Quarterly Report for Quarter Ending September 30, 2026 (Form 10-Q)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis should be read in conjunction with the condensed consolidated financial statements and related notes included in this Quarterly Report on Form 10-Q ("Quarterly Report"). In addition, such analysis should be read in conjunction with the audited condensed consolidated financial statements, the related notes, and the other information included in the Company's Annual Report on Form 10-K for the year ended December 31, 2025 ("2025 Annual Report"). The following discussion and analysis contain forward-looking statements that reflect our future plans, estimates, beliefs and expected performance. Please read "Cautionary Note Regarding Forward-Looking Statements" below.

National Energy Services Reunited Corp. (the "Company," "NESR," "we," "our," "us" or similar terms) is one of the largest oilfield services providers in the Middle East and North Africa ("MENA") region. The Company's business consists primarily of upstream and midstream oilfield services with oil and natural gas companies as customers. NESR's revenues are primarily derived by providing production services ("Production Services") such as hydraulic fracturing, coiled tubing, stimulation and pumping, cementing, nitrogen services, filtration services, pipelines and industrial services, production assurance, artificial lift services, completions and integrated production management. NESR also provides drilling and evaluation services ("Drilling and Evaluation Services") such as rigs and integrated services, fishing and downhole tools, thru-tubing intervention, tubular running services, directional drilling, drilling and completion fluids, pressure control, well testing services, wireline logging services, and slickline services. NESR has significant operations throughout the MENA region including Saudi Arabia, Oman, Kuwait, United Arab Emirates, Iraq, Algeria, Egypt and Libya.

EXECUTIVE OVERVIEW

Drivers of Our Financial Condition and Results of Operations

As of the end of the three-month and nine-month periods covered by this Quarterly Report, the conflict involving the United States, Israel and Iran, and the associated volatility in Brent crude oil prices, have not had a material adverse impact on our results of operations or financial condition. Demand for our services has remained resilient, supported in large part by continued customer investment in Saudi Arabia, including the Jafurah unconventional field, as well as sustained activity in certain of our other operating locations. However, the duration, scope and ultimate trajectory of the conflict remain uncertain, and any de-escalation or further escalation of the conflict, as well as related sanctions, supply disruptions or other geopolitical developments, could materially affect commodity prices, customer capital spending, and our results of operations and financial condition in future periods. For a full discussion of the drivers of our financial condition and results of operations, see the section entitled "Drivers of Our Financial Condition and Results of Operations" in Part II, Item 7 of our 2025 Annual Report.

Key Performance Indicators

As of the end of the three-month and nine-month periods covered by this Quarterly Report, there have been no material changes regarding our key performance indicators. The following table shows rig count (Source: Baker Hughes Published Rig Count Data) and oil prices (Source: U.S. Energy Information Administration - Brent - Europe) as of the dates indicated. For a full discussion of our key performance indicators, see the section entitled "Key Performance Indicators" in Part II, Item 7 of our 2025 Annual Report.

RESULTS OF OPERATIONS

We operate our business through two operating segments and report our results of operations through two reporting segments, Production Services and Drilling and Evaluation Services, which aggregate services performed during distinct stages of a typical life-cycle of an oil well.

Production Services. Our Production Services segment includes the results of operations from services that are generally offered and performed during the production stage of a well's lifecycle. These services mainly include hydraulic fracturing, coiled tubing, stimulation and pumping, cementing, nitrogen services, filtration services, pipelines and industrial services, production assurance, artificial lift services, completions and integrated production management. Our Production Services accounted for 62%, 59%, 62%, and 61% of our revenues for the three-month period ended September 30, 2026, the three-month period ended September 30, 2025, the nine-month period ended September 30, 2026, and the nine-month period ended September 30, 2025, respectively.

