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What changed in NABORS INDUSTRIES LTD's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of NABORS INDUSTRIES LTD's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+231 added−228 removedSource: 10-K (2023-12-31) vs 10-K (2022-12-31)

Top changes in NABORS INDUSTRIES LTD's 2023 10-K

231 paragraphs added · 228 removed · 178 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeMany of our rigs are designed to address the challenges of working in specific operating environments, such as desert climates, mountainous regions, and tropical zones. ​ As of December 31, 2022, our international fleet consisted of 117 land-based drilling rigs.
Biggest changeMany of our rigs are designed to address the challenges of working in specific operating environments, such as desert climates, mountainous regions, and tropical zones. ​ As of December 31, 2023, our international fleet consisted of 116 land-based drilling rigs and 16 actively marketed platforms rigs in the international offshore drilling markets. ​ Drilling Solutions ​ Nabors Drilling Solutions (“NDS”) offers specialized drilling technologies, such as proprietary drilling-bit steering systems and rig instrumentation software that enhance drilling performance and wellbore placement. ​ Our tools are ideal for applications where high reliability, precise wellbore placement and drilling efficiency are required.
In recent years, we have added complementary services to our traditional rig offering, in many cases replacing third-party providers of these complementary services. ​ Drilling Contracts ​ Our drilling contracts are typically daywork contracts.
In recent years, we have added complementary services to our traditional rig offering, in many cases replacing third-party providers of these same services. ​ Drilling Contracts ​ Our drilling contracts are typically daywork contracts.
Corporate responsibility guides every aspect of our daily activities and is the key to our continued success. ​ We do not anticipate that compliance with currently applicable environmental laws and regulations and controls will significantly change our competitive position, capital spending or earnings during 2023.
Corporate responsibility guides every aspect of our daily activities and is the key to our continued success. ​ Environmental Compliance ​ We do not anticipate that compliance with currently applicable environmental laws and regulations and controls will significantly change our competitive position, capital spending or earnings during 2024.
Through our Journey to Excellence, we take a risk-based approach by ensuring our employees have access to preventive policies, procedures, programs, and training as they strive towards Mission Zero. ​ Board Oversight of Human Capital Management ​ Our human capital management efforts receive oversight from our board of directors.
Through our Journey to Excellence, we take a risk-based approach by ensuring our employees have access to preventative policies, procedures, programs, and training as they strive towards Mission Zero. ​ Board Oversight of Human Capital Management ​ Our human capital management efforts receive oversight from our board of directors.
Both TRS and MPD integrate with the rig, eliminating the need for third party service providers and thereby improving efficiencies and reducing cost. ​ Rig Technologies ​ Our Rig Technologies segment is primarily comprised of Canrig, which manufactures and sells top drives, catwalks, wrenches, drawworks and other drilling related equipment such as robotic systems and downhole tools which are installed on both onshore and offshore drilling rigs.
Both TRS and MPD integrate with the rig, eliminating the need for third party service providers and thereby improving efficiencies and reducing cost. ​ 6 Table of Contents Rig Technologies ​ Our Rig Technologies segment is primarily comprised of Canrig, which manufactures and sells top drives, catwalks, wrenches, drawworks and other drilling related equipment such as robotic systems and downhole tools which are installed on both onshore and offshore drilling rigs.
This is due in part to the fact that most rigs and drilling-related equipment can be moved from one region to another in response to changes in the levels of exploration, development and production activities and market conditions, which may result in an oversupply of rigs and drilling-related equipment in certain areas. ​ Although many rigs can be moved from one region to another in response to changes in levels of activity, competition has increased based on the supply of existing and new rigs across all our markets.
This is due in part to the fact that most rigs and drilling-related equipment can be moved from one region to another in response to changes in the levels of exploration, development and production activities and market conditions, which may result in an oversupply of rigs and drilling-related equipment in certain areas. ​ Competition has increased based on the supply of existing and new rigs across all our markets.
This transaction did not represent a strategic shift in our operations and did not have a major effect on our operations and financial results. ​ Environmental Compliance ​ Sustainability is an essential part of the corporate culture at Nabors and an integral part of our strategic plans.
This transaction did not represent a strategic shift in our operations and did not have a major effect on our operations and financial results. ​ Sustainability ​ Sustainability is an essential part of the corporate culture at Nabors and an integral part of our strategic plans.
Contract terms and rates differ depending on a variety of factors, including competitive conditions, the geographical area, the geological formation to be drilled, the equipment and services to be supplied (including enhanced drilling services), the on-site drilling conditions, and the anticipated duration of the work to be performed. ​ Our Customers ​ Our customers include major international, national and independent oil and gas companies.
Contract terms and rates differ depending on a variety of factors, including competitive conditions, the geographical area, the geological formation to be drilled, the equipment and services to be 7 Table of Contents supplied (including enhanced drilling services), the on-site drilling conditions, and the anticipated duration of the work to be performed. ​ Our Customers ​ Our customers include major international, national and independent oil and gas companies.
While the patents may collectively be material to our company, we do not believe any single patent is material to our business. ​ 9 Table of Contents Industry/Competitive Conditions ​ To a large degree, our businesses depend on the level of capital spending by oil and gas companies for exploration, development and production activities.
While the patents may collectively be material to our company, we do not believe any single patent is material to our business. ​ Industry/Competitive Conditions ​ To a large degree, our businesses depend on the level of capital spending by oil and gas companies for exploration, development and production activities.
We expect that the market for our drilling services will continue to be highly competitive. See Part I, Item 1A.—Risk Factors— We operate in a highly competitive industry with excess drilling capacity, which may adversely affect our results of operations . ​ The global market for drilling and related products and services is competitive.
We expect that the market for our drilling services will continue to be highly competitive. See Part I, Item 1A.—Risk Factors— We operate in a highly competitive industry with excess drilling capacity, which may adversely affect our results of operations . ​ 10 Table of Contents The global market for drilling and related products and services is competitive.
By implementing strategic recruiting efforts, employee development streams and retention, we have made progress that outpaces the industry. A few notable 2022 successes include: ​ ● 58% of U.S.
By implementing strategic recruiting efforts, employee development streams and retention, we have made progress that outpaces the industry. A few notable 2023 successes include: ​ ● 58% of U.S.
One customer, Saudi Aramco, accounted for approximately 26%, 31% and 29% of our consolidated operating revenues during the years ended December 31, 2022, 2021 and 2020, respectively, which operating revenues are primarily included in the results of our International Drilling reportable segment. Our contracts with Saudi Aramco are on a per rig basis.
