UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(Mark one)
| ☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended March 31, 2026
OR
| ☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from __________ to __________
Commission File Number: 001-38091
NATIONAL ENERGY SERVICES REUNITED CORP.
(Exact name of registrant as specified in its charter)
| British Virgin Islands | 82-4881231 | |
(State
or other jurisdiction of | (I.R.S. Employer Identification No.) | |
| 777 Post Oak Blvd., Suite 730, Houston, Texas | 77056 | |
| (Address of principal executive offices) | (Zip Code) |
| +1 (832) 925-3777 |
| Registrant’s telephone number, including area code |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
| Ordinary shares, no par value per share | NESR | The Nasdaq Capital Market |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer ☐ | Accelerated filer ☒ | |
| Non-accelerated filer ☐ | Smaller reporting company ☐ | |
| Emerging growth company ☐ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes ☐ No ☒
As of March 31, 2026, the registrant had ordinary shares outstanding.
NATIONAL ENERGY SERVICES REUNITED CORP.
FORM 10-Q
TABLE OF CONTENTS
| 2 |
PART I – FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
NATIONAL ENERGY SERVICES REUNITED CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(In US$ thousands, except share data)
| Description | March 31, 2026 | December 31, 2025 | ||||||
| Assets | ||||||||
| Current assets | ||||||||
| Cash and cash equivalents | $ | 92,956 | 124,797 | |||||
| Accounts receivable, net (Note 3) | 227,932 | 178,020 | ||||||
| Unbilled revenue | 171,341 | 121,186 | ||||||
| Service inventories (Note 4) | 96,206 | 94,834 | ||||||
| Prepaid assets | 9,706 | 13,237 | ||||||
| Retention withholdings | 26,214 | 33,125 | ||||||
| Other receivables | 54,753 | 54,511 | ||||||
| Other current assets | 10,513 | 10,664 | ||||||
| Total current assets | 689,621 | 630,374 | ||||||
| Non-current assets | ||||||||
| Property, plant and equipment, net (Note 5) | 476,154 | 465,454 | ||||||
| Intangible assets, net | 42,434 | 47,086 | ||||||
| Goodwill | 645,095 | 645,095 | ||||||
| Operating lease right-of-use assets | 25,977 | 20,300 | ||||||
| Other assets | 44,649 | 43,210 | ||||||
| Total assets | $ | 1,923,930 | $ | 1,851,519 | ||||
| Liabilities and equity | ||||||||
| Liabilities | ||||||||
| Accounts payable and accrued expenses | 483,048 | 421,064 | ||||||
| Current installments of long-term debt (Note 6) | 64,500 | 64,500 | ||||||
| Short-term borrowings (Note 6) | 47,353 | 54,250 | ||||||
| Income taxes payable (Note 7) | 30,843 | 25,092 | ||||||
| Other taxes payable | 15,152 | 12,351 | ||||||
| Operating lease liabilities | 1,984 | 2,948 | ||||||
| Other current liabilities | 17,408 | 24,715 | ||||||
| Total current liabilities | 660,288 | 604,920 | ||||||
| Long-term debt (Note 6) | 175,542 | 191,378 | ||||||
| Deferred tax liabilities | 918 | 1,691 | ||||||
| Employee benefit liabilities | 36,971 | 36,321 | ||||||
| Non-current operating lease liabilities | 22,683 | 18,447 | ||||||
| Other liabilities | 32,319 | 30,846 | ||||||
| Total liabilities | 928,721 | 883,603 | ||||||
| Commitments and contingencies (Note 8) | ||||||||
| Equity | ||||||||
| Preferred shares, no par value; shares authorized; issued and outstanding at March 31, 2026, and December 31, 2025, respectively | ||||||||
| Ordinary shares and additional paid-in capital, no par value; shares authorized; and shares issued and outstanding at March 31, 2026, and December 31, 2025, respectively | 906,311 | 902,845 | ||||||
| Retained income | 88,829 | 65,002 | ||||||
| Accumulated other comprehensive income | 69 | 69 | ||||||
| Total equity | 995,209 | 967,916 | ||||||
| Total liabilities and equity | $ | 1,923,930 | $ | 1,851,519 | ||||
The accompanying notes are an integral part of the consolidated financial statements.
| 3 |
NATIONAL ENERGY SERVICES REUNITED CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(In US$ thousands, except share data and per share amounts)
For the three-month period ended | ||||||||
| Description | March 31, 2026 | March 31, 2025 | ||||||
| Revenues | $ | 404,586 | $ | 303,102 | ||||
| Cost of services | (352,755 | ) | (265,647 | ) | ||||
| Gross profit | 51,831 | 37,455 | ||||||
| Selling, general, and administrative expenses (excluding Amortization) | (11,103 | ) | (11,821 | ) | ||||
| Amortization | (4,693 | ) | (4,693 | ) | ||||
| Operating income | 36,035 | 20,941 | ||||||
| Interest expense, net | (6,543 | ) | (8,284 | ) | ||||
| Other income, net | 1,449 | 1,059 | ||||||
| Income before income tax | 30,941 | 13,716 | ||||||
| Income tax expense | (7,114 | ) | (3,325 | ) | ||||
| Net income | $ | 23,827 | $ | 10,391 | ||||
| Weighted average shares outstanding (Note 9): | ||||||||
| Basic | 100,803,435 | 96,139,181 | ||||||
| Diluted | 102,931,550 | 96,710,484 | ||||||
| Earnings per share (Note 9): | ||||||||
| Basic | $ | 0.24 | $ | 0.11 | ||||
| Diluted | $ | 0.23 | $ | 0.11 | ||||
The accompanying notes are an integral part of the consolidated financial statements.
| 4 |
NATIONAL ENERGY SERVICES REUNITED CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)
(In US$ thousands)
For the three-month period ended | ||||||||
| Description | March 31, 2026 | March 31, 2025 | ||||||
| Net income | $ | 23,827 | $ | 10,391 | ||||
| Other comprehensive income, net of tax | - | - | ||||||
| Foreign currency translation adjustments | ||||||||
| Total comprehensive income, net of tax | $ | 23,827 | $ | 10,391 | ||||
The accompanying notes are an integral part of the consolidated financial statements.
