Nabors Industries (NBR) 10-Q 2023 Q3 Quarterly report

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended September 30, 2023

☐    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number: 001-32657

NABORS INDUSTRIES LTD.

(Exact name of registrant as specified in its charter)

Bermuda	98-0363970
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

Crown House

Second Floor

4 Par-la-Ville Road

Hamilton, HM08

Bermuda

(Address of principal executive office)

(441) 292-1510

(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
Common shares, $.05 par value per share	NBR	NYSE

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 (Section 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, 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 ☒

The number of common shares, par value $.05 per share, outstanding as of October 24, 2023 was 9,465,106, excluding 1,161,283 common shares held by our subsidiaries, or 10,626,389 in the aggregate.

NABORS INDUSTRIES LTD. AND SUBSIDIARIES

Index

PART I FINANCIAL INFORMATION
Item 1.	Financial Statements
	Condensed Consolidated Balance Sheets as of September 30, 2023 and December 31, 2022	3
	Condensed Consolidated Statements of Income (Loss) for the Three and Nine Months Ended September 30, 2023 and 2022	4
	Condensed Consolidated Statements of Comprehensive Income (Loss) for the Three and Nine Months Ended September 30, 2023 and 2022	5
	Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2023 and 2022	6
	Condensed Consolidated Statements of Changes in Equity for the Three and Nine Months Ended September 30, 2023 and 2022	7
	Notes to Condensed Consolidated Financial Statements	9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	25
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	35
Item 4.	Controls and Procedures	36
PART II OTHER INFORMATION
Item 1.	Legal Proceedings	36
Item 1A.	Risk Factors	36
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	36
Item 3.	Defaults Upon Senior Securities	37
Item 4.	Mine Safety Disclosures	37
Item 5.	Other Information	37
Item 6.	Exhibits	37
Signatures		38

2

NABORS INDUSTRIES LTD. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

	September 30,		December 31,
	2023		2022
	(In thousands, except per
	share amounts)
ASSETS
Current assets:
Cash and cash equivalents	$	387,483	$	451,025
Short-term investments		19,160		1,290
Accounts receivable, net of allowance of $52,427 and $52,895, respectively		324,970		327,397
Inventory, net		146,254		127,947
Other current assets		82,687		92,964
Total current assets		960,554		1,000,623
Property, plant and equipment, net		2,945,964		3,026,100
Restricted cash held in trust		418,125		284,841
Deferred income taxes		239,363		257,320
Other long-term assets		162,844		160,970
Total assets (1)	$	4,726,850	$	4,729,854
LIABILITIES AND EQUITY
Current liabilities:
Trade accounts payable	$	287,228	$	314,041
Accrued liabilities		212,974		247,575
Income taxes payable		22,998		27,990
Current lease liabilities		5,503		6,784
Total current liabilities		528,703		596,390
Long-term debt		2,501,339		2,537,540
Other long-term liabilities		312,631		377,671
Deferred income taxes		1,810		2,858
Total liabilities (1)		3,344,483		3,514,459
Commitments and contingencies (Note 8)
Redeemable noncontrolling interest in subsidiary		834,195		678,604
Shareholders’ equity:
Common shares, par value $0.05 per share:
Authorized common shares 32,000; issued 10,634 and 10,505, respectively		527		525
Capital in excess of par value		3,535,728		3,536,373
Accumulated other comprehensive income (loss)		(10,422)		(11,038)
Retained earnings (accumulated deficit)		(1,861,848)		(1,841,153)
Less: treasury shares, at cost, 1,161 and 1,090 common shares, respectively		(1,315,751)		(1,315,751)
Total shareholders’ equity		348,234		368,956
Noncontrolling interest		199,938		167,835
Total equity		548,172		536,791
Total liabilities and equity	$	4,726,850	$	4,729,854

(1) The condensed consolidated balance sheets as of September 30, 2023 and December 31, 2022 include assets and liabilities of variable interest entities. See Note 3—Joint Ventures and Note 13—Special Purpose Acquisition Companies for additional information.

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

3

NABORS INDUSTRIES LTD. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS)

(Unaudited)

		Three Months Ended				Nine Months Ended
		September 30,				September 30,
		2023		2022		2023		2022
	(In thousands, except per share amounts)
Revenues and other income:
Operating revenues		$	733,974	$	694,136	$	2,280,180	$	1,893,618
Investment income (loss)			10,169		4,813		31,778		5,798
Total revenues and other income			744,143		698,949		2,311,958		1,899,416
Costs and other deductions:
Direct costs			447,751		432,311		1,365,611		1,208,820
General and administrative expenses			62,182		57,594		187,144		169,400
Research and engineering			14,016		13,409		42,371		36,028
Depreciation and amortization			161,337		169,857		484,066		496,231
Interest expense			44,042		43,841		135,347		133,650
Other, net			35,546		(25,954)		(8,604)		68,975
Total costs and other deductions			764,874		691,058		2,205,935		2,113,104
Income (loss) before income taxes			(20,731)		7,891		106,023		(213,688)
Income tax expense (benefit):
Current			6,241		11,414		43,569		30,662
Deferred			4,272		938		16,407		4,714
Total income tax expense (benefit)			10,513		12,352		59,976		35,376
Net income (loss)			(31,244)		(4,461)		46,047		(249,064)
Less: Net (income) loss attributable to noncontrolling interest			(17,672)		(9,322)		(41,128)		(32,132)
Net income (loss) attributable to Nabors			(48,916)		(13,783)	$	4,919	$	(281,196)
Earnings (losses) per share:
Basic		$	(6.26)	$	(1.80)	$	(2.79)	$	(32.72)
Diluted		$	(6.26)	$	(1.80)	$	(2.79)	$	(32.72)
Weighted-average number of common shares outstanding:
Basic			9,148		9,099		9,168		8,830
Diluted			9,148		9,099		9,168		8,830

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

4

NABORS INDUSTRIES LTD. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Unaudited)

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2023		2022		2023		2022
	(in thousands)
Net income (loss) attributable to Nabors	$	(48,916)	$	(13,783)	$	4,919	$	(281,196)
Other comprehensive income (loss), before tax:
Translation adjustment attributable to Nabors		(172)		(1,651)		496		(2,481)
Pension liability amortization and adjustment		52		52		156		1,584
Other comprehensive income (loss), before tax		(120)		(1,599)		652		(897)
Income tax expense (benefit) related to items of other comprehensive income (loss)		12		12		36		36
Other comprehensive income (loss), net of tax		(132)		(1,611)		616		(933)
Comprehensive income (loss) attributable to Nabors		(49,048)		(15,394)		5,535		(282,129)
Comprehensive income (loss) attributable to noncontrolling interest		17,672		9,322		41,128		32,132
Comprehensive income (loss)	$	(31,376)	$	(6,072)	$	46,663	$	(249,997)

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

5

NABORS INDUSTRIES LTD. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	Nine Months Ended September 30,
	2023		2022
	(In thousands)
Cash flows from operating activities:
Net income (loss)	$	46,047	$	(249,064)
Adjustments to net income (loss):
Depreciation and amortization		484,066		496,231
Deferred income tax expense (benefit)		16,407		4,712
Impairments and other charges		5,318		—
Amortization of debt discount and deferred financing costs		6,393		8,012
Losses (gains) on debt buyback		(25,202)		(1,636)
Losses (gains) on long-lived assets, net		7,980		1,130
Losses (gains) on investments, net		(1,089)		544
Share-based compensation		12,671		11,854
Foreign currency transaction losses (gains), net		21,725		(4,054)
Mark-to-market (gain) loss on warrants		(44,314)		59,717
Noncontrolling interest		(41,128)		(32,132)
Other		144		176
Changes in operating assets and liabilities, net of effects from acquisitions:
Accounts receivable		(1,890)		(29,828)
Inventory		(18,305)		(312)
Other current assets		12,140		(12,578)
Other long-term assets		(786)		(12,301)
Trade accounts payable and accrued liabilities		(63,389)		30,538
Income taxes payable		(5,892)		(66)
Other long-term liabilities		45,045		30,157
Net cash provided by (used for) operating activities		455,941		301,100
Cash flows from investing activities:
Purchases of investments		(28,083)		(19,000)
Capital expenditures		(406,695)		(272,080)
Proceeds from sales of assets		9,677		24,030
Other		(3,873)		48
Net cash (used for) provided by investing activities		(428,974)		(267,002)
Cash flows from financing activities:
Proceeds from issuance of long-term debt		250,000		—
Reduction in long-term debt		(296,547)		(133,853)
Debt issuance costs		(8,036)		(3,864)
Proceeds from revolving credit facilities		220,000		250,000
Reduction in revolving credit facilities		(220,000)		(710,000)
Proceeds from issuance of common shares, net of issuance costs		—		3,767
Payments for employee taxes on net settlement of equity awards		(7,079)		(4,523)
Dividends to common and preferred shareholders		(194)		(65)
Distributions to noncontrolling interest		(2,269)		(3,489)
Distribution of trust account for special purpose acquisition company		(186,933)		—
Sale of non-controlling interest - special purpose acquisition company		305,000		—
Other		274		(445)
Net cash (used for) provided by financing activities		54,216		(602,472)
Effect of exchange rate changes on cash and cash equivalents		(10,773)		(863)
Net increase (decrease) in cash and cash equivalents and restricted cash		70,410		(569,237)
Cash and cash equivalents and restricted cash, beginning of period		737,140		1,273,510
Cash and cash equivalents and restricted cash, end of period	$	807,550	$	704,273
RECONCILIATION OF CASH AND CASH EQUIVALENTS AND RESTRICTED CASH
Cash and cash equivalents, beginning of period		451,025		991,471
Restricted cash, beginning of period		286,115		282,039
Cash and cash equivalents and restricted cash, beginning of period	$	737,140	$	1,273,510
Cash and cash equivalents, end of period		387,483		420,307
Restricted cash, end of period		420,067		283,966
Cash and cash equivalents and restricted cash, end of period	$	807,550	$	704,273

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

6

NABORS INDUSTRIES LTD. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(Unaudited)

				Capital		Accumulated			Retained
	Common Shares			in Excess		Other		Earnings				Non-
		Par		of Par		Comprehensive		(Accumulated		Treasury		controlling		Total
(In thousands, except per share amounts)	Shares	Value		Value		Income (Loss)		Loss)		Shares		Interest		Equity
As of June 30, 2022	10,509	$	525	$	3,528,440	$	(9,956)	$	(1,750,058)	$	(1,315,751)	$	147,602	$	600,802
Net income (loss)	—		—		—		—		(13,783)		—		9,322		(4,461)
Other comprehensive income (loss), net of tax	—		—		—		(1,611)		—		—		—		(1,611)
Share-based compensation	—		—		4,024		—		—		—		—		4,024
Accrued distribution on redeemable noncontrolling interest in subsidiary	—		—		—		—		(2,601)		—		—		(2,601)
Other	(2)		—		(89)		—		101		—		—		12
As of September 30, 2022	10,507	$	525	$	3,532,375	$	(11,567)	$	(1,766,341)	$	(1,315,751)	$	156,924	$	596,165
As of June 30, 2023	10,635	$	531	$	3,537,574	$	(10,290)	$	(1,809,414)	$	(1,315,751)	$	189,022	$	591,672
Net income (loss)	—		—		—		—		(48,916)		—		17,672		(31,244)
Other comprehensive income (loss), net of tax	—		—		—		(132)		—		—		—		(132)
Share issuance adjustment, net of tax	—		(4)		(6,196)		—		4,824		—		—		(1,376)
Share-based compensation	—		—		4,350		—		—		—		—		4,350
Vesting of restricted stock awards, net of shares withheld for employee taxes	(1)		—		—		—		—		—		—		—
IPO Warrants to SPAC public shareholders	—		—		—		—		—		—		3,426		3,426
Deemed dividends to SPAC public shareholders	—		—		—		—		(823)		—		(17,556)		(18,379)
Noncontrolling interest contributions (distributions)	—		—		—		—		—		—		7,374		7,374
Accrued distribution on redeemable noncontrolling interest in subsidiary	—		—		—		—		(7,517)		—		—		(7,517)
Other	—		—		—		—		(2)		—		—		(2)
As of September 30, 2023	10,634	$	527	$	3,535,728	$	(10,422)	$	(1,861,848)	$	(1,315,751)	$	199,938	$	548,172