Drilling and Evaluation Services. Our Drilling and Evaluation Services segment includes the results of operations from services that are generally offered and performed during pre-production stages of a well's lifecycle and related mainly to the operation of oil rigs. The services mainly include rigs and integrated services, fishing and downhole tools, thru-tubing intervention, tubular running services, directional drilling, drilling and completion fluids, pressure control, well testing services, wireline logging services and slickline services. Our Drilling and Evaluation Services accounted for 38%, 41%, 38%, and 39%, of our revenues for the three-month period ended September 30, 2026, the three-month period ended September 30, 2025, the nine-month period ended September 30, 2026, and the nine-month period ended September 30, 2025, respectively.

For a full discussion of our reportable segments, see the section entitled "Business" in Part I, Item 1 of our 2025 Annual Report.

Key Components of Revenues and Expenses

As of the end of the three-month and nine-month periods covered by this Quarterly Report, there have been no material changes to our key components of revenues and expenses. See the section entitled "Key Components of Revenues and Expenses" in Part II, Item 7 of our 2025 Annual Report for more information.

2026 compared to 2025

The following table presents our Condensed Consolidated Statements of Operations (Unaudited) data for the periods indicated (in US$ thousands):

Revenue. Revenue was $504.7 million for the three-month period ended September 30, 2026, compared to $295.3 million for the three-month period ended September 30, 2025, and $1,430.1 million for the nine-month period ended September 30, 2026, compared to $925.8 million for the nine-month period ended September 30, 2025.

The table below presents our revenue by segment for the periods indicated (in US$ thousands):

Production Services revenue was $313.0 million for the three-month period ended September 30, 2026, compared to $174.4 million for the three-month period ended September 30, 2025, and $883.7 million for the nine-month period ended September 30, 2026, compared to $567.6 million for the nine-month period ended September 30, 2025. The change in revenue was primarily due to increased hydraulic fracturing stages in Saudi Arabia.

Drilling and Evaluation Services revenue was $191.8 million for the three-month period ended September 30, 2026, compared to $120.9 million for the three-month period ended September 30, 2025, and $546.3 million for the nine-month period ended September 30, 2026, compared to $358.2 million for the nine-month period ended September 30, 2025. The change in revenue was primarily due to increased well testing and to a lesser extent, wireline logging activity in Saudi Arabia.

Cost of services. Cost of services was $435.8 million for the three-month period ended September 30, 2026, compared to $260.0 million for the three-month period ended September 30, 2025, and $1,228.0 million for the nine-month period ended September 30, 2026, compared to $809.1 million for the nine-month period ended September 30, 2025. Cost of services as a percentage of total revenue was 86.3%, 88.8%, 85.9% and 87.4% for the three-month period ended September 30, 2026, the three-month period ended September 30, 2025, the nine-month period ended September 30, 2026, and the nine-month period ended September 30, 2025, respectively. The change in cost of services as a percentage of total revenue is mainly due to increased activity levels in the period ended September 30, 2026, as compared to the prior year period, reflecting improved cost absorption as revenue scaled. Cost of services included depreciation expense of $33.2 million, $29.0 million, $94.0 million and $87.8 million for the three-month period ended September 30, 2026, the three-month period ended September 30, 2025, the nine-month period ended September 30, 2026, and the nine-month period ended September 30, 2025, respectively.

Gross profit. Gross profit was $69.0 million for the three-month period ended September 30, 2026, compared to $35.4 million for the three-month period ended September 30, 2025, and $202.1 million for the nine-month period ended September 30, 2026, compared to $116.7 million for the nine-month period ended September 30, 2025. Gross profit as a percentage of total revenue was 13.7%, 12.0%, 14.1% and 12.6% for the three-month period ended September 30, 2026, the three-month period ended September 30, 2025, the nine-month period ended September 30, 2026, and the nine-month period ended September 30, 2025, respectively. The change in trend is described under "Revenue" and "Cost of services."