| 5 |
NATIONAL ENERGY SERVICES REUNITED CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (UNAUDITED)
(In US$ thousands, except share data)
Ordinary Shares | ||||||||||||||||||||
and Additional | Accumulated Other | |||||||||||||||||||
| Ordinary | Paid-in | Comprehensive | Retained | Total | ||||||||||||||||
| Description | Shares | Capital | Income | Income | Equity | |||||||||||||||
| Balance at December 31, 2025 | 100,787,173 | $ | 902,845 | $ | 69 | $ | 65,002 | $ | 967,916 | |||||||||||
| Share-based compensation expense | - | 2,502 | 2,502 | |||||||||||||||||
| Issuance of equity-classified restricted share units | 10,081 | |||||||||||||||||||
| Settlement of liability-classified share-based compensation | 50,001 | 964 | 964 | |||||||||||||||||
| Net income | - | 23,827 | 23,827 | |||||||||||||||||
| Balance at March 31, 2026 | 100,847,255 | $ | 906,311 | $ | 69 | $ | 88,829 | $ | 995,209 | |||||||||||
Ordinary Shares | ||||||||||||||||||||
and Additional | Accumulated Other | |||||||||||||||||||
| Ordinary | Paid-in | Comprehensive | Retained | Total | ||||||||||||||||
| Description | Shares | Capital | Income | Income | Equity | |||||||||||||||
| Balance at December 31, 2024 | 96,045,856 | $ | 894,293 | $ | 69 | $ | 13,870 | $ | 908,232 | |||||||||||
| Share-based compensation expense | - | 1,856 | 1,856 | |||||||||||||||||
| Issuance of equity-classified restricted share units | 245,757 | |||||||||||||||||||
| Settlement of liability-classified share-based compensation | 61,353 | |||||||||||||||||||
| Net income | - | 10,391 | 10,391 | |||||||||||||||||
| Balance at March 31, 2025 | 96,352,966 | $ | 896,149 | $ | 69 | $ | 24,261 | $ | 920,479 | |||||||||||
The accompanying notes are an integral part of the consolidated financial statements.
| 6 |
NATIONAL ENERGY SERVICES REUNITED CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(In US$ thousands)
| For the three-month period ended | ||||||||
| Description | March 31, 2026 | March 31, 2025 | ||||||
| Cash flows from operating activities: | ||||||||
| Net income | $ | 23,827 | $ | 10,391 | ||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
| Depreciation and amortization | 33,779 | 36,035 | ||||||
| Share-based compensation expense | 2,502 | 1,856 | ||||||
| (Gain) loss on disposal of assets | (373 | ) | (363 | ) | ||||
| Non-cash interest expense (income) | (192 | ) | (143 | ) | ||||
| Deferred tax expense (benefit) | 1,132 | (1,239 | ) | |||||
| Allowance for doubtful receivables and unbilled revenue | 480 | (16 | ) | |||||
| Charges on obsolete service inventories | 853 | 920 | ||||||
| Impairments and other charges | 1,118 | |||||||
| Other operating activities, net | 25 | 38 | ||||||
| Changes in operating assets and liabilities: | ||||||||
| (Increase) decrease in accounts receivable | (50,392 | ) | (27,524 | ) | ||||
| (Increase) decrease in unbilled revenue | (50,154 | ) | (18,339 | ) | ||||
| (Increase) decrease in retention withholdings | 6,910 | 8,834 | ||||||
| (Increase) decrease in inventories | (2,224 | ) | (5,567 | ) | ||||
| (Increase) decrease in prepaid assets | 3,531 | 746 | ||||||
| (Increase) decrease in other current assets | 429 | (2,646 | ) | |||||
| (Increase) decrease in other long-term assets and liabilities | (1,934 | ) | 2,137 | |||||
| Increase (decrease) in accounts payable and accrued expenses | 61,419 | 15,094 | ||||||
| Increase (decrease) in other current liabilities | 1,127 | (847 | ) | |||||
| Net cash provided by operating activities | 30,745 | 20,485 | ||||||
| Cash flows from investing activities: | ||||||||
| Capital expenditures | (36,004 | ) | (30,124 | ) | ||||
| IPM investments (Note 2) | ||||||||
| Proceeds from disposal of assets | 402 | 637 | ||||||
| Other investing activities | (833 | ) | (2,000 | ) | ||||
| Net cash used in investing activities | (36,435 | ) | (31,487 | ) | ||||
| Cash flows from financing activities: | ||||||||
| Proceeds from long-term debt | ||||||||
| Repayments of long-term debt | (16,125 | ) | (17,537 | ) | ||||
| Proceeds from short-term borrowings | 19,587 | 26,841 | ||||||
| Repayments of short-term borrowings | (26,498 | ) | (26,252 | ) | ||||
| Payments on capital leases | (1,000 | ) | (710 | ) | ||||
| Payments on seller-provided financing for capital expenditures | (1,265 | ) | (601 | ) | ||||
| Other financing activities, net | ||||||||
| Net cash used in financing activities | (25,301 | ) | (18,259 | ) | ||||
| Effect of exchange rate changes on cash | ||||||||
| Net increase (decrease) in cash, cash equivalents, and restricted cash | (30,991 | ) | (29,261 | ) | ||||
| Cash and cash equivalents, beginning of period | 132,696 | 107,956 | ||||||
| Cash, cash equivalents, and restricted cash, end of period (Note 2) | $ | 101,705 | $ | 78,695 | ||||
The accompanying notes are an integral part of the consolidated financial statements.
| 7 |
NATIONAL ENERGY SERVICES REUNITED CORP. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
1. BASIS OF PRESENTATION
The accompanying consolidated financial statements of National Energy Services Reunited Corp. (the “Company,” “NESR,” “we,” “our,” “us,” or similar terms) have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements.
In the opinion of NESR management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included in the accompanying financial statements. All intercompany transactions and balances have been eliminated in consolidation. All amounts are shown in thousands ($000s) of U.S. dollars, except as noted.
Operating results for the three-month period ended March 31, 2026, are not necessarily indicative of the results that may be expected for the full year ending December 31, 2026. The balance sheet as of December 31, 2025 has been derived from NESR’s audited financial statements for the year then ended.
For further information, refer to the Consolidated Financial Statements and related notes included in NESR’s Annual Report on Form 10-K for the year ended December 31, 2025, filed with the Securities and Exchange Commission on March 6, 2026.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Cash, cash equivalents, and restricted cash
The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the Consolidated Balance Sheets to the amounts shown in the Consolidated Statements of Cash Flows (in US$ thousands):
| As of | ||||||||
| March 31, 2026 | December 31, 2025 | |||||||
| Cash and cash equivalents | $ | 92,956 | $ | 124,797 | ||||
| Restricted cash – current | 6,447 | 6,260 | ||||||
| Restricted cash – non-current | 2,302 | 1,639 | ||||||
| Cash, cash equivalents, and restricted cash | $ | 101,705 | $ | 132,696 | ||||
Supplemental cash flow information
Non-cash transactions were as follows:
| ● | Purchases of property, plant, and equipment in Accounts payable of $36.7 million and $37.8 million at March 31, 2026, and December 31, 2025, respectively, are not included under “Capital expenditures” within the Consolidated Statements of Cash Flows. | |
| ● | Purchases of property, plant, and equipment using seller-provided installment financing of $5.2 million and $2.1 million at March 31, 2026, and December 31, 2025, in Accounts payable are not included under “Payments on seller-provided financing for capital expenditures” within the Consolidated Statements of Cash Flows. |
Production Management Assets
The Company’s Integrated Production Management (“IPM”) projects are focused on developing and managing production on behalf of the Company’s customers under long-term agreements. Under these arrangements, the Company contributes its own services and products and, in certain cases, cash, toward the customer’s field development activities and operations. Although in certain arrangements the Company is paid for a portion of the services or products it provides, generally the Company will not be paid at the time of providing its services or upon delivery of its products. Instead, the Company is compensated based on cash flow generated by cash from the customer’s wells. Revenues from IPM arrangements, which is recognized as the related production is achieved, represented 0.0% (zero) and 0.8% of the Company’s Revenues for the three-month periods ended March 31, 2026, and March 31, 2025, respectively.
| 8 |
The Company capitalizes its cash investments in a project as well as the direct costs associated with providing services or products for which the Company will be compensated when the related production is achieved. These capitalized investments are amortized to the Consolidated Statements of Operations as the related production is achieved based on the units of production method, whereby each unit produced is assigned a pro-rata portion of the unamortized costs based on estimated total production, resulting in a matching of revenue with the applicable costs. Amortization expense relating to these capitalized investments was $0.0 (zero) million and $1.9 million for the three-month periods ended March 31, 2026, and March 31, 2025, respectively.