One customer, Saudi Aramco, accounted for approximately 26%, 26% and 31% of our consolidated operating revenues during the years ended December 31, 2023, 2022 and 2021, respectively, which operating revenues are primarily included in the results of our International Drilling reportable segment. Our contracts with Saudi Aramco are on a per rig basis.
We believe our customer base recognizes the quality of our assets, the competency of our crews, our industry leading operational performance and the value added by our performance software and our services integration. ​ 6 Table of Contents We believe our drilling technology portfolio positions us well to address the changing market dynamic both in the United States and internationally.
Our customer base recognizes the quality of our assets, the competency of our crews, our industry leading operational performance and the value added by our performance software and our services integration. ​ We believe our drilling technology portfolio positions us well to address the changing market dynamic both in the United States and internationally.
Our Compensation Committee oversees our human capital-related policies, programs, and initiatives that focus on diversity, succession planning, executive compensation, and benefits. Our Technology and Safety Committee provides oversight of employee safety, health, and wellness matters. ​ Seasonality ​ Our operations are subject to seasonal factors.
Our Compensation Committee oversees our human capital-related policies, programs, and initiatives that focus on diversity, succession planning, executive compensation, and benefits. Our Technology and Safety Committee provides oversight of employee safety, health, and wellness matters. ​ 9 Table of Contents Seasonality ​ Our operations are subject to seasonal factors.
Most available contracts for our services are currently awarded on a bid basis, which further increases competition based on price. ​ In addition to price, other competitive factors in the markets we serve are the overall quality of service and safety record, the technical specification and condition of equipment, the availability of skilled personnel and the ability to offer ancillary services.
Most available contracts for our services are currently awarded on a bid basis, which further increases competition based on price. ​ In addition to price, other competitive factors in the markets we serve are the overall quality of service and safety record, the technical specification and condition of equipment, the availability of skilled personnel, the ability to offer ancillary services and the environmental and technological friendliness of our products and services.
Leveraging our advanced drilling automation capabilities, Nabors’ highly skilled workforce continues to set new standards for operational excellence and transform our industry. ​ ​ With operations in over 15 countries, we are a global provider of drilling and drilling-related services for land-based and offshore oil and natural gas wells, with a fleet of rigs and drilling-related equipment which, as of December 31, 2022 included: ​ ● 300 actively marketed rigs for land-based drilling operations in the United States and various countries throughout the world; and ​ ● 29 actively marketed rigs for offshore platform drilling operations in the United States and multiple international markets. ​ 4 Table of Contents The following table presents our average rigs working (a measure of activity and utilization over the year) for the years ended December 31, 2022, 2021 and 2020: ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ 2022 ​ 2021 ​ 2020 Average Rigs Working: ​ ​ ​ ​ ​ ​ U.S.
Leveraging our advanced drilling automation capabilities, Nabors’ highly skilled workforce continues to set new standards for operational excellence and transform our industry. ​ With operations in over 15 countries, we are a global provider of drilling and drilling-related services for land-based and offshore oil and natural gas wells, with a fleet of rigs and drilling-related equipment which, as of December 31, 2023 included: ​ ● 291 actively marketed rigs for land-based drilling operations in the United States and various countries throughout the world; and ​ ● 28 actively marketed rigs for offshore platform drilling operations in the United States and multiple international markets. ​ The following table presents our average rigs working (a measure of activity and utilization over the year) for the years ended December 31, 2023, 2022 and 2021: ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ 2023 ​ 2022 ​ 2021 Average Rigs Working: ​ ​ ​ ​ ​ ​ U.S.
Our Drilling Solutions segment competes with services provided by Baker Hughes Co., Halliburton Co., Schlumberger Ltd., Expro Group Holdings NV, Weatherford International plc., as well as several of our drilling competitors and smaller, specialized service providers. ​ Acquisitions and Divestitures ​ We have grown from a land drilling business centered in the U.S.
Our Drilling Solutions segment competes with services provided by NOV, Pason, Baker Hughes Co., Halliburton Co., SLB, Expro Group Holdings NV, Weatherford International plc., as well as several of our drilling competitors and smaller, specialized service providers. ​ Acquisitions and Divestitures ​ We have grown from a land drilling business centered in the U.S.
See Part I, Item 1A.—Risk Factors— The loss of one or a number of our large customers could have a material adverse effect on our business, financial condition and results of operations. ​ Human Capital ​ As of December 31, 2022, Nabors employed approximately 12,000 employees worldwide, approximately 7,300 of which are located outside the U.S. ​ Diversity ​ As a global company focused on internal collaboration to achieve common goals and external partnerships to optimize customer value, Nabors believes a diverse workforce is key to our overall success.
See Part I, Item 1A.—Risk Factors— The loss of one or a number of our large customers could have a material adverse effect on our business, financial condition and results of operations. ​ Human Capital ​ As of December 31, 2023, Nabors employed approximately 12,000 employees worldwide, approximately 7,900 of which are located outside the United States. ​ Diversity ​ As a global company focused on internal collaboration to achieve common goals and external partnerships to optimize customer value, Nabors believes a diverse workforce is key to our overall success.
Lower 48, Canada and Alaska to an international business with land and offshore operations in major oil and gas markets around the world. This growth was fueled in part 10 Table of Contents by strategic acquisitions.
Lower 48, Canada and Alaska to an international business with land and offshore operations in major oil and gas markets around the world. This growth was fueled in part by strategic acquisitions.
Some of the Nabors Drilling Solutions products and services are listed below. ​ ● ROCKit® is a directional steering control system that increases performance while slide drilling, through drill string oscillation and precise toolface control; ​ ● SmartNAV™ is a collaborative guidance and advisory platform that delivers automated directional drilling information and instructions to drive consistent decision making, transparency, and improved performance; ​ ● SmartSLIDE ™ is an advanced directional steering control system that automates slide drilling to consistently deliver high performance; and ​ ● RigCLOUD ® provides tools and digital infrastructure that integrate applications to deliver real-time insight into operations across the rig fleet. ​ Nabors offers a full range of tubular running services .
Impactful NDS products and services include: ​ ● ROCKit®, a directional steering control system that increases performance while slide drilling, through drill string oscillation and precise toolface control; ​ ● SmartNAV™, a collaborative guidance and advisory platform that delivers automated directional drilling information and instructions to drive consistent decision making, transparency, and improved performance; ​ ● SmartSLIDE ™ , an advanced directional steering control system that automates slide drilling to consistently deliver high performance; and ​ ● RigCLOUD ®, a digital infrastructure that integrate applications to deliver real-time insight into operations across the rig fleet. ​ Nabors offers a full range of tubular running services (“TRS”) .
