.

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Income Taxes. 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 are currently contesting tax assessments in a number of countries and may contest future assessments. We believe the ultimate resolution of the outstanding assessments, for which we have not made any accrual, will not have a material adverse effect on our consolidated financial statements. We recognize uncertain tax positions that we believe have a greater than 50 percent likelihood of being sustained. We cannot predict or provide assurance as to the ultimate outcome of any existing or future assessments.

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Audit claims of approximately $122.3 million attributable to income tax have been assessed against us. We have contested, or intend to contest, these assessments, including through litigation if necessary, and we believe the ultimate resolution, for which we have not made any accrual, will not have a material adverse effect on our consolidated financial statements. Tax authorities may issue additional assessments or pursue legal actions as a result of tax audits and we cannot predict or provide assurance as to the ultimate outcome of such assessments and legal actions.

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Applicable income and withholding taxes have not been provided on undistributed earnings of our subsidiaries. We do not intend to repatriate such undistributed earnings except for distributions upon which incremental income and withholding taxes would not be material.

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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 ascertained to be 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.

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Litigation and Self-Insurance Reserves. Our operations are subject to many hazards inherent in the drilling and drilling services industries, including blowouts, cratering, explosions, fires, loss of well control, loss of or damage to the wellbore or underground reservoir, damaged or lost drilling equipment and damage or loss from inclement weather or natural disasters. Any of these and other hazards could result in personal injury or death, damage to or destruction of equipment and facilities, suspension of operations, environmental and natural resources damage and damage to the property of others. Our offshore operations are also subject to the hazards of marine operations including capsizing, grounding, collision and other damage from hurricanes and heavy weather or sea conditions and unsound ocean bottom conditions. Our operations are subject to risks of war or acts of terrorism, civil disturbances and other political events.

​

Accidents may occur, we may be unable to obtain desired contractual indemnities, and our insurance may prove inadequate in certain cases. There is no assurance that our insurance or indemnification agreements will adequately protect us against liability from all the consequences of the hazards described above. Moreover, our insurance coverage generally provides that we assume a portion of the risk in the form of a deductible or self-insured retention.

​

Based on the risks discussed above, it is necessary for us to estimate the level of our liability related to insurance and record reserves for these amounts in our consolidated financial statements. Reserves related to self-insurance are based on the facts and circumstances specific to the claims and our past experience with similar claims. The actual outcome of self-insured claims could differ significantly from estimated amounts. We maintain actuarially determined accruals in our consolidated balance sheets to cover self-insurance retentions for workers’ compensation, employers’ liability, general liability and automobile liability claims. These accruals are based on certain assumptions developed utilizing historical data to project future losses. Loss estimates in the calculation of these accruals are adjusted based upon actual claim settlements and reported claims. These loss estimates and accruals recorded in our financial statements for claims have historically been reasonable in light of the actual amount of claims paid.

​

Because the determination of our liability for self-insured claims is subject to significant management judgment and in certain instances is based on actuarially estimated and calculated amounts, and because such liabilities could be material in nature, management believes that accounting estimates related to self-insurance reserves are critical.

​

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During 2024, 2023 and 2022, no significant changes were made to the methodology used to estimate insurance reserves. For purposes of earnings sensitivity analysis, if the December 31, 2024 reserves were adjusted by 10%, total costs and other deductions would change by $7.8 million, or 0.26%.

​

Fair Value of Assets Acquired and Liabilities Assumed. In conjunction with accounting for acquisitions, it is necessary for us to estimate the values of assets acquired and liabilities assumed in business combinations using various assumptions. These estimates may be affected by such factors as changing market conditions, technological advances in the industry or changes in regulations governing the industry. The most significant assumptions, and the ones requiring the most judgement, involve estimated fair value of property, plant and equipment, and the resulting amount of goodwill, if any. The determination of the fair value of assets and liabilities is based on the market for the assets and the settlement value of the liabilities. Unforeseen changes in operations or technology could substantially alter management’s assumptions and could result in lower estimates of values of acquired assets or future cash flows. This could result in impairment charges being recorded in our consolidated statements of income (loss). As the determination of the fair value of assets acquired and liabilities assumed is subject to significant management judgement and a change in purchase price allocations could result in a material difference in amounts recorded in our consolidated financial statements, management believes that accounting estimates related to the valuation of assets acquired and liabilities assumed are critical. Given the nature of the evaluation of the fair value of assets acquired and liabilities assumed and the application to specific assets and liabilities, it is not possible to reasonably quantify the impact of changes in these assumptions.