7

				Capital		Accumulated			Retained
	Common Shares			in Excess		Other		Earnings				Non-
		Par		of Par		Comprehensive		(Accumulated		Treasury		controlling		Total
(In thousands, except per share amounts)	Shares	Value		Value		Income (Loss)		Loss)		Shares		Interest		Equity
As of December 31, 2021	9,295	$	466	$	3,454,563	$	(10,634)	$	(1,537,988)	$	(1,315,751)	$	128,282	$	718,938
Impact of adoption of ASU 2020-06 (Note 2)	—		—		(81,881)		—		60,701		—		—		(21,180)
As of January 1, 2022	9,295		466		3,372,682		(10,634)		(1,477,287)		(1,315,751)		128,282		697,758
Net income (loss)	—		—		—		—		(281,196)		—		32,132		(249,064)
Warrant Exercise, net of tax	1,051		52		152,451		—		—		—		—		152,503
Other comprehensive income (loss), net of tax	—		—		—		(933)		—		—		—		(933)
Noncontrolling interest contributions (distributions)	—		—		—		—		—		—		(3,490)		(3,490)
Share-based compensation	—		—		11,854		—		—		—		—		11,854
Accrued distribution on redeemable noncontrolling interest in subsidiary	—		—		—		—		(7,720)		—		—		(7,720)
Other	161		7		(4,612)		—		(138)		—		—		(4,743)
As of September 30, 2022	10,507	$	525	$	3,532,375	$	(11,567)	$	(1,766,341)	$	(1,315,751)	$	156,924	$	596,165
As of December 31, 2022	10,505	$	525	$	3,536,373	$	(11,038)	$	(1,841,153)	$	(1,315,751)	$	167,835	$	536,791
Net income (loss)	—		—		—		—		4,919		—		41,128		46,047
IPO Warrants to SPAC public shareholders	—		—		—		—		—		—		3,426		3,426
Share issuance adjustment, net of tax	—		(4)		(6,196)		—		4,824		—		—		(1,376)
Other comprehensive income (loss), net of tax	—		—		—		616		—		—		—		616
Noncontrolling interest contributions (distributions)	—		—		—		—		—		—		5,105		5,105
Vesting of restricted stock awards, net of shares withheld for employee taxes	(50)		(2)		(7,077)		—		—		—		—		(7,079)
Share-based compensation	179		8		12,663		—		—		—		—		12,671
Deemed dividends to SPAC public shareholders	—		—		—		—		(8,180)		—		(17,556)		(25,736)
Accrued distribution on redeemable noncontrolling interest in subsidiary	—		—		—		—		(22,307)		—		—		(22,307)
Other	—		—		(35)		—		49		—		—		14
As of September 30, 2023	10,634	$	527	$	3,535,728	$	(10,422)	$	(1,861,848)	$	(1,315,751)	$	199,938	$	548,172

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

8

Nabors Industries Ltd. and Subsidiaries

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 1 General

Unless the context requires otherwise, references in this report to “we,” “us,” “our,” “the Company,” or “Nabors” mean Nabors Industries Ltd., together with our subsidiaries. References in this 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 our 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 September 30, 2023 included:

● 298 actively marketed rigs for land-based drilling operations in the United States and various countries throughout the world; and

● 28 actively marketed rigs for offshore platform drilling operations in the United States and multiple international markets.

The short- and long-term implications of the military hostilities between Russia and Ukraine, which began in early 2022, remain difficult to predict. We continue to actively monitor this dynamic situation. As of September 30, 2023, 0.9% of our property, plant and equipment, net was located in Russia. For the nine months ending September 30, 2023, 1.2% of our operating revenues were from operations in Russia. We currently have no assets or operations in Ukraine.

Note 2 Summary of Significant Accounting Policies

Interim Financial Information

The accompanying unaudited condensed consolidated financial statements of Nabors have been prepared in conformity with generally accepted accounting principles in the United States (“U.S. GAAP”). Pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC” or “Commission”), certain information and footnote disclosures normally included in annual financial statements prepared in accordance with U.S. GAAP have been omitted. Therefore, these financial statements should be read together with our annual report on Form 10-K for the year ended December 31, 2022 (“2022 Annual Report”). In management’s opinion, the unaudited condensed consolidated financial statements contain all adjustments (consisting of normal recurring adjustments) necessary to state fairly our financial position as of September 30, 2023 and the results of operations, comprehensive income (loss), cash flows and changes in equity for the periods presented herein. Interim results for the nine months ended September 30, 2023 may not be indicative of results that will be realized for the full year ending December 31, 2023.

Principles of Consolidation

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

In addition to the consolidation of our majority owned subsidiaries, we also consolidate variable interest entities (“VIE”) 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 (a) the power to direct activities that most significantly impact the economic performance of the VIE and (b) the obligation to absorb losses or the right to receive benefits of the VIE that could potentially be significant to the VIE. Our joint venture, SANAD, which is equally owned by Saudi Aramco and Nabors,

9

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 3—Joint Ventures. Also, we are the co-sponsor of two special purpose acquisition companies (SPACs) and have determined each is a VIE. Nabors is the primary beneficiary of each SPAC as we have the power to direct their activities, the right to receive benefits and the obligation to absorb losses. Therefore, both SPACs have been consolidated. See Note 13—Special Purpose Acquisition Companies.

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 cost methods and includes the cost of materials, labor and manufacturing overhead. Inventory included the following:

	September 30,		December 31,
	2023		2022
	(In thousands)
Raw materials	$	135,069	$	118,351
Work-in-progress		9,962		6,121
Finished goods		1,223		3,475
	$	146,254	$	127,947

Recently adopted accounting pronouncements

In August 2020, the Financial Accounting Standards Board (“FASB”) issued ASU 2020-06, Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging —Contracts in Entity’s Own Equity (Subtopic 815-40). This ASU (a) simplifies an issuer’s accounting for convertible instruments by eliminating two of the three models in ASC 470-20 that require separate accounting for embedded conversion features, (b) amends diluted EPS calculations for convertible instruments by requiring the use of the if-converted method and (c) simplifies the settlement assessment entities are required to perform on contracts that can potentially settle in an entity’s own equity by removing certain requirements. ASU 2020-06 was required to be adopted on January 1, 2022. The adoption of this ASU was determined not to be material to our condensed consolidated financial statements. Using the modified retrospective method, the adoption of this ASU resulted in a pre-tax adjustment of $27.5 million to eliminate the remaining unamortized debt discount within long-term debt on our condensed consolidated balance sheet. Also, we recognized the cumulative effect of this change as a $60.7 million adjustment to the opening balance of retained earnings (accumulated deficit) and an $81.9 million adjustment to capital in excess of par in our condensed consolidated statement of changes in equity for year ended December 31, 2022.  

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.

Note 3 Joint Ventures

During 2016, we entered into an agreement with Saudi Aramco to form a joint venture known as SANAD to own, manage and operate onshore drilling rigs in the Kingdom of Saudi Arabia. SANAD is equally owned by Saudi Aramco and Nabors.

During 2017, Nabors and Saudi Aramco each contributed $20 million in cash for the purpose of capitalizing the joint venture upon formation. In addition, since inception Nabors and Saudi Aramco have each contributed a combination of drilling rigs, drilling rig equipment and other assets, including cash, with each if the party’s contributions having a value of approximately $394 million to the joint venture. The contributions were received in exchange for redeemable ownership interests which accrue interest annually, have a twenty-five year maturity and are required to be converted to authorized capital should certain events occur, including the accumulation of specified losses. In the accompanying condensed consolidated balance sheet, Nabors has reported Saudi Aramco’s share of authorized capital as a component of noncontrolling interest in equity and Saudi Aramco’s share of the redeemable ownership interests as redeemable noncontrolling interest in subsidiary, classified as mezzanine equity. As of September 30, 2023 and December 31, 2022, the amount included in redeemable noncontrolling interest was $416.1 million and $393.8 million, respectively. The accrued interest on the redeemable ownership interest is a non-cash financing activity and is reported as an increase in the redeemable noncontrolling interest in subsidiary line in our condensed consolidated balance sheet. In 2022 and 2021, SANAD settled approximately $20.6 million and $120 million, respectively, of the accrued interest from inception, by making cash payments to each partner for their respective amounts. The assets and liabilities included

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in the condensed balance sheet below are (a) assets that can either be used to settle obligations of the VIE or be made available in the future to the equity owners through dividends, distributions or in exchange of the redeemable ownership interests (upon mutual agreement of the owners) or (b) liabilities for which creditors do not have recourse to other assets of Nabors.

The condensed balance sheet of SANAD, as included in our condensed consolidated balance sheet, is presented below.

	September 30,		December 31,
	2023		2022
	(In thousands)
Assets:
Cash and cash equivalents	$	274,545	$	302,949
Accounts receivable		86,772		92,922
Other current assets		13,413		14,750
Property, plant and equipment, net		614,159		489,358
Other long-term assets		25,103		21,278
Total assets	$	1,013,992	$	921,257
Liabilities:
Accounts payable	$	88,836	$	62,409
Accrued liabilities		4,617		6,639
Other liabilities		36,816		36,312
Total liabilities	$	130,269	$	105,360

Note 4 Accounts Receivable Purchase and Sales Agreements

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 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 September 30, 2023 and December 31, 2022 is approximately $52.3 million and $62.3 million, respectively.

In July 2021, we entered into the First Amendment to the A/R Purchase Agreement (the “First Amendment”), which reduced the commitments of the Purchasers from $250 million to $150 million and extended the term of the agreements by two years, to August 13, 2023.

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.

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 September 30, 2023, approximately $174.0 million had been sold to and as yet uncollected by the Purchasers. As of December 31, 2022, the corresponding number was approximately $208.0 million.

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Note 5 Debt

Debt consisted of the following:

	September 30,		December 31,
	2023		2022
	(In thousands)
5.10% senior notes due September 2023 (1)	$	—	$	52,004
0.75% senior exchangeable notes due January 2024 (2)		155,529		177,005
5.75% senior notes due February 2025		474,092		474,092
9.00% senior priority guaranteed notes due February 2025		—		209,384
7.25% senior guaranteed notes due January 2026		557,902		557,902
7.375% senior priority guaranteed notes due May 2027		700,000		700,000
7.50% senior guaranteed notes due January 2028		389,609		389,609
1.75% senior exchangeable notes due June 2029		250,000		—
	$	2,527,132	$	2,559,996
Less: deferred financing costs		25,793		22,456
Long-term debt	$	2,501,339	$	2,537,540

(1) The 5.10% senior notes due September 2023 were classified as long-term as of December 31, 2022, because we had the ability and intent to refinance these obligations utilizing our 2022 Credit Agreement.

