NABORS INDUSTRIES LTD (NBR)

CIK: 0001163739. SIC: 1381 Drilling Oil & Gas Wells. Latest 10-K as of: 2026-02-13.

SIC breadcrumb: Mining > SIC Major Group 13 > SIC 1381 Drilling Oil & Gas Wells

SEC company page: https://www.sec.gov/edgar/browse/?CIK=1163739. Latest filing source: 0001104659-26-014997.

Selected Fundamentals

Metric	Value	Unit	FY	Filed
Revenue	3,184,693,000	USD	2025	2026-02-13
Net income	286,624,000	USD	2025	2026-02-13
Assets	4,789,657,000	USD	2025	2026-02-13

Financials

Annual standardized facts from SEC companyfacts as of latest extracted filing date 2026-02-13. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0001163739.json. Derived margins, ratios, and free cash flow are computed from the extracted annual SEC facts.

Flow metrics use full-year FY periods from 10-K/10-K/A filings; balance-sheet metrics use FY-end instants. Free cash flow = operating cash flow - capital expenditures. Missing metrics are omitted rather than fabricated.

Metric	2013	2014	2015	2016	2017	2018	2019	2020	2021	2022	2023	2024	2025
Revenue				2,227,839,000	2,564,285,000	3,057,619,000	3,043,383,000	2,134,043,000	2,017,548,000	2,653,766,000	3,005,981,000	2,930,126,000	3,184,693,000
Net income				-1,029,742,000	-546,811,000	-640,948,000	-702,885,000	-805,641,000	-569,272,000	-350,261,000	-11,784,000	-176,084,000	286,624,000
Operating income				-118,335,000	-141,937,000	58,621,000	89,145,000	-171,461,000	-80,787,000	44,320,000	433,707,000	416,769,000	471,051,000
Diluted EPS				-3.64	-1.90	-99.61	-105.39	-118.69	-76.58	-40.52	-5.49	-22.37	17.39
Operating cash flow				531,905,000	62,756,000	325,773,000	684,558,000	349,761,000	428,776,000	501,089,000	637,862,000	581,432,000	693,266,000
Capital expenditures							427,741,000	195,523,000	234,040,000	373,445,000	540,851,000	567,919,000	715,948,000
Dividends paid	47,168,000	59,145,000	69,363,000	50,924,000	68,503,000			22,538,000	7,380,000	65,000	194,000	87,000
Assets				8,187,015,000	8,401,984,000	7,853,944,000	6,760,658,000	5,503,428,000	5,525,364,000	4,729,854,000	5,277,965,000	4,504,301,000	4,789,657,000
Liabilities				4,932,220,000	5,259,213,000	4,698,757,000	4,285,101,000	3,803,780,000	4,131,143,000	3,514,459,000	3,996,880,000	3,297,963,000	3,352,014,000
Stockholders' equity				3,247,025,000	2,911,816,000	2,700,850,000	1,982,811,000	1,151,384,000	590,656,000	368,956,000	326,614,000	134,996,000	590,727,000
Cash and cash equivalents				264,093,000	336,997,000	447,766,000	435,990,000	472,246,000	991,471,000	451,025,000	1,057,487,000	389,652,000	940,707,000
Free cash flow							256,817,000	154,238,000	194,736,000	127,644,000	97,011,000	13,513,000	-22,682,000

Ratios

ROE and ROA use period-end equity/assets. Liabilities / equity uses total liabilities divided by stockholders' equity. Current ratio uses current assets divided by current liabilities when both are reported.

Metric	2016	2017	2018	2019	2020	2021	2022	2023	2024	2025
Net margin	-46.22%	-21.32%	-20.96%	-23.10%	-37.75%	-28.22%	-13.20%	-0.39%	-6.01%	9.00%
Operating margin	-5.31%	-5.54%	1.92%	2.93%	-8.03%	-4.00%	1.67%	14.43%	14.22%	14.79%
Return on equity	-31.71%	-18.78%	-23.73%	-35.45%	-69.97%	-96.38%	-94.93%	-3.61%	-130.44%	48.52%
Return on assets	-12.58%	-6.51%	-8.16%	-10.40%	-14.64%	-10.30%	-7.41%	-0.22%	-3.91%	5.98%
Liabilities / equity	1.52	1.81	1.74	2.16	3.30	6.99	9.53	12.24	24.43	5.67
Current ratio	1.41	1.57	1.92	1.90	2.20	2.86	1.68	1.36	1.75	1.56

Financial Charts

Quarterly

Quarterly standardized facts from SEC companyfacts as of latest extracted filing date 2026-05-01. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0001163739.json.