​

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES

​

We may be exposed to certain market risks arising from the use of financial instruments in the ordinary course of business. This risk arises primarily as a result of potential changes in the fair market value of financial instruments due to adverse fluctuations in foreign currency exchange rates, credit risk, interest rates, and marketable and non-marketable security prices as discussed below.

​

Foreign Currency Risk. We operate in a number of international areas and are involved in transactions denominated in currencies other than U.S. dollars, which exposes us to foreign exchange rate risk and foreign currency devaluation risk. The most significant exposures arise in connection with our operations in Argentina and Russia, which usually are substantially unhedged.

​

We have experienced certain risks specific to our operations in Argentina. Argentina’s economy is currently considered highly inflationary under U.S. GAAP, which is defined as cumulative inflation rates exceeding 100% in the most recent three-year period based on inflation data published by the respective governments.

​

At various times, we utilize local currency borrowings (foreign currency denominated debt), the payment structure of customer contracts and foreign exchange contracts to selectively hedge our exposure to exchange rate fluctuations in connection with monetary assets, liabilities, cash flows and commitments denominated in certain foreign currencies. A foreign exchange contract is a foreign currency transaction, defined as an agreement to exchange different currencies at a given future date and at a specified rate. A hypothetical 10% increase in the value of our foreign currencies relative to the U.S. dollar as of December 31, 2024 would result in a $5.1 million increase in the fair value of our net monetary liabilities denominated in currencies other than U.S. dollars.

​

Credit Risk. Our financial instruments that potentially subject us to concentrations of credit risk consist primarily of cash equivalents, short-term and long-term investments and accounts receivable. Cash equivalents such as deposits and temporary cash investments are held by major banks or investment firms. Our short-term and long-term investments are managed within established guidelines that limit the amounts that may be invested with any one issuer and provide guidance as to issuer credit quality. We believe that the credit risk in our cash and investment portfolio is minimized as a result of the mix of our investments. In addition, our trade receivables are with a variety of U.S., international and non-U.S. national oil and gas companies. Management considers this credit risk to be limited due to the financial resources of these companies. We perform ongoing credit evaluations of our customers, and we generally do not require material collateral. We do occasionally require prepayment of amounts from customers whose creditworthiness is in question prior to providing services to them. We maintain reserves for potential credit losses, and these losses historically have been within management’s expectations.

​

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Interest Rate and Marketable and Non-marketable Security Price Risk. Our financial instruments that are potentially sensitive to changes in interest rates include our floating rate debt instruments (our 2024 Credit Agreement), our fixed rate debt securities comprised of our 1.75% senior exchangeable notes; 7.50% and 8.875% senior guaranteed notes; 7.375% and 9.125% senior priority guaranteed notes; our investments in debt securities (including corporate and mortgage-CMO debt securities); and our investments in overseas funds that invest primarily in a variety of public and private U.S. and non-U.S. securities (including asset-backed and mortgage-backed securities, global structured-asset securitizations, whole-loan mortgages and participations in whole loans and whole-loan mortgages), which are classified as long-term investments.

​

We may utilize derivative financial instruments that are intended to manage our exposure to interest rate risks. We account for derivative financial instruments under the Derivatives Topic of the ASC. The use of derivative financial instruments could expose us to further credit risk and market risk. Credit risk in this context is the failure of a counterparty to perform under the terms of the derivative contract. When the fair value of a derivative contract is positive, the counterparty would owe us, which can create credit risk for us. When the fair value of a derivative contract is negative, we would owe the counterparty, and therefore, we would not be exposed to credit risk. We attempt to minimize credit risk in derivative instruments by entering into transactions with major financial institutions that have a significant asset base. Market risk related to derivatives is the adverse effect on the value of a financial instrument that results from changes in interest rates. We try to manage market risk associated with interest-rate contracts by establishing and monitoring parameters that limit the type and degree of market risk that we undertake.