SG&A expense. Selling, general, and administrative ("SG&A") expense, which represents costs associated with managing and supporting our operations, was $12.6 million for the three-month period ended September 30, 2026, compared to $11.1 million for the three-month period ended September 30, 2025, and $35.7 million for the nine-month period ended September 30, 2026, compared to $35.0 million for the nine-month period ended September 30, 2025. The increases in SG&A expense for the three and nine months ended September 30, 2026, compared to the corresponding periods in 2025, were primarily attributable to higher share-based compensation expense associated with awards granted in 2026. These increases were partially offset by lower costs associated with the remediation of the Company's previously identified material weakness in internal control over financial reporting, which was fully remediated as of June 30, 2025. SG&A expense as a percentage of total revenue was 2.5%, 3.7%, 2.5% and 3.8% for the three-month period ended September 30, 2026, the three-month period ended September 30, 2025, the nine-month period ended September 30, 2026, and the nine-month period ended September 30, 2025, respectively. SG&A expense as a percentage of total revenue decreased in 2026 as compared to 2025 due to a significant increase in overall activity levels for the Company.

Amortization expense. Amortization expense was $3.9 million for the three-month period ended September 30, 2026, compared to $4.7 million for the three-month period ended September 30, 2025, and $13.0 million for the nine-month period ended September 30, 2026, compared to $14.1 million for the nine-month period ended September 30, 2025. Amortization expense is driven mainly by acquired intangible assets resulting from acquisitions.

Interest expense, net. Interest expense, net, was $6.7 million for the three-month period ended September 30, 2026, compared to $8.1 million for the three-month period ended September 30, 2025, and $20.3 million for the nine-month period ended September 30, 2026, compared to $25.0 million for the nine-month period ended September 30, 2025. Interest expense, net, decreased period-over-period, due to lower debt levels during 2026 as compared to 2025.

Other (expense) / income, net. Other (expense) / income, net, was ($2.8) million for the three-month period ended September 30, 2026, compared to $0.8 million for the three-month period ended September 30, 2025, and ($0.2) million for the nine-month period ended September 30, 2026, compared to $2.8 million for the nine-month period ended September 30, 2025. The period-over-period fluctuation in Other (expense) / income, net, was primarily attributable to a $2.9 million charge recognized during the third quarter of 2026 related to an investment accounted for under the measurement alternative prescribed by Accounting Standards Codification 321, Investments-Equity Securities.

Income tax expense. Income tax expense was $8.7 million for the three-month period ended September 30, 2026, compared to income tax (benefit) of $(5.5) million for the three-month period ended September 30, 2025, and income tax expense of $30.7 million for the nine-month period ended September 30, 2026, compared to income tax expense of $2.1 million for the nine-month period ended September 30, 2025. The recognition of an income tax benefit for the three-month period ended September 30, 2025, despite positive income before income tax, primarily reflects adjustments to the Company's uncertain tax positions and unrecognized tax benefits totaling $9.2 million on a net basis. See Note 7, Income Taxes, to our condensed consolidated interim financial statements included in Part 1, Item 1, "Financial Statements (Unaudited)" of this Quarterly Report.

Net income. Net income was $34.3 million for the three-month period ended September 30, 2026, compared to $17.7 million for the three-month period ended September 30, 2025, and $102.2 million for the nine-month period ended September 30, 2026, compared to $43.3 million for the nine-month period ended September 30, 2025.

Supplemental Segment Operating Income Discussion

Production Services operating income was $42.6 million for the three-month period ended September 30, 2026, compared to $15.6 million for the three-month period ended September 30, 2025, and $135.6 million for the nine-month period ended September 30, 2026, compared to $58.3 million for the nine-month period ended September 30, 2025. The change in supplemental segment operating income was primarily due to increased hydraulic fracturing stages in Saudi Arabia with a significant portion of incremental revenue translating into segment operating income.