Drilling 97.2 ​ 70.9 ​ 67.9 Canada Drilling — ​ 6.5 ​ 9.0 International Drilling 74.2 ​ 67.9 ​ 75.7 ​ 171.4 ​ 145.3 ​ 152.6 ​ Average rigs working represents a measure of the number of equivalent rigs operating during a given period.
Drilling 86.3 ​ 97.2 ​ 67.9 Canada Drilling — ​ — ​ 9.0 International Drilling 77.6 ​ 74.2 ​ 75.7 ​ 163.9 ​ 171.4 ​ 152.6 ​ Average rigs working represents a measure of the number of equivalent rigs operating during a given period.
Drilling, Canada Drilling, International Drilling, Drilling Solutions and Rig Technologies. ​ Additional information regarding the geographic markets in which we operate and our business segments can be found in Note 18—Segment Information in Part II, Item 8.—Financial Statements and Supplementary Data. ​ U.S.
Drilling, Canada Drilling, International Drilling, Drilling Solutions and Rig Technologies. ​ Additional information regarding the geographic markets in which we operate and our business segments can be found in Note 18—Segment Information in Part II, Item 8.—Financial Statements and Supplementary Data. ​ U.S. Drilling ​ Nabors operates one of the largest land-based drilling rig fleets in the U.S.
Educational Assistance ​ In 2009, our former Chairman and CEO, Eugene M. Isenberg, established the Isenberg Education Fund Scholarship Program to provide educational assistance to talented, high-achieving individuals who demonstrate strong academic performance, dedicated community service, and financial need. This aid is available to qualified employees and their family members.
Isenberg, established the Isenberg Education Fund Scholarship Program to provide educational assistance to talented, high-achieving individuals who demonstrate strong academic performance, dedicated community service, and financial need. This aid is available to qualified employees and their family members.
See “—Drilling Solutions” below for more information. ​ Canada Drilling ​ In July 2021, we closed on the sale of our Canada Drilling assets. ​ International Drilling ​ We conduct activities in major international oil and gas markets, most notably Saudi Arabia, Argentina, Colombia and Mexico.
See “—Drilling Solutions” below for more information. ​ Canada Drilling ​ In July 2021, we closed on the sale of our Canada Drilling assets. ​ International Drilling ​ We operate in major international oil and gas markets, primarily in the Middle East and Latin America, most notably Saudi Arabia, Argentina, Colombia and Mexico.
Rig Technologies also provides aftermarket sales and services for the installed base of its equipment. ​ Our Business Strategy ​ Our business strategy is to build shareholder value and enhance our competitive position by: ​ ● leveraging our existing global infrastructure and operating reputation to capitalize on growth opportunities; ​ ● enhancing our technology position and advancing drilling technology both on the rig and downhole; ​ ● expanding our portfolio of value-added services to our customers; ​ ● investing in alternative energy and carbon reduction technologies; ​ ● achieving superior operational and health, safety and environmental performance; and ​ ● achieving financial returns in excess of our cost of capital. ​ During the past several years we have transformed our fleet in the Lower 48 into what we believe is the most capable, modern fleet in the market.
Rig Technologies also provides aftermarket sales and services for the installed base of its equipment. ​ NDS and Rig Technologies’ portfolio of services and capabilities are available to third-party customers both in domestic and international markets. ​ Our Business Strategy ​ Our business strategy is to build shareholder value and enhance our competitive position by: ​ ● leveraging our existing global infrastructure and leading operating performance to capitalize on growth opportunities; ​ ● enhancing our technology position and advancing drilling technology both on the rig and downhole; ​ ● expanding our portfolio of value-added services to our customers; ​ ● investing in alternative energy and carbon reduction technologies; ​ ● achieving superior operational and health, safety and environmental performance; and ​ ● achieving financial returns in excess of our cost of capital. ​ We believe we deploy the most capable and modern rig fleet in the Lower 48 market.
In our International segment, significant competitors with operations in multiple countries include KCA Deutag Drilling Limited, Saipem S.p.A, as well as many contractors with regional or local rig operations. ​ Our Rig Technologies segment competes primarily with National Oilwell Varco Inc., Bentec GmbH, and several smaller rig equipment suppliers.
In our International segment, significant competitors with operations in multiple countries include KCA Deutag Drilling Limited, as well as many contractors with regional or local rig operations. ​ Our Rig Technologies segment competes primarily with NOV, KCA Deutag, and several smaller rig equipment suppliers.
As a result, we developed our suite of PACE® drilling rigs. In 2013, we introduced our PACE®-X800 rig equipped with an advanced walking system with multidirectional capabilities that enables the rig to move efficiently over existing wells on a pad. Because the ancillary equipment accompanies the rig, it moves easily between adjacent rows of wells.
In 2013, we introduced our PACE®-X800 rig equipped with an advanced walking system with multidirectional capabilities that enables the rig to move efficiently over multiple wellheads on a pad. Because the rig’s ancillary equipment is integrated within the rig, it moves easily between adjacent rows of wells.
A daywork contract differs from a footage contract (in which the drilling contractor is paid on the basis of a rate per foot drilled) and a turnkey contract (in which the drilling contractor is paid for drilling a well to a specified depth for a fixed price).
While daywork contracts represent the bulk of our relationships, we also have footage contracts (in which the drilling contractor is paid on the basis of a rate per foot drilled) and turnkey contracts (in which the drilling contractor is paid for drilling a well to a specified depth for a fixed price).
Based on our most recent employee engagement survey, we learned that: ​ ● 41% of our U.S. workforce is comprised of racial minority groups (5.1% relative change increase from 2021) with racial minorities comprising 30% of management; and ● 5% of our workforce identifies as female, with 11% of this female population holding management positions ​ ​ 7 Table of Contents Talent Management ​ Nabors is committed to gender and ethnicity balance in its hiring practices and workplaces.
Based on our most recent employee engagement survey, we learned that: ​ ● 42% of our workforce is comprised of minority groups with minorities comprising 37% of management (7% increase from 2022). ● 8% of our workforce identifies as female (3% increase from 2022), with 19% of them holding management positions (8% increase from 2022). ​ Talent Management ​ Nabors is committed to gender and ethnicity balance in its hiring practices and workplaces.
Tubular running services (TRS) primarily include casing running, tubing running and torque monitoring. Managed pressure drilling (MPD) primarily includes drives, manifolds, tanks, pumps and gas handling equipment. Our proprietary software empowers the driller to deliver these services with consistency and repeatability.