The unamortized portion of the Company’s investments in IPM projects was $0.0 (zero) million and $0.0 (zero) million at March 31, 2026, and December 31, 2025, respectively.
At March 31, 2026, and March 31, 2025, the Company assessed whether the unamortized costs associated with these investments exceed the present value of future cash flows from the projects, and recorded an impairment charge to Cost of Services of $0.0 (zero) million and $1.1 million for the three-month periods ended March 31, 2026, and March 31, 2025, respectively.
Recently issued accounting standards not yet adopted
On November 4, 2024, the FASB issued ASU No. 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses (the “ASU”), which requires disaggregated disclosure of income statement expenses for public business entities (“PBEs”). The ASU does not change the expense captions an entity presents on the face of the income statement; rather, it requires disaggregation of certain expense captions into specified categories in disclosures within the footnotes to the financial statements. ASU 2024-03 is effective for all PBEs for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted. The Company is currently reviewing the impact of the adoption on the consolidated financial statements.
All new accounting pronouncements that have been issued but not yet effective are currently being evaluated and, at this time, are not expected to have a material impact on our financial position or results of operations.
| 9 |
3. ACCOUNTS RECEIVABLE, NET
The following table summarizes the accounts receivable of the Company as of the period end dates set forth below (in US$ thousands):
| As of | ||||||||
March 31, 2026 | December 31, 2025 | |||||||
| Trade receivables | $ | 242,142 | $ | 191,792 | ||||
| Less: allowance for credit losses | (14,210 | ) | (13,772 | ) | ||||
| Total | $ | 227,932 | $ | 178,020 | ||||
Trade receivables relate to the sale of services, for which credit is extended based on the Company’s evaluation of the customer’s creditworthiness. The movement in the allowance for credit losses is as follows (in US$ thousands):
For the three-month period ended | ||||||||
| March 31, 2026 | March 31, 2025 | |||||||
| Allowance for credit losses at beginning of period | $ | (13,772 | ) | $ | (15,206 | ) | ||
| (Increase) decrease to allowance for the period | (480 | ) | 16 | |||||
| Write-off of credit losses | 42 | 160 | ||||||
| Reclassifications | ||||||||
| Allowance for credit losses at end of period | $ | (14,210 | ) | $ | (15,030 | ) | ||
4. SERVICE INVENTORIES
The following table summarizes the service inventories for the period end dates as set forth below (in US$ thousands):
| March 31, | December 31, | |||||||
| 2026 | 2025 | |||||||
| Spare parts and consumables | $ | 60,339 | $ | 59,469 | ||||
| Chemicals | 35,867 | 35,365 | ||||||
| Total | $ | 96,206 | $ | 94,834 | ||||
| 10 |
5. PROPERTY, PLANT, & EQUIPMENT
Property, plant and equipment, net of accumulated depreciation, of the Company consists of the following as of the period end dates set forth below (in US$ thousands):
| Estimated Useful | As of | |||||||||
| Lives (in years) | March 31, 2026 | December 31, 2025 | ||||||||
| Buildings and leasehold improvements | 5 to 25 | $ | 56,588 | $ | 56,937 | |||||
| Drilling rigs, plant and equipment | 1 to 15 | 856,146 | 818,147 | |||||||
| Office equipment (furniture and fixtures) and tools | 3 to 10 | 14,930 | 14,785 | |||||||
| Vehicles and cranes | 5 to 10 | 8,944 | 9,364 | |||||||
| Less: Accumulated depreciation | (538,331 | ) | (522,072 | ) | ||||||
| Land | 11,664 | 11,664 | ||||||||
| Capital work in progress | 66,213 | 76,629 | ||||||||
| Total | $ | 476,154 | $ | 465,454 | ||||||
The Company recorded depreciation expense of $29.1 million and $29.5 million for the three-month period ended March 31, 2026, and the three-month period ended March 31, 2025, respectively, within Cost of Services in the Consolidated Statements of Operations.
6. DEBT
Long-term debt
The Company’s long-term debt obligations consist of the following (in US$ thousands):
| March 31, 2026 | December 31, 2025 | |||||||
| Secured Term Loan | $ | 241,875 | $ | 258,000 | ||||
| Secured Revolving Credit Facility | ||||||||
| Less: unamortized debt issuance costs | (1,833 | ) | (2,122 | ) | ||||
| Total loans and borrowings | 240,042 | 255,878 | ||||||
| Less: current installments | (64,500 | ) | (64,500 | ) | ||||
| Long-term debt, net of unamortized debt issuance costs and excluding current installments | $ | 175,542 | $ | 191,378 | ||||
2021 Secured Facilities Agreement
On November 4, 2021, the Company entered into an $860 million Secured Facilities Agreement (the “2021 Secured Facilities Agreement”). At inception, the 2021 Secured Facilities Agreement consisted of a $430 million term loan due by November 4, 2027 (the “Term Loan” or “Secured Term Loan”), a $80.0 million revolving credit facility due by November 4, 2025 (“RCF” or “Secured Revolving Credit Facility”), and a $350 million working capital facility that renews annually or bi-annually by mutual agreement between the lenders and the Company. The Secured Revolving Credit Facility was extended from November 4, 2025, to February 4, 2026, by mutual agreement of the Company and its lenders. Following February 4, 2026, the Company did not extend its Secured Revolving Credit Facility, as operating cash flow, together with available cash and cash equivalents, is sufficient to support working capital, capital expenditures, and debt repayment obligations. The Company is currently working with its lenders to refinance and extend the 2021 Secured Facilities Agreement.
| 11 |
Borrowings under the Term Loan incur, and prior borrowings under the RCF incurred, interest based on the secured overnight financing rate (“SOFR”) for U.S. dollar-denominated borrowings or the Saudi Arabian Interbank Offered Rate (“SAIBOR”) for Saudi Arabia Riyal borrowings plus 2.6% to 3.0% per annum, varying based on the Company’s Net Debt / EBITDA ratio as defined in the 2021 Secured Facilities Agreement. As of March 31, 2026, and December 31, 2025, this resulted in interest rates of 6.52% and 7.13%, respectively, for U.S. dollar-denominated borrowings, and interest rates of 7.44% and 7.61%, respectively, for Saudi Arabian Riyal borrowings. As of March 31, 2026, and December 31, 2025, the Company had drawn $241.9 million and $258.0 million, respectively, of the Term Loan, and $0.0 (zero) million and $0.0 (zero) million, respectively, of the RCF. Additionally, as of March 31, 2026, and December 31, 2025, the Company had $0.0 (zero) million and $59.2 million, respectively, available to be drawn under the RCF.