​

Fair Value of Financial Instruments. The fair value of our fixed rate long-term debt and revolving credit facilities is estimated based on quoted market prices or prices quoted from third-party financial institutions. The carrying and fair values of these liabilities were as follows:

​

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

​ ​ As of December 31,

​ ​ Effective ​ ​ ​ ​ ​ ​ ​ Effective ​ ​ ​ ​ ​ ​

​ ​ Interest ​ Carrying ​ Fair ​ Interest ​ Carrying ​ Fair

​ ​ Rate ​ Value ​ Value ​ Rate ​ Value ​ Value

​ (In thousands)

Less: current portion ​ ​ ​ ​ — ​ ​ ​ ​ ​ ​ ​ 629,621 ​ ​ ​

Less: deferred financing costs ​ ​ ​ ​ 34,392 ​ ​ ​ ​ ​ ​ ​ 33,992 ​ ​ ​

​

The fair values of our cash equivalents, trade receivables and trade payables approximate their carrying values due to the short-term nature of these instruments. Our warrants are carried at fair market value.

​

Our investments in debt securities and a portion of our long-term investments are sensitive to changes in interest rates. Additionally, our investment portfolio of debt and equity securities, which are carried at fair value, exposes us to price risk.

​

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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

​

INDEX

​

Report of Independent Registered Public Accounting Firm (PCAOB ID 238) 52

Consolidated Balance Sheets as of December 31, 2024 and 2023 54

Notes to Consolidated Financial Statements 59

​

​

​

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Report of Independent Registered Public Accounting Firm

​

To the Board of Directors and Shareholders of Nabors Industries Ltd.

​

Opinions on the Financial Statements and Internal Control over Financial Reporting

​

We have audited the accompanying consolidated balance sheets of Nabors Industries Ltd. and its subsidiaries (the “Company”) as of December 31, 2024 and 2023, and the related consolidated statements of income (loss), of comprehensive income (loss), of changes in equity and of cash flows for each of the three years in the period ended December 31, 2024, including the related notes and financial statement schedule listed in the index appearing under Item 15(a)(2) (collectively referred to as the consolidated financial statements”). We also have audited the Company's internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

​

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2024 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.

​

Basis for Opinions

​

The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in Management's Report on Internal Control over Financial Reporting appearing under Item 9A. Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company's internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

​

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.

​

Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

​

Definition and Limitations of Internal Control over Financial Reporting

​

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting

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principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

​

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

​

Critical Audit Matters

​

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to theconsolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidatedfinancial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

​

Revenue Recognition – Contract Drilling Revenue

​

As described in Note 18 to the consolidated financial statements, the Company’s operating revenue was $2,930 million for the year ended December 31, 2024. Management recognizes revenue when control of a good or service promised in a contract (i.e., performance obligation) is transferred to a customer. Control is obtained when a customer has the ability to direct the use of and obtain substantially all the remaining benefits from that good or service. Contract drilling revenues are recorded over time utilizing the input method based on time elapsed. The measurement of progress considers the transfer of the service to the customer as the Company provides daily drilling services. The Company receives payment after the services have been performed by billing customers periodically (typically monthly). Within the drilling contracts, management has identified one performance obligation in which the transaction price is allocated. The timing of revenue recognition may differ from the timing of invoicing to customers and these timing differences result in receivables, contract assets, or contract liabilities (deferred revenue) on the Company’s consolidated balance sheet.

​

The principal consideration for our determination that performing procedures relating to revenue recognition – contract drilling revenue is a critical audit matter is a high degree of auditor effort in performing procedures related to the Company’s revenue recognition for contract drilling revenue.

