UNITEDSTATES
SECURITIESAND EXCHANGE COMMISSION
Washington,D.C. 20549
Form
REPORTOF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16 UNDER THE
SECURITIESEXCHANGE ACT OF 1934
Forthe month of August 2025
CommissionFile Number:
(Exactname of Registrant as specified in its charter)
NotApplicable
(Translationof registrant’s name into English)
(Addressof principal executive office)
Indicateby check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F. Form 20-F ☒ Form40-F ☐
Theinformation and related exhibits contained in this Report on Form 6-K are hereby incorporated by reference into National Energy ServicesReunited Corp.’s Registration Statement on Form S-8 (File No. 333-280902).
TABLEOF CONTENTS
| 1 |
FINANCIALINFORMATION AND CURRENCY OF FINANCIAL STATEMENTS
Theunaudited condensed consolidated interim financial statements included in Part 1, Item 1, “Financial Statements (Unaudited)”of this Periodic Report have been prepared in accordance with generally accepted accounting principlesin the United States of America (“U.S. GAAP”). Unless otherwise indicated, all references in this Periodic Report to “dollars,”“$,” or “US$” are to U.S. dollars, which is the reporting currency of the unaudited condensed consolidatedinterim financial statements.
| 2 |
PARTI – FINANCIAL INFORMATION
ITEM1. UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
NATIONALENERGY SERVICES REUNITED CORP. AND SUBSIDIARIES
UNAUDITEDCONDENSED CONSOLIDATED BALANCE SHEETS
(InUS$ thousands, except share data)
| June 30, 2025 | December 31, 2024 | |||||||
| Assets | ||||||||
| Current assets | ||||||||
| Cash and cash equivalents | $ | |||||||
| Accounts receivable, net (Note 3) | ||||||||
| Unbilled revenue | ||||||||
| Service inventories (Note 4) | ||||||||
| Prepaid assets | ||||||||
| Retention withholdings | ||||||||
| Other receivables | ||||||||
| Other current assets | ||||||||
| Total current assets | ||||||||
| Non-current assets | ||||||||
| Property, plant and equipment, net (Note 5) | ||||||||
| Intangible assets, net | ||||||||
| Goodwill | ||||||||
| Operating lease right-of-use assets | ||||||||
| Other assets | ||||||||
| Total assets | $ | $ | ||||||
| Liabilities and equity | ||||||||
| Liabilities | ||||||||
| Accounts payable and accrued expenses | ||||||||
| Current installments of long-term debt (Note 6) | ||||||||
| Short-term borrowings (Note 6) | ||||||||
| Income taxes payable | ||||||||
| Other taxes payable | ||||||||
| Operating lease liabilities | ||||||||
| Other current liabilities | ||||||||
| Total current liabilities | ||||||||
| Long-term debt (Note 6) | ||||||||
| Deferred tax liabilities | ||||||||
| Employee benefit liabilities | ||||||||
| Non-current operating lease liabilities | ||||||||
| Other liabilities | ||||||||
| Total liabilities | ||||||||
| Commitments and contingencies (Note 8) | ||||||||
| Equity | ||||||||
| Preferred shares, | ||||||||
| Common stock and additional paid in capital, | ||||||||
| Retained earnings | ||||||||
| Accumulated other comprehensive income | ||||||||
| Total equity | ||||||||
| Total liabilities and equity | $ | $ | ||||||
Theaccompanying notes are an integral part of the unaudited condensed consolidated interim financial statements.
| 3 |
NATIONALENERGY SERVICES REUNITED CORP. AND SUBSIDIARIES
UNAUDITEDCONDENSED CONSOLIDATED INTERIM STATEMENTS OF OPERATIONS
(InUS$ thousands, except share data and per share amounts)
| For the three-month period ended | For the six-month period ended | |||||||||||||||
| Description | June 30, 2025 | June 30, 2024 | June 30, 2025 | June 30, 2024 | ||||||||||||
| Revenues | $ | $ | $ | $ | ||||||||||||
| Cost of services | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Gross profit | ||||||||||||||||
| Selling, general and administrative expenses (excluding Amortization) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Amortization | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Operating income | ||||||||||||||||
| Interest expense, net | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other income, net | ||||||||||||||||
| Income before income tax | ||||||||||||||||
| Income tax expense | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Net income | $ | $ | $ | $ | ||||||||||||
| Weighted average shares outstanding (Note 10): | ||||||||||||||||
| Basic | ||||||||||||||||
| Diluted | ||||||||||||||||
| Earnings per share (Note 10): | ||||||||||||||||
| Basic | $ | $ | $ | $ | ||||||||||||
| Diluted | $ | $ | $ | $ | ||||||||||||
Theaccompanying notes are an integral part of the unaudited condensed consolidated interim financial statements.
| 4 |
NATIONALENERGY SERVICES REUNITED CORP. AND SUBSIDIARIES
UNAUDITEDCONDENSED CONSOLIDATED INTERIM STATEMENTS OF COMPREHENSIVE INCOME
(InUS$ thousands)
| For the three-month period ended | For the six-month period ended | |||||||||||||||
| Description | June 30, 2025 | June 30, 2024 | June 30, 2025 | June 30, 2024 | ||||||||||||
| Net income | $ | $ | $ | $ | ||||||||||||
| Other comprehensive income, net of tax | - | - | - | - | ||||||||||||
| Foreign currency translation adjustments | ||||||||||||||||
| Total comprehensive income, net of tax | $ | $ | $ | $ | ||||||||||||
Theaccompanying notes are an integral part of the unaudited condensed consolidated interim financial statements.
| 5 |
NATIONALENERGY SERVICES REUNITED CORP. AND SUBSIDIARIES
UNAUDITEDCONDENSED CONSOLIDATED INTERIM STATEMENTS OF SHAREHOLDERS’ EQUITY
(InUS$ thousands, except share data)
Common Stock | ||||||||||||||||||||
and Additional | Accumulated Other | |||||||||||||||||||
| Ordinary | Paid-in | Comprehensive | Retained | Total | ||||||||||||||||
| Description | Shares | Capital | Income | Income | Equity | |||||||||||||||
| Balance at December 31, 2024 | $ | $ | | $ | $ | |||||||||||||||
| Share-based compensation expense | - | |||||||||||||||||||
| Issuance of equity-classified restricted share units | ||||||||||||||||||||
| Settlement of liability-classified share-based compensation | ||||||||||||||||||||
| Transaction costs associated with warrant exchange (Note 9) | ( | ) | ( | ) | ||||||||||||||||
| Net income | - | |||||||||||||||||||
| Balance at June 30, 2025 | $ | $ | $ | $ | ||||||||||||||||
| Common Stock | ||||||||||||||||||||
and Additional | Accumulated Other | |||||||||||||||||||
| Ordinary | Paid in | Comprehensive | Retained | Total | ||||||||||||||||
| Description | Shares | Capital | Income | (Deficit) | Equity | |||||||||||||||
| Balance at December 31, 2023 | $ | $ | | $ | ( | ) | $ | |||||||||||||
| Share-based compensation expense | - | |||||||||||||||||||
| Vesting of restricted share units | ( | ) | ( | ) | ||||||||||||||||
| Other | ( | ) | ( | ) | ( | ) | ||||||||||||||
| Net income | - | |||||||||||||||||||
| Balance at June 30, 2024 | $ | $ | $ | ( | ) | $ | ||||||||||||||
Common Stock | ||||||||||||||||||||
and Additional | Accumulated Other | |||||||||||||||||||
| Ordinary | Paid-in | Comprehensive | Retained | Total | ||||||||||||||||
| Description | Shares | Capital | Income | Income | Equity | |||||||||||||||
| Balance at March 31, 2025 | $ | $ | $ | $ | ||||||||||||||||
| Share-based compensation expense | - | |||||||||||||||||||
| Settlement of liability-classified share-based compensation | ||||||||||||||||||||
| Transaction costs associated with warrant exchange (Note 9) | - | ( | ) | ( | ) | |||||||||||||||
| Net income | - | |||||||||||||||||||
| Balance at June 30, 2025 | $ | $ | $ | $ | ||||||||||||||||
| Common Stock | ||||||||||||||||||||
| and | Accumulated | |||||||||||||||||||
| Additional | Other | |||||||||||||||||||
| Ordinary | Paid in | Comprehensive | Retained | Total | ||||||||||||||||
| Description | Shares | Capital | Income | (Deficit) | Equity | |||||||||||||||
| Balance at March 31, 2024 | $ | $ | | $ | ( | ) | $ | |||||||||||||
| Share-based compensation expense | - | |||||||||||||||||||
| Vesting of restricted share units | ( | ) | ( | ) | ||||||||||||||||
| Other | ( | ) | ||||||||||||||||||
| Net income | - | |||||||||||||||||||
| Balance at June 30, 2024 | $ | $ | $ | ( | ) | $ | ||||||||||||||
Theaccompanying notes are an integral part of the unaudited condensed consolidated interim financial statements.