The 2021 Secured Facilities Agreement also includes a working capital facility of $259 million and $325 million as of March 31, 2026, and December 31, 2025, respectively, for issuance of letters of guarantee, letters of credit and refinancing letters of credit into debt over a period of no more than two years, which carries an interest rate equal to SOFR for U.S. dollar-denominated borrowings, or SAIBOR for Saudi Arabia Riyal borrowings, for the applicable interest period, plus a margin of 1.25% to 1.5% per annum. The working capital facility decreased by $66.0 million during the quarter ended March 31, 2026, due to the scheduled expiration of one tranche of availability within the lender syndicate. As of March 31, 2026, and December 31, 2025, this resulted in interest rates of 6.52% and 7.13%, respectively, for U.S. dollar-denominated borrowings, and interest rates of 7.44% and 8.18%, respectively, for Saudi Arabian Riyal borrowings. The working capital facility requires the payment of a commitment fee each quarter. The commitment fee is computed at the rate of 0.3125% (25% of the margin) on the facility lender’s available commitment for the relevant quarter. As of March 31, 2026, and December 31, 2025, the Company had utilized $241.7 million and $243.8 million, respectively, under this working capital facility and the balance of $17.3 million and $81.2 million, respectively, was available to the Company.
The 2021 Secured Facilities Agreement includes covenants that specify maximum leverage (Net Debt / EBITDA) up to 3.50, minimum debt service coverage ratio (Cash Flow / Debt Service) of at least 1.25, and interest coverage (EBITDA / Interest) of at least 4.00. As of March 31, 2026, and December 31, 2025, the Company was in compliance with all financial and non-financial covenants under the 2021 Secured Facilities Agreement.
Short-term debt
The Company’s short-term debt obligations consist of the following (in US$ thousands):
| March 31, 2026 | December 31, 2025 | |||||||
| Other short-term borrowings from working capital facilities | $ | 47,353 | $ | 54,250 | ||||
| Less: unamortized debt issuance costs | ||||||||
| Short-term debt, excluding current installments of long-term debt | $ | 47,353 | $ | 54,250 | ||||
Short-term borrowings primarily consist of financing for capital equipment and inventory purchases.
Other debt information
Scheduled principal payments of long-term debt for periods subsequent to March 31, 2026, are as follows (in US$ thousands):
| 2026 | $ | 48,375 | ||
| 2027 | 193,500 | |||
| 2028 | ||||
| 2029 | ||||
| 2030 | ||||
| Total long-term debt | $ | 241,875 |
| 12 |
7. INCOME TAXES
NESR is a holding company incorporated in the British Virgin Islands (“BVI”), which imposes a 0% statutory corporate income tax rate on income generated outside the jurisdiction. NESR’s subsidiaries operate across multiple tax jurisdictions in the MENA region, where statutory tax rates generally range from 0% to 35%. However, the adoption of Domestic Minimum Top-Up Taxes (DMTT) under the OECD Pillar Two framework has, in many cases, resulted in effective tax rates exceeding local statutory minimums.
The Company recorded income tax expense of $7.1 million with an effective tax rate of 23.0%, and $3.3 million with an effective tax rate of 24.2%, for the three-month periods ended March 31, 2026, and March 31, 2025, respectively, in the Consolidated Statements of Operations.
The period-on-period decrease in the effective tax rate is primarily driven by changes in geographic earnings mix, as well as higher pre-tax income relative to adjustments related to the Company’s uncertain tax positions and unrecognized tax benefits.
8. COMMITMENTS AND CONTINGENCIES
Capital expenditure commitments
The Company was committed to incur capital expenditures of $75.8 million and $45.6 million at March 31, 2026, and December 31, 2025, respectively. Substantially all of the commitments outstanding as of March 31, 2026, are expected to be settled during 2026 and 2027.
Other commitments
The Company purchases certain property, plant, and equipment using seller-provided installment financing with payment terms extending to 24 months. As of March 31, 2026, and December 31, 2025, the Company recorded $5.2 million and $2.1 million, respectively, in Accounts payable for amounts due using seller-provided installment financing.
The Company had outstanding letters of credit amounting to $7.2 million and $6.6 million as of March 31, 2026, and December 31, 2025, respectively.
In the normal course of business with customers, vendors and others, the Company has entered into off-balance sheet arrangements, such as surety bonds for performance, and other bank issued guarantees which totaled $193.3 million and $187.1 million as of March 31, 2026, and December 31, 2025, respectively. The Company has also entered into cash margin guarantees totaling $16.0 million and $14.9 million at March 31, 2026, and December 31, 2025, respectively. A liability is accrued when a loss is both probable and can be reasonably estimated. Cash margin guarantees totaling $8.7 million and $7.9 million have been secured by restricted cash deposits at March 31, 2026, and December 31, 2025, respectively. None of the off-balance sheet arrangements either has, or is likely to have, a material effect on the Company’s consolidated financial statements.
Legal proceedings
In the first quarter of 2024, the Company lost control (i.e., ceased to be the primary beneficiary) of a subsidiary in Qatar following a judgment from a lawsuit concerning the ownership and historical profits of this entity. Neither the deconsolidation event nor any potential losses associated with these historical profits were deemed material to the Company’s financial position or results of operations. Subsequent to the judgment, the plaintiff initiated similar actions against other unrelated Company entities in both Qatar and the United Arab Emirates. Based on the advice of legal counsel in each jurisdiction, the Company believes it has strong grounds to defend its positions in both jurisdictions; however, the ultimate outcome of these proceedings cannot be determined at this time. The Company currently estimates that a loss in the range of $1.2 million to $11.8 million (43.1 million Qatari Riyals), for which it is jointly and severally liable with a co-defendant, could be incurred in connection with these matters.
Additionally, the Company is involved in certain legal proceedings which arise in the ordinary course of business and the outcomes of which are currently subject to uncertainties and therefore the probability of a loss, if any, being sustained and an estimate of the amount of any loss are difficult to ascertain. Consequently, it is not possible to make a reasonable estimate of the expected financial effect, if any, that will result from ultimate resolution of these disputes. The Company is contesting these claims/disputes and the Company’s management currently believes that it is not required to recognize a provision because they are not probable or reasonably estimable and any impacts are not expected to have a material impact on the Company’s business, financial condition, results of operations, or liquidity.