TRS primarily includes casing running, tubing running and torque monitoring. Nabors also offers managed pressure drilling (“MPD”) services that expands the capability of rigs to drill wells in otherwise challenging formations. Our proprietary software empowers the driller to deliver these services with consistency and repeatability.
Our portfolio of energy transition related technologies includes proprietary emissions reporting and analytics software, engine management controls, energy storage systems, hydrogen injection catalysts, carbon capture technology and fuel enhancing additives, as well as traditional high-line power and dual-fuel offerings. ​ In addition, Nabors has engaged in venture investment opportunities for exposure to several high growth potential segments in these burgeoning lower carbon markets.
Our portfolio of energy transition related technologies includes real-time emissions monitoring quantification and reporting and analytics software, engine management controls, energy storage systems, and hydrogen technologies, as well as solutions that enable use of high-line power and dual-fuels. ​ 11 Table of Contents In addition, Nabors has invested in venture opportunities in several high potential markets addressing carbon reduction.
Our initial investments focus on alternative energy sources such as geothermal and hydrogen, energy storage and carbon capture, including utilization and sequestration technologies and emissions monitoring. ​
Our initial investments focus on alternative energy sources such as geothermal, hydrogen, energy storage and carbon capture, including utilization and sequestration technologies and emissions monitoring. For example, in February 2023, Nabors Energy Transition Corp. (“NETC”) entered into a definitive agreement for a business combination, with one such investment target, Vast Solar Pty. Ltd.
In 2016, we introduced our PACE®-M800 and PACE®-M1000 rigs which complement our existing PACE®-X800 rigs. The PACE®-M800 rig is designed for lower-density multi-well pads whereas the PACE®-M1000 is designed for higher density pads. Both are designed to move rapidly between pads.
In 2016, we introduced our PACE®-M800 and PACE®-M1000 rigs which complement our existing PACE®-X800 rigs. Both versions of the M-series are designed to move rapidly between pads. ​ In recent years we have developed and deployed a full suite of technology supporting Nabors and third-party rigs.
Drilling ​ Operating one of the largest land-based drilling rig fleets in the U.S., Nabors continues to drive innovation and integration in the industry. Nabors offers a full suite of options including performance tools and innovations. We maintain activities in the lower 48 states (“lower 48 market”) and Alaska as well as offshore in the Gulf of Mexico.
We continue to drive innovation and integration in the industry. Nabors offers a full suite of advanced solutions including performance software and automation technologies. We are active in the major hydrocarbon basins across the Lower 48 market and Alaska as well as offshore in the Gulf of Mexico.
Our U.S. fleet consists of 171 AC rigs and 11 SCR land rigs, which were actively marketed as of December 31, 2022. ​ Since our first AC land rig was built in 2002, we have continued to develop industry-leading breakthroughs. As the industry shifted to multi-well pad drilling, we anticipated the appetite for greater efficiencies and adaptability through batch drilling.
Our marketed U.S. fleet as of December 31, 2023 consists of 166 AC rigs, which use alternating electrical current in order to make ultra fine adjustments to optimize drilling, 9 SCR land rigs, legacy rigs using direct current silicon-controlled rectifiers to drive motors, and 12 offshore platform rigs. ​ 5 Table of Contents Since we introduced our first AC land rig in 2002, we have continued to develop industry-leading breakthroughs.
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Featuring the same advanced walking capabilities as the PACE®-X800 rig, the PACE®-M800 rig can quickly move efficiently on pads and over short distances. ​ In addition to land drilling operations throughout the lower 48 and Alaska, we also actively marketed 12 platform rigs in the U.S.
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As the industry shifted to multi-well pad drilling, we anticipated the demand for greater efficiencies and adaptability for batch drilling on multi-well drilling pads. As a result, we developed our PACE® drilling rigs.
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Gulf of Mexico as of December 31, 2022. ​ In recent years we have deployed a full suite of technology supporting Nabors and third party rigs. By seizing the opportunity to move forward, faster, Nabors has employed automation to increase safety, instill efficient processes and build agility for our customers.
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Demonstrating Nabors technology leadership, we employ automation to improve safety, increase efficiencies and build agility for our customers.
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At the same time, we actively marketed 17 platforms rigs in the international offshore drilling markets. ​ 5 Table of Contents Drilling Solutions ​ Through Nabors Drilling Solutions, we offer specialized drilling technologies, such as proprietary steering systems and rig instrumentation software systems that enhance drilling performance and wellbore placement. ​ Nabors specializes in wellbore placement solutions and is a leading provider of directional drilling and Measurement-While Drilling (MWD) systems and services.
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Selling, General and Administrative (SGA) and Field Support workforce hires were racially diverse; ● Over 20% reduction in female attrition among SGA and Field Support workforce since 2022; and ● A 2023 employee engagement survey indicated employees viewed their current teams as diverse. ​ Our talent management team focused their efforts on career development across the entire organization, with the following notable successes: ​ ● Completed and reviewed succession planning for 100% of executives, directors and managers; ● Started succession planning for the supervisor level and achieved over 51%; ● Over 67% of critical role vacancies were filled with internal successors; ● Strongest in-person and online participation over 3 years in the Evolving Your Career series which included 2 sessions with senior leadership; ● In the second year of our ACE (Actively Changing Energy) program, Cohort 2 comprised of recently graduated STEM professionals, with a noteworthy 100% representation from diverse communities; and ● Created professional development plans for 83 high-potential technical and functional experts, over 54% representing diverse communities. ​ 8 Table of Contents Employee Resource Groups ​ Our Employee Resource Groups (ERGs), comprised of employees with shared interests, characteristics, or life experiences, strongly influence and cultivate change.
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Our tools are ideal for applications where high reliability, precise wellbore placement and drilling efficiency are crucial.
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Training begins at onboarding, where employees receive job-specific instruction with integrated safety expectations, corporate ethics, and behaviors that create an inclusive workplace. ​ Successes experienced in 2023 include: ​ ● Diversity and inclusion training was provided to U.S. field operations-based workforce achieving 93% compliance; ● Achieved 97% compliance with all safety-related training; ● Achieved 97% compliance with four new Journey to Excellence training modules; ● Achieved 98% compliance with a new Code of Business Conduct training published in four languages: Arabic, English, Russian, and Spanish; and ● Increased drilling crew field-based competency levels by 35% and verified crew competence by completing over 2,314 formal assessments. ​ Educational Assistance ​ In 2009, our former Chairman and CEO, Eugene M.
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Selling, General and Administrative (SGA) and Field Support workforce hires in 2022 identified as racially or gender diverse, up more than 10% from the prior year; ● Reduced female attrition among SGA and Field Support workforce by over 20% from 2021; and ● Employee engagement survey indicated over 90% of employees viewed their current teams as diverse.