​

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to the revenue recognition process, including controls over the recording of contract drilling revenue. These procedures also included, among others (i) testing the completeness, accuracy, and occurrence of revenue recognized for a sample of revenue transactions by obtaining and inspecting source documents, such as contracts, invoices, and activity summary details; (ii) testing the cut-off of revenue recognized for a sample of receivables by obtaining and inspecting source documents, such as contracts and activity summary details; and (iii) testing a sample of outstanding customer invoice balances as of December 31, 2024 by obtaining and inspecting source documents, such as invoices, activity summary details, and subsequent cash receipts.

​

​

​

/s/ PricewaterhouseCoopers LLP

​

Houston, Texas

February 13, 2025

We have served as the Company’s auditor since 1987.

​

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NABORS INDUSTRIES LTD. AND SUBSIDIARIES

​

CONSOLIDATED BALANCE SHEETS

​

​ ​ ​ ​ ​ ​ ​ ​

​ ​ December 31,

​ ​ (In thousands, except for

​ ​ share amounts)

ASSETS ​ ​ ​ ​ ​ ​ ​

Current assets: ​ ​ ​ ​ ​ ​ ​

LIABILITIES AND EQUITY ​ ​ ​ ​ ​ ​ ​

Current liabilities: ​ ​ ​ ​ ​ ​ ​

Current portion of debt ​ $ — ​ $ 629,621 ​

Current lease liabilities ​ 6,768 ​ 5,423 ​

Commitments and contingencies (Note 14) ​ ​ ​ ​ ​ ​ ​

Redeemable noncontrolling interest in subsidiary ​ ​ 785,091 ​ 739,075 ​

​ ​ ​ ​ ​ ​ ​ ​

Shareholders’ equity: ​ ​ ​ ​ ​ ​ ​

Common shares, par value $0.05 per share: ​ ​ ​ ​ ​ ​ ​

Accumulated other comprehensive income (loss) ​ (10,414) ​ (10,832) ​

_____________________________

​

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

​

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NABORS INDUSTRIES LTD. AND SUBSIDIARIES

​

CONSOLIDATED STATEMENTS OF INCOME (LOSS)

​

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

​ ​ Year Ended December 31,

​ ​ (In thousands, except per share amounts) ​

Revenues and other income: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Costs and other deductions: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Income tax expense (benefit): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Earnings (losses) per share: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Weighted-average number of common shares outstanding: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

​

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

​

​

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NABORS INDUSTRIES LTD. AND SUBSIDIARIES

​

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

​

​ ​ ​ ​ ​ ​ ​ ​ ​ ​

​ Year Ended December 31,

​ (In thousands) ​

Other comprehensive income (loss), before tax: ​ ​ ​ ​ ​ ​ ​ ​ ​

Translation adjustment attributable to Nabors ​ 256 ​ ​ 45 ​ ​ (1,993) ​

Pension liability amortization and adjustment 210 ​ 209 ​ 1,645 ​

Other comprehensive income (loss), before tax 466 ​ 254 ​ (348) ​

Other comprehensive income (loss), net of tax 418 ​ 206 ​ (404) ​

​

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

​

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NABORS INDUSTRIES LTD. AND SUBSIDIARIES

​

CONSOLIDATED STATEMENTS OF CASH FLOWS

​

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

​ ​ Year Ended December 31,

​ ​ (In thousands)

Cash flows from operating activities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Adjustments to net income (loss): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Impairments and other charges ​ 26,079 ​ 8,318 ​ — ​

Losses (gains) on sale of long-lived assets, net ​ 27,927 ​ 13,920 ​ 7,352 ​

Foreign currency transaction losses (gains), net ​ 28,150 ​ 37,286 ​ 6,689 ​

Net loss (gain) related to investment in Vast ​ ​ 4,575 ​ (7,167) ​ — ​

Trade accounts payable and accrued liabilities ​ (25,150) ​ (32,389) ​ 61,636 ​

Cash flows from investing activities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Cash flows from financing activities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Proceeds from issuance of long-term debt ​ 550,000 ​ 900,000 ​ — ​

Dividends to common and preferred shareholders ​ (87) ​ (194) ​ (65) ​

Distributions to noncontrolling interest ​ ​ (950) ​ ​ (2,269) ​ ​ (3,489) ​

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

​

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

​

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NABORS INDUSTRIES LTD. AND SUBSIDIARIES