| 13 |
| Date | Transaction Detail | Change in Shares | Three-month period ended March 31, 2026, Weighted Average | |||||||
| January 1, 2026 | Beginning Balance | 100,787,173 | ||||||||
| January 15, 2026 | Equity-classified Restricted Stock Issuance | 833 | 694 | |||||||
| January 30, 2026 | Equity-classified Restricted Stock Issuance | 7,332 | 4,888 | |||||||
| February 25, 2026 | Equity-classified Restricted Stock Issuance | 1,666 | 629 | |||||||
| March 13, 2026 | Equity-classified Restricted Stock Issuance | 250 | 50 | |||||||
| March 13, 2026 | Settlement of liability-classified share-based compensation | 50,001 | 10,001 | |||||||
| March 31, 2026 | Ending Balance | 100,803,435 | ||||||||
| Date | Transaction Detail | Change in Shares | Three-month period ended March 31, 2025, Weighted Average | |||||||
| January 1, 2025 | Beginning Balance | 96,045,856 | ||||||||
| January 6, 2025 | Settlement of liability-classified share-based compensation | 61,353 | 57,263 | |||||||
| February 17, 2025 | Equity-classified Restricted Stock Issuance | 666 | 311 | |||||||
| February 27, 2025 | Equity-classified Restricted Stock Issuance | 1,000 | 356 | |||||||
| March 17, 2025 | Equity-classified Restricted Stock Issuance | 12,430 | 1,934 | |||||||
| March 18, 2025 | Equity-classified Restricted Stock Issuance | 231,661 | 33,461 | |||||||
| March 31, 2025 | Ending Balance | 96,139,181 | ||||||||
| 14 |
| For the three-month period ended | ||||||||||||||||||||||||
| March 31, 2026 | March 31, 2025 | |||||||||||||||||||||||
| Net income to Ordinary Shareholders | Weighted-average ordinary shares outstanding | EPS | Net income to Ordinary Shareholders | Weighted-average ordinary shares outstanding | EPS | |||||||||||||||||||
| Basic EPS - ordinary shares | $ | 23,827 | 100,803,435 | $ | 0.24 | $ | 10,391 | 96,139,181 | $ | 0.11 | ||||||||||||||
| Restricted stock units | 2,128,115 | ) | 571,303 | (0.00 | ) | |||||||||||||||||||
| Antidilution sequencing - subtotal | 23,827 | 102,931,550 | 0.23 | 10,391 | 96,710,484 | 0.11 | ||||||||||||||||||
| 35,540,380 warrants @ $5.75 per half share | ||||||||||||||||||||||||
| Diluted EPS - ordinary shares | $ | 23,827 | 102,931,550 | $ | 0.23 | $ | 10,391 | 96,710,484 | $ | 0.11 | ||||||||||||||
Prior to the announcement of the exchange offer on May 30, 2025, potentially dilutive warrants had no impact on the determination of dilutive earnings per share as these potential ordinary shares were antidilutive for the three-month period ended March 31, 2025.
In addition to the warrants, the Company excluded and weighted-average restricted stock units from dilutive ordinary shares for the three-month periods ended March 31, 2026, and 2025, respectively, as they were assumed to be repurchased due to the impact of unrecognized share-based compensation cost.
10. REPORTABLE SEGMENTS
The Company determines its operating segments using the management approach, under which its Chief Executive Officer, as the Company’s chief operating decision maker, regularly reviews financial information to allocate resources and assess performance. The Company has identified two reportable segments, Production Services and Drilling and Evaluation Services, which provide a range of oilfield services to oil and natural gas customers across the well lifecycle. Segment performance is evaluated primarily based on revenue and segment operating income (loss), excluding corporate-level expenses such as overhead, share-based compensation, and transaction-related costs. The Company’s operations are primarily located in the MENA region.
| 15 |
Revenue from operations
For the three-month period ended | ||||||||
| (in US$ thousands) | March 31, 2026 | March 31, 2025 | ||||||
| Reportable Segment: | ||||||||
| Production Services | $ | 241,045 | $ | 188,087 | ||||
| Drilling and Evaluation Services | 163,541 | 115,015 | ||||||
| Total external revenue | $ | 404,586 | $ | 303,102 | ||||
Long-lived assets
| As of | ||||||||
| (in US$ thousands) | March 31, 2026 | December 31, 2025 | ||||||
| Reportable Segment: | ||||||||
| Production Services | $ | 223,324 | $ | 222,306 | ||||
| Drilling and Evaluation Services | 197,832 | 186,738 | ||||||
| Total Reportable Segments | 421,156 | 409,044 | ||||||
| Unallocated assets | 54,998 | 56,410 | ||||||
| Total long-lived assets | $ | 476,154 | $ | 465,454 | ||||
Unallocated assets mainly comprise buildings and leasehold improvements in the countries which support both segments in the normal course of business.
Total segment operating income
For the three-month period ended | ||||||||
| (in US$ thousands) | March 31, 2026 | March 31, 2025 | ||||||
| Reportable Segment: | ||||||||
| Production Services | $ | 32,737 | $ | 20,029 | ||||
| Drilling and Evaluation Services | 18,182 | 16,147 | ||||||
| Total Reportable Segments | 50,919 | 36,176 | ||||||
| Unallocated expenses | (14,884 | ) | (15,235 | ) | ||||
| Total operating income | 36,035 | 20,941 | ||||||
| Interest expense, net | (6,543 | ) | (8,284 | ) | ||||
| Other income, net | 1,449 | 1,059 | ||||||
| Income before income tax | $ | 30,941 | $ | 13,716 | ||||
Unallocated expenses for the three-month periods ended March 31, 2026, and March 31, 2025, respectively, mainly include corporate selling, general, and administrative expenses (inclusive of amortization), offset in small part by a portion of these costs that are allocated to the reportable segments. As described elsewhere, corporate selling, general, and administrative expenses are primarily comprised of payroll and compensation costs for headquarters’ employees, professional and legal expenses relating to audit firms, consulting firms and legal counsel, and depreciation charges on headquarters’ offices and leasehold improvements.
Significant segment expenses, which represent the difference between segment revenue and pre-tax segment income, consist of the following:
| For the three-month period ended | ||||||||
| (in US$ thousands) | March 31, 2026 | March 31, 2025 | ||||||
| Production Services: | ||||||||
| Compensation | $ | 49,093 | $ | 47,025 | ||||
| Cost of products, materials, and supplies | 82,560 | 53,017 | ||||||
| Transport and rental | 34,296 | 28,316 | ||||||
| Depreciation and amortization | 16,140 | 20,232 | ||||||
| Other | 26,219 | 19,462 | ||||||
| Total | $ | 208,308 | $ | 168,052 | ||||
| For the three-month period ended | ||||||||
| (in US$ thousands) | March 31, 2026 | March 31, 2025 | ||||||
| Drilling and Evaluation Services: | ||||||||
| Compensation | $ | 46,704 | $ | 36,658 | ||||
| Cost of products, materials, and supplies | 23,166 | 17,932 | ||||||
| Transport and rental | 41,474 | 22,287 | ||||||
| Depreciation and amortization | 13,120 | 11,405 | ||||||
| Other | 20,895 | 10,592 | ||||||
| Total | $ | 145,359 | $ | 98,874 | ||||
| 16 |
Other segment expenses include mobilization, occupancy, professional, and other costs.