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This year, 69% of the applicants met all requirements and received monetary awards for their fall semester education. ​ Health, Welfare and Retirement ​ We provide employees health and welfare benefits standard for the industry and their location of employment.
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Employee Resource Groups ​ Our Employee Resource Groups (ERGs), comprised of employees with shared interests, characteristics, or life experiences, strongly influence and cultivate change.
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(“Vast”), a development-stage company specializing in the design and manufacturing of concentrated solar thermal power (CSP) systems. The business combination was completed on December 18, 2023 with NETC merging with and into a wholly owned subsidiary of Vast. Following the merger, Nabors now has a significant non-controlling equity investment in Vast. ​
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Training begins at onboarding, where employees receive job-specific instruction with integrated safety expectations, corporate ethics, and behaviors that create an inclusive workplace.
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In 2022 we: ​ ● Added four new training modules focused on diversity and inclusion; ● Achieved 96% compliance with all safety-related training; ● Added the Tools, Trades, Torque, Tech (T4) Future Workforce, a two-day event sponsored by the North Dakota Petroleum Foundation to provide hands-on demonstrations and activities to over 900 local students; and Our talent management team focused their efforts on career development across the entire organization, noting the following successes in 2022: ​ ● 100% succession planning completed for executives, directors, and managers; ● 50% of critical role vacancies were filled with internal successors; ● More than 30% employee participation and engagement at 10+ internal webinars conducted with director-level and above presentations; ● Implemented our ACE (Actively Changing Energy) program, featuring newly degreed STEM graduates, 80% of whom are from diverse communities; and ● Identified and completed development plans for more than 80 high-potential and technical/functional expert employees, 50% representing diverse communities.
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This year, 64% of the applicants met all requirements and received monetary awards for their fall semester education. ​ In partnership with our customers Hess Corporation and Halliburton, Nabors committed $1 million to a newly established four-year, $14.0 million apprenticeship program for the five North Dakota tribal colleges.
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The North Dakota Tribal College Apprenticeship Program provides tuition assistance, stipends, and other financial support to improve educational and employment opportunities for Native and non-Native tribal college students. 8 Table of Contents ​ Health, Welfare and Retirement ​ We provide employees health and welfare benefits standard for the industry and their location of employment.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

74 edited+17 added−14 removed121 unchanged
Biggest changeRisks associated with these threats include, among other things: ​ ● theft or misappropriation of funds; ​ ● loss, corruption, or misappropriation of intellectual property, or other proprietary, confidential or personally identifiable information (including customer, supplier, or employee data); ​ ● disruption or impairment of our and our customers’ business operations and safety procedures; ​ ● damage to our reputation with our customers and the market; ​ ● the perception of our products or services as having security vulnerabilities; ​ ● exposure to litigation and legal and regulatory costs; ​ ● loss or damage to our worksite data delivery systems; and ​ ● increased costs to prevent, respond to or mitigate cybersecurity events. ​ Although we utilize various procedures and controls to mitigate our exposure to such risk, cybersecurity attacks and other cyber events are evolving and unpredictable.
Biggest changeThe rapid evolution and increased adoption of artificial intelligence technologies amplifies these concerns. 29 Table of Contents ​ Risks associated with these threats include, among other things: ​ ● theft or misappropriation of funds; ​ ● loss, corruption, or misappropriation of intellectual property, or other proprietary, confidential or personally identifiable information (including customer, supplier, or employee data); ​ ● disruption or impairment of our and our customers’ business operations and safety procedures; ​ ● damage to our reputation with our customers and the market; ​ ● the perception of our products or services as having security vulnerabilities; ​ ● exposure to litigation and legal and regulatory costs; ​ ● loss or damage to our worksite data delivery systems; and ​ ● increased costs to prevent, respond to or mitigate cybersecurity events. ​ Any perceived or actual electronic or physical security breach involving the misappropriation, loss, or other unauthorized disclosure of confidential or personally identifiable information, including penetration of our systems security, whether by us or by a third party, could disrupt our business, damage our reputation and our relationships with our customers or employees, expose us to risks of litigation, significant fines and penalties and liability, result in the deterioration of our customers’ and employees’ confidence in us, and adversely affect our business, results of operations and financial condition.
Additional risks not presently known to us or that we currently deem immaterial may also impair our business operations. ​ Risk Factors Summary ​ The following is a summary of the principal risks included in this annual report that we believe could adversely affect our business, operations, and financial results. ​ Business and Operational Risks ​ ● Fluctuations in oil and natural gas prices could adversely affect drilling activity and our revenues, cash flows and profitability. ● Our customers and thereby our business and profitability could be adversely affected by low oil prices and/or turmoil in the global economy. 11 Table of Contents ● We operate in a highly competitive industry with excess drilling capacity, which may adversely affect our results of operations. ● We must renew customer contracts to remain competitive. ● The nature of our operations presents inherent risks of loss, including weather-related risks, that could adversely affect our results of operations. ● Our drilling contracts may in certain instances be renegotiated, suspended or terminated on short notice and/or without an early termination payment. ● The loss of one or a number of our large customers could have a material adverse effect on our business, financial condition and results of operations. ● The profitability of our operations could be adversely affected by war, civil disturbance, terrorist activity or other political or economic instability, fluctuation in currency exchange rates and local import and export controls. ● We rely on third-party suppliers, manufacturers and service providers to secure equipment, components and parts used in rig operations, conversions, upgrades and construction. ● Our contracts with state-owned energy companies may expose us to greater risks than we normally assume in contracts with non-governmental customers. ● Control of oil and natural gas reserves by state-owned oil companies may affect the demand for our services and products and create additional risks in our operations. ● Our operating expense includes fixed costs that may not decline in proportion to decreases in rig utilization and dayrates. ● Actions of and disputes with our joint venture partners could have a material adverse effect on the business and results of operations of our joint ventures and, in turn, our business and consolidated results of operations. ● Failure to realize the anticipated benefits of acquisitions, divestitures, investments, joint ventures and other strategic transactions may adversely affect our business, results of operations and financial position. ● Decisions by internet service, cloud hosting service and related providers to restrict or ban our ability to use their platforms could adversely affect our ability to promote and conduct our business and inform investors. ● Failure to effectively and timely address the energy transition could adversely affect our business, financial condition, results of operations, cash flows and share price. ● Our aspirations, goals and initiatives related to sustainability and emissions reduction, and our public statements and disclosures regarding them, expose us to risks. ● We are subject to a number of uncertainties during the timeframe when Nabors Energy Transition Corporation (NETC) pursues a business combination, which could adversely affect our business, financial condition, results of operations, cash flows and share price. ​ Financial Risks ​ ● We may record additional losses or impairment charges related to sold or idle drilling rigs and other assets. ● Our financial and operating flexibility could be affected by our long-term debt and other financial commitments. ● Volatility in prices of goods and services and interest rates could expose us to risks in managing our operating and capital costs. ● Our ability to access capital markets could be limited. ● A downgrade in our credit rating could negatively affect our cost of capital and our ability to access capital markets or other financing sources. ​ Technology Risks ​ ● New technologies may cause our drilling methods and equipment to become less competitive and it may become necessary to incur higher levels of operating and capital expenditures in order to keep pace with the disruptive trends in the drilling industry.