Drilling and Evaluation operating income was $27.7 million for the three-month period ended September 30, 2026, compared to $16.3 million for the three-month period ended September 30, 2025, and $67.6 million for the nine-month period ended September 30, 2026, compared to $53.1 million for the nine-month period ended September 30, 2025. The change in supplemental segment operating income was primarily due to additional well testing, and to a lesser extent, wireline logging, activity in Saudi Arabia with a share of incremental revenue contributing to segment operating income.

LIQUIDITY AND CAPITAL RESOURCES

Our objective in financing our business is to maintain sufficient liquidity, adequate financial resources and financial flexibility to fund the requirements of our business. We had cash and cash equivalents of $106.8 million as of September 30, 2026, and $124.8 million as of December 31, 2025. Our outstanding borrowings were $267.3 million as of September 30, 2026, and $310.1 million as of December 31, 2025. Current available borrowing capacity totaled $39.5 million and $146.9 million, as of September 30, 2026, and December 31, 2025, respectively. Borrowing capacity decreased in the nine-month period ended September 30, 2026, reflecting the Company's decision not to extend its $59.2 million Secured Revolving Credit Facility beyond February 4, 2026, given sufficient operating cash flow and liquidity, as well as a $46.6 million reduction in the Working Capital Facility following the scheduled expiration of one tranche of availability within the lender syndicate as partially offset by new commitments. In October 2026, the Company announced the funding of the 2026 Secured Facilities Agreement and $55.0 Million Term Facilities Agreement, see Note 6, Debt, to the condensed consolidated financial statements included in Part 1, Item 1, "Financial Statements," of this Quarterly Report. We believe that our cash on hand, cash flows generated from operations, and liquidity available through our credit facilities will provide sufficient liquidity to manage our global cash needs. See "Capital Requirements" below.

Cash Flows

Cash flows provided by (used in) each type of activity were as follows for the periods presented (in US$ thousands):

Operating Activities

Cash flows provided by operating activities were $201.5 million for the nine-month period ended September 30, 2026, compared to cash flows provided by operating activities of $125.7 million for the nine-month period ended September 30, 2025. The difference between periods was primarily driven by higher net income.

Investing Activities

Cash flows used in investing activities were $154.9 million for the nine-month period ended September 30, 2026, compared to cash flows used in investing activities of $106.8 million for the nine-month period ended September 30, 2025. The difference between periods was primarily due to higher cash paid for capital expenditures period-over-period to support growth in our operations. Our principal recurring investing activity is the funding of capital expenditures to ensure that we have the appropriate levels and types of machinery and equipment in place to generate revenue from operations.

Financing Activities

Cash flows used in financing activities were $52.9 million for the nine-month period ended September 30, 2026, compared to cash flows used in financing activities of $57.1 million for the nine-month period ended September 30, 2025. The difference between periods was primarily attributable to lower short-term borrowings.

Credit Facilities

Our principal credit facilities and instruments outstanding or available as of September 30, 2026, are discussed in Note 6, Debt, to the condensed consolidated financial statements included in Part 1, Item 1, "Financial Statements," of this Quarterly Report.

Capital Requirements

As of the end of the three-month and nine-month periods covered by this Quarterly Report, there have been no material changes to our capital requirements. See the section entitled "Capital Requirements" in Part II, Item 7 of our 2025 Annual Report for more information.

Off-Balance Sheet Arrangements

Our off-balance sheet arrangements, including letters of credit and guarantees, are discussed in Note 8, Commitments and Contingencies, to the condensed consolidated financial statements included in Part 1, Item 1, "Financial Statements," of this Quarterly Report.

Contractual Obligations and Commitments

As of the end of the three-month and nine-month periods covered by this Quarterly Report, there have been no material changes to our contractual obligations. See the section entitled "Contractual Obligations and Commitments" in Part II, Item 7 of our 2025 Annual Report for more information. Subsequent to September 30, 2026, the Company entered into new contractual obligations and commitments which are discussed in Note 6, Debt, to the condensed consolidated financial statements included in Part 1, Item 1, "Financial Statements," of this Quarterly Report.