Revenue by geographic area
For the three-month period ended | ||||||||
| (in US$ thousands) | March 31, 2026 | March 31, 2025 | ||||||
| Geographic Area: | ||||||||
| Domestic (British Virgin Islands) | $ | $ | ||||||
| MENA | 402,805 | 301,458 | ||||||
| Rest of World | 1,781 | 1,644 | ||||||
| Total revenue | $ | 404,586 | $ | 303,102 | ||||
Long-lived assets by geographic area
| As of | ||||||||
| (in US$ thousands) | March 31, 2026 | December 31, 2025 | ||||||
| Geographic area: | ||||||||
| Domestic (British Virgin Islands) | $ | $ | ||||||
| MENA | 468,347 | 457,124 | ||||||
| Rest of World | 7,807 | 8,330 | ||||||
| Total long-lived assets | $ | 476,154 | $ | 465,454 | ||||
| 17 |
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis should be read in conjunction with the consolidated financial statements and related notes included in this Quarterly Report on Form 10-Q (“Quarterly Report”). In addition, such analysis should be read in conjunction with the audited consolidated financial statements, the related notes, and the other information included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025 (“2025 Annual Report”). The following discussion and analysis contain forward-looking statements that reflect our future plans, estimates, beliefs and expected performance. Please read “Cautionary Note Regarding Forward-Looking Statements” below.
National Energy Services Reunited Corp. (the “Company,” “NESR,” “we,” “our,” “us” or similar terms) is one of the largest oilfield services providers in the Middle East and North Africa (“MENA”) region. The Company’s business consists primarily of upstream and midstream oilfield services with oil and natural gas companies as customers. NESR’s revenues are primarily derived by providing production services (“Production Services”) such as hydraulic fracturing, coiled tubing, stimulation and pumping, cementing, nitrogen services, filtration services, pipelines and industrial services, production assurance, artificial lift services, completions and integrated production management. NESR also provides drilling and evaluation services (“Drilling and Evaluation Services”) such as rigs and integrated services, fishing and downhole tools, thru-tubing intervention, tubular running services, directional drilling, drilling and completion fluids, pressure control, well testing services, wireline logging services, and slickline services. NESR has significant operations throughout the MENA region including Saudi Arabia, Oman, Kuwait, United Arab Emirates (“UAE”), Iraq, Algeria, Egypt and Libya.
EXECUTIVE OVERVIEW
Drivers of Our Financial Condition and Results of Operations
As of the end of the three-month period covered by this Quarterly Report, the ongoing conflict between the United States, Israel and Iran has contributed to heightened volatility in global crude oil markets and increased upstream activity across the MENA region, as reflected in the increase in Brent crude prices and the regional rig count discussed below. While these conditions have favorably impacted customer demand for our services during the period, the duration, scope and ultimate trajectory of the conflict remain uncertain, and a de-escalation, a further escalation, or related sanctions, supply disruptions or geopolitical responses could materially affect commodity prices, customer capital spending and our results of operations and financial condition in future periods. For a full discussion of the drivers of our financial condition and results of operations, see the section entitled “Drivers of Our Financial Condition and Results of Operations” in Part II, Item 7 of our 2025 Annual Report.
Key Performance Indicators
As of the end of the three-month period covered by this Quarterly Report, there have been no material changes regarding our key performance indicators except as provided in the following table which shows rig count (Source: Baker Hughes Published Rig Count Data) and oil prices (Source: U.S. Energy Information Administration - Brent – Europe) as of the dates indicated. For a full discussion of our key performance indicators, see the section entitled “Key Performance Indicators” in Part II, Item 7 of our 2025 Annual Report.
| As of | ||||||||
| March 31, 2026 | December 31, 2025 | |||||||
| Rig count: | ||||||||
| MENA | 555 | 565 | ||||||
| Rest of World – outside of North America | 507 | 500 | ||||||
| Total International Rig Count | 1,062 | 1,065 | ||||||
| Brent Crude (per barrel) | $ | 126.69 | $ | 61.35 | ||||
| 18 |
RESULTS OF OPERATIONS
We operate our business through two operating segments and report our results of operations through two reporting segments, Production Services and Drilling and Evaluation Services, which aggregate services performed during distinct stages of a typical life cycle of an oil well.
Production Services. Our Production Services segment includes the results of operations from services that are generally offered and performed during the production stage of a well’s lifecycle. These services mainly include hydraulic fracturing, coiled tubing, stimulation and pumping, cementing, nitrogen services, filtration services, pipelines and industrial services, production assurance, artificial lift services, completions and integrated production management. Our Production Services accounted for 60% and 62% of our revenues for the three-month periods ended March 31, 2026, and March 31, 2025, respectively.
Drilling and Evaluation Services. Our Drilling and Evaluation Services segment includes the results of operations from services that are generally offered and performed during pre-production stages of a well’s lifecycle and related mainly to the operation of oil rigs. The services mainly include rigs and integrated services, fishing and downhole tools, thru-tubing intervention, tubular running services, directional drilling, drilling and completion fluids, pressure control, well testing services, wireline logging services and slickline services. Our Drilling and Evaluation Services accounted for 40% and 38% of our revenues for the three-month periods ended March 31, 2026, and March 31, 2025, respectively.
For a full discussion of our reportable segments, see the section entitled “Business” in Part I, Item 1 of our 2025 Annual Report.
Key Components of Revenues and Expenses
As of the end of the three-month period covered by this Quarterly Report, there have been no material changes to our key components of revenues and expenses. See the section entitled “Key Components of Revenues and Expenses” in Part II, Item 7 of our 2025 Annual Report for more information.
2026 compared to 2025
The following table presents our Consolidated Statements of Operations (Unaudited) data for the periods indicated (in US$ thousands):
For the three-month period ended | ||||||||
| Description | March 31, 2026 | March 31, 2025 | ||||||
| Revenues | $ | 404,586 | $ | 303,102 | ||||
| Cost of services | (352,755 | ) | (265,647 | ) | ||||
| Gross profit | 51,831 | 37,455 | ||||||
| Selling, general, and administrative expenses (excluding Amortization) | (11,103 | ) | (11,821 | ) | ||||
| Amortization | (4,693 | ) | (4,693 | ) | ||||
| Operating income | 36,035 | 20,941 | ||||||
| Interest expense, net | (6,543 | ) | (8,284 | ) | ||||
| Other income, net | 1,449 | 1,059 | ||||||
| Income before income tax | 30,941 | 13,716 | ||||||
| Income tax expense | (7,114 | ) | (3,325 | ) | ||||
| Net income | $ | 23,827 | $ | 10,391 | ||||
Revenue. Revenue was $404.6 million for the three-month period ended March 31, 2026, compared to $303.1 million for the three-month period ended March 31, 2025.
The table below presents our revenue by segment for the periods indicated (in US$ thousands):
For the three-month period ended | ||||||||
| March 31, 2026 | March 31, 2025 | |||||||
| Reportable Segment: | ||||||||
| Production Services | $ | 241,045 | $ | 188,087 | ||||
| Drilling and Evaluation Services | 163,541 | 115,015 | ||||||
| Total revenue | $ | 404,586 | $ | 303,102 | ||||
| 19 |
Production Services revenue was $241.0 million for the three-month period ended March 31, 2026, compared to $188.1 million for the three-month period ended March 31, 2025. The change in revenue was primarily due to increased hydraulic fracturing stages in Saudi Arabia.
Drilling and Evaluation Services revenue was $163.5 million for the three-month period ended March 31, 2026, compared to $115.0 million for the three-month period ended March 31, 2025. The change in revenue was primarily due to increased well testing activity in Saudi Arabia.