Flow metrics use discrete quarter-length periods from 10-Q/10-Q/A filings. Q4 revenue and net income are derived only when annual FY and nine-month YTD facts exist for the same fiscal year; derived Q4 values are labeled. EPS Q4 is not derived.

Quarter	End Date	Revenue	Net Income	Diluted EPS	Method
2022-Q2	2022-06-30			-9.41	reported discrete quarter
2022-Q3	2022-09-30			-1.80	reported discrete quarter
2023-Q1	2023-03-31			4.11	reported discrete quarter
2023-Q2	2023-06-30	767,067,000	4,611,000	-0.31	reported discrete quarter
2023-Q3	2023-09-30	733,974,000	-48,916,000	-6.26	reported discrete quarter
2023-Q4	2023-12-31	725,801,000	-16,703,000		derived Q4 = FY annual - nine-month YTD
2024-Q1	2024-03-31	733,704,000	-34,333,000	-4.54	reported discrete quarter
2024-Q2	2024-06-30	734,798,000	-32,255,000	-4.29	reported discrete quarter
2024-Q3	2024-09-30	731,805,000	-55,825,000	-6.86	reported discrete quarter
2024-Q4	2024-12-31	729,819,000	-53,671,000		derived Q4 = FY annual - nine-month YTD
2025-Q1	2025-03-31	736,186,000	32,988,000	2.18	reported discrete quarter
2025-Q2	2025-06-30	832,788,000	-30,910,000	-2.71	reported discrete quarter
2025-Q3	2025-09-30	818,190,000	274,198,000	16.85	reported discrete quarter
2025-Q4	2025-12-31	797,529,000	10,348,000		derived Q4 = FY annual - nine-month YTD
2026-Q1	2026-03-31	783,548,000	-15,166,000	-1.54	reported discrete quarter

Quarterly Charts

Macro Cross-References

CPIAUCSL - Consumer Price Index for All Urban Consumers: All Items in U.S. City Average
UNRATE - Unemployment Rate
FEDFUNDS - Federal Funds Effective Rate
CES0500000003 - Average Hourly Earnings of All Employees, Total Private
DFEDTARU - Federal Funds Target Range - Upper Limit
DFEDTARL - Federal Funds Target Range - Lower Limit
DGS3MO - Market Yield on U.S. Treasury Securities at 3-Month Constant Maturity
DGS2 - Market Yield on U.S. Treasury Securities at 2-Year Constant Maturity
DGS10 - Market Yield on U.S. Treasury Securities at 10-Year Constant Maturity
DGS30 - Market Yield on U.S. Treasury Securities at 30-Year Constant Maturity
T10Y2Y - 10-Year Treasury Constant Maturity Minus 2-Year Treasury Constant Maturity
CPILFESL - Consumer Price Index for All Urban Consumers: All Items Less Food and Energy
CPIUFDSL - Consumer Price Index for All Urban Consumers: Food
CPIENGSL - Consumer Price Index for All Urban Consumers: Energy
CUSR0000SAH1 - Consumer Price Index for All Urban Consumers: Shelter
PCEPI - Personal Consumption Expenditures: Chain-type Price Index
PCEPILFE - Personal Consumption Expenditures Excluding Food and Energy: Chain-type Price Index
PPIACO - Producer Price Index by Commodity: All Commodities
T10YIE - 10-Year Breakeven Inflation Rate
U6RATE - Total Unemployed, Plus All Marginally Attached Workers Plus Total Employed Part Time for Economic Reasons
PAYEMS - All Employees, Total Nonfarm
CIVPART - Labor Force Participation Rate
EMRATIO - Employment-Population Ratio
UNEMPLOY - Unemployed
CE16OV - Employment Level
ICSA - Initial Claims
JTSJOL - Job Openings: Total Nonfarm
JTSQUR - Quits: Total Nonfarm
GDPC1 - Real Gross Domestic Product
A191RL1Q225SBEA - Real Gross Domestic Product: Percent Change from Preceding Period
INDPRO - Industrial Production: Total Index
TCU - Capacity Utilization: Total Index
HOUST - New Privately-Owned Housing Units Started: Total Units
PERMIT - New Privately-Owned Housing Units Authorized in Permit-Issuing Places: Total Units
RSAFS - Advance Retail Sales: Retail Trade
PCE - Personal Consumption Expenditures
DSPIC96 - Real Disposable Personal Income
PSAVERT - Personal Saving Rate
M2SL - M2
BOPGSTB - U.S. International Trade in Goods and Services: Balance
MSPUS - Median Sales Price of Houses Sold for the United States
HSN1F - New One Family Houses Sold: United States
RHORUSQ156N - Homeownership Rate in the United States
TTLCONS - Total Construction Spending: Total Construction in the United States
RRVRUSQ156N - Rental Vacancy Rate in the United States
TOTALSL - Total Consumer Credit Owned and Securitized
REVOLSL - Revolving Consumer Credit Owned and Securitized
DRCCLACBS - Delinquency Rate on Credit Card Loans, All Commercial Banks
GDP - Gross Domestic Product
GPDI - Gross Private Domestic Investment
GCE - Government Consumption Expenditures and Gross Investment
PCEC - Personal Consumption Expenditures
NETEXP - Net Exports of Goods and Services
GFDEBTN - Federal Debt: Total Public Debt
GFDEGDQ188S - Federal Debt: Total Public Debt as Percent of Gross Domestic Product
FYFSD - Federal Surplus or Deficit
FGRECPT - Federal Government Current Receipts
FGEXPND - Federal Government: Current Expenditures
MANEMP - All Employees, Manufacturing
USCONS - All Employees, Construction
USTRADE - All Employees, Retail Trade
USFIRE - All Employees, Financial Activities
USGOVT - All Employees, Government
AWHAETP - Average Weekly Hours of All Employees, Total Private
DGORDER - Manufacturers' New Orders: Durable Goods
NEWORDER - Manufacturers' New Orders: Nondefense Capital Goods Excluding Aircraft
BUSINV - Total Business Inventories
EXPGS - Exports of Goods and Services
IMPGS - Imports of Goods and Services
IR - Import Price Index (End Use): All Commodities
PPIFIS - Producer Price Index by Commodity: Final Demand