| 6 |
NATIONALENERGY SERVICES REUNITED CORP. AND SUBSIDIARIES
UNAUDITEDCONDENSED CONSOLIDATED INTERIM STATEMENTS OF CASH FLOWS
(InUS$ thousands)
| For the six-month period ended | ||||||||
| June 30, 2025 | June 30, 2024 | |||||||
| Cash flows from operating activities: | ||||||||
| Net income | $ | $ | ||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
| Depreciation and amortization | ||||||||
| Share-based compensation expense | ||||||||
| (Gain) / loss on disposal of assets | ( | ) | ||||||
| Non-cash interest expense (income) | ( | ) | ||||||
| Deferred tax (benefit) expense | ( | ) | ||||||
| Allowance for (reversal of) doubtful receivables | ( | ) | ||||||
| Charges on obsolete service inventories | ||||||||
| Impairments and other charges | ||||||||
| Other operating activities, net | ( | ) | ||||||
| Changes in operating assets and liabilities: | ||||||||
| (Increase) decrease in accounts receivable | ( | ) | ||||||
| (Increase) decrease in unbilled revenue | ( | ) | ( | ) | ||||
| (Increase) decrease in retention withholdings | ||||||||
| (Increase) decrease in inventories | ( | ) | ||||||
| (Increase) decrease in prepaid expenses | ( | ) | ( | ) | ||||
| (Increase) decrease in other current assets | ( | ) | ||||||
| Change in other long-term assets and liabilities | ( | ) | ||||||
| Increase (decrease) in accounts payable and accrued expenses | ||||||||
| Increase (decrease) in other current liabilities | ( | ) | ||||||
| Net cash provided by operating activities | ||||||||
| Cash flows from investing activities: | ||||||||
| Capital expenditures | ( | ) | ( | ) | ||||
| IPM investments (Note 2) | ||||||||
| Proceeds from disposal of assets | ||||||||
| Other investing activities | ( | ) | ( | ) | ||||
| Net cash used in investing activities | ( | ) | ( | ) | ||||
| Cash flows from financing activities: | ||||||||
| Proceeds from long-term debt | ||||||||
| Repayments of long-term debt | ( | ) | ( | ) | ||||
| Proceeds from short-term borrowings | ||||||||
| Repayments of short-term borrowings | ( | ) | ( | ) | ||||
| Payments on capital leases | ( | ) | ( | ) | ||||
| Payments on seller-provided financing for capital expenditures | ( | ) | ( | ) | ||||
| Other financing activities, net | ( | ) | ( | ) | ||||
| Net cash used in financing activities | ( | ) | ( | ) | ||||
| Effect of exchange rate changes on cash | ||||||||
| Net increase in cash | ||||||||
| Cash and cash equivalents, beginning of period | ||||||||
| Cash and cash equivalents, end of period | $ | $ | ||||||
Theaccompanying notes are an integral part of the unaudited condensed consolidated interim financial statements.
| 7 |
NATIONALENERGY SERVICES REUNITED CORP. AND SUBSIDIARIES
NOTESTO UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
1.BASIS OF PRESENTATION
Theaccompanying unaudited condensed consolidated financial statements of National Energy Services Reunited Corp. (“NESR,” the“Company,” “we,” “our,” “us” or similar term) have been prepared in accordance with generallyaccepted accounting principles in the United States of America for interim financial information. Accordingly, they do not include allof the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinionof NESR management, all adjustments considered necessary for a fair statement have been included in the accompanying unaudited interimfinancial statements. All intercompany transactions and balances have been eliminated in consolidation. Operating results for the six-monthperiod ended June 30, 2025, are not necessarily indicative of the results that may be expected for the full year ending December 31,2025. The December 31, 2024, balance sheet information has been derived from the NESR 2024 audited financial statements. For furtherinformation, refer to the Consolidated Financial Statements and notes thereto included in the NESR Annual Report on Form 20-F for theyear ended December 31, 2024 (the “Annual Report”), filed with the Securities and Exchange Commission on March 28,2025.
2.CONDENSED CONSOLIDATED INTERIM SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Supplementalcash flow information
Non-cashtransactions were as follows:
| ● | Purchases of property, plant, and equipment in Accounts payable of $ | |
| ● | Purchases of property, plant, and equipment using seller-provided installment financing of $ |
ProductionManagement Assets
TheCompany’s Integrated Production Management (“IPM”) projects are focused on developing and managing production on behalfof the Company’s customers under long-term agreements. Under these arrangements, the Company contributes its own services and productsand, in certain cases, cash, toward the customer’s field development activities and operations. Although in certain arrangementsthe Company is paid for a portion of the services or products it provides, generally the Company will not be paid at the time of providingits services or upon delivery of its products. Instead, the Company is compensated based on cash flow generated by cash from the customer’swells. Revenues from IPM arrangements, which are recognized as the related production is achieved, represented
TheCompany capitalizes its cash investments in a project as well as the direct costs associated with providing services or products forwhich the Company will be compensated when the related production is achieved. These capitalized investments are amortized to the UnauditedCondensed Consolidated Interim Statements of Operations as the related production is achieved based on the units of production method,whereby each unit produced is assigned a pro-rata portion of the unamortized costs based on estimated total production, resulting ina matching of revenue with the applicable costs. Amortization expense relating to these capitalized investments was $
Theunamortized portion of the Company’s investments in IPM projects was $
Ateach balance sheet date, the Company assesses whether the unamortized costs associated with these investments exceed the present valueof future cash flows from the projects, and recorded impairment charges $
Recentlyissued accounting standards not yet adopted
InDecember 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No.2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which requires a tabular reconciliation using bothpercentages and amounts, broken out into specific categories with certain reconciling items at or above 5% of the statutory tax furtherbroken out by nature and/or jurisdiction. This ASU also has disclosure requirements related to income taxes paid (net of refunds received),broken out between federal, state/local and foreign, and amounts paid to an individual jurisdiction when 5% or more of the total incometaxes paid. The ASU is effective for fiscal years beginning after December 15, 2024, with early adoption permitted. The Company is currentlyreviewing the impact of the adoption on the consolidated financial statements.
OnNovember 4, 2024, the FASB issued ASU No. 2024-03, Income Statement—Reporting Comprehensive Income—Expense DisaggregationDisclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, which requires disaggregated disclosure of income statementexpenses for public business entities (“PBEs”). The ASU does not change the expense captions an entity presents on the faceof the income statement; rather, it requires disaggregation of certain expense captions into specified categories in disclosures withinthe footnotes to the financial statements. ASU 2024-03 is effective for all PBEs for fiscal years beginning after December 15, 2026,and interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted. The Company is currently reviewingthe impact of the adoption on the consolidated financial statements.
Allother new accounting pronouncements that have been issued but not yet effective are currently being evaluated and, at this time, arenot expected to have a material impact on our financial position or results of operations.