Cost of services. Cost of services was $352.8 million for the three-month period ended March 31, 2026, compared to $265.6 million for the three-month period ended March 31, 2025. Cost of services as a percentage of total revenue was 87.2% and 87.6% for the three-month periods ended March 31, 2026, and March 31, 2025, respectively. The change in cost of services as a percentage of total revenue is mainly due to increased activity levels in the period ended March 31, 2026, as compared to the prior year period, reflecting improved cost absorption as revenue scaled. Cost of services included depreciation expense of $29.1 million, and $29.5 million for the three-month period ended March 31, 2026, and March 31, 2025, respectively.
Gross profit. Gross profit was $51.8 million for the three-month period ended March 31, 2026, compared to $37.5 million for the three-month period ended March 31, 2025. Gross profit as a percentage of total revenue was 12.8% and 12.4% for the three-month period ended March 31, 2026, and the three-month period ended March 31, 2025, respectively. The change in trend is described under “Revenue” and “Cost of services.”
SG&A expense. SG&A expense, which represents costs associated with managing and supporting our operations, was $11.1 million for the three-month period ended March 31, 2026, compared to $11.8 million for the three-month period ended March 31, 2025. SG&A expense as a percentage of total revenue was 2.7% and 3.9% for the three-month period ended March 31, 2026, and March 31, 2025, respectively. The period-over-period decrease in SG&A expense was primarily attributable to lower spending on activities related to the remediation of the Company’s material weakness, as the Company completed remediation as of June 30, 2025 and therefore incurred significant remediation-related costs during the quarter ended March 31, 2025.
Amortization expense. Amortization expense was $4.7 million for the three-month period ended March 31, 2026, compared to $4.7 million for the three-month period ended March 31, 2025. Amortization expense is driven mainly by acquired intangible assets resulting from acquisitions.
Interest expense, net. Interest expense, net, was $6.5 million for the three-month period ended March 31, 2026, compared to $8.3 million for the three-month period ended March 31, 2025. Interest expense, net, decreased period-over-period, due to lower debt levels during 2026 as compared to 2025.
Other income, net. Other income, net, was $1.4 million for the three-month period ended March 31, 2026, compared to $1.1 million for the three-month period ended March 31, 2025.
Income tax expense. Income tax expense was $7.1 million for the three-month period ended March 31, 2026, compared to $3.3 million for the three-month period ended March 31, 2025. The decrease in effective tax rate period-on-period is primarily attributable to changes in geographic earnings mix, as well as higher pre-tax income relative to adjustments related to the Company’s uncertain tax positions and unrecognized tax benefits. See Note 7, Income Taxes, to our consolidated financial statements included in Item 1, “Financial Statements,” of this Quarterly Report.
| 20 |
Net income. Net income was $23.8 million for the three-month period ended March 31, 2026, compared to $10.4 million for the three-month period ended March 31, 2025.
Supplemental Segment Operating Income Discussion
For the three-month period ended | ||||||||
| (in US$ thousands) | March 31, 2026 | March 31, 2025 | ||||||
| Reportable Segment: | ||||||||
| Production Services | $ | 32,737 | $ | 20,029 | ||||
| Drilling and Evaluation Services | 18,182 | 16,147 | ||||||
Production Services operating income was $32.7 million for the three-month period ended March 31, 2026, compared to $20.0 million for the three-month period ended March 31, 2025. The change in Supplemental Segment Operating Income was primarily due to increased hydraulic fracturing stages in Saudi Arabia with a significant portion of incremental revenue translating into segment operating income.
Drilling and Evaluation operating income was $18.2 million for the three-month period ended March 31, 2026, compared to $16.1 million for the three-month period ended March 31, 2025. The change in Supplemental Segment Operating Income was primarily due to additional well testing activity in Saudi Arabia with a share of incremental revenue contributing to segment operating income.
LIQUIDITY AND CAPITAL RESOURCES
Our objective in financing our business is to maintain sufficient liquidity, adequate financial resources and financial flexibility to fund the requirements of our business. We had cash and cash equivalents of $93.0 million as of March 31, 2026, and $124.8 million as of December 31, 2025. Our outstanding borrowings were $287.4 million as of March 31, 2026, and $310.1 million as of December 31, 2025. Current available borrowing capacity totaled $21.7 million and $146.9 million, as of March 31, 2026, and December 31, 2025, respectively. Borrowing capacity decreased in the quarter ended March 31, 2026, reflecting the Company’s decision not to extend its $59.2 million Secured Revolving Credit Facility beyond February 4, 2026, given sufficient operating cash flow and liquidity, as well as a $66.0 million reduction in the working capital facility following the scheduled expiration of one tranche of availability within the lender syndicate. The Company is currently working with its lenders to refinance and extend the 2021 Secured Facilities Agreement. We believe that our cash on hand, cash flows generated from operations, and liquidity available through our credit facilities will provide sufficient liquidity to manage our global cash needs. See “Capital Requirements” below.
Cash Flows
Cash flows provided by (used in) each type of activity were as follows for the periods presented (in US$ thousands):
| For the three-month period ended | ||||||||
| March 31, 2026 | March 31, 2025 | |||||||
| Cash provided by (used in): | ||||||||
| Operating Activities | $ | 30,745 | $ | 20,485 | ||||
| Investing Activities | (36,435 | ) | (31,487 | ) | ||||
| Financing Activities | (25,301 | ) | (18,259 | ) | ||||
| Effect of exchange rate changes on cash | - | - | ||||||
| Net change in cash and cash equivalents | $ | (30,991 | ) | $ | (29,261 | ) | ||
| 21 |
Operating Activities
Cash flows provided by operating activities were $30.7 million for the three-month period ended March 31, 2026, compared to cash flows provided by operating activities of $20.5 million for the three-month period ended March 31, 2025. The difference between periods was primarily driven by improved net income, and partially offset by increases in working capital to fund higher activity levels in the business.
Investing Activities
Cash flows used in investing activities were $36.4 million for the three-month period ended March 31, 2026, compared to cash flows used in investing activities of $31.5 million for the three-month period ended March 31, 2025. The difference between periods was primarily due to higher cash paid for capital expenditures period-over-period. Our principal recurring investing activity is the funding of capital expenditures to ensure that we have the appropriate levels and types of machinery and equipment in place to generate revenue from operations.
Financing Activities
Cash flows used in financing activities were $25.3 million for the three-month period ended March 31, 2026, compared to cash flows used in financing activities of $18.3 million for the three-month period ended March 31, 2025. The difference between periods was primarily attributable to lower short-term borrowings, as seasonal working capital requirements were funded internally.
Credit Facilities
Our principal credit facilities and instruments outstanding or available as of March 31, 2026, are discussed in Note 6, Debt, to the consolidated financial statements included in Item 1, “Financial Statements,” of this Quarterly Report.
| 22 |
Capital Requirements
As of the end of the three-month period covered by this Quarterly Report, there have been no material changes to our capital requirements. See the section entitled “Capital Requirements” in Part II, Item 7 of our 2025 Annual Report for more information.
Off-Balance Sheet Arrangements
Our off-balance sheet arrangements, including letters of credit and guarantees, are discussed in Note 8, Commitments and Contingencies, to the consolidated financial statements included in Item 1, “Financial Statements,” of this Quarterly Report.