Latest quarter (10-Q)

Latest 10-Q source: 0001104659-26-053683.

Extracted structurally from real Item 2 body heading to real Item 3/4 boundary. Confidence: high. Filing date: 2026-05-01. Report date: 2026-03-31.

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, global and regional conflicts 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 our 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

Table of Contents

●

our ability to retain skilled employees;



●

our ability to complete, and realize the expected benefits of, strategic transactions, such as our acquisition of Parker Drilling Company (“Parker”);



●

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 new tariffs, trade embargoes or sanctions;



●

general economic conditions, including the capital and credit markets; and



●

our ability to utilize NOLs.



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 2025 Annual Report.



Management Overview



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



We are a leading provider of advanced technology for the energy industry. With operations in over 20 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



Demand for our services and products is subject to a complex set of macroeconomic, industry and company-specific factors that influence customer’s decisions to drill and invest in exploration, development and production activities. The volume of exploration, development and production activity is significantly influenced by the prices of crude oil and natural gas, which can fluctuate widely, are inherently volatile and tend to be highly sensitive to a range of factors. These factors include global supply and demand dynamics, production decisions and actions taken by major oil-producing countries, as well as geopolitical developments impacting large hydrocarbon-producing regions.



In addition to commodity price dynamics, certain oil and gas companies may intentionally limit their capital spending as they focus on capital discipline and shareholder returns over production growth, which can moderate activity levels even during periods of favorable pricing. Further, industry consolidation, particularly among U.S. operators has

26

Table of Contents

occurred in recent years. In certain cases, these transactions have impacted overall rig demand, as the combined operators reassess activity levels and fleet requirements.



Since late 2022 and through the fourth quarter of 2025, global energy commodity markets have experienced sustained volatility driven by evolving geopolitical dynamics, and more recently, domestic policy changes. Beginning in the first quarter of 2026, the conflict in the Middle East resulted in damage to oil and gas production facilities in several producing countries and a very significant curtailment in oil and gas exports from the region. The near-term impact of these events has been a dramatic increase in global crude oil prices and elevated natural gas prices in certain markets.



Operator responses to the conflict have varied by region. In the Middle East, a number of offshore rigs have been placed on standby or had operations suspended. In contrast, land drilling activity in the markets where we operate has continued, and in our case, has increased modestly.



In the United States, operators generally maintained their prior drilling activity, even as oil prices have increased. Although futures market pricing reflects the most pronounced increases in the near-term months, U.S. operators have largely remained committed to their prior spending plans and have not increased activity levels in response to the recent movement in oil prices.



In the United States, pricing discipline for drilling rigs remains intact, supporting stable rig dayrates and daily rig margins. At the same time, continued gains in drilling efficiency have enabled U.S. oil and gas producers to sustain production levels with fewer rigs. As a result, while rig pricing dynamics have remained relatively stable, these efficiency gains have reduced the number of rigs required.



Internationally, we continue to see constructive medium- to longer-term fundamentals supported by production-capacity expansion and the development of unconventional resources in a number of markets. In many of these regions, drilling activity is supported by longer-term contractual agreements, which tend to moderate near-term volatility. Nevertheless, activity levels may be affected by near-term geopolitical developments, supply-chain disruptions and customer-specific capital allocation decisions.