​

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

​

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

​ ​ ​ ​ ​ ​ ​ Capital ​ Accumulated ​ Retained ​ ​ ​ ​ ​ ​ ​ ​ ​

​ ​ Common Shares ​ in Excess ​ Other ​ Earnings ​ ​ ​ ​ Non- ​ ​ ​

​ ​ Par of Par Comprehensive (Accumulated Treasury controlling Total

Share-based compensation ​ — ​ ​ — ​ ​ 15,828 ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ 15,828

Net income (loss) ​ — ​ ​ — ​ ​ — ​ ​ — ​ (11,784) ​ ​ — ​ ​ 61,688 ​ 49,904

Other ​ (32) ​ ​ (3) ​ ​ (2,641) ​ ​ — ​ ​ (95) ​ ​ — ​ ​ — ​ ​ (2,739)

​

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

​

​

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Nabors Industries Ltd. and Subsidiaries

​

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

​

Note 1 Nature of Operations

​

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

​

Our business is comprised of our global land-based and offshore drilling rig operations and other rig related services and technologies. We provide performance tools, directional drilling services, tubular running services and innovative technologies for our own rig fleet and those operated by third parties. In addition, we 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 15 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 December 31, 2024 included:

​

​

​

The short- and long-term implications of the military hostilities between Russia and Ukraine, which began in early 2022, are difficult to predict at this time. We continue to actively monitor this dynamic situation. As of December 31, 2024 and 2023, 0.7% and 0.9% of our property, plant and equipment, net was located in Russia, respectively. For the years ending December 31, 2024 and 2023, 0.9% and 1.1% of our operating revenues was from operations in Russia, respectively. We currently have no assets or operations in Ukraine.

​

On January 10, 2025, the U.S. announced new sanctions targeting Russia’s oil production and exports, including a petroleum services prohibition that is scheduled to take effect on February 27, 2025. We are currently evaluating the effects of the sanctions as they may have a negative impact on our operations within the country. Depending on the eventual outcome and impact of these sanctions, we could face future charges of approximately $30-35 million related to the net assets of these operations.

​

The consolidated financial statements and related footnotes are presented in accordance with U.S. GAAP.

​

Note 2 Summary of Significant Accounting Policies

​

Principles of Consolidation

​

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

​

We consolidate variable interest entities (“VIE’s”) 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 (1) the power to direct activities that most significantly impact the economic performance of the VIE and (2) 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 12—Joint Ventures. Also, as of December 31, 2024, we are the co-sponsor of a special purpose acquisition company (SPAC) and have determined it is a VIE. Nabors is the

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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 20—Special Purpose Acquisition Companies.

​

Cash and Cash Equivalents

​

Cash and cash equivalents include demand deposits, callable time deposits and various other short-term investments with original maturities of three months or less.

​

Short-term Investments

​

Short-term investments consist primarily of available-for-sale debt securities. These debt securities are held at fair market value. Also, equity securities are included and are stated at fair value with any changes in fair value recognized in investment income (loss) in our consolidated statements of income (loss).

​

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 costs methods and includes the cost of materials, labor and manufacturing overhead. Inventory, which is presented net of reserves of $24.3 million and $23.9 million as of December 31, 2024 and 2023, respectively, included the following:

​

​ ​ ​ ​ ​ ​ ​ ​

​ ​ December 31,

​ ​ (In thousands)

Finished goods ​ 2,500 ​ — ​

​

Property, Plant and Equipment

​

Property, plant and equipment, including renewals and betterments, are stated at cost, while maintenance and repairs are expensed currently. Interest costs applicable to the construction of qualifying assets are capitalized as a component of the cost of such assets. We provide for the depreciation of our drilling rigs using the units-of-production method. For each day a rig is operating, we depreciate it over an approximate 4,927-day period, with the exception of our jackup rigs, which are depreciated over an 8,030-day period, after provision for salvage value. For each day a rig asset is not operating, it is depreciated over an assumed depreciable life of 20 years, with the exception of our jackup rigs, where a 30-year depreciable life is used, in each case after provision for salvage value.