(2) The 0.75% senior exchangeable notes due January 2024 were classified as long-term as of September 30, 2023, because we had the ability and intent to refinance these obligations utilizing our 2022 Credit Agreement.

During the nine months ended September 30, 2023, we repurchased $230.9 million aggregate principal amount of outstanding Nabors Delaware’s notes for approximately $236.8 million in cash, including principal, premium of $4.7 million and $1.9 million in accrued and unpaid interest. In connection with these repurchases, we recognized a $25.2 million gain for the nine months ended September 30, 2023 which is included in Other, net in our condensed consolidated statement of income (loss). $24.5 million of the gain recognized was related to accrued interest for the 9.00% senior priority guaranteed notes due February 2025 accounted for in accordance with ASC 470-60, Troubled Debt Restructuring by Debtors. In addition, the remaining balance of the 5.10% senior notes due September 2023 of $52.1 million was fully redeemed in June 2023.

1.75% Senior Exchangeable Notes Due June 2029

In February 2023, Nabors Delaware issued $250.0 million in aggregate principal amount of 1.75% senior exchangeable notes due 2029, which are fully and unconditionally guaranteed by Nabors. The notes bear interest at a rate of 1.75% per year payable semiannually on June 15 and December 15 of each year, beginning on December 15, 2023. As of September 30, 2023, there was $250.0 million in aggregate principal amount that remained outstanding.

The 1.75% exchangeable notes are exchangeable, only under certain conditions, at an exchange rate of 4.7056 common shares of Nabors per $1,000 principal amount of exchangeable notes (equivalent to an exchange price of approximately $212.51 per common share). Upon any exchange, Nabors will settle its exchange obligation in cash, common shares of Nabors, or a combination of cash and common shares, at our election. The 1.75% exchangeable notes are redeemable, in whole or in part, at our option at any time on or after June 15, 2026 only if the last reported sale price per common shares exceed 130% of the exchange price on (1) each of at least 20 trading days, whether or not consecutive, during the 30 consecutive trading days ending on, and including, the trading days immediately before the date of the related redemption notice; and (2) the trading day immediately before we send such notice, at a cash redemption price equal to 100% of the principal amount to be redeemed plus accrued and unpaid interest. If a “fundamental change” (as defined in the Indenture) occurs, subject to certain conditions, holders may require us to repurchase for cash any or all of their 1.75% exchangeable notes at a repurchase price equal to 100% of the principal amount of the 1.75% exchangeable notes to be repurchased, plus accrued and unpaid interest. Based on our assessment of the features of the 1.75% exchangeable notes, it was determined that there are features that need to be assessed for bifurcation as a derivative. As part of the assessment, the features were either not required to be bifurcated based on accounting guidance or would have no value if bifurcated.

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0.75% Senior Exchangeable Notes Due January 2024

In January 2017, Nabors Delaware issued $575.0 million in aggregate principal amount of 0.75% exchangeable senior unsecured notes due 2024, which are fully and unconditionally guaranteed by Nabors. The notes bear interest at a rate of 0.75% per year payable semiannually on January 15 and July 15 of each year, beginning on July 15, 2017. As of September 30, 2023 and December 31, 2022, there was approximately $155.5 million and $177.0 million in aggregate principal amount that remained outstanding, respectively.

The 0.75% exchangeable notes are currently exchangeable, under certain conditions, at an exchange rate of .8018 common shares of Nabors per $1,000 principal amount of 0.75% exchangeable notes (equivalent to an exchange price of approximately $1,247.19 per common share). Upon any exchange, as a result of an amendment to the notes, Nabors Delaware will settle its exchange obligation in cash. If a “fundamental change” (as defined in the Indenture) occurs, subject to certain conditions, holders may require us to repurchase for cash any or all of their 0.75% exchangeable notes at a repurchase price equal to 100% of the principal amount of the 0.75% exchangeable notes to be repurchased, plus accrued and unpaid interest. The 0.75% exchangeable notes were originally bifurcated for accounting purposes into debt and equity components of $411.2 million and $163.8 million, respectively, based on the terms of the notes and the relative fair value at the issuance date. The adoption of ASU 2020-06 effective January 1, 2022 resulted in a pre-tax adjustment of $27.5 million to eliminate the remaining unamortized debt discount.

2022 Credit Agreement

On January 21, 2022, Nabors Delaware entered into a revolving credit agreement between Nabors Delaware, the guarantors from time-to-time party thereto, the issuing banks (the “Issuing Banks”) and other lenders party thereto (the “Lenders”) and Citibank, N.A., as administrative agent (the “2022 Credit Agreement”). Under the 2022 Credit Agreement, the Lenders have committed to provide to Nabors Delaware up to an aggregate principal amount at any time outstanding not in excess of $350.0 million (with an accordion feature for an additional $100.0 million, subject to lender approval) under a secured revolving credit facility, including sub-facilities provided by certain of the Lenders for letters of credit in an aggregate principal amount at any time outstanding not in excess of $100.0 million.

The 2022 Credit Agreement permits the incurrence of additional indebtedness secured by liens, which may include liens on the collateral securing the facility, in an amount up to $150.0 million as well as a grower basket for term loans in an amount not to exceed $100.0 million secured by liens not on the collateral. The Company is required to maintain an interest coverage ratio (EBITDA/interest expense), which increases on a quarterly basis, 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. The facility matures on the earlier of (a) January 21, 2026 and (b) to the extent any principal amount of Nabors Delaware’s existing 5.75% senior notes due 2025 remains outstanding on the date that is 90 days prior to the applicable maturity date for such indebtedness, then such 90^th day.

Additionally, the Company is subject to 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), (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 basket of up to $100.0 million). The agreement also includes a collateral coverage requirement that the collateral rig fair value is to be no less than the collateral coverage threshold, as defined in the agreement.  This requirement includes an independent appraisal report to be delivered every 6 months following the closing date.

As of September 30, 2023, we had no borrowings outstanding under our 2022 Credit Agreement. The weighted average interest rate on borrowings under the 2022 Credit Agreement at September 30, 2023 was 8.02%. In order to make any future borrowings under the 2022 Credit Agreement, Nabors and certain of its wholly owned subsidiaries are subject to compliance with the conditions and covenants contained therein, including compliance with applicable financial ratios. We had $45.7 million of letters of credit outstanding under the 2022 Credit Agreement as of September 30, 2023.

As of the date of this report, we were in compliance with all covenants under the 2022 Credit Agreement. We expect to remain in compliance with all covenants under the 2022 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

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assurance of continued compliance if our current projections or material underlying assumptions prove to be incorrect. If we fail to comply with the covenants, the revolving credit commitment could be terminated, and any outstanding borrowings under the facility could be declared immediately due and payable.

Note 6 Shareholders’ Equity

Common share warrants

On May 27, 2021, the Board declared a distribution of warrants to purchase its common shares (the “Warrants”) to holders of the Company’s common shares. Holders of Nabors common shares received two-fifths of a warrant per common share held as of the record date (rounded down for any fractional warrant). Nabors issued approximately 3.2 million Warrants on June 11, 2021 to shareholders of record as of June 4, 2021. As of September 30, 2023, 2.5 million Warrants remain outstanding and 1.1 million common shares have been issued as a result of exercises of Warrants.

Each Warrant represents the right to purchase one common share at an initial exercise price of $166.66667 per Warrant, subject to certain adjustments (the “Exercise Price”). Payment of the exercise price may be in (a) cash or (b)“Designated Notes,” which the Company initially defined as (x) Nabors Delaware’s (i) 5.10% Notes due 2023, (ii) 0.75% Exchangeable Notes due 2024, (iii) 5.75% Notes due 2025 and (y) the Company’s 7.25% Notes due 2026, subject to compliance with applicable procedures with respect to the delivery of the Warrants and Designated Notes. Effective March 21, 2022, the 0.75% Exchangeable Notes due 2024 were removed from the list of Designated Notes and in June 2023, the remaining balance of the 5.10% Notes due 2023 was fully redeemed. The Exercise Price and the number of common shares issuable upon exercise are subject to anti-dilution adjustments, including for share dividends, splits, subdivisions, spin-offs, consolidations, reclassifications, combinations, noncash distributions, cash dividends (other than regular quarterly cash dividends not exceeding a permitted threshold amount), certain pro rata shares repurchases, and similar transactions, including certain issuances of common shares (or securities exercisable or convertible into or exchangeable for common shares) at a price (or having a conversion price) that is less than 95% of the market price of the common shares. The Warrants expire on June 11, 2026, but the expiration date may be accelerated at any time by the Company upon 20-days’ prior notice. The Warrants are traded on the over-the-counter market.

The Warrants are recognized as derivative liabilities in accordance with ASC 815-40. Accordingly, the Company recognizes the Warrant instruments as liabilities at fair value and adjusts the instruments to fair value at each reporting period. The liabilities are subject to re-measurement at each balance sheet date until exercised, and any change in fair value is recognized in the Company’s statement of operations. On September 30, 2023 and December 31, 2022, the fair value of the Warrants was approximately $36.3 million and $80.9 million, respectively. During the three and nine months ended September 30, 2023, approximately $7.9 million of loss and $44.3 million of gain has been recognized for the change in the liability and included in Other, net in our consolidated statements of income (loss), respectively. During the three and nine months ended September 30, 2022, approximately $34.0 million of gain and $63.0 million of loss has been recognized for the change in the liability and included in Other, net in our consolidated statements of income (loss), respectively.

Note 7 Fair Value Measurements

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.

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.

Under the fair value hierarchy:

● Level 1 measurements include unadjusted quoted market prices for identical assets or liabilities in an active market;

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● Level 2 measurements include quoted market prices for identical assets or liabilities in an active market that have been adjusted for items such as effects of restrictions for transferability and those that are not quoted but are observable through corroboration with observable market data, including quoted market prices for similar assets; and

● Level 3 measurements include those that are unobservable and of a subjective nature.

Recurring Fair Value Measurements

Our financial assets that are accounted for at fair value on a recurring basis as of September 30, 2023 and December 31, 2022 consisted of short-term investments and restricted cash held in trust. During the nine months ended September 30, 2023, 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 September 30, 2023 and December 31, 2022, our restricted cash held in trust was carried at fair market value and totaled $418.1 million and $284.8 million, respectively, and consisted of Level 1 measurements. No material Level 2 or Level 3 measurements existed for our financial assets for any of the periods presented.

Our financial liabilities that are accounted for at fair value on a recurring basis as of September 30, 2023 and December 31, 2022 consisted of the Warrants and are included in other long-term liabilities in the accompanying consolidated financial statements. As of September 30, 2023 and December 31, 2022, the Warrants were carried at fair market value using their trading price and totaled $36.3 million and $80.9 million, respectively.

Nonrecurring Fair Value Measurements

We applied fair value measurements to our nonfinancial assets and liabilities measured on a nonrecurring basis, which consist of measurements primarily related to 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 were considered Level 3 inputs.