Comparison of the three months ended March 31, 2026 and 2025



Operating revenues for the three months ended March 31, 2026 totaled $783.5 million, representing an increase of $47.4 million, compared to the three months ended March 31, 2025. For a more detailed description of operating results, see Segment Results of Operations below.



Net loss attributable to Nabors totaled $15.2 million ($1.54 per diluted share) for the three months ended March 31, 2026 compared to net income attributable to Nabors of $33.0 million ($2.18 per diluted share) for the three months ended March 31, 2025, or a $48.2 million decrease in net income. See Segment Results of Operations and Other Financial Information below for additional discussion.



General and administrative expenses for the three months ended March 31, 2026 totaled $71.8 million, representing an increase of $3.3 million, or 5%, compared to the three months ended March 31, 2025. This is reflective of increases in workforce costs and general operating costs as a result of the Parker acquisition, along with inflationary pressures as market conditions have changed.



Depreciation and amortization expense for the three months ended March 31, 2026 was $156.2 million, representing an increase of $1.5 million, or 1%, compared to the three months ended March 31, 2025. The increase is a result of the additional assets obtained in the Parker acquisition and capital expenditures.



27

Table of Contents

Segment Results of Operations



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

































Three Months Ended















March 31,

















2026



2025



Increase/(Decrease)





(In thousands, except percentages and rig activity)

U.S. Drilling

    



    

    



    

    



    

    

    

    

Operating revenues



$

241,144



$

230,746



$

10,398



5

%

Adjusted operating income (loss) (1)



$

24,624



$

31,599



$

(6,975)



(22)

%

Average rigs working (2)



75.3



68.2



7.1



10

%



























International Drilling

























Operating revenues



$

419,496



$

381,718



$

37,778



10

%

Adjusted operating income (loss) (1)



$

40,757



$

32,958



$

7,799



24

%

Average rigs working (2)



92.6



85.0



7.6



9

%



























Drilling Solutions

























Operating revenues



$

106,222



$

93,179



$

13,043



14

%

Adjusted operating income (loss) (1)



$

31,872



$

32,913



$

(1,041)

(3)

%



























Rig Technologies

























Operating revenues



$

27,222



$

44,165



$

(16,943)



(38)

%

Adjusted operating income (loss) (1)



$

(1,888)



$

4,335



$

(6,223)

(144)

%



(1)

Adjusted operating income (loss) is our measure of segment profit and loss. See Note 12—Segment Information

[Excerpt truncated for page length; source filing is linked above.]

Latest 10-K MD&A

Extracted structurally from real Item 7 body heading to real Item 7A/8 boundary. Confidence: high. Filing date: 2026-02-13. Report date: 2025-12-31.

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

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

This section of this Form 10-K generally discusses fiscal 2025 and fiscal 2024 items and year-to-year comparisons between fiscal 2025 and fiscal 2024. Discussions of fiscal 2023 items and year-to-year comparisons between fiscal 2024 and fiscal 2023 that are not included in this Form 10-K can be found in “Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations” of the Company’s Annual Report on Form 10-K for the fiscal year December 31, 2024, as filed with the SEC on February 13, 2025, which is available on the SEC’s website at www.sec.gov.

Management Overview

We are a leading provider of advanced technology for the energy industry. With operations in over 20 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 factors including supply and demand cycles and geopolitical uncertainties particularly those impacting large hydrocarbon-producing countries. Certain oil and gas companies may also intentionally limit their capital spending as they focus on generating returns to shareholders as opposed to maximizing hydrocarbon production. Additionally, in recent years significant consolidation among oil and gas companies has taken place, especially in the United States. In some cases, these transactions may have an impact on overall rig demand, as the acquiring company may apply criteria that results in a different level of demand for drilling rigs than the previous two companies would have had on a stand-alone basis.

Since late 2022 and continuing through the fourth quarter of 2025, global energy commodity markets have experienced sustained volatility driven by evolving geopolitical dynamics, and more recently, domestic policy changes. In the U.S., operators generally reacted to these market conditions with caution by reducing their drilling activity – particularly in the natural gas basins. This trend appears to be shifting with the expectation for higher natural gas demand in the future. Meanwhile, a number of operators in oil-driven basins, especially the Permian Basin, have reduced drilling activity as they have realized efficiency gains and achieved their production goals.

Table of Contents

Despite the reduction in overall rig count in the United States, pricing discipline for drilling rigs in this market remained intact, generally supporting rig dayrates and daily rig margins.

Oil prices have been impacted by recent production actions announced by certain large international oil producers. Natural gas prices, particularly in the United States, have generally increased, in part as demand increased as LNG export facilities ramped throughput.