Additional risks not presently known to us or that we currently deem immaterial may also impair our business operations. ​ Risk Factors Summary ​ The following is a summary of the principal risks included in this annual report that we believe could adversely affect our business, operations, and financial results. ​ Business and Operational Risks ​ ● Fluctuations in oil and natural gas prices could adversely affect drilling activity and our revenues, cash flows and profitability. ● Our customers and thereby our business and profitability could be adversely affected by low oil prices and/or turmoil in the global economy. ● We operate in a highly competitive industry with excess drilling capacity, which may adversely affect our results of operations. ● We must renew customer contracts to remain competitive. ● The nature of our operations presents inherent risks of loss, including weather-related risks, that could adversely affect our results of operations. ● Our drilling contracts may in certain instances be renegotiated, suspended or terminated on short notice and/or without an early termination payment. ● The loss of one or a number of our large customers could have a material adverse effect on our business, financial condition and results of operations. ● The profitability of our operations could be adversely affected by war, civil disturbance, terrorist activity or other political or economic instability, fluctuation in currency exchange rates and local import and export controls. ● We rely on third-party suppliers, manufacturers and service providers to secure equipment, components and parts used in rig operations, conversions, upgrades and construction. ● Our contracts with state-owned energy companies may expose us to greater risks than we normally assume in contracts with non-governmental customers. ● Control of oil and natural gas reserves by state-owned oil companies may affect the demand for our services and products and create additional risks in our operations. ● Our operating expense includes fixed costs that may not decline in proportion to decreases in rig utilization and dayrates. ● Actions of and disputes with our joint venture partners could have a material adverse effect on the business and results of operations of our joint ventures and, in turn, our business and consolidated results of operations. ● Failure to realize the anticipated benefits of acquisitions, divestitures, investments, joint ventures and other strategic transactions may adversely affect our business, results of operations and financial position. ● Decisions by internet service, cloud hosting service and related providers to restrict or ban our ability to use their platforms could adversely affect our ability to promote and conduct our business and inform investors. ● Failure to effectively and timely address the energy transition could adversely affect our business, financial condition, results of operations, cash flows and share price. 12 Table of Contents ● Our aspirations, goals and initiatives related to sustainability and emissions reduction, and our public statements and disclosures regarding them, expose us to risks. ● We are subject to a number of uncertainties during the timeframe when Nabors Energy Transition Corporation II (NETC II) pursues a business combination, which could adversely affect our business, financial condition, results of operations, cash flows and share price. ​ Financial Risks ​ ● We may record additional losses or impairment charges related to sold or idle drilling rigs and other assets. ● Our financial and operating flexibility could be affected by our long-term debt and other financial commitments. ● Volatility in prices of goods and services and interest rates could expose us to risks in managing our operating and capital costs. ● Our ability to access capital markets could be limited. ● A downgrade in our credit rating could negatively affect our cost of capital and our ability to access capital markets or other financing sources. ​ Technology Risks ​ ● New technologies may cause our drilling methods and equipment to become less competitive and it may become necessary to incur higher levels of operating and capital expenditures in order to keep pace with the disruptive trends in the drilling industry.
An ownership change generally occurs if there is a more than 50 percentage point increase in the aggregate equity ownership of the Company by one or more “5 percent shareholders” (as that term is defined for purposes of Sections 382 and 383 of the Code) in any testing period, which is generally the three-year period preceding any potential ownership change, measured against their lowest percentage ownership at any time during such period. ​ There is no assurance that the Company will not experience an ownership change under Section 382 as a result of future actions that may significantly limit or possibly eliminate its ability to use its NOL carryforwards and potentially certain other tax attributes.
An ownership change generally occurs if there is a more than 50 percentage point increase in the aggregate equity ownership of the Company by one or more “5 percent shareholders” (as that term is defined for purposes of Sections 382 and 383 of the Code) in any testing period, which is generally the three-year period preceding any potential ownership change, measured against their lowest percentage ownership at any time during such period. ​ There is no assurance that the Company will not experience an ownership change under Section 382 as a result of future actions that may significantly limit or possibly eliminate its ability to use its NOL carryforwards and certain other tax attributes.
Violations of these laws could have a negative effect on our business. ● Changes to or noncompliance with laws and regulations regarding environmental matters or exposure to environmental liabilities could adversely affect our results of operations. ● The physical effects of climate change and the regulation of greenhouse gas emissions could have a negative effect on our business. ● We are subject to complex and evolving laws and regulations regarding data privacy and security. ● Legal proceedings and governmental investigations could affect our financial condition and results of operations. ● Our business may be affected by changes in applicable sanctions or export controls laws and regulations, including those targeting Russia. ● We may be subject to changes in tax laws and have additional tax liabilities. ● The Company’s ability to use its net operating loss carryforwards, and possibly other tax attributes, to offset future taxable income for U.S. federal income tax purposes may be significantly limited due to various circumstances, including future transactions involving the sale or issuance of Company equity securities, or if taxable income does not reach sufficient levels. ​ Share Capital and Corporate Structure Risks ​ ● Significant issuances of common shares could adversely affect the market price of our common shares. ● Our common share price has been and may continue to be volatile. ● Provisions in our organizational documents may be insufficient to thwart a coercive hostile takeover attempt; conversely, provisions in our organizational documents and in our outstanding debt and Saudi joint venture documents may deter a change of control transaction and decrease the likelihood of a shareholder receiving a change of control premium. ● As a holding company, we depend on our operating subsidiaries and investments to meet our financial obligations. ​ General Risks ​ ● Investor sentiment and public perception related to the fossil fuels industry and to ESG initiatives could affect the demand for our services, increase our costs of capital, our reporting requirements and our operations, which could negatively affect our stock price. ● Our business, results of operations and financial condition have been and may continue to be adversely affected by global public health epidemics, including the strain of coronavirus known as COVID-19, and future adverse effects could be material and difficult to predict. ● Our business is subject to cybersecurity risks. ● The loss of key executives or inability to attract and retain experienced technical professionals and talented personnel could reduce our competitiveness and harm prospects for future success. ​ For a more complete discussion of the risks facing our business, see below. ​ Business and Operational Risks ​ Fluctuations in oil and natural gas prices could adversely affect drilling activity and our revenues, cash flows and profitability. ​ Our operations, demand for our services, and the rates we are able to charge for such services depend on the level of spending by oil and gas companies for exploration, development and production activities.