Fair Value of Debt Instruments

We estimate the fair value of our financial instruments in accordance with U.S. GAAP. The fair value of our long-term debt and revolving credit facilities is estimated based on quoted market prices or prices quoted from third-party financial institutions. The fair value of our debt instruments is determined using Level 2 measurements. The carrying and fair values of these liabilities were as follows:

		September 30, 2023				December 31, 2022
		Carrying		Fair		Carrying		Fair
		Value		Value		Value		Value
	(In thousands)
5.10% senior notes due September 2023		$	—	$	—	$	52,004	$	51,354
0.75% senior exchangeable notes due January 2024			155,529		152,616		177,005		164,898
5.75% senior notes due February 2025			474,092		464,748		474,092		454,773
9.00% senior priority guaranteed notes due February 2025			—		—		209,384		213,507
7.25% senior guaranteed notes due January 2026			557,902		540,373		557,902		529,432
7.375% senior priority guaranteed notes due May 2027			700,000		679,504		700,000		686,686
7.50% senior guaranteed notes due January 2028			389,609		359,843		389,609		354,400
1.75% senior exchangeable notes due June 2029			250,000		221,113		—		—
		$	2,527,132	$	2,418,196	$	2,559,996	$	2,455,050
Less: deferred financing costs			25,793				22,456
		$	2,501,339			$	2,537,540

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.

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Note 8 Commitments and Contingencies

Contingencies

Income Tax

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 do not recognize the benefit of income tax positions we believe are more likely than not to be disallowed upon challenge by a tax authority. If any tax authority successfully challenges our operational structure, intercompany pricing policies or the taxable presence of our subsidiaries in certain countries, if the terms of certain income tax treaties are interpreted in a manner that is adverse to our structure, or if we lose a material tax dispute in any country, our effective tax rate on our worldwide earnings could change substantially.

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 we determine to be more likely than not 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. At this time, we consider it more likely than not that we will have sufficient taxable income in the future that will allow us to realize the deferred tax assets that we have recognized. However, it is possible that some of our recognized deferred tax assets, relating to net operating loss carryforwards and tax credits, could expire unused or could carryforward indefinitely without utilization. Therefore, unless we are able to generate sufficient taxable income from our component operations, a substantial valuation allowance to reduce our deferred tax assets may be required, which would materially increase our tax expense in the period the allowance is recognized and materially adversely affect our results of operations and statement of financial condition.

Litigation

Nabors and its subsidiaries are defendants or otherwise involved in a number of lawsuits in the ordinary course of business. We estimate the range of our liability related to pending litigation when we believe the amount and range of loss can 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. In the opinion of management and based on liability accruals provided, our ultimate exposure with respect to these pending lawsuits and claims is not expected to have a material adverse effect on our consolidated financial position or cash flows, although they could have a material adverse effect on our results of operations for a particular reporting period.

In March 2011, the Court of Ouargla entered a judgment of approximately $20.6 million (at September 30, 2023 exchange rates) against us relating to alleged violations of Algeria’s foreign currency exchange controls, which require that goods and services provided locally be invoiced and paid in local currency. The case relates to certain foreign currency payments made to us by CEPSA, a Spanish operator, for wells drilled in 2006. Approximately $7.5 million of the total contract amount was paid offshore in foreign currency, and approximately $3.2 million was paid in local currency. The judgment includes fines and penalties of approximately four times the amount at issue. We have appealed the ruling based on our understanding that the law in question applies only to resident entities incorporated under Algerian law. An intermediate court of appeals upheld the lower court’s ruling, and we appealed the matter to the Supreme Court. On September 25, 2014, the Supreme Court overturned the verdict against us, and the case was reheard by the Ouargla Court of Appeals on March 22, 2015 in light of the Supreme Court’s opinion. On March 29, 2015, the Ouargla Court of Appeals reinstated the initial judgment against us. We appealed this decision again to the Supreme Court, which again overturned the appeals court’s decision. The case was moved back to the court of appeals, which, once again, reinstated the verdict, failing to abide by the Supreme Court’s ruling. Accordingly, we are appealing once more to the Supreme Court to try to get a final ruling on the matter. While our payments were consistent with our

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historical operations in the country, and, we believe, those of other multinational corporations there, as well as interpretations of the law by the Central Bank of Algeria, the ultimate resolution of this matter could result in a loss of up to $12.6 million in excess of amounts accrued.

Off-Balance Sheet Arrangements (Including Guarantees)

We are a party to some 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 Facility (see Note 4—Accounts Receivable Purchase and Sales Agreements) 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 Nabors 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.

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

	Maximum Amount
	2023		2024	2025	Thereafter	Total
	(In thousands)
Financial standby letters of credit and other financial surety instruments	$	4,370	29,642	60	13,772	$	47,844

Note 9 Earnings (Losses) Per Share

ASC 260, Earnings per Share, requires companies to treat unvested share-based payment awards that have nonforfeitable rights to dividends or dividend equivalents as a separate class of securities in calculating earnings (losses) per share. We have granted and expect to continue to grant to employees restricted stock grants that contain nonforfeitable rights to dividends. Such grants are considered participating securities under ASC 260. As such, we are required to include these grants in the calculation of our basic earnings (losses) per share and calculate basic earnings (losses) per share using the two-class method. The two-class method of computing earnings per share is an earnings allocation formula that determines earnings per share for each class of common stock and participating security according to dividends declared and participation rights in undistributed earnings. The participating security holders are not contractually obligated to share in losses. Therefore, losses are not allocated to the participating security holders.

Basic earnings (losses) per share is computed utilizing the two-class method and is calculated based on the weighted-average number of common shares outstanding during the periods presented.

Diluted earnings (losses) per share is computed using the weighted-average number of common and common equivalent shares outstanding during the periods utilizing the two-class method for stock options and unvested restricted shares and the if-converted method for the 1.75% senior exchangeable notes due June 2029 as the instrument contains a provision for share settlement.

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A reconciliation of the numerators and denominators of the basic and diluted earnings (losses) per share computations is as follows:

		Three Months Ended				Nine Months Ended
		September 30,				September 30,
		2023		2022		2023		2022
	(In thousands, except per share amounts)
BASIC EPS:
Net income (loss) (numerator):
Income (loss), net of tax		$	(31,244)	$	(4,461)	$	46,047	$	(249,064)
Less: net (income) loss attributable to noncontrolling interest			(17,672)		(9,322)		(41,128)		(32,132)
Less: deemed dividends to SPAC public shareholders			(823)		—		(8,180)		—
Less: accrued distribution on redeemable noncontrolling interest in subsidiary			(7,517)		(2,601)		(22,307)		(7,720)
Numerator for basic earnings per share:
Adjusted income (loss), net of tax - basic		$	(57,256)	$	(16,384)	$	(25,568)	$	(288,916)
Weighted-average number of shares outstanding - basic			9,148		9,099		9,168		8,830
Earnings (losses) per share:
Total Basic		$	(6.26)	$	(1.80)	$	(2.79)	$	(32.72)
DILUTED EPS:
Adjusted income (loss), net of tax - diluted		$	(57,256)	$	(16,384)	$	(25,568)	$	(288,916)
Weighted-average number of shares outstanding - diluted			9,148		9,099		9,168		8,830
Earnings (losses) per share:
Total Diluted		$	(6.26)	$	(1.80)	$	(2.79)	$	(32.72)

For all periods presented, the computation of diluted earnings (losses) per share excludes shares related to outstanding stock options with exercise prices greater than the average market price of Nabors’ common shares and shares related to the outstanding Warrants when their exercise price or exchange price is higher than the average market price of Nabors’ common shares, because their inclusion would be anti-dilutive and because they are not considered participating securities.

In any period during which the average market price of Nabors’ common shares exceeds the exercise prices of the stock options, such stock options or warrants will be included in our diluted earnings (losses) per share computation using the if-converted method of accounting. Restricted stock is included in our basic and diluted earnings (losses) per share computation using the two-class method of accounting in all periods because such stock is considered participating securities. For periods in which we experience a net loss, all potential common shares have been excluded from the calculation of weighted-average shares outstanding, because their inclusion would be anti-dilutive.

The average number of shares from options and shares related to outstanding Warrants that were excluded from diluted earnings (losses) per share that would potentially dilute earnings per share in the future were as follows (in thousands):

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2023		2022		2023		2022
Potentially dilutive securities excluded as anti-dilutive		3,370		3,369		3,383		3,369

Additionally, for the three and nine months ended September 30, 2023, we excluded 1.2 and 1.0 million common shares from the computation of diluted shares related to the conversion of the 1.75% senior exchangeable notes due June 2029, because their effect would be anti-dilutive under the if-converted method, respectively.

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Note 10 Supplemental Balance Sheet and Income Statement Information

Accrued liabilities included the following:

	September 30,		December 31,
	2023		2022
	(In thousands)
Accrued compensation	$	60,965	$	64,926
Deferred revenue		31,511		37,808
Other taxes payable		35,263		39,621
Workers’ compensation liabilities		6,588		6,588
Interest payable		41,887		69,174
Litigation reserves		26,979		18,681
Other accrued liabilities		9,781		10,777
	$	212,974	$	247,575

Investment income (loss) includes the following:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2023		2022		2023		2022
	(In thousands)
Interest and dividend income	$	10,041	$	4,814	$	30,573	$	6,535
Gains (losses) on marketable securities		128		(1)		1,205		(737)
	$	10,169	$	4,813	$	31,778	$	5,798

Other, net included the following:

		Three Months Ended				Nine Months Ended
		September 30,				September 30,
		2023		2022		2023		2022
	(In thousands)
Losses (gains) on sales, disposals and involuntary conversions of long-lived assets		$	7,054	$	4,650	$	7,982	$	1,129
Energy transition initiatives			173		—		7,893		—
Warrant and derivative valuation			7,637		(34,049)		(44,578)		59,684
Litigation expenses and reserves			13,660		4,335		20,815		12,463
Foreign currency transaction losses (gains)			4,915		(877)		21,725		(4,054)
(Gain) loss on debt buyback			(103)		(1,259)		(25,202)		(3,236)
Other losses (gains)			2,210		1,246		2,761		2,989
		$	35,546	$	(25,954)	$	(8,604)	$	68,975

The changes in accumulated other comprehensive income (loss), by component, included the following:

	Gains		Defined
	(losses) on		benefit		Foreign
	cash flow		pension plan		currency
	hedges		items		items		Total
	(In thousands (1) )
As of January 1, 2022	$	2	$	(5,356)	$	(5,280)	$	(10,634)
Other comprehensive income (loss) before reclassifications		—		1,428		(2,481)		(1,053)
Amounts reclassified from accumulated other comprehensive income (loss)		—		120		—		120
Net other comprehensive income (loss)		—		1,548		(2,481)		(933)
As of September 30, 2022	$	2	$	(3,808)	$	(7,761)	$	(11,567)

(1) All amounts are net of tax.

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	Gains		Defined
	(losses) on		benefit		Foreign
	cash flow		pension plan		currency
	hedges		items		items		Total
	(In thousands (1) )
As of January 1, 2023	$	2	$	(3,767)	$	(7,273)	$	(11,038)
Other comprehensive income (loss) before reclassifications		—		—		496		496
Amounts reclassified from accumulated other comprehensive income (loss)		—		120		—		120
Net other comprehensive income (loss)		—		120		496		616
As of September 30, 2023	$	2	$	(3,647)	$	(6,777)	$	(10,422)

(1) All amounts are net of tax.