U.S. oil and gas production has proved resilient in the face of reduced drilling activity aided by efficiency gains.

Internationally, we generally see an expansion of production capacity as well as the widespread development of unconventional resources driving an expected increase in oilfield activity broadly across those markets. In Saudi Arabia specifically, the operating rig fleet has begun to rebound following the activity suspensions in 2024 of a large number of rigs.

Recent Developments

Acquisition of Parker Drilling Company

On March 11, 2025, Nabors completed its merger with Parker Drilling Company (“Parker”) resulting in Parker becoming a wholly owned subsidiary of Nabors. Parker provides drilling services across global energy markets. Total consideration for the acquisition included cash consideration of $0.6 million and the issuance of 4.8 million shares of our common stock, which based on the closing price of our common stock of $37.50 on March 11, 2025, valued the purchase price consideration of the transaction at approximately $180.6 million.

Sale of Quail Tools, LLC

On August 20, 2025, Nabors entered into a definitive agreement to sell Quail Tools to Superior Energy Services, Inc. Quail Tools was part of Nabors’ acquisition of Parker. Net consideration for the sale totals $625.0 million inclusive of a net working capital adjustment. Consideration comprised of cash of $375.0 million and a seller note of $250.0 million. On October 9, 2025, Nabors received prepayment in full of the $250.0 million seller note, including accrued and unpaid interest.

7.625% Senior Priority Guaranteed Notes due November 2032

On November 10, 2025, Nabors issued $700.0 million in aggregate principal amount of 7.625% senior priority guaranteed notes, which are fully and unconditionally guaranteed by Nabors and certain of Nabors’ indirect wholly-owned subsidiaries. Interest on the notes is payable on May 15 and November 15 of each year. The notes have a maturity date of November 15, 2032. Nabors used the net proceeds to redeem all of its 7.375% senior priority guaranteed notes due May 2027.

Financial Results

Comparison of the years ended December 31, 2025 and 2024

Operating revenues in 2025 totaled $3.2 billion, representing an increase of $254.6 million, or 9%, from 2024. For a more detailed description of operating results see Segment Results of Operations, below.

Net income attributable to Nabors totaled $286.6 million for 2025 ($17.39 per diluted share) compared to a net loss attributable to Nabors of $176.1 million ($22.37 per diluted share) in 2024, or a $462.7 million increase in net income. Adjusted operating income (loss) across our operating segments, increased by $54.3 million, or 13%. $113.7 million of the increase is due to the gain on bargain purchase related to the Parker acquisition and $414.0 million was due to the gain on the disposition of Quail Tools. These gains were partially offset by $26.5 million of asset impairments related to assets held in Russia, $24.6 million related to severance and reorganization costs and $19.9 million of transaction related costs. See Segment Results of Operations and Other Financial Information below for additional discussion.

Table of Contents

General and administrative expenses in 2025 totaled $304.6 million, representing an increase of $55.3 million, or 22% from 2024. This is reflective of increases in workforce costs and general operating costs as a result of the Parker acquisition, along with inflationary pressures as market conditions have changed.

Depreciation and amortization expense in 2025 was $649.2 million, representing an increase of $15.8 million, or 2%, from 2024. The increase is a result of the additional assets obtained in the Parker acquisition.

Segment Results of Operations

During the years ended December 31, 2025 and 2024, our business consisted of four reportable segments: U.S. Drilling, International Drilling, Drilling Solutions and Rig Technologies.

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

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

Year Ended

December 31,

2025

2024

Increase/(Decrease)

(In thousands, except percentages and rig activity)

U.S. Drilling

Operating revenues

976,644

1,028,122

(51,478)

(5)

Adjusted operating income (loss) (1)

131,372

176,281

(44,909)

(25)

Average rigs working (2)

69.9

75.1

(5.2)

(7)

International Drilling

Operating revenues

1,597,765

1,446,092

151,673

Adjusted operating income (loss) (1)

164,123

107,858

56,265

Average rigs working (2)

88.4

83.7

4.7

Drilling Solutions

Operating revenues

513,283

314,071

199,212

Adjusted operating income (loss) (1)

167,282

112,387

54,895

Rig Technologies

Operating revenues

154,036

201,677

(47,641)

(24)

Adjusted operating income (loss) (1)

8,274

20,243

(11,969)

(59)

(1)

Adjusted operating income (loss) is our measure of segment profit and loss. See Note 17 – Segment Information to the consolidated financial statements included in Item 8 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 decreased by $51.5 million or 5% in 2025 compared to 2024. Decreases in the Lower 48 land rig market for both average number of rigs working and dayrates, more than offset the incremental revenue from acquired Parker rig operations in the Alaska and U.S. Offshore markets.