| 8 |
3.ACCOUNTS RECEIVABLE, NET
Thefollowing table summarizes the accounts receivable of the Company as of the period end dates set forth below (in US$ thousands):
| As of | ||||||||
| June 30, 2025 | December 31, 2024 | |||||||
| Trade receivables | $ | $ | ||||||
| Less: allowance for credit losses | ( | ) | ( | ) | ||||
| Total | $ | $ | ||||||
Tradereceivables relate to the sale of services, for which credit is extended based on the Company’s evaluation of the customer’screditworthiness. The gross contractual amounts of trade receivables at June 30, 2025 and December 31, 2024, were $
| For the three-month period ended | For the six-month period ended | |||||||||||||||
| June 30, 2025 | June 30, 2024 | June 30, 2025 | June 30, 2024 | |||||||||||||
| Allowance for credit losses at beginning of period | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| (Increase) decrease to allowance for the period | ( | ) | ( | ) | ||||||||||||
| Write-off of credit losses | ||||||||||||||||
| Allowance for credit losses at end of period | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
4.SERVICE INVENTORIES
Thefollowing table summarizes the service inventories for the period end dates as set forth below (in US$ thousands):
| June 30, | December 31, | |||||||
| 2025 | 2024 | |||||||
| Spare parts and consumables | $ | $ | ||||||
| Chemicals | ||||||||
| Total | $ | $ | ||||||
| 9 |
5.PROPERTY, PLANT, & EQUIPMENT
Property,plant, and equipment, net of accumulated depreciation, of the Company consists of the following as of the period end dates set forthbelow (in US$ thousands):
| Estimated Useful | As of | |||||||||
| Lives (in years) | June 30, 2025 | December 31, 2024 | ||||||||
| Buildings and leasehold improvements | $ | $ | ||||||||
| Drilling rigs, plant and equipment | ||||||||||
| Office equipment (furniture and fixtures) and tools | ||||||||||
| Vehicles and cranes | ||||||||||
| Less: Accumulated depreciation | ( | ) | ( | ) | ||||||
| Land | ||||||||||
| Capital work in progress | ||||||||||
| Total | $ | $ | ||||||||
TheCompany recorded depreciation expense of $
6.DEBT
Long-termdebt
TheCompany’s long-term debt obligations consist of the following (in US$ thousands):
| June 30, 2025 | December 31, 2024 | |||||||
| Secured Term Loan | $ | $ | ||||||
| Secured Revolving Credit Facility | ||||||||
| Borrowings from Long-Term 24 Month Working Capital Facilities | ||||||||
| Less: unamortized debt issuance costs | ( | ) | ( | ) | ||||
| Total loans and borrowings | ||||||||
| Less: current installments | ( | ) | ( | ) | ||||
| Long-term debt, net of unamortized debt issuance costs and excluding current installments | $ | $ | ||||||
2021Secured Facilities Agreement
OnNovember 4, 2021, the Company entered into a $
| 10 |
Borrowingsunder the Term Loan and RCF facilities incur interest based on the secured overnight financing rate (“SOFR”) for U.S. dollar-denominatedborrowings or the Saudi Arabian Interbank Offered Rate (“SAIBOR”) for Saudi Arabia Riyal borrowings plus
The2021 Secured Facilities Agreement also includes a working capital facility of $
Short-termdebt
TheCompany’s short-term debt obligations consist of the following (in US$ thousands):
| June 30, 2025 | December 31, 2024 | |||||||
| Short-term borrowings from working capital facilities | $ | $ | ||||||
| Less: unamortized debt issuance costs | ( | ) | ( | ) | ||||
| Short-term debt, excluding current installments of long-term debt | $ | $ | ||||||
Short-termborrowings primarily consist of financing for capital equipment and inventory purchases.
Otherdebt information
Scheduledprincipal payments of long-term debt for periods subsequent to June 30, 2025, are as follows (in US$ thousands):
| 2025 | $ | |||
| 2026 | ||||
| 2027 | ||||
| 2028 | ||||
| 2029 | ||||
| Total long-term debt | $ |
| 11 |
7.INCOME TAXES
NESRis a holding company incorporated in the British Virgin Islands, which imposes a zero percent statutory corporate income tax rate onincome generated outside of the British Virgin Islands. The subsidiaries operate in multiple tax jurisdictions throughout the MiddleEast and North Africa (“MENA”) and Asia Pacific regions where statutory tax rates generally vary. In the British VirginIslands, the statutory rate is effectively
TheCompany recorded income tax expense of $
Thedecrease in effective tax rate period-on-period is primarily attributable to fewer provisions for uncertain tax positions in variousjurisdictions.
8.COMMITMENTS AND CONTINGENCIES
Capitalexpenditure commitments
TheCompany was committed to incur capital expenditures of $
Othercommitments
TheCompany purchases certain property, plant, and equipment using seller-provided installment financing with payment terms extending to24 months. As of June 30, 2025, and December 31, 2024, the Company recorded $
TheCompany had outstanding letters of credit amounting to $
Inthe normal course of business with customers, vendors and others, the Company has entered into off-balance sheet arrangements, such assurety bonds for performance, and other bank issued guarantees which totaled $
Legalproceedings
TheCompany is involved in certain legal proceedings which arise in the ordinary course of business and the outcomes of which are currentlysubject to uncertainties and therefore the probability of a loss, if any, being sustained and an estimate of the amount of any loss aredifficult to ascertain. Consequently, it is not possible to make a reasonable estimate of the expected financial effect, if any, thatwill result from ultimate resolution of these disputes. The Company is contesting these claims/disputes and the Company’s managementcurrently believes that it is not required to recognize a provision because they are not probable or reasonably estimable and any impactsare not expected to have a material impact on the Company’s business, financial condition, results of operations, or liquidity.
| 12 |
9.EQUITY
Warrants
On May 30, 2025,the Company commenced an exchange offer and consent solicitation relating to its outstanding warrants. The Company offered to all holdersof the warrants the opportunity to receive ordinary shares in exchange for each outstanding warrant tendered by the holder and exchangedpursuant to the offer. The Company concurrently solicited consents from holders of the warrants to amend the Warrant Agreement, datedas of May 11, 2017, by and between the Company and Continental Stock Transfer & Trust Company,as warrant agent, to permit the Company to require that each warrant that is outstanding upon the closing of the exchange offer be convertedinto
Upon theexpiration of the exchange offer on June 30, 2025,
The Companycosts of the exchange offer were recorded as a reduction to Common stock and additional paid-in capital on the Company’sunaudited condensed consolidated balance sheet. Had the exchange offer been fully reflected in the Company’s weighted averageshares outstanding as of January 1, 2025, the Company’s Earnings per share (Note 10) for the three-month and six-month periodsended June 30, 2025, would have each been reduced by $per share on both a basic and diluted basis.
| Date | Transaction Detail | Change in Shares | Three-month period ended June 30, 2025, Weighted Average | |||||||
| April 1, 2025 | Beginning Balance | |||||||||
| April 22, 2025 | Settlement of liability-classified share-based compensation | |||||||||
| June 30, 2025 | Ending Balance | |||||||||
| Date | Transaction Detail | Change in Shares | Three-month period ended Weighted | |||||||
| April 1, 2024 | Beginning Balance | |||||||||
| April 1, 2024 | Restricted Stock Issuance | |||||||||
| April 23, 2024 | Restricted Stock Issuance | |||||||||
| May 2, 2024 | Return of shares from W.D. Van Gonten Engineering | ( | ) | ( | ) | |||||
| June 30, 2024 | Ending Balance | |||||||||
| Date | Transaction Detail | Change in Shares | Six-month period ended June 30, 2025, Weighted Average | |||||||
| January 1, 2025 | Beginning Balance | |||||||||
| January 6, 2025 | Settlement of liability-classified share-based compensation | |||||||||
| February 17, 2025 | Equity-classified Restricted Stock Issuance | |||||||||
| February 27, 2025 | Equity-classified Restricted Stock Issuance | |||||||||
| March 17, 2025 | Equity-classified Restricted Stock Issuance | |||||||||
| March 18, 2025 | Equity-classified Restricted Stock Issuance | |||||||||
| April 22, 2025 | Settlement of liability-classified share-based compensation | |||||||||
| June 30, 2025 | Ending Balance | |||||||||
| Date | Transaction Detail | Change in Shares | Six-month period ended Weighted | |||||||
| January 1, 2024 | Beginning Balance | |||||||||
| January 9, 2024 | Restricted Stock Issuance | |||||||||
| March 17, 2024 | Restricted Stock Issuance | |||||||||
| March 18, 2024 | Restricted Stock Issuance | |||||||||
| March 19, 2024 | Restricted Stock Issuance | |||||||||
| April 1, 2024 | Restricted Stock Issuance | |||||||||
| April 23, 2024 | Restricted Stock Issuance | |||||||||
| May 2, 2024 | Return of shares from W.D. Van Gonten Engineering | ( | ) | ( | ) | |||||
| June 30, 2024 | Ending Balance | |||||||||
| 13 |
| For the three-month period ended | ||||||||||||||||||||||||
| June 30, 2025 | June 30, 2024 | |||||||||||||||||||||||
| Net income to Ordinary Shareholders | Weighted-average ordinary shares outstanding | EPS | Net income to Ordinary Shareholders | Weighted-average ordinary shares outstanding | EPS | |||||||||||||||||||
| Basic EPS - ordinary shares | $ | $ | $ | $ | ||||||||||||||||||||
| Restricted stock units | ||||||||||||||||||||||||
| Antidilution sequencing - subtotal | ||||||||||||||||||||||||
| May 30, 2025, tender offer to exchange | ||||||||||||||||||||||||
| Diluted EPS - ordinary shares | $ | $ | $ | $ | ||||||||||||||||||||
| 14 |
| For the six-month period ended | ||||||||||||||||||||||||
| June 30, 2025 | June 30, 2024 | |||||||||||||||||||||||
| Net income to Ordinary Shareholders | Weighted-average ordinary shares outstanding | EPS | Net loss to Ordinary Shareholders | Weighted-average ordinary shares outstanding | EPS | |||||||||||||||||||
| Basic EPS - ordinary shares | $ | $ | $ | $ | ||||||||||||||||||||
| Restricted stock units | ||||||||||||||||||||||||
| Antidilution sequencing - subtotal | ||||||||||||||||||||||||
| May 30, 2025, tender offer to exchange | ||||||||||||||||||||||||
| Diluted EPS - ordinary shares | $ | $ | $ | $ | ||||||||||||||||||||
Prior to the announcementof the exchange offer on May 30, 2025, potentially dilutive warrants had no impact on the determination of dilutive earningsper share as these potential ordinary shares were antidilutive for the three-month period ended June 30, 2025 , the three-monthperiod ended June 30, 2024, the six-month period ended June 30, 2025 , and the six-month period ended June 30, 2024, respectively,.