Contractual Obligations and Commitments
As of the end of the three-month period covered by this Quarterly Report, there have been no material changes to our contractual obligations. See the section entitled “Contractual Obligations and Commitments” in Part II, Item 7 of our 2025 Annual Report for more information.
Other Factors Affecting Liquidity
Shelf registration statement. The Company does not have any effective shelf registration statements as of March 31, 2026.
Capital expenditure commitments. The Company was committed to incur capital expenditures of $75.8 million and $45.6 million at March 31, 2026, and December 31, 2025, respectively. Substantially all of the commitments outstanding as of December 31, 2025, are expected to be settled during 2026.
Capital return program. In May 2026, the Company approved a capital return program consisting of (i) a quarterly cash dividend, anticipated to commence in the fourth quarter of 2026, at an expected rate of $0.10 per Ordinary Share, and (ii) authorization for the repurchase of up to $50.0 million of the Company’s Ordinary Shares from time to time through open market transactions, privately negotiated transactions, or otherwise, at prevailing market prices and subject to market conditions, applicable legal requirements, and liquidity considerations.
| 23 |
As of the end of the three-month period covered by this Quarterly Report, there have been no material changes to other factors affecting our liquidity except as described above. See the section entitled “Other Factors Affecting Liquidity” in Part II, Item 7 of our 2025 Annual Report for more information.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
As of the end of the three-month period covered by this Quarterly Report, there have been no material changes to our critical accounting policies and estimates. See the section entitled “Critical Accounting Policies and Estimates” in Part II, Item 7 of our 2025 Annual Report for more information.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report contains forward-looking statements (as such term is defined in Section 27A of the Securities Act of 1933, as amended, (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)). Any and all statements contained in this Quarterly Report that are not statements of historical fact may be deemed forward-looking statements. Terms such as “may,” “might,” “would,” “should,” “could,” “project,” “estimate,” “predict,” “potential,” “strategy,” “anticipate,” “attempt,” “develop,” “plan,” “help,” “believe,” “continue,” “intend,” “expect,” “future,” and terms of similar import (including the negative of any of these terms) may identify forward-looking statements. However, not all forward-looking statements may contain one or more of these identifying terms. Forward-looking statements in this Quarterly Report may include, without limitation, the plans and objectives of management for future operations, projections of income or loss, earnings or loss per share, capital expenditures, dividends, capital structure or other financial items, our future financial performance, including any such statement contained in a discussion and analysis of financial condition by management or in the results of operations included pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”), expansion plans and opportunities, completion and integration of acquisitions and the assumptions underlying or relating to any such statement.
The forward-looking statements are not meant to predict or guarantee actual results, performance, events or circumstances and may not be realized because they are based upon our current projections, plans, objectives, beliefs, expectations, estimates and assumptions and are subject to a number of risks and uncertainties and other influences, many of which we have no control over, including the impact of the extent of any material weakness or significant deficiencies in our internal control over financial reporting. Actual results and the timing of certain events and circumstances may differ materially from those described by the forward-looking statements as a result of these risks and uncertainties. Factors that may influence or contribute to the accuracy of the forward-looking statements or cause actual results to differ materially from expected or desired results may include, without limitation:
| ● | Changing commodity prices, market volatility and other market trends that affect our customers’ demand for our services; | |
| ● | Public health crises and other catastrophic events; | |
| ● | The level of capital spending by our customers; | |
| ● | Political, market, financial and regulatory risks, including those related to the geographic concentration of our operations and customers; | |
| ● | Our operations, including maintenance, upgrades and refurbishment of our assets, may require significant capital expenditures, which may or may not be available to us; | |
| ● | Operating hazards inherent in our industry and the ability to secure sufficient indemnities and insurance; | |
| ● | Our ability to successfully integrate acquisitions; | |
| ● | Conditions in the Middle East, including current uncertainty and instability resulting from the conflict between the United States, Israel and Iran, as well as other regional hostilities that could adversely affect our business; and | |
| ● | Other risks and uncertainties set forth in Part I, Item 1A, “Risk Factors,” included in this Quarterly Report and our 2025 Annual Report. |
Readers are cautioned not to place undue reliance on forward-looking statements because of the risks and uncertainties related to them and to the risk factors. The Company disclaims any obligation to update the forward-looking statements contained in this Quarterly Report to reflect any new information or future events or circumstances or otherwise, except as required by law. Readers should read this Quarterly Report in conjunction with other documents which the Company may file or furnish from time to time with the SEC.
| 24 |
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
As of the end of the three-month period covered by this Quarterly Report, there have been no material changes to our market risk. See the section entitled “Quantitative and Qualitative Disclosures about Market Risk” in Part II, Item 7A of our 2025 Annual Report for more information.
ITEM 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the three-month period covered by this Quarterly Report. Based on such evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that, as of such date, our disclosure controls and procedures were effective at the reasonable assurance level.
No changes in our internal control over financial reporting occurred during the three-month period covered by this Quarterly Report that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
| 25 |
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Our legal proceedings as of the end of the three-month period covered by this Quarterly Report on Form 10-Q (“Quarterly Report”) are discussed in Note 8, Commitments and Contingencies, to the consolidated financial statements included in Item 1, “Financial Statements,” of this Quarterly Report.
ITEM 1A. RISK FACTORS
There are several factors that affect our business and operations, many of which are beyond our control. In addition to information set forth in this Quarterly Report, careful consideration should be given to the risk factors discussed under the caption “Risk Factors” in Part I, Item IA of our 2025 Annual Report, which could have a material impact on our business, financial condition or results of operations and are hereby incorporated by reference into this Quarterly Report. Such risks are not the only risks we face. Additional risks and uncertainties not presently known to us or that we currently believe to be immaterial may also have a material impact on our business, financial condition or results of operations.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
During the three-month period covered by this Quarterly Report, we had no mine safety violations or other regulatory matters required to be disclosed pursuant to Section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 104 of Regulation S-K.
ITEM 5. OTHER INFORMATION
Rule 10b5-1 Trading Plans
During the fiscal quarter ended March 31, 2026, Al Nowais Investments LLC, an entity in which Mr. Yousef Al Nowais, director of the Company, has a pecuniary interest, adopted a Rule 10b5-1 trading arrangement (as defined in Item 408 of Regulation S-K promulgated under the Exchange Act) that is intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) of the Exchange Act. Under the trading arrangement, Al Nowais Investments LLC may sell an aggregate of up to 2,679,198 ordinary shares (the “Shares”) of the Company. Any sales under the trading arrangement will be made during the period beginning June 25, 2026, and ending on such date as all of the Shares have been sold or June 25, 2027.
ITEM 6. EXHIBITS
* Filed herewith.
** Furnished herewith.
| 26 |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| NATIONAL ENERGY SERVICES REUNITED CORP. | ||
| Date: May 11, 2026 | /s/ Sherif Foda | |
| Name: | Sherif Foda | |
| Title: | Chief Executive Officer | |
| (Principal Executive Officer) | ||
| Date: May 11, 2026 | /s/ Stefan Angeli | |
| Name: | Stefan Angeli | |
| Title: | Chief Financial Officer | |
| (Principal Financial and Accounting Officer) | ||
| 27 |