International Drilling

Operating revenues increased by $151.7 million or 10% in 2025 compared to 2024. Incremental revenue from acquired Parker rig operations in international markets and the contribution of recently deployed rigs in other international markets comprise the majority of the increase.

Table of Contents

Drilling Solutions

Operating revenues increased by $199.2 million or 63% in 2025 compared to 2024. The increase in revenue is related to acquired Parker operations. This increase from Parker operations was slightly offset by a decline in results in the U.S. markets, which was driven by the reduction in drilling activity.

Rig Technologies

Operating revenues decreased by $47.6 million or 24% in 2025 compared to 2024 due to the overall decline in activity as mentioned previously.

Other Financial Information

Interest expense

Interest expense for 2025 was $215.4 million, representing an increase of $4.5 million, or 2%, compared to 2024. The increase was primarily due to an increase in our effective interest rate levels and an increase in our average outstanding debt balance throughout 2025 as compared to 2024.

Gain on disposition of Quail Tools

Gain on disposition of Quail Tools for the years ended December 31, 2025 and 2024 was $414.0 million and zero, respectively. The gain on disposition of Quail Tools was related to the sale of Quail Tools in the third quarter of 2025.

Gain on bargain purchase

Gain on bargain purchase for the years ended December 31, 2025 and 2024 was $113.7 million and zero, respectively. The gain on bargain purchase was related to the Parker acquisition in the first quarter of 2025.

Other, net

Other, net for the year ended December 31, 2025 was a loss of $65.8 million, compared to a loss of $106.8 million during 2024. During 2025, this loss was from $26.5 million in asset impairments related to assets held in Russia, $19.9 million of transaction related costs, $24.6 million related to severance and reorganization costs, $15.5 million for losses on debt buybacks, and $15.2 million in other than temporary impairment of securities which was offset by $8.4 million of mark-to-market gains on the common share warrants and $46.9 million in gain on sales of assets. In comparison, during 2024, the loss was from $28.1 million in foreign currency losses, $14.9 million for losses on debt buybacks, $26.4 million from loss on sale of assets and $26.1 million from other than temporary impairment of securities. This loss was offset by $16.9 million of gain from mark-to-market gains related to the common share warrants.

Income taxes

Our worldwide income tax expense for 2025 was $163.1 million compared to $56.9 million for 2024. The increase in tax expense was primarily attributable to the Parker acquisition and sale of Quail Tools, as well as 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 the 2024 Credit Agreement and cash generated from operations. As of December 31, 2025, we had cash and short-term investments of $940.7 million and working capital of $558.6 million. As of December 31, 2024, we had cash and short-term investments of $397.3 million and working capital of $427.6 million.

At December 31, 2025, we had no borrowings outstanding and $69.8 million of letters of credit outstanding under the 2024 Credit Agreement, which has a total borrowing capacity of $350.0 million and a separate letter of credit tranche

Table of Contents

that permits us to issue letters of credit with total reimbursement obligations not to exceed $125.0 million. Letters of credit issued will not affect revolving loan capacity and vice versa.

The 2024 Credit Agreement requires us to maintain an interest coverage ratio (EBITDA/interest expense of 2.75:1.00) and a minimum guarantor value, requiring the guarantors (other than the Company) and their subsidiaries to own at least 90% of the consolidated property, plant and equipment of the Company. Additionally, the Company is subject to certain covenants (which are subject to certain exceptions) and include, among others, (a) a covenant restricting our ability to incur liens (subject to the additional liens basket of up to $150.0 million, among other exceptions), (b) a covenant restricting its ability to pay dividends or make other distributions with respect to its capital stock and to repurchase certain indebtedness, and (c) a covenant restricting the ability of the Company’s subsidiaries to incur debt (subject to the grower debt basket of up to $100.0 million). The facility matures on the earlier of (a) June 17, 2029 and (b) to the extent 10% or more of the respective principal amount of any of the 7.50% Senior Guaranteed Notes due January 2028 or 50% or more of the principal amount of the 1.75% Senior Exchangeable Notes due June 2029 remains outstanding on the date that is 90 days prior to the applicable maturity date for such indebtedness, then such 90th day.

As of the date of this report, we were in compliance with all covenants under the 2024 Credit Agreement, including those regarding the required interest coverage ratio and minimum guarantor value, which were 4.16:1.00 and 99.8%, respectively, as of December 31, 2025. If we fail to perform our obligations under the covenants, the revolving credit commitments under the 2024 Credit Agreement could be terminated, and any outstanding borrowings under the facilities could be declared immediately due and payable. If necessary, we have the ability to manage our covenant compliance by taking certain actions including reductions in discretionary capital or other types of controllable expenditures, monetization of assets, amending or renegotiating the revolving credit agreement, accessing capital markets through a variety of alternative methods, or any combination of these alternatives. We expect to remain in compliance with all covenants under the 2024 Credit Agreement during the twelve-month period following the date of this report based on our current operational and financial projections. 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. See Part I, Item 1A.—Risk Factors—A downgrade in our credit rating could negatively impact our cost of and ability to access capital markets or other financing sources.