Inaddition to the warrants, the Company also had restricted stock units excluded from dilutive ordinary shares for the three-monthperiod ended June 30, 2025, as they were assumed repurchased through the impact of unrecognized share-based compensation cost.
11.REPORTABLE SEGMENTS
Operatingsegments are components of an enterprise where separate financial information is available and that are evaluated regularly by the Company’sCODM in deciding how to allocate resources and in assessing performance. The Company reports segment information based on the “management”approach and its CODM is its Chief Executive Officer.
TheCompany’s services are similar to one another in that they consist of oilfield services and related offerings, whose customersare oil and natural gas companies. The results of operations of the service offerings are regularly reviewed by the CODM for the Companyfor the purposes of determining resource and asset allocation and assessing performance. The Company has determined that it has two reportablesegments, Production Services and Drilling and Evaluation Services. The CODM evaluates the operating results of its reportable segmentsprimarily based on revenue and segment operating (loss) / income. Segment operating (loss) / income does not include general corporateexpenses, such as corporate overhead (costs incurred at the Company’s global and regional headquarter locations), share-based compensation,and transaction and integration costs, as these expenses are not allocated to the Company’s reportable segments and not reportedto the Company’s CODM.
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ProductionServices that are offered depend on the well life cycle in which the services may fall. They include, but are not limited to, the followingtypes of service offerings: 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.
Drillingand Evaluation Services generates its revenue from the following service offerings: rigs and integrated services, fishing and downholetools, thru-tubing intervention, tubular running services, directional drilling, drilling and completion fluids, pressure control, welltesting services, wireline logging services, and slickline services.
TheCompany’s operations and activities are located within certain geographies, primarily the MENA region.
Revenuefrom operations
| For the three-month period ended | For the six-month period ended | |||||||||||||||
| June 30, 2025 | June 30, 2024 | June 30, 2025 | June 30, 2024 | |||||||||||||
| Reportable Segment: | ||||||||||||||||
| Production Services | $ | $ | $ | $ | ||||||||||||
| Drilling and Evaluation Services | ||||||||||||||||
| Total external revenue | $ | $ | $ | $ | ||||||||||||
Long-livedassets
| As of | ||||||||
| June 30, 2025 | December 31, 2024 | |||||||
| Reportable Segment: | ||||||||
| Production Services | $ | $ | ||||||
| Drilling and Evaluation Services | ||||||||
| Total Reportable Segments | ||||||||
| Unallocated assets | ||||||||
| Total long-lived assets | $ | $ | ||||||
Unallocatedassets mainly comprise of buildings and leasehold improvements in the countries which supports both the segments in the normal courseof business.
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Totalsegment operating income
| For the three-month period ended | For the six-month period ended | |||||||||||||||
| June 30, 2025 | June 30, 2024 | June 30, 2025 | June 30, 2024 | |||||||||||||
| Reportable Segment: | ||||||||||||||||
| Production Services | $ | $ | $ | $ | ||||||||||||
| Drilling and Evaluation Services | ||||||||||||||||
| Total Reportable Segments | ||||||||||||||||
| Unallocated expenses | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Total operating income | ||||||||||||||||
| Interest expense, net | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other income, net | ||||||||||||||||
| Income before income tax | $ | $ | $ | $ | ||||||||||||
Unallocatedexpenses for the three-month and six-month periods ended June 30, 2025, and June 30, 2024, respectively, mainlyinclude corporate selling, general, and administrative expenses (inclusive of amortization), offset in small part by a portion of thesecosts that are allocated to the reportable segments. As described elsewhere, corporate selling, general, and administrative expensesare primarily comprised of payroll and compensation costs for headquarters’ employees, professional and legal expenses relatingto audit firms, consulting firms and legal counsel, and depreciation charges on headquarters’ offices and leasehold improvements.
Significantsegment expenses, which represent the difference between segment revenue and pretax segment income, consist of the following:
| For the three-month period ended | For the six-month period ended | |||||||||||||||
| June 30, 2025 | June 30, 2024 | June 30, 2025 | June 30, 2024 | |||||||||||||
| Production Services: | ||||||||||||||||
| Compensation | $ | $ | $ | $ | ||||||||||||
| Cost of products, materials, and supplies | ||||||||||||||||
| Transport and rental | ||||||||||||||||
| Depreciation and amortization | ||||||||||||||||
| Other | ||||||||||||||||
| $ | $ | $ | $ | |||||||||||||
| For the three-month period ended | For the six-month period ended | |||||||||||||||
| June 30, 2025 | June 30, 2024 | June 30, 2025 | June 30, 2024 | |||||||||||||
| Drilling and Evaluation Services | ||||||||||||||||
| Compensation | $ | $ | $ | $ | ||||||||||||
| Cost of products, materials, and supplies | ||||||||||||||||
| Transport and rental | ||||||||||||||||
| Depreciation and amortization | ||||||||||||||||
| Other | ||||||||||||||||
| $ | $ | $ | $ | |||||||||||||
Othersegment expenses include mobilization, occupancy, professional, and other costs.
Revenueby geographic area
| For the three-month period ended | For the six-month period ended | |||||||||||||||
| June 30, 2025 | June 30, 2024 | June 30, 2025 | June 30, 2024 | |||||||||||||
| Geographic Area: | ||||||||||||||||
| Domestic (British Virgin Islands) | $ | $ | $ | $ | ||||||||||||
| MENA | ||||||||||||||||
| Rest of World | ||||||||||||||||
| Total revenue | $ | $ | $ | $ | ||||||||||||
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Long-livedassets by geographic area
| As of | ||||||||
| June 30, 2025 | December 31, 2024 | |||||||
| Geographic area: | ||||||||
| Domestic (British Virgin Islands) | $ | $ | ||||||
| MENA | ||||||||
| Rest of World | ||||||||
| Total long-lived assets | $ | $ | ||||||
CautionaryNote Regarding Forward-Looking Statements
This Periodic Report on Form6-K (this “Periodic Report”) contains forward-looking statements (as such term is defined in Section 27A of the SecuritiesAct of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)). Any andall statements contained in this Periodic 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 PeriodicReport may include, without limitation, the plans and objectives of management for future operations, projections of income or loss, earningsor loss per share, capital expenditures, dividends, capital structure or other financial items, our future financial performance, includingany such statement contained in a discussion and analysis of financial condition by management or in the results of operations includedpursuant 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.
Theforward-looking statements are not meant to predict or guarantee actual results, performance, events or circumstances and may not berealized because they are based upon our current projections, plans, objectives, beliefs, expectations, estimates and assumptions andare subject to a number of risks and uncertainties and other influences, many of which we have no control over, including the impactof the extent of any material weakness or significant deficiencies in our internal control over financial reporting and any action takenby the SEC including potential fines or penalties arising out of the SEC inquiry. Actual results and the timing of certain events andcircumstances 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 materiallyfrom expected or desired results may include, without limitation:
| ● | Changing commodity prices, market volatility and other market trends that affect our customers’ demand for our services; | |
| ● | Public health crises and other catastrophic events; | |
| ● | The level of capital spending by our customers; | |
| ● | Political, market, financial and regulatory risks, including those related to the geographic concentration of our operations and customers; | |
| ● | Our operations, including maintenance, upgrades and refurbishment of our assets, may require significant capital expenditures, which may or may not be available to us; | |
| ● | Operating hazards inherent in our industry and the ability to secure sufficient indemnities and insurance; | |
| ● | Our ability to successfully integrate acquisitions; | |
| ● | Competition, including capital and technological advances; and | |
| ● | Other risks and uncertainties set forth in Part I, Item 3D, “Risk Factors,” included in this Periodic Report. |
Readersare cautioned not to place undue reliance on forward-looking statements because of the risks and uncertainties related to them and tothe risk factors. The Company disclaims any obligation to update the forward-looking statements contained in this Periodic Report toreflect any new information or future events or circumstances or otherwise, except as required by law. Readers should read this PeriodicReport in conjunction with other documents which the Company may file or furnish from time to time with the SEC.