​

Depreciation on our buildings, oilfield hauling and mobile equipment, and other machinery and equipment is computed using the straight-line method over the estimated useful life of the asset after provision for salvage value (buildings—10 to 30 years; oilfield hauling and mobile equipment and other machinery and equipment—3 to 10 years). Amortization of capitalized leases is included in depreciation and amortization expense. Upon retirement or other disposal of fixed assets, the cost and related accumulated depreciation are removed from the respective property, plant and equipment accounts and any gains or losses are included in our consolidated statements of income (loss).

​

We review our assets for impairment when events or changes in circumstances indicate that their carrying amounts may not be recoverable. If the estimated undiscounted future cash flows are not sufficient to support the asset’s recorded value, an impairment charge is recognized to the extent the carrying amount of the long-lived asset exceeds its estimated fair value. Management considers a number of factors such as estimated future cash flows from the assets, appraisals and current market value analysis in determining fair value. The determination of future cash flows requires the estimation of utilization, dayrates, operating margins, sustaining capital and remaining economic life. Such estimates can change based on market conditions, technological advances in the industry or changes in regulations governing the industry. Significant and unanticipated changes to the assumptions could result in future impairments. A significantly prolonged period of lower oil and natural gas prices could adversely affect the demand for and prices of our services, which could result in future impairment charges. As the determination of whether impairment charges should be recorded on our long-lived assets is subject to significant management judgment, and an impairment of these assets could result in a

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material charge on our consolidated statements of income (loss), management believes that accounting estimates related to impairment of long-lived assets are critical.

​

For an asset classified as held for sale, we consider the asset impaired when its carrying amount exceeds fair value less its cost to sell. Fair value is determined in the same manner as a long-lived asset that is held and used.

​

Litigation and Insurance Reserves

​

We estimate our reserves related to litigation and insurance based on the facts and circumstances specific to the litigation and insurance claims and our past experience with similar claims. We maintain actuarially determined accruals in our consolidated balance sheets to cover self-insurance retentions. See Note 14—Commitments and Contingencies regarding self-insurance accruals. We estimate the range of our liability related to pending litigation when we believe the amount and range of loss can reasonably 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.

​

Revenue Recognition

​

We recognize revenues and costs on daywork contracts daily as the work progresses over the contract term. For certain contracts, we receive lump sum payments for the mobilization of rigs and other drilling equipment. We defer revenue related to mobilization periods and recognize the revenue over the term of the related drilling contract.

​

Costs incurred related to a mobilization period for which a contract is secured are deferred and recognized over the term of the related drilling contract. Costs incurred to relocate rigs and other drilling equipment to areas in which a contract has not been secured are expensed as incurred. We defer recognition of revenue on amounts received from customers for prepayment of services until those services are provided.

​

We recognize revenue for top drives and other capital equipment we manufacture upon transfer of control, which generally occurs when the product has been shipped to the customer.

​

We recognize, as operating revenue, proceeds from business interruption insurance claims in the period that the claim is realizable. Proceeds from casualty insurance settlements in excess of the carrying value of damaged assets are recognized in other, net in our consolidated statement of income (loss) in the period that the applicable proof of loss documentation is received. Proceeds from casualty insurance settlements that are expected to be less than the carrying value of damaged assets are recognized at the time the loss is incurred and recorded in other, net in our consolidated statement of income (loss).

​

We recognize reimbursements received for out of pocket expenses incurred as revenues and account for out of pocket expenses as direct costs.

​

Research and Engineering

​

Research and engineering expenses are expensed as incurred and include costs associated with the research and development of new products and services and costs associated with sustaining engineering of existing products and services.

​

Income Taxes

​

We are a Bermuda exempted company and are not subject to income taxes in Bermuda. On December 18, 2023, Bermuda enacted a 15% corporate income tax regime (the “Bermuda CIT”) that applies to Bermuda businesses that are part of multinational enterprise groups with annual revenue of €750 million or more and is effective for tax years beginning on or after January 1, 2025. We have provided for income taxes based on the tax laws and rates in effect in the countries where we operate and earn income. The income taxes in these jurisdictions vary substantially. Our worldwide

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effective tax rate for financial statement purposes will continue to fluctuate from year to year due to changes in the geographic mix of pre-tax earnings.