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

December 31,

2025

(In thousands)

Credit available

283,667

Less: Letters of credit outstanding, inclusive of financial and performance guarantees

128,619

Remaining availability

155,048

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

Table of Contents

Factors—As a holding company, we depend on our operating subsidiaries and investments to meet our financial obligations.

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.

Over the term of the facility, we entered into a number of amendments. Most recently, in August 2025, we entered into the First Amendment to the A/R Sales Agreement and the Fifth Amendment to the A/R Purchase Agreement. The First Amendment to the A/R Sales Agreement amends the agreement to, among other things, add certain subsidiaries of Parker Drilling Company, an indirect wholly-owned subsidiary of the Company, as originators (the “Additional Originators”). The Fifth Amendment to the A/R Purchase Agreement amends the agreement to make changes to reflect the joinder of the Additional Originators.

The amount available for purchase under the A/R Agreements fluctuates over time based on the total amount of eligible receivables generated during the normal course of business after excluding excess concentrations and certain other ineligible receivables. The maximum purchase commitment of the Purchasers under the A/R Agreements is $250.0 million and the amount of receivables purchased by the third-party Purchasers as of December 31, 2025 was $137.0 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 3—Accounts Receivable Purchase and Sales Agreements.

Other Indebtedness

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

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

Purchase commitments outstanding on December 31, 2025 totaled approximately $410.7 million, primarily for rig-related enhancements, sustaining capital expenditures, operating expenses, and purchases of inventory. $371.4 million of the outstanding commitments are expected to be paid in 2026. Purchase commitments include agreements to purchase goods or services that are enforceable and legally binding and that specify all significant terms, including fixed or minimum quantities to be purchased; fixed, minimum or variable pricing provisions; and the approximate timing of the transaction. We can reduce planned expenditures if necessary or increase them if market conditions and new business opportunities warrant it. The level of our outstanding purchase commitments and our expected level of capital expenditures for 2026 represent a number of capital programs that are currently underway or planned.

As of December 31, 2025, we had approximately $2.5 billion of net book value of long-term debt outstanding with $2.5 billion in aggregate principal with $379.1 million in aggregate principal to be repaid in the next twelve months. We have expected aggregate future interest payments of $911.8 million related to the outstanding debt with $180.1 million due in the next twelve months. See Note 9—Debt in Part II, Item 8.—Financial Statements and Supplementary Data for

Table of Contents

additional details. Our obligations for operating leases total $49.0 million with $12.6 million of the obligations coming due in the upcoming year. See Note 19—Leases in Part II, Item 8.—Financial Statements and Supplementary Data for additional details.

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

We are a party to transactions, agreements or other contractual arrangements defined as “off-balance sheet arrangements” that could have a material future effect on our financial position, results of operations, liquidity and capital resources. The most significant of these off-balance sheet arrangements include the A/R Agreements (see —Accounts Receivable Purchase and Sales Agreements, above) and certain agreements and obligations under which we provide financial or performance assurance to third parties. Certain of these financial or performance assurances serve as guarantees, including standby letters of credit issued on behalf of insurance carriers in conjunction with our workers’ compensation insurance program and other financial surety instruments such as bonds. In addition, we have provided indemnifications, which serve as guarantees, to some third parties. These guarantees include indemnification provided by us to our share transfer agent and our insurance carriers. We are not able to estimate the potential future maximum payments that might be due under our indemnification guarantees, if any. Management believes the likelihood that we would be required to perform or otherwise incur any material losses associated with any of these guarantees is remote.

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

Maximum Amount

2026

2027

2028

Thereafter

Total

(In thousands)

Financial standby letters of credit and other financial surety instruments

42,243

4,785

2,456

49,504

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, 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 2025 and 2024 cash flows below.

Operating Activities. Net cash provided by operating activities totaled $693.3 million during 2025, compared to net cash provided of $581.4 million during 2024. Operating cash flows are our primary source of capital and liquidity. Cash from operating results (before working capital changes) totaled $620.7 million during 2025, a decrease of $61.9 million when compared to $682.7 million in 2024. This was due to the decrease in activity across our business in 2025 compared to 2024. Changes in working capital items such as collection of receivables, other deferred revenue arrangements and payments of operating payables are significant factors affecting operating cash flows and can be volatile in periods of increasing or decreasing activity levels. Changes in working capital items provided $72.5 million in cash flows during 2025 and used $101.2 million in cash flows during 2024.