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ITEM2. OPERATING AND FINANCIAL REVIEW
Thefollowing discussion and analysis should be read in conjunction with the unaudited condensed consolidated interim financial statementsand related notes included in this Periodic Report. In addition, such analysis should be read in conjunction with the audited consolidatedfinancial statements, the related notes, and the other information included in the Company’s Annual Report on Form 20-F for yearended December 31, 2024. 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.”
Overview
Weare a provider of services to the oil and natural gas industry primarily in the MENA region. We currently operate in 16 countries, witha strong presence in Saudi Arabia, Oman, Kuwait, United Arab Emirates, Iraq, Algeria, Egypt and Libya. Our company was founded with avision of creating a regional provider for oilfield services that offers a full portfolio of solutions for our customers with a focuson supporting the economies in which we operate. ESG considerations are central to our company, and we believe that employing local staffand fully integrating with regional economies is a critical part of the social component of our ESG philosophy. In addition, we havefound that promoting high local content in our operations optimizes our cost structure, enhancing our ability to generate free cash flowin various commodity price environments. With its vast reserves of oil and natural gas, the MENA region continues to dominate in itsrole as a vital source of global energy supply and stability. Our services include a broad suite of offerings that are essential in thedrilling and completion of new oil and natural gas wells and in the remedial work on existing wells, both onshore and offshore, includingcompletion services and equipment and drilling and evaluation services and equipment.
FactorsAffecting our Results of Operations
GlobalE&P Trends
Weprovide oilfield services to exploration and production companies with operations in the onshore and offshore oil and natural gas sectorsin the MENA region. Demand for our services is mainly driven by our customers’ operations and is therefore linked to global commodityprices and expectations about future prices, rig activity and other factors.
CyclicalNature of Sector
Theoilfield services sector is a highly cyclical industry. As a result, our operating results can fluctuate from quarter to quarter andperiod to period. However, due to the lower average cost of production per barrel in the Middle East and the need for infrastructurespending to sustain or increase current production levels of these oil rich countries, we believe that we are less affected by oil pricevolatility as compared to oilfield services companies that operate in other regions, as discussed below.
DrillingEnvironments
Basedon energy industry data, the bulk of oil production comes from onshore activity. We provide services to exploration and production (“E&P”)companies with both onshore and offshore drilling operations. Offshore drilling generally provides higher margins to service providersdue to greater complexity, logistical challenges and the need for innovative solutions.
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GeographicConcentration; Middle Eastern Operations
Forthe three-month period ended June 30, 2025, the three-month period ended June 30, 2024, the six-month period ended June 30, 2025,and the six-month period ended June 30, 2024, respectively, 99%, 99%, 99%, and 99%, of our revenue came from the MENA region,particularly the Middle East. The Middle East accounts for almost a third of global oil production, according to the Energy InstituteStatistical Review of World Energy 2025 (74th edition). Given the low break-even price of production, it is a key regionfor oilfield service companies. Most oil and natural gas fields in the Middle East are legacy fields on land or in shallow waters. Thesefields are largely engaged in development drilling activity, driven by the need for redevelopment, enhanced oil recovery via stimulationand the drilling of new production wells. Further, a number of gas fields scheduled to be developed in the near future will require oilfieldservices. As a result, our capital expenditure and related financing needs may increase materially in the future.
Inaddition, regional drilling operations may be impacted by local political and economic trends. Due to the concentration of our operationsin the MENA region, and particularly the Middle East, our financial condition and results of operations may be impacted by geopolitical,political or economic instability affecting the countries in which we operate, including reduced production and drilling activities,extended periods of low oil prices and decreased oil demand, armed conflict, imposition of economic sanctions, changes in governmentsand currency devaluations, among others.
ManyMENA countries rely on the energy sector as the major source of national revenues. Even at lower oil and natural gas prices, such oiland natural gas dependent economies have continued to maintain significant production and drilling activities. Further, given that MiddleEast markets have among the lowest break-even prices of production, they can continue to produce profitably at significantly lower commodityprices.
KeyComponents of Revenues and Expenses
Revenues
Weearn revenue from our broad suite of oilfield services, including coiled tubing, hydraulic fracturing, cementing, stimulation and pumping,well testing services, drilling services and rental, fishing and remediation, drilling and workover rigs, nitrogen services, wirelinelogging services, turbines drilling, directional drilling, filtration services and slickline services, among others. Revenues are recognizedwhen performance obligations are satisfied in accordance with contractual terms, in an amount that reflects the consideration the Companyexpects to be entitled to in exchange for services rendered or rentals provided. A performance obligation arises under contracts withcustomers to render services or provide rentals and is the unit of account under Accounting Standards Update (ASU) 2014-09, Revenue fromContracts with Customers. The Company accounts for services rendered and rentals provided separately if they are distinct and the serviceor rental is separately identifiable from other items provided to a customer and if a customer can benefit from the services renderedor rentals provided on its own or with other resources that are readily available to the customer. A contract’s transaction priceis allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied.A contract’s standalone selling prices are determined based on the prices that the Company charges for its services rendered andrentals provided. Most of the Company’s performance obligations are satisfied over time, which is generally represented by a periodof 30 days or less. The Company’s payment terms vary by the type of products or services offered. The term between invoicing andwhen the payment is due is typically 30-60 days per contract.
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Costof services
Costof services primarily includes staff costs for service personnel, purchase of non-capitalized material, equipment and supplies (suchas tools and rental equipment), depreciation relating to capital assets used in our operations, vehicle and equipment rental and maintenanceand repair.
Selling,general and administrative (excluding Amortization) (“SG&A”) expense
SG&Aexpense, excluding Amortization, which is presented separately, primarily includes salary and employee benefits for non-production personnel(primarily management and administrative personnel), professional service fees, office facilities and equipment, office supplies andnon-capitalized office equipment and depreciation of office furniture and fixtures.
Amortization
Amortizationexpense primarily includes amortization of intangible assets associated with acquired customer contracts, trademarks and tradenames.
Interestexpense, net
Interestexpense primarily consists of interest on outstanding debt, net of interest income.
Otherincome / (expense), net
Otherincome / (expense), net primarily consists of bank charges and foreign exchange gains and losses.
KeyPerformance Indicators
Historically,we have tracked two principal non-financial performance indicators that are important drivers of our results of operations: oil priceand rig count. Oil price is important because the level of spending by E&P companies, our principal customers, is significantly influencedby anticipated future prices of oil, which is typically indicative of expected supply and demand. Changes in E&P spending, in turn,typically result in an increased or decreased demand for our services. Rig count, particularly in the regions in which we operate, isan indicator of the level of activity and spending by our E&P customers and has historically been an important indicator of our financialperformance and activity levels. More recently, our customers in certain parts of the MENA region have increased their efforts to commercializenatural gas, particularly from unconventional formations. Over time, we anticipate that the market for natural gas will also become akey performance indicator for the Company.
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Thefollowing 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:
| As of | ||||||||
| June 30, 2025 | December 31, 2024 | |||||||
| Rig count: | ||||||||
| MENA | 382 | 374 | ||||||
| Rest of World – outside of North America | 531 | 535 | ||||||
| Total International Rig Count | 913 | 909 | ||||||
| Brent Crude (per barrel) | $ | 68.15 | $ | 74.58 | ||||
Basisof Presentation of Financial Information
Segments
Weoperate our business through two operating segments and report our results of operations through two reporting segments, Production Servicesand Drilling and Evaluation Services, which aggregate services performed during distinct stages of a typical life cycle of an oil well.
ProductionServices. Our Production Services segment includes the results of operations from services that are generally offered and performedduring the production stage of a well’s lifecycle. These services mainly include hydraulic fracturing, coiled tubing, stimulationand pumping, cementing, nitrogen services, filtration services, pipelines and industrial services, production assurance, artificial liftservices, completions and integrated production management. Our Production Services accounted for 63%, 68%, 62%, and 67%,of our revenues for the three-month period ended June 30, 2025, the three-month period ended June 30, 2024, the six-month period endedJune 30, 2025, and the six-month period ended June 30, 2024, respectively.