​

We recognize increases to our tax reserves for uncertain tax positions along with interest and penalties as an increase to other long-term liabilities.

​

For U.S. and other jurisdictional income tax purposes, we have net operating loss carryforwards and other tax attributes that we are required to assess quarterly for potential valuation allowances. We consider the sufficiency of existing temporary differences and expected future earnings levels in determining the amount, if any, of valuation allowance required against such carryforwards and against deferred tax assets.

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Use of Estimates

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The preparation of financial statements in conformity with U.S. GAAP requires management to make certain estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities, the disclosures of contingent assets and liabilities at the balance sheet date and the amounts of revenues and expenses recognized during the reporting period. Actual results could differ from such estimates. Areas where critical accounting estimates are made by management include:

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● depreciation of property, plant and equipment;

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● impairment of long-lived assets;

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● income taxes;

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● litigation and self-insurance reserves; and

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● fair value of assets acquired and liabilities assumed.

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Recent Accounting Pronouncements

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Adopted

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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.

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Not Yet Adopted

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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 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.

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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, deletion and amortization recognized as part of oil and gas producing activities. This ASU is effective for fiscal years

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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.

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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.

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Note 3 Accounts Receivable Purchase and Sales Agreements

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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 December 31, 2024 and 2023 is approximately $44.6 million and $67.0 million, respectively.

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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.

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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.

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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 concentrations and certain other ineligible receivables. As of December 31, 2024 and 2023, approximately $130.0 million and $145.0 million had been sold to and as yet uncollected by the Purchasers, respectively.

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Note 4 Merger Agreement

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On October 14, 2024, we and certain subsidiaries of ours entered into a merger agreement (the “Merger Agreement”) to acquire Parker Drilling Company (“Parker”), pursuant to which, upon the terms and subject to the conditions set forth therein, we will acquire Parker for 4.8 million of our common shares, subject to a collar. The precise number of shares to be issued to Parker stockholders will be 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 is below $42.70, Parker stockholders will also receive a cash component for their shares of Parker stock. If the volume weighted average price is above $99.62, the merger consideration will consist of the number of shares equal to $478,176,000 divided by the Closing Price.

Parker provides drilling services across global energy markets. Through its Quail Tools subsidiary, Parker is the leading rental provider of high-performance downhole tubulars in the U.S. market. Internationally, Parker provides tubular rentals and repair services, with state-of-the-art facilities located in key geographies. Parker offers differentiated, casing and tubular running services in the U.S., the Middle East, Latin America, and Asia. Its portfolio also includes a fleet of 17 drilling rigs in the U.S. and international markets, as well as Operations & Maintenance services primarily in Canada and Alaska.

The transaction is expected to close in the first quarter of 2025, subject to customary closing conditions and receipt of required regulatory approvals.

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Note 5 Fair Value Measurements

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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.

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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.

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Under the fair value hierarchy:

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Recurring Fair Value Measurements

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Our financial assets that are accounted for at fair value on a recurring basis as of December 31, 2024 and 2023 consisted of restricted cash held in trust and short-term investments. During 2024, 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 December 31, 2024 and 2023, our restricted cash held in trust was carried at fair market value and totaled $331.8 million and $315.5 million, respectively, and consisted of Level 1 measurements. Our short-term investments were primarily held at fair value and totaled $7.6 million and $12.7 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.

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Our financial liabilities that are accounted for at fair value on a recurring basis as of December 31, 2024 and 2023 consisted of warrants and are included in other long-term liabilities in the accompanying consolidated financial statements. The warrants, as discussed in Note 11- Shareholders’ Equity, were carried at fair market value using their trading price and totaled $9.0 million and $25.9 million as of December 31, 2024 and 2023, respectively.

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Nonrecurring Fair Value Measurements

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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.