Violations of these laws could have a negative effect on our business. ● Changes to or noncompliance with laws and regulations regarding environmental matters or exposure to environmental liabilities could adversely affect our results of operations. ● The physical effects of climate change and the regulation of greenhouse gas emissions could have a negative effect on our business. ● We are subject to complex and evolving laws and regulations regarding data privacy and security. ● Legal proceedings and governmental investigations could affect our financial condition and results of operations. ● Our business may be affected by changes in applicable sanctions or export controls laws and regulations, including those targeting Russia. ● We may be subject to changes in tax laws and have additional tax liabilities. ● The Company’s ability to use its net operating loss carryforwards, and possibly other tax attributes, to offset future taxable income for U.S. federal income tax purposes may be significantly limited due to various circumstances, including future transactions involving the sale or issuance of Company equity securities, or if taxable income does not reach sufficient levels. ​ Share Capital and Corporate Structure Risks ​ ● Significant issuances of common shares could adversely affect the market price of our common shares. ● Our common share price has been and may continue to be volatile. ● Provisions in our organizational documents may be insufficient to thwart a coercive hostile takeover attempt; conversely, provisions in our organizational documents and in our outstanding debt and Saudi 13 Table of Contents joint venture documents may deter a change of control transaction and decrease the likelihood of a shareholder receiving a change of control premium. ● As a holding company, we depend on our operating subsidiaries and investments to meet our financial obligations. ​ General Risks ​ ● Investor sentiment and public perception related to the fossil fuels industry and to ESG initiatives could affect the demand for our services, increase our costs of capital, our reporting requirements and our operations, which could negatively affect our stock price. ● Our business, results of operations and financial condition have been and may continue to be adversely affected by global public health epidemics, including the strain of coronavirus known as COVID-19, and future adverse effects could be material and difficult to predict. ● Our business is subject to cybersecurity risks. ● The loss of key executives or inability to attract and retain experienced technical professionals and talented personnel could reduce our competitiveness and harm prospects for future success. ​ For a more complete discussion of the risks facing our business, see below. ​ Business and Operational Risks ​ Fluctuations in oil and natural gas prices could adversely affect drilling activity and our revenues, cash flows and profitability. ​ Our operations, demand for our services, and the rates we are able to charge for such services depend on the level of spending by oil and gas companies for exploration, development and production activities.
Some factors include, but are not limited to, (i) the extent to which our customers' decisions directly impact, relate to, or influence the use of our equipment that creates the emissions we report, (ii) the availability and cost of low- or non-carbon-based energy sources and technologies, (ii) evolving regulatory requirements affecting sustainability standards or disclosures, and (iv) the availability of suppliers that can meet our sustainability and other standards.
Some factors include, but are not limited to, (i) the extent to which our customers’ decisions directly impact, relate to, or influence the use of our equipment that creates the emissions we report, (ii) the availability and cost of low- or non-carbon-based energy sources and technologies, (iii) evolving regulatory requirements affecting sustainability standards or disclosures, and (iv) the availability of suppliers that can meet our sustainability and other standards.
There can be no assurance that we will: ​ ● have sufficient capital resources to improve existing rigs or build new, technologically advanced drilling rigs; ​ ● avoid cost overruns inherent in large fabrication projects resulting from numerous factors such as shortages or unscheduled delays in delivery of equipment or materials, inadequate levels of skilled labor, unanticipated increases in costs of equipment, materials and labor, design and engineering problems, and financial or other difficulties; ​ ● successfully deploy idle, stacked, new or upgraded drilling rigs; ​ ● effectively manage the size or growth of our organization and drilling fleet; ​ ● develop competitive technologies or choose the right technologies to develop; ​ ● maintain crews necessary to operate existing or additional drilling rigs; or ​ ● successfully improve our financial condition, results of operations, business or prospects as a result of improving existing drilling rigs or building new drilling rigs. ​ In the event that we are successful in developing new technologies for use in our business, there is no guarantee of future demand for those technologies.
There can be no assurance that we will: ​ ● have sufficient capital resources to improve existing rigs or build new, technologically advanced drilling rigs; ​ ● avoid cost overruns inherent in large fabrication projects resulting from numerous factors such as shortages or unscheduled delays in delivery of equipment or materials, inadequate levels of skilled labor, unanticipated increases in costs of equipment, materials and labor, design and engineering problems, and financial or other difficulties; ​ ● successfully deploy idle, stacked, new or upgraded drilling rigs; ​ ● effectively manage the size or growth of our organization and drilling fleet; ​ ● develop competitive technologies or choose the right technologies to develop; ​ ● maintain crews necessary to operate existing or additional drilling rigs; or ​ ● successfully improve our financial condition, results of operations, business or prospects as a result of improving existing drilling rigs or building new drilling rigs with updated technology. ​ In the event that we are successful in developing new technologies for use in our business, there is no guarantee of future demand for those technologies.
Similarly, our failure or perceived failure to pursue or fulfill our sustainability-focused goals, targets, and objectives, to comply with ethical, environmental, or other standards, regulations, or expectations, or to satisfy various reporting standards with respect to these matters, within the timelines we announce, or at all, could adversely affect our business or reputation, as well as expose us to government enforcement actions and private litigation. ​ We will be subject to a number of uncertainties during the timeframe when Nabors Energy Transition Corporation (NETC) pursues a business combination, which could adversely affect our business, financial condition, results of operations, cash flows and share price. ​ If NETC is unable to consummate a suitable business transaction during the prescribed time period set forth in the terms of the initial public offering, we may experience negative reactions from the financial markets and from our shareholders.
Similarly, our failure or perceived failure to pursue or fulfill our sustainability-focused goals, targets, and objectives, to comply with ethical, environmental, or other standards, regulations, or expectations, or to satisfy various reporting standards with respect to these matters, within the timelines we announce, or at all, could adversely affect our business or reputation, as well as expose us to government enforcement actions and private litigation. ​ We will be subject to a number of uncertainties during the timeframe when Nabors Energy Transition Corporation II (“NETC II”) pursues a business combination, which could adversely affect our business, financial condition, results of operations, cash flows and share price. ​ If NETC II is unable to consummate a suitable business transaction during the prescribed time period set forth in the terms of the initial public offering, we may experience negative reactions from the financial markets and from our shareholders.