Drillingand Evaluation Services. Our Drilling and Evaluation Services segment includes the results of operations from services that are generallyoffered and performed during pre-production stages of a well’s lifecycle and related mainly to the operation of oil rigs. The servicesmainly include rigs and integrated services, fishing and downhole tools, thru-tubing intervention, tubular running services, directionaldrilling, drilling fluids, pressure control, well testing services, wireline logging services and slickline services. Our Drilling andEvaluation Services accounted for 37%, 32%, 38%, and 33%, of our revenues for the three-month period ended June 30, 2025,the three-month period ended June 30, 2024, the six-month period ended June 30, 2025, and the six-month period ended June 30, 2024, respectively.
SeeItem 4B, “Business Overview” in our Annual Report on Form 20-F for the year ended December 31, 2024, which is hereby incorporatedby reference into this Periodic Report, for a description of our reportable segments.
Resultsof Operations
Thediscussions below relating to significant line items from our consolidated statements of operations are based on available informationand represent our analysis of significant changes or events that impact the fluctuations in or comparability of reported amounts. Whereappropriate, we have identified specific events and changes that affect comparability or trends. In addition, the discussions below forrevenues are on an aggregate basis for each fiscal period, as the business drivers for all services are similar. All amounts in tablesare in US$ thousands, except share data and per share amounts.
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2025compared to 2024
Thefollowing table presents our Condensed Consolidated Interim Statements of Operations data for the periods indicated:
| For the three-month period ended | For the six-month period ended | |||||||||||||||
| Description | June 30, 2025 | June 30, 2024 | June 30, 2025 | June 30, 2024 | ||||||||||||
| Revenues | $ | 327,368 | $ | 324,969 | $ | 630,470 | $ | 621,817 | ||||||||
| Cost of services | (283,484 | ) | (271,830 | ) | (549,131 | ) | (525,736 | ) | ||||||||
| Gross profit | 43,884 | 53,139 | 81,339 | 96,081 | ||||||||||||
| Selling, general and administrative expenses (excluding Amortization) | (12,099 | ) | (14,329 | ) | (23,920 | ) | (28,020 | ) | ||||||||
| Amortization | (4,694 | ) | (4,694 | ) | (9,387 | ) | (9,387 | ) | ||||||||
| Operating income | 27,091 | 34,116 | 48,032 | 58,674 | ||||||||||||
| Interest expense, net | (8,562 | ) | (9,439 | ) | (16,846 | ) | (20,043 | ) | ||||||||
| Other income / (expense), net | 940 | 184 | 1,999 | 805 | ||||||||||||
| Income before income tax | 19,469 | 24,861 | 33,185 | 39,436 | ||||||||||||
| Income tax expense | (4,268 | ) | (5,988 | ) | (7,593 | ) | (10,581 | ) | ||||||||
| Net income | $ | 15,201 | $ | 18,873 | $ | 25,592 | $ | 28,855 | ||||||||
Revenue.Revenue was $327.4 million for the quarter ended June 30, 2025, compared to $325.0 million for the quarter ended June 30,2024, and $630.5 million for the six-month period ended June 30, 2025, compared to $621.8 million for the six-month period endedJune 30, 2024.
Thetable below presents our revenue by segment for the periods indicated:
| For the three-month period ended | For the six-month period ended | |||||||||||||||
| June 30, 2025 | June 30, 2024 | June 30, 2025 | June 30, 2024 | |||||||||||||
| Reportable Segment: | ||||||||||||||||
| Production Services | $ | 205,061 | $ | 219,595 | $ | 393,148 | $ | 414,098 | ||||||||
| Drilling and Evaluation Services | 122,307 | 105,374 | 237,322 | 207,719 | ||||||||||||
| Total revenue | $ | 327,368 | $ | 324,969 | $ | 630,470 | $ | 621,817 | ||||||||
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ProductionServices revenue was $205.1 million for the quarter ended June 30, 2025, compared to $219.6 million for the quarter ended June30, 2024, and $393.1 million for the six-month period ended June 30, 2025, compared to $414.1 million for the six-month periodended June 30, 2024. The change in revenue was primarily due to reduced hydraulic fracturing stages in Saudi Arabia upon contracttransition offset partially by additional specialty chemical sales in Egypt.
Drillingand Evaluation Services revenue was $122.3 million for the quarter ended June 30, 2025, compared to $105.4 million for the quarterended June 30, 2024, and $237.3 million for the six-month period ended June 30, 2025, compared to $207.7 million for the six-monthperiod ended June 30, 2024. The change in revenue was primarily due to additional well testing activity due to increased rig assignmentsin Saudi Arabia and higher period-over-period contribution from the Roya™ advanced directional drilling technology platform.
Costof services. Cost of services was $283.5 million for the quarter ended June 30, 2025, compared to $271.8 million for thequarter ended June 30, 2024, and $549.1 million for the six-month period ended June 30, 2025, compared to $525.7 million for thesix-month period ended June 30, 2024. Cost of services as a percentage of total revenue was 86.6%, 83.6%, 87.1% and 84.5%for the quarter ended June 30, 2025, the quarter ended June 30, 2024, the six-month period ended June 30, 2025, and the six-month periodended June 30, 2024, respectively. The change in cost of services as a percentage of total revenue is mainly due to an elevated coststructure expected to support higher activity levels in the second half of 2025. Cost of services included depreciation expense of $29.3million, $27.9 million, $58.8 million and $55.5 million for the quarter ended June 30, 2025, the quarter ended June 30, 2024,the six-month period ended June 30, 2025, and the six-month period ended June 30, 2024, respectively.
Grossprofit. Gross profit as a percentage of total revenue was 13.4%, 16.4%, 12.9% and 15.5% for the quarter ended June30, 2025, the quarter ended June 30, 2024, the six-month period ended June 30, 2025, and the six-month period ended June 30, 2024, respectively.The change in trend is described under “Revenue” and “Cost of services.”
SG&Aexpense. SG&A expense, which represents costs associated with managing and supporting our operations, was $12.1 millionfor the quarter ended June 30, 2025, compared to $14.3 million for the quarter ended June 30, 2024, and $23.9 million for thesix-month period ended June 30, 2025, compared to $28.0 million for the six-month period ended June 30, 2024. SG&A as a percentageof total revenue was 3.7%, 4.4%, 3.8% and 4.5% for the quarter ended June 30, 2025, the quarter ended June 30, 2024, thesix-month period ended June 30, 2025, and the six-month period ended June 30, 2024, respectively. The decrease in SG&A period overperiod is primarily due to lower spending on activities designed to facilitate remediation of the Company’s previously existingmaterial weaknesses.
Amortizationexpense. Amortization expense was $4.7 million for the quarter ended June 30, 2025, compared to $4.7 million forthe quarter ended June 30, 2024, and $9.4 million for the six-month period ended June 30, 2025, compared to $9.4 million for thesix-month period ended June 30, 2024. Amortization expense is driven mainly by acquired intangible assets resulting from acquisitions.
Interestexpense, net. Interest expense, net, was $8.6 million for the quarter ended June 30, 2025, compared to $9.4 million forthe quarter ended June 30, 2024, and $16.8 million for the six-month period ended June 30, 2025, compared to $20.0 million forthe six-month period ended June 30, 2024. Interest expense, net, decreased period-over-period, due to lower debt levels during 2025 ascompared to 2024.
Other(expense) income, net. Other (expense) income, net, was $0.9 million for the quarter ended June 30, 2025, compared to$0.2 million for the quarter ended June 30, 2024, and $2.0 million for the six-month period ended June 30, 2025, compared to $0.8million for the six-month period ended June 30, 2024.
Incometax expense (benefit). Income tax expense (benefit) was $4.3 million for the quarter ended June 30, 2025, compared to$6.0 million for the quarter ended June 30, 2024, and $7.6 million for the six-month period ended June 30, 2025, compared to $10.6million for the six-month period ended June 30, 2024. The decrease in effective tax rate period-on-period is primarily attributable tofewer provisions for uncertain tax positions in various jurisdictions. See Note 7, Income Taxes, to our condensed consolidatedinterim financial statements included in Part 1, Item 1, “Financial Statements (Unaudited)” of this Periodic Report.
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Netincome. Net income was $15.2 million for the quarter ended June 30, 2025, compared to $18.9 million for the quarter endedJune 30, 2024, and $25.6 million for the six-month period ended June 30, 2025, compared to $28.9 million for the six-month periodended June 30, 2024.