The line items that were reclassified to net income included the following:

		Three Months Ended				Nine Months Ended
		September 30,				September 30,
		2023		2022		2023		2022
	(In thousands)
General and administrative expenses		$	52	$	52	$	156	$	156
Total income (loss) before income tax			(52)		(52)		(156)		(156)
Tax expense (benefit)			(12)		(12)		(36)		(36)
Reclassification adjustment for (gains)/ losses included in net income (loss)		$	(40)	$	(40)	$	(120)	$	(120)

Note 11 Segment Information

The following table sets forth financial information with respect to our reportable operating segments:

		Three Months Ended				Nine Months Ended
		September 30,				September 30,
		2023		2022		2023		2022
	(In thousands)
Operating revenues:
U.S. Drilling		$	276,385	$	297,178	$	941,867	$	767,769
International Drilling			344,780		306,355		1,002,478		881,705
Drilling Solutions			72,831		61,981		224,729		172,042
Rig Technologies			61,437		50,496		183,481		132,326
Other reconciling items (1)			(21,459)		(21,874)		(72,375)		(60,224)
Total		$	733,974	$	694,136	$	2,280,180	$	1,893,618

		Three Months Ended				Nine Months Ended
		September 30,				September 30,
		2023		2022		2023		2022
	(In thousands)
Adjusted operating income (loss): (2)
U.S. Drilling		$	49,582	$	37,776	$	210,859	$	40,213
International Drilling			9,862		(907)		22,226		(2,629)
Drilling Solutions			25,341		20,099		80,830		53,068
Rig Technologies			4,995		3,412		13,741		2,788
Total segment adjusted operating income (loss)		$	89,780	$	60,380	$	327,656	$	93,440

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		Three Months Ended				Nine Months Ended
		September 30,				September 30,
		2023		2022		2023		2022
	(In thousands)
Reconciliation of segment adjusted operating income (loss) to net income (loss):
Net income (loss)		$	(31,244)	$	(4,461)	$	46,047	$	(249,064)
Income tax expense (benefit)			10,513		12,352		59,976		35,376
Income (loss) before income taxes		$	(20,731)	$	7,891		106,023	$	(213,688)
Investment (income) loss			(10,169)		(4,813)		(31,778)		(5,798)
Interest expense			44,042		43,841		135,347		133,650
Other, net			35,546		(25,954)		(8,604)		68,975
Other reconciling items (3)			41,092		39,415		126,668		110,301
Total segment adjusted operating income (loss) (2)		$	89,780	$	60,380	$	327,656	$	93,440

	September 30,		December 31,
	2023		2022
	(In thousands)
Total assets:
U.S. Drilling	$	1,278,623	$	1,389,459
International Drilling		2,239,422		2,273,766
Drilling Solutions		81,464		63,652
Rig Technologies		239,384		207,345
Other reconciling items (3)		887,957		795,632
Total	$	4,726,850	$	4,729,854

(1) Represents the elimination of inter-segment transactions related to our Rig Technologies operating segment.

(2) Adjusted operating income (loss) represents income (loss) before income taxes, interest expense, investment income (loss), and other, net. Management evaluates the performance of our operating segments using adjusted operating income (loss), which is a segment performance measure, because it believes 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. A reconciliation from net income (loss) is provided in the above table.

(3) Represents the elimination of inter-segment transactions and unallocated corporate expenses and assets.

Note 12 Revenue Recognition

We recognize 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 of 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 we provide daily drilling services. We receive payment after the services have been performed by billing customers periodically (typically monthly). However, a portion of our revenues are recognized at a point-in-time as control is transferred at a distinct point in time such as with the sale of our top drives and other capital equipment. Within our drilling contracts, we have identified one performance obligation in which the transaction price is allocated.

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Disaggregation of revenue

In the following table, revenue is disaggregated by geographical region. The table also includes a reconciliation of the disaggregated revenue with the reportable segments:

	Three Months Ended
	September 30, 2023
		U.S. Drilling		International Drilling		Drilling Solutions		Rig Technologies		Other		Total
	(In thousands)
Lower 48	$	241,900	$	—	$	45,646	$	27,453	$	—	$	314,999
U.S. Offshore Gulf of Mexico		25,768		—		2,974		—		—		28,742
Alaska		8,717		—		469		—		—		9,186
Canada		—		—		467		1,526		—		1,993
Middle East & Asia		—		243,691		10,550		27,430		—		281,671
Latin America		—		86,665		11,885		3,265		—		101,815
Europe, Africa & CIS		—		14,424		840		1,763		—		17,027
Eliminations & other		—		—		—		—		(21,459)		(21,459)
Total	$	276,385	$	344,780	$	72,831	$	61,437	$	(21,459)	$	733,974

	Nine Months Ended
	September 30, 2023
		U.S. Drilling		International Drilling		Drilling Solutions		Rig Technologies		Other		Total
	(In thousands)
Lower 48	$	820,927	$	—	$	148,587	$	92,069	$	—	$	1,061,583
U.S. Offshore Gulf of Mexico		89,744		—		8,929		—		—		98,673
Alaska		31,196		—		1,450		—		—		32,646
Canada		—		—		1,137		5,539		—		6,676
Middle East & Asia		—		704,918		32,587		70,190		—		807,695
Latin America		—		251,300		30,446		7,776		—		289,522
Europe, Africa & CIS		—		46,260		1,593		7,907		—		55,760
Eliminations & other		—		—		—		—		(72,375)		(72,375)
Total	$	941,867	$	1,002,478	$	224,729	$	183,481	$	(72,375)	$	2,280,180

	Three Months Ended
	September 30, 2022
		U.S. Drilling		International Drilling		Drilling Solutions		Rig Technologies		Other		Total
	(In thousands)
Lower 48	$	247,290	$	—	$	40,561	$	27,279	$	—	$	315,130
U.S. Offshore Gulf of Mexico		31,108		—		2,476		—		—		33,584
Alaska		18,780		—		530		—		—		19,310
Canada		—		—		368		1,354		—		1,722
Middle East & Asia		—		204,544		10,044		19,324		—		233,912
Latin America		—		79,366		7,849		89		—		87,304
Europe, Africa & CIS		—		22,445		153		2,450		—		25,048
Eliminations & other		—		—		—		—		(21,874)		(21,874)
Total	$	297,178	$	306,355	$	61,981	$	50,496	$	(21,874)	$	694,136

	Nine Months Ended
	September 30, 2022
		U.S. Drilling		International Drilling		Drilling Solutions		Rig Technologies		Other		Total
	(In thousands)
Lower 48	$	627,774	$	—	$	110,527	$	77,677	$	—	$	815,978
U.S. Offshore Gulf of Mexico		91,481		—		8,079		—		—		99,560
Alaska		48,514		—		1,284		—		—		49,798
Canada		—		—		1,146		3,573		—		4,719
Middle East & Asia		—		590,678		29,520		43,128		—		663,326
Latin America		—		226,866		20,840		89		—		247,795
Europe, Africa & CIS		—		64,161		646		7,859		—		72,666
Eliminations & other		—		—		—		—		(60,224)		(60,224)
Total	$	767,769	$	881,705	$	172,042	$	132,326	$	(60,224)	$	1,893,618

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Contract balances

We perform our obligations under a contract with a customer by transferring goods or services in exchange for consideration from the customer. We recognize a contract asset or liability when we transfer goods or services to a customer and bill an amount which differs from the revenue allocated to the related performance obligations.

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 our condensed consolidated balance sheet. In general, we receive payments from customers based on dayrates as stipulated in our contracts (e.g., operating rate, standby rate, etc.). The invoices billed to the customer are based on the varying rates applicable to the operating status on each rig. Accounts receivable are recorded when the right to consideration becomes unconditional.

Dayrate contracts also may contain fees charged to the customer for up-front rig modifications, mobilization and demobilization of equipment and personnel. These fees are associated with contract fulfillment activities, and the related revenue (subject to any constraint on estimates of variable consideration) is allocated to a single performance obligation and recognized ratably over the initial term of the contract. Mobilization fees are generally billable to the customer in the initial phase of a contract and generate contract liabilities until they are recognized as revenue. Demobilization fees are generally received at the end of the contract and generate contract assets when they are recognized as revenue prior to becoming receivables from the customer.

We receive reimbursements from our customers for the purchase of supplies, equipment, personnel services and other services provided at their request. Reimbursable revenues are variable and subject to uncertainty as the amounts received and timing thereof are dependent on factors outside of our influence. Accordingly, these revenues are constrained and not recognized until the uncertainty is resolved, which typically occurs when the related costs are incurred on behalf of the customer. We are generally considered a principal in these transactions and record the associated revenues at the gross amounts billed to the customer.

The opening and closing balances of our receivables, contract assets and current and long-term contract liabilities are as follows:

			Contract		Contract		Contract		Contract
	Contract		Assets		Assets		Liabilities		Liabilities
	Receivables		(Current)		(Long-term)		(Current)		(Long-term)
	(In millions)
As of December 31, 2022	$	401.9	$	23.6	$	0.1	$	29.2	$	3.2
As of September 30, 2023	$	372.7	$	14.0	$	2.8	$	21.3	$	2.5

Approximately 90% of the contract liability balance at the beginning of the period is expected to be recognized as revenue during 2023, of which 72% was recognized during the nine months ended September 30, 2023, and 10% is expected to be recognized during 2024.

Additionally, 96% of the contract asset balance at the beginning of the period is expected to be recognized as expense during 2023, of which 80% was recognized during the nine months ended September 30, 2023, and 4% is expected to be recognized during 2024. This disclosure does not include variable consideration allocated entirely to a wholly unsatisfied performance obligation or promise to transfer a distinct good or service that forms part of a single performance obligation.

Note 13 Special Purpose Acquisition Companies

Nabors is the co-sponsor of two SPACs. Each is a consolidated VIE included in the accompanying consolidated financial statements under Restricted cash held in trust and Redeemable noncontrolling interest in subsidiary. Each SPAC’s funds are held in an interest-bearing U.S. based trust account (“Trust Account”) and are invested in money market funds meeting certain conditions under Rule 2a-7 under the Investment Company Act, each of which invests only in direct U.S. government treasury obligations. The funds in the trust accounts will only be released to the SPACs upon completion by the applicable SPAC of a business combination or in connection with redemptions of any of the redeemable common shares, except with respect to interest earned on the funds which may be withdrawn to pay the SPAC’s taxes.

23

The company accounts for the non-controlling interest in the SPACs as subject to possible redemption in accordance with FASB ASC Topic 480 “Distinguishing Liabilities from Equity.” The SPACs’ common stock features certain redemption rights, which are considered to be outside the company’s control and subject to occurrence of uncertain future events. Nabors will recognize any future changes in redemption value immediately as they occur – i.e., adjusting the carrying amount of the instrument to its current redemption amount at each reporting period.

NETC

In November 2021, Nabors Energy Transition Corp. (“NETC”) cosponsored by Nabors and Greens Road Energy LLC completed its’ initial public offering. Greens Road Energy LLC is owned by certain members of Nabors’ board of directors and management team. As part of the initial public offering of NETC and subsequent private placement warrant transactions, $281.5 million was deposited in a Trust Account. At a special meeting held on May 11, 2023, $186.9 million was distributed from the Trust Account to NETC’s stockholders who exercised their right to redeem their shares for a pro rata portion of the funds in the Trust Account. As of September 30, 2023 and December 31, 2022, the Trust Account balance was $106.9 million and $284.8 million, respectively.

Approximately $106.9 million and $284.8 million of non-controlling interest subject to possible redemption is presented at full redemption value as temporary equity, outside of the stockholders’ equity section in the accompanying consolidated financial statements as of September 30, 2023 and December 31, 2022, respectively.

The following table summarizes NETC’s effects on changes in non-controlling interest subject to possible redemption.