Investing Activities. Net cash provided by investing activities totaled $97.1 million during 2025 compared to net cash used of $555.5 million in 2024. Our primary use of cash for investing activities is for capital expenditures related to rig-related enhancements, new construction and equipment, and sustaining capital expenditures. During 2025 and 2024, we used cash for capital expenditures totaling $715.9 million and $567.9 million, respectively. We received $98.6 million in proceeds from sales of assets and insurance proceeds during 2025 compared to $15.5 million in 2024. During 2025, we received $84.4 million in cash acquired in the Parker acquisition, net of cash paid and $622.9 million from the sale of Quail Tools.

Financing Activities. Net cash used for financing activities totaled $566.8 million during 2025. During 2025, we received net proceeds of $700.0 million from issuance of long-term debt, repaid $0.9 billion of outstanding long-term debt. Also, we made distributions of $342.4 million from the Trust Account to NETC II stockholders. Cash in the Trust Account can only be used in connection to the SPAC and is not available to use for general operations. Net cash used for

Table of Contents

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

Other Matters

Recent Accounting Pronouncements

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

Supplementary Data.

Critical Accounting Estimates

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

●

it requires assumptions to be made that were uncertain at the time the estimate was made; and

●

changes in the estimate or different estimates that could have been selected could have a material impact on our consolidated financial position or results of operations.

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

Depreciation of Property, Plant and Equipment. The drilling and drilling services industries are very capital intensive. Property, plant and equipment represented 61% of our total assets as of December 31, 2025, and depreciation and amortization constituted 24% of our total costs and other deductions in 2025.

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

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

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

There have been no factors related to the performance of our portfolio of assets, changes in technology or other factors indicating that these estimates do not continue to be appropriate. Accordingly, for the years ended December 31, 2025, 2024 and 2023, no significant changes have been made to the depreciation rates applied to property, plant and equipment, the underlying assumptions related to estimates of depreciation, or the methodology applied. However, certain events could occur that would materially affect our estimates and assumptions related to depreciation. Unforeseen changes in operations or technology could substantially alter management’s assumptions regarding our

Table of Contents

ability to realize the return on our investment in operating assets and therefore affect the useful lives and salvage values of our assets.

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

Assumptions in the determination of future cash flows are made with the involvement of management personnel at the operational level where the most specific knowledge of market conditions and other operating factors exists. For 2025, 2024 and 2023, no significant changes have been made to the methodology utilized to determine future cash flows.

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

Audit claims of approximately $142.1 million attributable to income tax have been assessed against us. We have contested, or intend to contest, these assessments, including through litigation if necessary, and we believe the ultimate resolution, for which we have not made any accrual, will not have a material adverse effect on our consolidated financial statements. Tax authorities may issue additional assessments or pursue legal actions as a result of tax audits and we cannot predict or provide assurance as to the ultimate outcome of such assessments and legal actions.

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

In certain jurisdictions we have recognized deferred tax assets and liabilities. Judgment and assumptions are required in determining whether deferred tax assets will be fully or partially utilized. When we estimate that all or some portion of certain deferred tax assets such as net operating loss carryforwards will not be utilized, we establish a valuation allowance for the amount ascertained to be unrealizable. We continually evaluate strategies that could allow for future utilization of our deferred assets. Any change in the ability to utilize such deferred assets will be accounted for in the period of the event affecting the valuation allowance. If facts and circumstances cause us to change our expectations regarding future tax consequences, the resulting adjustments could have a material effect on our financial results or cash flow.

Litigation and Self-Insurance Reserves. Our operations are subject to many hazards inherent in the drilling and drilling services industries, including blowouts, cratering, explosions, fires, loss of well control, loss of or damage to the wellbore or underground reservoir, damaged or lost drilling equipment and damage or loss from inclement weather or natural disasters. Any of these and other hazards could result in personal injury or death, damage to or destruction of equipment and facilities, suspension of operations, environmental and natural resources damage and damage to the property of others. Our offshore operations are also subject to the hazards of marine operations including capsizing,

Table of Contents

grounding, collision and other damage from hurricanes and heavy weather or sea conditions and unsound ocean bottom conditions. Our operations are subject to risks of war or acts of terrorism, civil disturbances and other political events.

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

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

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

During 2025, 2024 and 2023, no significant changes were made to the methodology used to estimate insurance reserves. For purposes of earnings sensitivity analysis, if the December 31, 2025 reserves were adjusted by 10%, total costs and other deductions would change by $7.2 million, or 0.27%.

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