SupplementalSegment Operating Income Discussion
| For the three-month period ended | For the six-month period ended | |||||||||||||||
| June 30, 2025 | June 30, 2024 | June 30, 2025 | June 30, 2024 | |||||||||||||
| Reportable Segment: | ||||||||||||||||
| Production Services | $ | 22,696 | $ | 27,954 | $ | 42,725 | $ | 46,878 | ||||||||
| Drilling and Evaluation Services | 20,714 | 12,921 | 36,861 | 22,677 | ||||||||||||
ProductionServices segment operating income was $22.7 million for the quarter ended June 30, 2025, compared to $28.0 million for the quarterended June 30, 2024, and $42.7 million for the six-month period ended June 30, 2025, compared to $46.9 million for the six-monthperiod ended June 30, 2024. The decrease in operating income was primarily due to reduced hydraulic fracturing stages in Saudi Arabiaupon contract transition offset partially by additional specialty chemical sales in Egypt.
Drillingand Evaluation segment operating income was $20.7 million for the quarter ended June 30, 2025, compared to $12.9 millionfor the quarter ended June 30, 2024, and $36.9 million for the six-month period ended June 30, 2025, compared to $22.7million for the six-month period ended June 30, 2024. The change in Supplemental Segment Operating Income was primarily due to additionalwell testing activity due to increased rig assignments in Saudi Arabia and higher period-over-period contribution from the Roya™advanced directional drilling technology platform.
Liquidityand Capital Resources
Ourobjective in financing our business is to maintain sufficient liquidity, adequate financial resources and financial flexibility to fundthe requirements of our operations. We had cash and cash equivalents of $131.8 million as of June 30, 2025, and $108.0million as of December 31, 2024. Our outstanding borrowings were $354.8 million as of June 30, 2025, and $382.8 million as ofDecember 31, 2024. Current available borrowing capacity totaled $138.4 million and $167.3 million, as of June 30, 2025, and December31, 2024, respectively. We believe that our cash on hand, cash flows generated from operations, and liquidity available through our creditfacilities, including recently drawn facilities, will provide sufficient liquidity to manage our cash needs. See “CapitalResources” below.
CashFlows
Cashflows provided by (used in) each type of activity were as follows for the periods presented (in US$ thousands):
| For the six-month period ended | ||||||||
| June 30, 2025 | June 30, 2024 | |||||||
| Cash provided by (used in): | ||||||||
| Operating Activities | $ | 118,971 | $ | 112,281 | ||||
| Investing Activities | (62,429 | ) | (56,707 | ) | ||||
| Financing Activities | (32,696 | ) | (48,398 | ) | ||||
| Effect of exchange rate changes on cash | - | - | ||||||
| Net change in cash and cash equivalents | $ | 23,846 | $ | 7,176 | ||||
| 25 |
OperatingActivities
Cashflows provided by operating activities were $119.0 million for the six-month period ended June 30, 2025, compared to cashflows provided by operating activities of $112.3 million for the six-month period ended June 30, 2024. Cash flows from operatingactivities fluctuated by $6.7 million in the six-month period ended June 30, 2025, compared to the six-month periodended June 30, 2024, primarily due to increased efficiency in the cash management of accounts payable to offset increasedaccounts receivable levels.
InvestingActivities
Cashflows used in investing activities were $62.4 million for the six-month period ended June 30, 2025, compared to cash flows usedin investing activities of $56.7 million for the six-month period ended June 30, 2024. The difference between periods was primarily dueto higher cash paid for capital expenditures period-over-period. Our principal recurring investing activity is the funding ofcapital expenditures to ensure that we have the appropriate levels and types of machinery and equipment in place to generate revenuefrom operations.
FinancingActivities
Cashflows used in financing activities were $32.7 million for the six-month period ended June 30, 2025, compared to cash flows usedin financing activities of $48.4 million for the six-month period ended June 30, 2024. The shift between 2024 and 2025 is primarily attributableto timing of short-term borrowings and repayments period-over-period.
CreditFacilities
Ourprincipal credit facilities and instruments outstanding or available as of June 30, 2025, are discussed in Note 6, Debt, to theunaudited condensed consolidated interim financial statements included in Item 1, “Financial Statements,” of this PeriodicReport on Form 6-K.
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CapitalResources
Forthe foreseeable future, we believe cash on hand, cash flows from operating activities and available credit facilities will provide uswith sufficient capital resources and liquidity to manage our working capital needs, meet contractual obligations, fund capital expenditures,and support the development of our short-term operating strategies.
Weplan to pursue strategic acquisitions as an element of our business strategy. The timing, size or success of any acquisition and theassociated potential capital commitments are unpredictable and uncertain. We may seek to fund all or part of any such acquisition withproceeds from debt or equity issuances, or may issue equity directly to the sellers in any such acquisition, or any combination thereof.Our ability to obtain capital for strategic acquisitions will depend on our future operating performance, financial condition and, morebroadly, on the availability of equity and debt financing. Capital availability will be affected by prevailing conditions in our industry,the global economy, the global financial markets and other factors, many of which are beyond our control. Any additional debt servicerequirements we take on could be based on higher interest rates and shorter maturities and could impose a significant burden on our resultsof operations and financial condition, and the issuance of additional equity securities could result in significant dilution to our shareholders.
SECSettlement
OnAugust 28, 2024, we reached a settlement of a civil administrative proceeding with the SEC related to the Company’s restatementof its previously issued financial statements for 2018 through 2020. The Company, without admitting or denying the findings, agreed toa cease-and-desist order regarding Sections 13(a), 13(b)(2)(A), and 13(b)(2)(B) of the Exchange Act and Rules 13a-1, 13a-15(a) - (c),and 13a-16 thereunder. As part of the settlement, the Company paid a civil monetary penalty to the SEC in the amount of $400,000.
Contemporaneouslywith this filing, our Chief Executive Officer will certify to the SEC that the Company has completed the non-monetary undertakingsrequired by the settlement. No further monetary penalties are expected by management upon completion of this certification.
OtherFactors Affecting Liquidity
Customerreceivables. In line with industry practice, we bill our customers for our services in arrears and are, therefore, subject toour customers delaying or failing to pay our invoices. In weak economic environments, we may experience increased delays and failuresto pay our invoices due to, among other reasons, a reduction in our customers’ cash flow from operations and their access to thecredit markets as well as unsettled political conditions. If our customers delay paying or fail to pay us a significant amount of ouroutstanding receivables, it could have a material impact on our liquidity, results of operations and financial condition.
Shelfregistration statement. The Company does not have any effective shelf registration statements as of June 30, 2025.
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Off-BalanceSheet Arrangements
Lettersof Credit
TheCompany had outstanding letters of credit amounting to $3.1 million and $2.3 million as of June 30, 2025, and December 31, 2024,respectively.
GuaranteeAgreements
Inthe normal course of business with customers, vendors and others, the Company has entered into off-balance sheet arrangements, such assurety bonds for performance, and other bank issued guarantees which totaled $189.9 million and $165.4 million as of June 30,2025, and December 31, 2024, respectively. The Company has also entered into cash margin guarantees totaling $6.0 million and$4.2 million at June 30, 2025, and December 31, 2024, respectively. A liability is accrued when a loss is both probable and can be reasonablyestimated. None of the off-balance sheet arrangements either has, or is likely to have, a material effect on the Company’s consolidatedfinancial statements.
ContractualObligations
Theinformation in the Annual Report on Form 20-F for the year ended December 31, 2024, under the section entitled “Tabular Disclosureof Contractual Obligations” in Part I, Item 5F, is hereby incorporated by reference into this Periodic Report. As of June 30, 2025,there were no material changes to this disclosure regarding our contractual obligations.
CriticalAccounting Policies and Estimates
Theinformation in the Annual Report on Form 20-F for the year ended December 31, 2024, under the section entitled “Critical AccountingPolicies and Estimates” in Part I, Item 5A, is hereby incorporated by reference into this Periodic Report. As of June 30, 2025,there were no material changes to this disclosure regarding our Critical Accounting Policies and Estimates made in the Annual Report.
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ITEM3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
ForeignCurrency Risk
Weare exposed to foreign currency risks that arise from normal business operations. These risks include transaction gains and losses associatedwith transactions denominated in currencies other than a location’s functional currency.
Localcurrency balances in the United Arab Emirates, Saudi Arabia, Oman, Kuwait and Qatar entities are not considered to represent significantcurrency risk as the respective currencies in these countries are pegged to either the U.S. dollar or a weighted basket of currenciesheavily weighted to the U.S. dollar. Our foreign currency risk arises from the settlement of transactions in currencies other than ourfunctional currency, specifically in the Algerian Dinar, Egyptian Pound, Libyan Dinar, and Iraqi Dinar. However, customer contracts inthese countries are largely denominated in U.S. dollars. We do not believe that a 10% increase or decrease in the relative value of theU.S. dollar to other currencies would have a material effect on our operating results or financial condition.