	2023
	(In thousands)
Balance, beginning of year	$	284,841
Redemptions		(186,933)
Net earnings		4,715
Nabors deemed dividends to SPAC public shareholders		2,597
Noncontrolling interest deemed dividends to SPAC public shareholders		1,641
Balance as of September 30	$	106,861

In February 2023, NETC entered into a definitive agreement for a business combination with Vast Solar Pty Ltd (“Vast”), a development-stage company specializing in the design and manufacturing of concentrated solar thermal power (CSP) systems. The agreement is subject to certain customary closing conditions. The company continues to evaluate what the accounting treatment for its investment in NETC will be after the business combination is complete.

NETC has until November 19, 2023 (or up to December 19, 2023 if extended pursuant to its’ charter) to consummate a business combination.  It is uncertain that NETC will be able to consummate a business combination by this time. If a business combination is not consummated by this date, there will be a mandatory liquidation and subsequent dissolution of NETC.

NETC II

In July 2023, Nabors Energy Transition Corporation II (“NETC II”) co-sponsored by Nabors and Greens Road Energy II LLC, completed its initial public offering of 30,500,000 units at $10.00 per unit, generating gross proceeds of approximately $305.0 million. Greens Road Energy II LLC is owned by certain members of Nabors’ management team. Simultaneously with the closing of the IPO, NETC II completed the private sale of an aggregate of 9,540,000 warrants for an aggregate value of $9.5 million, of which 4,348,000 warrants were purchased by related parties including certain Nabors officers and employees, with the remainder being purchased by a subsidiary of Nabors. As part of the initial public offering of NETC II and subsequent private placement warrant transactions, $308.1 million was deposited in a Trust Account on July 18, 2023. As of September 30, 2023, the Trust Account balance was $311.3 million.

Approximately $311.3 million of non-controlling interest subject to possible redemption is presented at full redemption value as temporary equity, outside of the stockholders’ equity section in the accompanying consolidated financial statements as of September 30, 2023.

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The following table summarizes NETC II’s effects on changes in non-controlling interest subject to possible redemption.

	2023
	(In thousands)
Balance, beginning of year	$	—
Initial public offering		294,474
Net earnings		3,214
Nabors deemed dividends to SPAC public shareholders		5,583
Noncontrolling interest deemed dividends to SPAC public shareholders		7,993
Balance as of September 30	$	311,264

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

We often discuss expectations regarding our future markets, demand for our products and services, and our performance in our annual, quarterly and current reports, press releases, and other written and oral statements. Statements relating to matters that are not historical facts are “forward-looking statements” within the meaning of the safe harbor provisions of 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”). These “forward-looking statements” are based on an analysis of currently available competitive, financial and economic data and our operating plans. They are inherently uncertain and investors should recognize that events and actual results could turn out to be significantly different from our expectations. By way of illustration, when used in this document, words such as “anticipate,” “believe,” “expect,” “plan,” “intend,” “estimate,” “project,” “will,” “should,” “could,” “may,” “predict” and similar expressions are intended to identify forward-looking statements.

You should consider the following key factors when evaluating these forward-looking statements:

● geopolitical events, pandemics (including COVID-19) and other macro-events and their respective and collective impact on our operations as well as oil and gas markets and prices;

● fluctuations and volatility in worldwide prices of and demand for oil and natural gas;

● fluctuations in levels of oil and natural gas exploration and development activities;

● fluctuations in the demand for our services;

● competitive and technological changes and other developments in the oil and gas and oilfield services industries;

● our ability to renew customer contracts in order to maintain competitiveness;

● the existence of operating risks inherent in the oil and gas and oilfield services industries;

● the possibility of the loss of one or a number of our large customers;

● the amount and nature of our future capital expenditures and how we expect to fund our capital expenditures;

● the occurrence of cybersecurity incidents, attacks or other breaches to our information technology systems;

● the impact of long-term indebtedness and other financial commitments on our financial and operating flexibility;

● our access to, and the cost of, capital, including the impact of a downgrade in our credit rating, covenant restrictions, availability under our secured revolving credit facility, future issuances of debt or equity securities and the global interest rate environment;

● our dependence on our operating subsidiaries and investments to meet our financial obligations;

25

● our ability to retain skilled employees;

● our ability to complete, and realize the expected benefits of, strategic transactions;

● changes in tax laws and the possibility of changes in other laws and regulations;

● the possibility of political or economic instability, civil disturbance, war or acts of terrorism in any of the countries in which we do business;

● global views on and the regulatory environment related to energy transition and our ability to implement our energy transition initiatives;

● potential long-lived asset impairments;

● the possibility of changes to U.S. trade policies and regulations including the imposition of trade embargoes, sanctions or tariffs; and

● general economic conditions, including the capital and credit markets.

Our business depends, to a large degree, on the level of spending by oil and gas companies for exploration, development and production activities. Therefore, a sustained increase or decrease in the price of oil or natural gas, that has a material impact on exploration, development and production activities, could also materially affect our financial position, results of operations and cash flows.

The above description of risks and uncertainties is by no means all-inclusive but highlights certain factors that we believe are important for your consideration. For a more detailed description of risk factors that may affect us or our industry, please refer to Item 1A. — Risk Factors in our 2022 Annual Report.

Management Overview

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

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.

Outlook

The demand for our services and products is a function of the level 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 supply and demand cycles. Additionally, some oil and gas companies may intentionally limit their capital spending to a percentage of their operating cash flows.

During 2022, global oilfield activity substantially returned to pre-COVID levels. Since late 2022, global energy commodity markets have experienced higher levels of volatility, in part due to the disruptions and effects of the war in Ukraine. In the U.S., operators generally reacted to the conflict 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, have declined significantly since the third quarter of 2022. In turn, gas-directed activity decreased. More recently, the anticipated completion of several large liquified natural gas terminals currently under construction on the U.S. Gulf Coast has in part led to an increase in natural gas prices. The increase in natural gas demand from these facilities and in natural gas prices could lead to greater demand for related oilfield services.

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Recent Developments

1.75% Senior Exchangeable Notes Due June 2029

In February 2023, Nabors Delaware issued $250.0 million in aggregate principal amount of 1.75% senior exchangeable notes due 2029, which are fully and unconditionally guaranteed by Nabors. The notes bear interest at a rate of 1.75% per year payable semiannually on June 15 and December 15 of each year, beginning on December 15, 2023.

The exchangeable notes are currently exchangeable, under certain conditions, at an exchange rate of 4.7056 common shares of Nabors per $1,000 principal amount of exchangeable notes (equivalent to an exchange price of approximately $212.51 per common share). Upon any exchange, Nabors will settle its exchange obligation in cash, common shares of Nabors, or a combination of cash and common shares, at our election.

NETC Merger Agreement

In February 2023, NETC entered into a definitive agreement for a business combination with Vast, a development-stage company specializing in the design and manufacturing of concentrated solar thermal power (CSP) systems. The agreement is subject to certain customary closing conditions, and is expected to close in the fourth quarter.

Nabors Energy Transition Corporation II

In July 2023, NETC II, a special purpose acquisition company, commonly referred to as a “SPAC”, co-sponsored by Nabors and Greens Road Energy II LLC, completed its initial public offering of 30,500,000 units at $10.00 per unit, generating gross proceeds of approximately $305.0 million. Greens Road Energy II LLC is owned by certain members of Nabors’ management team. Simultaneously with the closing of the IPO, NETC II completed the private sale of an aggregate of 9,540,000 warrants for an aggregate value of $9.5 million, of which 4,348,000 warrants were purchased by related parties including certain Nabors officers and employees, with the remainder being purchased by a subsidiary of Nabors. NETC II was formed for the sole purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses with significant growth potential and to create value by supporting the company in the public markets. NETC II intends to identify solutions, opportunities, companies or technologies that focus on advancing the energy transition; specifically ones that facilitate, improve or complement the reduction of carbon or greenhouse gas emissions while satisfying growing energy consumption across markets globally.

Comparison of the three months ended September 30, 2023 and 2022

Operating revenues for the three months ended September 30, 2023 totaled $734.0 million, representing an increase of $39.8 million, or 6%, compared to the three months ended September 30, 2022. For a more detailed description of operating results, see Segment Results of Operations below.

Net loss attributable to Nabors totaled $48.9 million ($6.36 loss per diluted share) for the three months ended September 30, 2023 compared to a net loss attributable to Nabors of $13.8 million ($1.80 per diluted share) for the three months ended September 30, 2022, or a $35.1 million increase in net loss. The increase in net loss is attributable to the absence of gains related to mark-to-market activity for the common share warrants in the current year that were present in the prior year which contributed approximately $41.7 million to the decrease in net income. See Other Financial Information —Other, net below for additional discussion.

General and administrative expenses for the three months ended September 30, 2023 totaled $62.2 million, representing an increase of $4.6 million, or 8%, compared to the three months ended September 30, 2022. This is reflective of increases in workforce costs and general operating costs as market conditions have improved and operating levels have increased.

Research and engineering expenses for the three months ended September 30, 2023 totaled $14.0 million, representing an increase of $0.6 million, or 5%, compared to the three months ended September 30, 2022. This is primarily reflective of an increase in research and development activities, along with increased engineering support costs for the higher general operating activity levels as market conditions have improved.

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Depreciation and amortization expense for the three months ended September 30, 2023 was $161.3 million, representing a decrease of $8.5 million, or 5%, compared to the three months ended September 30, 2022. The decrease is a result of the limited capital expenditures over recent years coupled with a higher amount of older assets reaching the end of their useful lives.

Segment Results of Operations

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

	Three Months Ended
	September 30,
	2023		2022		Increase/(Decrease)
U.S. Drilling
Operating revenues	$	276,385	$	297,178	$	(20,793)	(7)	%
Adjusted operating income (loss) (1)	$	49,582	$	37,776	$	11,806	31	%
Average rigs working (2)		80.4		99.8		(19.4)	(19)	%
International Drilling
Operating revenues	$	344,780	$	306,355	$	38,425	13	%
Adjusted operating income (loss) (1)	$	9,862	$	(907)	$	10,769	n/m (3)
Average rigs working (2)		77.2		74.6		2.6	3	%
Drilling Solutions
Operating revenues	$	72,831	$	61,981	$	10,850	18	%
Adjusted operating income (loss) (1)	$	25,341	$	20,099	$	5,242	26	%
Rig Technologies
Operating revenues	$	61,437	$	50,496	$	10,941	22	%
Adjusted operating income (loss) (1)	$	4,995	$	3,412	$	1,583	46	%

(1) Adjusted operating income (loss) is our measure of segment profit and loss. See Note 11—Segment Information to the consolidated financial statements included in Item 1 of the report.

(2) Represents a measure of the average number of rigs operating during a given period. For example, one rig operating 45 days during a quarter represents approximately 0.5 average rigs working for the quarter. On an annual period, one rig operating 182.5 days represents approximately 0.5 average rigs working for the year.

(3) The percentage is so large that it is not meaningful.

U.S. Drilling

Operating revenues for our U.S. Drilling segment decreased by $20.8 million or 7% during the three months ended September 30, 2023 compared to the corresponding period in 2022. The decrease in operating revenues was due to a 19% decrease in average rigs working offset by an increase in average day rates since the third quarter of 2022. Despite the decrease in operating revenues, adjusted operating income increased by $11.8 million due to lower operating costs as a result of the decrease in average rigs working and from slightly lower depreciation due to the limited capital expenditures over recent years.