Other Factors Affecting Liquidity

Shelf registration statement. On May 26, 2026, the Company filed a shelf registration statement on Form S-3 with the SEC that automatically became effective the same day. The shelf registration statement gives the Company the ability to sell the ordinary shares from time to time in one or more offerings. The specific terms, including the amount, of any ordinary shares to be sold in any such offering, if it does occur, would be described in supplemental filings with the SEC. The shelf registration statement currently provides flexibility for strategic opportunities, financing initiatives, and other corporate purposes. The shelf registration statement will expire in 2029.

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

Capital return program. In May 2026, the Company approved a capital return program consisting of (i) a quarterly cash dividend, anticipated to commence in the fourth quarter of 2026, at an expected rate of $0.10 per ordinary share, and (ii) authorization for the repurchase of up to $50.0 million of the Company's ordinary shares from time to time through open market transactions, privately negotiated transactions, or otherwise, at prevailing market prices and subject to market conditions, applicable legal requirements, and liquidity considerations. On November 6, 2026, the Company's Board of Directors declared its first quarterly cash dividend of $0.10 per ordinary share, payable on December 10, 2026, to shareholders of record as of December 3, 2026. We expect to fund dividends and share repurchases through a combination of existing cash on hand and cash flows generated from operations. These capital allocation activities will be evaluated in the context of our overall liquidity position, operating requirements and strategic priorities.

As of the end of the three-month and nine-month periods covered by this Quarterly Report, there have been no material changes to other factors affecting our liquidity except as described above. See the section entitled "Other Factors Affecting Liquidity" in Part II, Item 7 of our 2025 Annual Report for more information.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

As of the end of the three-month and nine-month periods covered by this Quarterly Report, there have been no material changes to our critical accounting policies and estimates. See the section entitled "Critical Accounting Policies and Estimates" in Part II, Item 7 of our 2025 Annual Report for more information.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report contains forward-looking statements (as such term is defined in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act")). Any and all statements contained in this Quarterly Report that are not statements of historical fact may be deemed forward-looking statements. Terms such as "may," "might," "would," "should," "could," "project," "estimate," "predict," "potential," "strategy," "anticipate," "attempt," "develop," "plan," "help," "believe," "continue," "intend," "expect," "future," and terms of similar import (including the negative of any of these terms) may identify forward-looking statements. However, not all forward-looking statements may contain one or more of these identifying terms. Forward-looking statements in this Quarterly Report may include, without limitation, the plans and objectives of management for future operations, projections of income or loss, earnings or loss per share, capital expenditures, dividends, capital structure or other financial items, our future financial performance, including any such statement contained in a discussion and analysis of financial condition by management or in the results of operations included pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC"), expansion plans and opportunities, completion and integration of acquisitions and the assumptions underlying or relating to any such statement.

The forward-looking statements are not meant to predict or guarantee actual results, performance, events or circumstances and may not be realized because they are based upon our current projections, plans, objectives, beliefs, expectations, estimates and assumptions and are subject to a number of risks and uncertainties and other influences, many of which we have no control over, including the impact of the extent of any material weakness or significant deficiencies in our internal control over financial reporting. Actual results and the timing of certain events and circumstances may differ materially from those described by the forward-looking statements as a result of these risks and uncertainties. Factors that may influence or contribute to the accuracy of the forward-looking statements or cause actual results to differ materially from expected or desired results may include, without limitation:

Readers are cautioned not to place undue reliance on forward-looking statements because of the risks and uncertainties related to them and to the risk factors. The Company disclaims any obligation to update the forward-looking statements contained in this Quarterly Report to reflect any new information or future events or circumstances or otherwise, except as required by law. Readers should read this Quarterly Report in conjunction with other documents which the Company may file or furnish from time to time with the SEC.