CreditRisk
Creditrisk is the risk that one party to a financial instrument may fail to discharge an obligation and cause the other party to incur a financialloss. We are exposed to credit risk on our accounts receivable, unbilled revenue, and other receivables and certain other assets (suchas bank balances) as reflected in our Consolidated Balance Sheet, with the maximum exposure equaling the carrying amount of these assetsin the Consolidated Balance Sheet. We seek to manage our credit risk with respect to banks by only dealing with reputable banks (ourcash and cash equivalents are primarily held with banks and financial institution counterparties that are rated A1 to Baa3, based onMoody’s ratings) and with respect to customers by monitoring outstanding receivables and following up on outstanding balances.Management also considers the factors that may influence the credit risk of its customer base, including the default risk of the industryand the country in which our customers operate. We sell our products to a variety of customers, mainly to NOCs in the MENA region.
Wehave not experienced any material losses related to non-payment of receivables from individual or groups of customers due to loss ofcreditworthiness during the years ended December 31, 2024, 2023 and 2022. Management believes that we do not have additional credit riskbeyond the amounts already provided for credit losses in our accounts receivable.
LiquidityRisk
Liquidityrisk is the risk that we may not be able to meet our financial obligations as they fall due. Our approach to managing liquidity riskis to ensure, as far as possible, that we will always have sufficient liquidity to meet our liabilities when due, under both normal andstressed conditions, without incurring unacceptable costs or liabilities. We maintain cash flow forecasts to monitor our liquidity position.
Accountspayable are normally settled within customary terms for the industry. We believe cash on hand, cash flows from operating activities andthe available credit facilities will provide us with sufficient capital resources and liquidity to manage our working capital needs,meet contractual obligations, fund capital expenditures, and support the development of our short-term and long-term operating strategies.See “Risk Factors – We might require additional equity or debt financing to fund operations and/or future acquisitions,”above.
MarketRisk
Weare exposed to market risks primarily from changes in interest rates on our borrowings.
Sincethe end of 2021, interest rates have significantly increased as central banks have sought to reduce inflationary pressures. As of June30, 2025, and December 31, 2021, borrowings under the Term Loan, RCF, and working capital facilities incurred interest at therate of 7.21% and 2.96%, respectively, for U.S. dollar-denominated borrowings, and interest rates of 7.93% and 3.44%, respectively,for Saudi Arabian Riyal borrowings. Consequently, our interest expense, net, has increased.
Wedo not use derivatives for trading purposes, to generate income or to engage in speculative activity.
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ITEM4. INTERNAL CONTROLS AND PROCEDURES
DisclosureControls and Procedures
We maintain disclosurecontrols and procedures that are designed to provide reasonable assurance that material information required to be disclosed in our reportsthat we submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’srules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer andChief Financial Officer, as appropriate, to allow timely decisions regarding required financial disclosure. In designing and evaluatingthe disclosure controls and procedures, management recognizes that a control system, no matter how well designed and operated, can provideonly reasonable, not absolute, assurance that the objectives of the control system are met. Because of the inherent limitations in allcontrol systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, withina company have been detected. Based on their evaluation, our Chief Executive Officer and Chief Financial Officer have concluded thatour disclosure controls and procedures (as defined in rules 13(a)-15(e) and 15(d)-15(e) under the Securities Exchange Act of 1934, asamended), were effective as of the end of the period covered by this Periodic Report.
Remediationof Previously Disclosed Material Weakness
In connection with theaudits of the Company’s financial statements for the years ended December 31, 2024, 2023, and 2022, management and the Company’sindependent registered public accounting firm identified a material weakness in the Company’s internal control over financial reporting.Our senior management failed to set an appropriate tone at the top sufficient to ensure a culture of compliance with the Company’saccounting, finance and internal control policies, including through:
| ● | Lack of an effective organizational structure to promote effective internal control: | |
| ● | Lack of effective communication protocols to ensure timely escalation and resolving of accounting issues; and | |
| ● | Insufficient technical accounting resources with an appropriate level of accounting knowledge, experience and training commensurate with our structure and financial reporting requirements to appropriately analyze, record and disclose accounting matters timely and accurately in accordance with U.S. GAAP. |
Duringthe six-months ended June 30, 2025, and the years ended December 31, 2024, and 2023, with the oversight of the Audit Committee of theBoard of Directors, the Company executed its remediation plan to address this material weakness. These remedial steps included the following:
| ● | Our Chief Executive Officer and members of our broader executive team completed a multi-module training course on corporate governance for public companies facilitated by a third-party law firm, conducted formal training on internal control for executive management, country leaders, segment directors and function leads, and implemented continuous professional development for all employees in all locations. | |
| ● | Announced new independent directors joining our Board of Directors in June 2024 and May 2025, respectively. | |
| ● | Changed the Company’s reporting lines for financial reporting on an interim basis including that the Company’s Chief Financial Officer reports directly to the non-executive members of the Board of Directors as to all financial reporting and accounting matters and will continue to do so at least until December 31, 2026. | |
| ● | Enhanced policies and procedures to improve our overall control environment and develop proper monitoring controls around timely evaluation and communication of internal control deficiencies to those parties responsible for taking corrective action, including senior management and the Board of Directors, as appropriate. | |
| ● | Appointed an internally promoted Director of Internal Audit in addition to engaging a third party to provide an Internal Audit function on an interim basis until such time as the Company develops a sufficient in-house Internal Audit team. | |
| ● | Evaluated the optimal structure for the financial reporting and accounting, technology, and other support functions, considering the decentralized nature of the Company’s operations and the regions in which it operates, and made changes to organizational chart and personnel as required. | |
| ● | Completed full redesign the risk control matrix utilized by the Company to implement Internal Control Integrated Framework (2013) and subsequently implemented all revisions during the third calendar quarter of 2024. | |
| ● | For controls performed at multiple locations, improved documentation, commonality of controls, and operating effectiveness by introducing standardized templates to capture key aspects of controls with a focus on the accuracy and completeness of reports and/or data used in the performance of controls and the addition of checklists to ensure consistency of procedures. | |
| ● | Since 2023, Annual Cash Incentive (Bonus) compensation includes metrics linked to internal controls compliance. | |
| ● | Added new employees and consultants to bolster financial reporting, technology, accounting, and other support functions. | |
| ● | Conducted formal compliance workshops with country management, service line management, the complete supply chain organization, and function heads, that reemphasized the location of key Company policies, and required certifications that each trainee understood where to find the Company’s policies and understood their content. | |
| ● | Engaged in training throughout the finance and accounting organization, including through a three-day Controllers Conference in May 2023, focused on U.S. GAAP and the specific issues that led to the Company’s restatement. |
Managementhas determined that due to the successful implementation of these remedial steps, coupled with testing of these redesigned control activitiesacross our business, the Company has successfully remediated its previously reported material weakness related to tone at the top.
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PARTII - OTHER INFORMATION
Item1. Legal Proceedings.
TheCompany is involved in certain legal proceedings which arise in the ordinary course of business and the outcomes of which are currentlysubject to uncertainties and therefore the probability of a loss, if any, being sustained and an estimate of the amount of any loss aredifficult to ascertain. Consequently, it is not possible to make a reasonable estimate of the expected financial effect, if any, thatwill result from ultimate resolution of these disputes. The Company is contesting these claims/disputes and the Company’s managementcurrently believes that it is not required to recognize a provision because they are not probable or reasonably estimable and any impactsare not expected to have a material impact on the Company’s business, financial condition, results of operations, or liquidity.
Item1A. Risk Factors.
RisksRelating to Our Business and Operations
Thereare several factors that affect our business and operations, many of which are beyond our control. In addition to information set forthin this Periodic Report, careful consideration should be given to the risk factors discussed under the caption “Risk Factors”in Part I, Item 3D of the Annual Report on Form 20-F for the year ended December 31, 2024, which could have a material impact on ourbusiness, financial condition or results of operations and are hereby incorporated by reference into this Periodic Report. Such risksare not the only risks we face. Additional risks and uncertainties not presently known to us or that we currently believe to be immaterialmay also have a material impact on our business, financial condition or results of operations.
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SIGNATURES
Pursuantto the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf bythe undersigned, thereunto duly authorized.
| NATIONAL ENERGY SERVICES REUNITED CORP. | ||
| Date: August 20, 2025 | /s/ Sherif Foda | |
| Name: | Sherif Foda | |
| Title: | Chief Executive Officer | |
| (Principal Executive Officer) | ||
| Date: August 20, 2025 | /s/ Stefan Angeli | |
| Name: | Stefan Angeli | |
| Title: | Chief Financial Officer | |
| (Principal Financial and Accounting Officer) | ||
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