International Drilling

Operating revenues for our International Drilling segment during the three months ended September 30, 2023 increased by $38.4 million or 13% compared to the corresponding prior year period. This increase was due to a 3% increase in the average rigs working, reflecting increased drilling activity as market conditions and demand for our drilling services have increased since the prior year. The increase is also attributable to an increase in day rates, as pricing for our services has improved since the third quarter of 2022.

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Drilling Solutions

Operating revenues for this segment increased by $10.9 million or 18% during the three months ended September 30, 2023 compared to the corresponding period in 2022 as market conditions and demand for our services have improved.

Rig Technologies

Operating revenues for our Rig Technologies segment increased by $10.9 million or 22% during the three months ended September 30, 2023 compared to the corresponding period as market conditions and demand for our services have improved since the prior year.

Other Financial Information

Interest expense

Interest expense for the three months ended September 30, 2023 was $44.0 million, representing an increase of $0.2 million compared to the three months ended September 30, 2022. The increase was primarily due to an increase in our effective interest rate levels on our outstanding debt throughout the three months ended September 30, 2023 as compared to the three months ended September 30, 2022.

Other, net

Other, net for the three months ended September 30, 2023 was a loss of $35.5 million compared to a $26.0 million gain for the three months ended September 30, 2022 representing a $61.5 million increase in loss. The $35.5 million of loss during the three months ended September 30, 2023 primarily consisted of $13.7 million from increases in litigation reserves, $7.9 million from mark-to-market losses on the common share warrants, $7.1 million in losses on sales and disposals of long-lived assets and $4.9 million in foreign currency transaction losses. In comparison, the amount during the three months ended September 30, 2022 primarily consisted of $34.0 million recognized related to mark-to-market gains on the common stock warrants, partially offset by $4.7 million in losses on sales and disposals of long-lived assets and $4.3 million due to increases in litigation reserves.

Income tax

Our worldwide tax expense for the three months ended September 30, 2023 was $10.5 million compared to $12.4 million for the three months ended September 30, 2022. The decrease in tax expense was primarily attributable to the change in amount and geographic mix of our pre-tax earnings (losses).

Comparison of the nine months ended September 30, 2023 and 2022

Operating revenues for the nine months ended September 30, 2023 totaled $2.3 billion, representing an increase of $0.4 billion, or 20%, compared to the nine months ended September 30, 2022. All of our operating segments experienced an increase in operating revenues over this period. For a more detailed description of operating results, see Segment Results of Operations below.

Net income attributable to Nabors totaled $4.9 million ($2.79 loss per diluted share) for the nine months ended September 30, 2023 compared to a net loss attributable to Nabors of $281.2 million ($32.72 per diluted share) for the nine months ended September 30, 2022, or a $286.1 million increase in net income. The increase in net income is attributable to improved market conditions, which has resulted in an increase of approximately $234.2 million in adjusted operating income across all of our segments from the prior year. In addition, gains related to mark-to-market activity for the common share warrants during the nine months ended September 30, 2023 contributed approximately $107.3 million to the increase in net income. See Other Financial Information —Other, net below for additional discussion.

General and administrative expenses for the nine months ended September 30, 2023 totaled $187.1 million, representing an increase of $17.7 million, or 10%, compared to the nine months ended September 30, 2022. This is

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reflective of increases in workforce costs and general operating costs as market conditions have improved and operating levels have increased.

Research and engineering expenses for the nine months ended September 30, 2023 totaled $42.4 million, representing an increase of $6.3 million, or 18%, compared to the nine months ended September 30, 2022. This is primarily reflective of an increase in research and development activities, along with increased engineering support costs for the higher general operating activity levels, as market conditions have improved.

Depreciation and amortization expense for the nine months ended September 30, 2023 was $484.1 million, representing a decrease of $12.2 million, or 2%, compared to the nine months ended September 30, 2022. The decrease is a result of the limited capital expenditures over recent years coupled with a higher amount of older assets reaching the end of their useful lives.

Segment Results of Operations

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

		Nine Months Ended
		September 30,
		2023		2022		Increase/(Decrease)
	(In thousands, except percentages and rig activity)
U.S. Drilling
Operating revenues		$	941,867	$	767,769	$	174,098	23	%
Adjusted operating income (loss) (1)		$	210,859	$	40,213	$	170,646	424	%
Average rigs working (2)			89.7		95.5		(5.8)	(6)	%
International Drilling
Operating revenues		$	1,002,478	$	881,705	$	120,773	14	%
Adjusted operating income (loss) (1)		$	22,226	$	(2,629)	$	24,855	945	%
Average rigs working (2)			76.9		73.6		3.3	4	%
Drilling Solutions
Operating revenues		$	224,729	$	172,042	$	52,687	31	%
Adjusted operating income (loss) (1)		$	80,830	$	53,068	$	27,762	52	%
Rig Technologies
Operating revenues		$	183,481	$	132,326	$	51,155	39	%
Adjusted operating income (loss) (1)		$	13,741	$	2,788	$	10,953	393	%

(1) Adjusted operating income (loss) is our measure of segment profit and loss. See Note 11—Segment Information to the consolidated financial statements included in Item 1 of the report.

(2) Represents a measure of the average number of rigs operating during a given period. For example, one rig operating 45 days during a quarter represents approximately 0.5 average rigs working for the quarter. On an annual period, one rig operating 182.5 days represents approximately 0.5 average rigs working for the year.

U.S. Drilling

Operating revenues for our U.S. Drilling segment increased by $174.1 million or 23% during the nine months ended September 30, 2023 compared to the corresponding period in 2022. The increase is primarily attributable to an increase in day rates, as pricing for our services has improved. Adjusted operating income increased by $170.6 million. The component of the revenue increase driven by the day rates contributed directly to the increase in adjusted operating income. Also, depreciation was lower due to the limited capital expenditures over recent years.

International Drilling

Operating revenues for our International Drilling segment during the nine months ended September 30, 2023 increased by $120.8 million or 14% compared to the corresponding prior year period. The increase is attributable to an increase in day rates, as pricing for our services has improved and a 4% increase in the average rigs working, reflecting increased drilling activity as market conditions and demand for our drilling services have increased since the prior year.

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Drilling Solutions

Operating revenues for this segment increased by $52.7 million or 31% during the nine months ended September 30, 2023 compared to the corresponding period in 2022 as market conditions and demand for our services have rebounded.

Rig Technologies

Operating revenues for our Rig Technologies segment increased by $51.2 million or 39% during the nine months ended September 30, 2023 compared to the corresponding period as market conditions and demand for our services have improved since the prior year.

Other Financial Information

Interest expense

Interest expense for the nine months ended September 30, 2023 was $135.3 million, representing an increase of $1.7 million, or 1%, compared to nine months ended September 30, 2022. The increase was primarily due to an increase in our effective interest rate levels on our outstanding debt throughout the nine months ended September 30, 2023 as compared to the nine months ended September 30, 2022.

Other, net

Other, net for the nine months ended September 30, 2023 was a gain of $8.6 million compared to $69.0 million loss for the nine months ended September 30, 2022 representing a $77.6 million increase in income. During the nine months ended September 30, 2023, $44.3 million was from mark-to-market gains of the common share warrants and $25.2 million of gain was recognized for debt buybacks offset by $21.7 million in foreign currency transaction losses, $7.9 million in costs related to energy transition initiatives and $20.8 million from increases in litigation reserves. In comparison, the amount during the nine months ended September 30, 2022 primarily consisted of $59.7 million mark-to-market losses for the common share warrants and $12.5 million from increases in litigation reserves. In addition, there were $4.1 million in foreign currency gains and $3.2 million related to net gains on debt buybacks.

Income tax

Our worldwide tax expense for the nine months ended September 30, 2023 was $60.0 million compared to $35.4 million for the nine months ended September 30, 2022. The increase in tax expense was primarily attributable to the change in amount and geographic mix of our pre-tax earnings (losses).

Liquidity and Capital Resources

Financial Condition and Sources of Liquidity

Our primary sources of liquidity are cash and investments, availability under our revolving credit facility and cash generated from operations. As of September 30, 2023, we had cash and short-term investments of $406.6 million and working capital of $431.9 million. As of December 31, 2022, we had cash and short-term investments of $452.3 million and working capital of $404.2 million.

On September 30, 2023, we had no borrowings outstanding under the 2022 Credit Agreement, which has a total borrowing capacity of $350.0 million. We had $45.7 million of letters of credit outstanding under the 2022 Credit Agreement as of September 30, 2023.

The 2022 Credit Agreement requires us to maintain an interest coverage ratio (EBITDA/interest expense), which increases on a quarterly basis, 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), (b) a covenant restricting its ability to pay dividends or make other distributions with respect to its capital stock and to

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repurchase certain indebtedness, and (c) a covenant restricting the ability of the Company’s subsidiaries to incur debt (subject to the grower basket of up to $100.0 million).

The facility matures on the earlier of (a) January 21, 2026 and (b) to the extent any principal amount of Nabors Delaware’s existing 5.75% senior notes due 2025 remains outstanding on the date that is 90 days prior to the applicable maturity date for such indebtedness, then such 90^th day.

As of the date of this report, we were in compliance with all covenants under the 2022 Credit Agreement. If we fail to perform our obligations under the covenants, the revolving credit commitments under the 2022 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 2022 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 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.

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.

We had 11 letter-of-credit facilities with various banks as of September 30, 2023. Availability under these facilities as of September 30, 2023 was as follows:

	September 30,
	2023
	(In thousands)
Credit available	$	428,906
Less: Letters of credit outstanding, inclusive of financial and performance guarantees		106,061
Remaining availability	$	322,845

Accounts Receivable Purchase and Sales Agreements

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.

On July 13, 2021, we entered into the First Amendment to the A/R Purchase Agreement which, among other things, reduced the commitments of the third-party financial institutions (the “Purchasers”) from $250 million to $150 million.

On June 27, 2022, we entered into the Third Amendment to the A/R Purchase Agreement which extended the term of the Purchase Agreement to August 13, 2024 and increased the commitments of the Purchasers from $150 million to $250 million. Subject to Purchaser approval, the A/R Purchase Agreement allows for purchase commitments to be increased to $300 million.

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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 September 30, 2023 was $174.0 million.

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 4—Accounts Receivable Purchase and Sales Agreements.

Other Indebtedness

See Note 5—Debt, for further details about our financing arrangements, including our debt securities.

Future Cash Requirements

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 2022 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.

Purchase commitments outstanding at September 30, 2023 totaled approximately $370.6 million, primarily for capital expenditures, other operating expenses and purchases of inventory. We can reduce planned expenditures if necessary or increase them if market conditions and new business opportunities warrant it. The level of our outstanding purchase commitments and our expected level of capital expenditures over the next 12 months represent a number of capital programs that are currently underway or planned.

See our discussion of guarantees issued by Nabors that could have a potential impact on our financial position, results of operations or cash flows in future periods included below under “Off-Balance Sheet Arrangements (Including Guarantees).”

There have been no material changes to the contractual cash obligations that were included in our 2022 Annual Report.

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

Cash Flows

Our cash flows depend, to a large degree, on the level of spending by oil and gas companies for exploration, development and production activities. Sustained decreases in the price of oil or natural gas could have a material impact on these activities and could also materially affect our cash flows. Certain sources and uses of cash, such as the level of discretionary capital expenditures or acquisitions, purchases and sales of investments, dividends, loans, issuances and repurchases of debt and of our common shares are within our control and are adjusted as necessary based on market conditions. We discuss our cash flows for the nine months ended September 30, 2023 and 2022 below.

Operating Activities. Net cash provided by operating activities totaled $455.9 million during the nine months ended September 30, 2023, compared to net cash provided of $301.1 million during the corresponding 2022 period. Operating cash flows are our primary source of capital and liquidity. Cash from operating results (before working capital changes) was $489.0 million for the nine months ended September 30, 2023, an increase of $193.5 million when compared to $295.5 million in the corresponding 2022 period. This was due to the increase in activity across our business for the

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nine-month period ended September 30, 2023 compared to the nine-month period ended September 30, 2022. Changes in working capital items such as collection of receivables, other deferred revenue arrangements and payments of operating payables are also significant factors affecting operating cash flows and can be highly volatile in periods of increasing or decreasing activity levels. Changes in working capital items used $33.1 million in cash flows during the nine months ended September 30, 2023, a $38.7 million unfavorable change as compared to the $5.6 million in cash flows provided by working capital in the corresponding 2022 period.

Investing Activities. Net cash used for investing activities totaled $429.0 million during the nine months ended September 30, 2023 compared to net cash used of $267.0 million during the corresponding 2022 period. Our primary use of cash for investing activities is capital expenditures for rig-related enhancements, new construction and equipment, and sustaining capital expenditures. During the nine months ended September 30, 2023 and 2022, we used cash for capital expenditures totaling $406.7 million and $272.1 million, respectively.

During the nine months ended September 30, 2023, we received $9.7 million in proceeds from asset sales. We also invested $11.1 million in companies that focus on energy transition related technologies. During the nine months ended September 30, 2022, we received $24.0 million in proceeds from asset sales. We also invested $19.0 million in companies that focus on energy transition related technologies.

Financing Activities. Net cash provided by financing activities totaled $54.2 million during the nine months ended September 30, 2023. During the nine months ended September 30, 2023, we received proceeds of $250.0 million from issuance of the 1.75% Exchangeable Notes and repaid $296.5 million of outstanding long-term debt. We received $305.0 million from the public offering of NETC II and made a distribution of $186.9 million from the Trust Account to NETC stockholders who exercised their right to redemption of their shares.

Net cash used by financing activities totaled $602.5 million during the nine months ended September 30, 2022. During the nine months ended September 30, 2022, we repaid $460.0 million in net amounts under our revolving credit facility and $133.9 million of long-term debt.

Summarized Combined Financial Information for Guarantee of Securities of Subsidiaries

Nabors Delaware is an indirect, wholly owned subsidiary of Nabors. Nabors fully and unconditionally guarantees the due and punctual payment of the principal of, premium, if any, and interest on Nabors Delaware’s registered notes, which, as of September 30, 2023, are its 5.75% Senior Notes due 2025 (the “Registered Notes”), and any other obligations of Nabors Delaware under the Registered Notes when and as they become due and payable, whether at maturity, upon redemption, by acceleration or otherwise, if Nabors Delaware is unable to satisfy these obligations. Nabors’ guarantee of Nabors Delaware’s obligations under the Registered Notes are its unsecured and unsubordinated obligation and have the same ranking with respect to Nabors’ indebtedness as the Registered Notes have with respect to Nabors Delaware’s indebtedness. In the event that Nabors is required to withhold or deduct on account of any Bermudian taxes due from any payment made under or with respect to its guarantees, subject to certain exceptions, Nabors will pay additional amounts so that the net amount received by each holder of Registered Notes will equal the amount that such holder would have received if the Bermudian taxes had not been required to be withheld or deducted.

The following summarized financial information is included so that separate financial statements of Nabors Delaware are not required to be filed with the SEC. The condensed consolidating financial statements present investments in both consolidated and unconsolidated affiliates using the equity method of accounting.

In lieu of providing separate financial statements for issuers and guarantors (the “Obligated Group”), we have presented the accompanying supplemental summarized combined balance sheet and income statement information for the Obligated Group based on Rule 13-01 of the SEC’s Regulation S-X that we early adopted effective April 1, 2020.

All significant intercompany items among the Obligated Group have been eliminated in the supplemental summarized combined financial information. The Obligated Group’s investment balances in Subsidiary Non-Guarantors have been excluded from the supplemental combined financial information. Significant intercompany balances and activity for the Obligated Group with other related parties, including Subsidiary Non-Guarantors (referred to as “affiliates”), are presented separately in the accompanying supplemental summarized financial information.

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Summarized combined Balance Sheet and Income Statement information for the Obligated Group follows:

	September 30,		December 31,
Summarized Combined Balance Sheet Information	2023		2022
	(In thousands)
Assets
Current Assets	$	1,332	$	2,578
Non-Current Assets		468,289		458,232
Noncurrent assets - affiliates		5,906,547		5,733,274
Total Assets	$	6,376,168	$	6,194,084
Liabilities and Stockholders’ Equity
Current liabilities	$	46,686	$	79,941
Noncurrent liabilities		2,637,307		2,698,835
Total Liabilities		2,683,993		2,778,776
Stockholders’ Equity		3,692,175		3,415,308
Total Liabilities and Stockholders’ Equity	$	6,376,168	$	6,194,084

	Nine Months Ended		Year Ended
	September 30,		December 31,
Summarized Combined Income Statement Information	2023		2022
	(In thousands)
Total revenues, earnings (loss) from consolidated affiliates and other income	$	(231,248)	$	(148,523)
Income (loss), net of tax		(301,423)		(420,492)
Net income (loss) attributable to Nabors		(301,423)		(420,492)

Other Matters

Recent Accounting Pronouncements

See Note 2—Summary of Significant Accounting Policies.

Off-Balance Sheet Arrangements (Including Guarantees)

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. 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.

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

	Maximum Amount
	2023		2024	2025	Thereafter	Total
	(In thousands)
Financial standby letters of credit and other financial surety instruments	$	4,370	29,642	60	13,772	$	47,844

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We may be exposed to market risks arising from the use of financial instruments in the ordinary course of business as discussed in our 2022 Annual Report. Other than changes in the fair value of our warrants due to changes in trading values as discussed in “Note 6 Shareholders’ Equity” to our Condensed Consolidated Financial Statements, there were

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no material changes in our exposure to market risk during the nine months ended September 30, 2023 from those disclosed in our 2022 Annual Report.

ITEM 4. CONTROLS AND PROCEDURES

We maintain a set of disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) designed to provide reasonable assurance that information required to be disclosed in our reports filed under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to management as appropriate to allow timely decisions regarding required disclosure. We have investments in certain unconsolidated entities that we do not control or manage. Because we do not control or manage these entities, our disclosure controls and procedures with respect to these entities are necessarily more limited than those we maintain with respect to our consolidated subsidiaries.

The Company’s management, with the participation of the Chief Executive Officer and the Chief Financial Officer, has evaluated the effectiveness of the Company’s disclosure controls and procedures as of the end of the period covered by this report. Based on this evaluation, the Chief Executive Officer and the Chief Financial Officer have concluded that the Company’s disclosure controls and procedures were effective as of the end of the period covered by this report.

There were no changes in our internal control over financial reporting during the quarter ended September 30, 2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

See Note 8 — Commitments and Contingencies — Litigation for information regarding our legal proceedings.

ITEM 1A. RISK FACTORS

Except as set forth below, there have been no material changes from the risk factors previously disclosed in Part 1, Item 1A, of our 2022 Annual Report on Form 10-K, which in addition to the information set forth elsewhere in this report and our 2022 Annual Report, should be carefully considered when evaluating us. These risks are not the only risks we face. Additional risks not presently known to us or that we currently deem immaterial may also impair our business.

We will be subject to a number of uncertainties during the timeframe when Nabors Energy Transition Corporation II (NETC II) pursues a business combination, which could adversely affect our business, financial condition, results of operations, cash flows and share price.

If NETC II is unable to consummate a suitable business transaction during the prescribed time period set forth in the terms of the initial public offering, we may experience negative reactions from the financial markets and from our shareholders. In addition, in the event that NETC II is able to find a suitable business combination, or if the business combination is unsuccessful, there is no assurance that we will realize the anticipated value of such transaction.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

We withheld the following shares of our common shares to satisfy tax withholding obligations in connection with grants of share awards during the three months ended September 30, 2023 from the distributions described below. These

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shares may be deemed to be “issuer purchases” of shares that are required to be disclosed pursuant to this Item, but were not purchased as part of a publicly announced program to purchase common shares:

					Approximated
				Total Number	Dollar Value of
				of Shares	Shares that May
	Total	Average		Purchased as	Yet Be
	Number of	Price		Part of Publicly	Purchased
Period	Shares	Paid per		Announced	Under the
(In thousands, except per share amounts)	Repurchased	Share (1)		Program	Program (2)
July 1 - July 31	1	$	114.04	—	278,914
August 1 - August 31	—	$	—	—	278,914
September 1 - September 30	—	$	—	—	278,914

(1) Shares were withheld from employees and directors to satisfy certain tax withholding obligations due in connection with grants of shares under our 2013 Stock Plan and 2016 Stock Plan. Each of the 2016 Stock Plan, the 2013 Stock Plan, the 2003 Employee Stock Plan and the 1999 Stock Option Plan for Non-Employee Directors provide for the withholding of shares to satisfy tax obligations, but do not specify a maximum number of shares that can be withheld for this purpose. These shares were not purchased as part of a publicly announced program to purchase common shares.

(2) In August 2015, our Board authorized a share repurchase program under which we may repurchase up to $400.0 million of our common shares in the open market or in privately negotiated transactions. The program was renewed by the Board in February 2019. Through September 30, 2023, we repurchased 0.3 million of our common shares for an aggregate purchase price of approximately $121.1 million under this program. As of September 30, 2023, we had $278.9 million that remained authorized under the program that may be used to repurchase shares. The repurchased shares, which are held by our subsidiaries, are registered and tradable subject to applicable securities law limitations and have the same voting, dividend and other rights as other outstanding shares. As of September 30, 2023, our subsidiaries held 1.2 million of our common shares.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS

Exhibit No.	Description
31.1	Rule 13a-14(a)/15d-14(a) Certification of Anthony G. Petrello, Chairman, President and Chief Executive Officer*
31.2	Rule 13a-14(a)/15d-14(a) Certification of William Restrepo, Chief Financial Officer*
32.1	Certifications required by Rule 13a-14(b) or Rule 15d-14(b) and Section 1350 of Chapter 63 of Title 18 of the United States Code (18 U.S.C. 1350), executed by Anthony G. Petrello, Chairman, President and Chief Executive Officer and William Restrepo, Chief Financial Officer.*
101.INS	Inline XBRL Instance Document*
101.SCH	Inline XBRL Schema Document*
101.CAL	Inline XBRL Calculation Linkbase Document*
101.LAB	Inline XBRL Label Linkbase Document*
101.PRE	Inline XBRL Presentation Linkbase Document*
101.DEF	Inline XBRL Definition Linkbase Document*
104	Cover Page Interactive Data File (the cover page XBRL tags are embedded in the Inline XBRL document)

*Filed herewith.

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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.

NABORS INDUSTRIES LTD.
By:	/s/ ANTHONY G. PETRELLO
	Anthony G. Petrello
	Chairman, President and
	Chief Executive Officer
	(Principal Executive Officer)
By:	/s/ WILLIAM RESTREPO
	William Restrepo
	Chief Financial Officer (Principal Financial Officer and Accounting Officer)
Date:	October 27, 2023

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