Under Section 382, an ownership change would subject the Company to an annual limitation that applies to the amount of pre-ownership change NOLs (and possibly certain other tax attributes) that may be used to offset post-ownership change taxable income.
Under Section 382, an ownership change would subject the Company to an annual limitation that applies to the amount of pre-ownership change NOLs (and certain other tax attributes) that may be used to offset post-ownership change taxable income.
In response to ongoing military hostilities between Russia and Ukraine, the United States, the United Kingdom, the European Union, and other jurisdictions imposed new and additional economic sanctions, export controls and other trade restrictions (“collectively, “Sanctions Measures”) targeting Russia, Belarus and certain regions of Ukraine, including Sanctions Measures that impose: (i) restrictions on engaging in specified activities or transactions, or any and all activities and transactions, with, involving or for the benefit of certain designated Russian and Belarusian entities or individuals (collectively, “Sanctions Targets”); (ii) a specific prohibition on new investment in the Russian energy sector, broadly defined to include the procurement, exploration, extraction, drilling, mining, harvesting, production, refinement, liquefaction, gasification, regasification, conversion, enrichment, fabrication or transport of petroleum, natural gas, liquified natural gas, natural gas liquids, or petroleum products or other products capable of producing energy; and (iii) a broad prohibition on new investment in Russia. 24 Table of Contents Pursuant to applicable Sanctions, we may be obliged to limit our business activities, may incur costs in order to implement and maintain compliance programs, and may be subject to investigations, enforcement actions or penalties relating to actual or alleged instances of noncompliance with the Sanctions Measures.
In response to ongoing military hostilities between Russia and Ukraine, the United States, the United Kingdom, the European Union, and other jurisdictions imposed new and additional economic sanctions, export controls and other trade restrictions (collectively, “Sanctions Measures”) targeting Russia, Belarus and certain regions of Ukraine, including Sanctions Measures that impose: (i) restrictions on engaging in specified activities or transactions, or any and all activities and transactions, with, involving or for the benefit of certain designated Russian and Belarusian entities or individuals (collectively, “Sanctions Targets”); (ii) a specific prohibition on new investment in the Russian energy sector, broadly defined to include the procurement, exploration, extraction, drilling, mining, harvesting, production, refinement, liquefaction, gasification, regasification, conversion, enrichment, fabrication or transport of petroleum, natural gas, liquified natural gas, natural gas liquids, or petroleum products or other products capable of producing energy; and (iii) a broad prohibition on new investment in Russia. ​ Pursuant to applicable Sanctions, we may be obliged to limit our business activities, may incur costs in order to implement and maintain compliance programs, and may be subject to investigations, enforcement actions or penalties relating to actual or alleged instances of noncompliance with the Sanctions Measures.
If subsidiaries are unable to distribute or otherwise make 27 Table of Contents payments to us, we may not be able to pay interest or principal on obligations when due, and we cannot assure you that we will be able to obtain the necessary funds from other sources. ​ General Risks ​ Investor sentiment and public perception related to the fossil fuels industry and to ESG initiatives could affect the demand for our services, increase our costs of capital, our reporting requirement, and our operations, which could negatively affect our stock price. ​ Regulators, investor advocacy groups, investment funds, and other stakeholders are increasingly focused on environmental, social, and governance (“ESG”) matters and have placed increasing importance on the non-financial impacts of their investments.
If subsidiaries are unable to distribute or otherwise make payments to us, we may not be able to pay interest or principal on obligations when due, and we cannot assure you that we will be able to obtain the necessary funds from other sources. ​ General Risks ​ Investor sentiment and public perception related to the fossil fuels industry and to ESG initiatives could affect the demand for our services, increase our costs of capital, our reporting requirement, and our operations, which could negatively affect our stock price. ​ Regulators, investor advocacy groups, investment funds, and other stakeholders are increasingly focused on environmental, social, and governance (“ESG”) matters and have placed increasing importance on the non-financial impacts of their investments.
Growth through building of new drilling rigs and improvement of existing rigs is not assured. ● Limitations on our ability to obtain, maintain, protect or enforce our intellectual property rights, including our trade secrets, could cause a loss in revenues and any competitive advantage we hold. ● Technology disputes could negatively affect our operations or increase our costs. 12 Table of Contents ● Improvements in or new discoveries of alternative energy technologies could have a material adverse effect on our financial condition and results of operations. ​ Legal and Regulatory Risks ​ ● Our international business exposes us to additional risks, including risks related to geopolitical and economic factors, international laws and regulations, and compliance obligations and risks under the Foreign Corrupt Practices Act and other applicable anti-corruption laws .
Growth through building of new drilling rigs and improvement of existing rigs is not assured. ● Limitations on our ability to obtain, maintain, protect or enforce our intellectual property rights, including our trade secrets, could cause a loss in revenues and any competitive advantage we hold. ● Technology disputes could negatively affect our operations or increase our costs. ● Improvements in or new discoveries of alternative energy technologies could have a material adverse effect on our financial condition and results of operations. ​ Legal and Regulatory Risks ​ ● Our international business exposes us to additional risks, including risks related to geopolitical and economic factors, international laws and regulations, and compliance obligations and risks under the Foreign Corrupt Practices Act and other applicable anti-corruption laws .
Due to the highly competitive nature of the industry, which can be exacerbated during periods of depressed 14 Table of Contents market conditions, we may not be able to renew or replace expiring contracts or, if we are able to, we may not be able to secure or improve existing dayrates or other material terms, which could have an adverse effect on our business, financial condition and results of operations. ​ The nature of our operations presents inherent risks of loss, including weather-related risks, that could adversely affect our results of operations. ​ Our operations are subject to many hazards inherent in the drilling industry, including environmental pollution, 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.
Due to the highly competitive nature of the industry, which can be exacerbated during periods of depressed market conditions, we may not be able to renew or replace expiring contracts or, if we are able to, we may not be able to secure or improve existing dayrates or other material terms, which could have an adverse effect on our business, financial condition and results of operations. ​ The nature of our operations presents inherent risks of loss, including weather-related risks, that could adversely affect our results of operations. ​ Our operations are subject to many hazards inherent in the drilling industry, including environmental pollution, 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.
Future or more stringent federal or state regulation could dramatically increase operating costs for oil and natural gas companies, curtail production and demand for oil and natural gas in areas of the world where our customers operate, and reduce the market for our services by making wells and/or oilfields uneconomical to operate, which may in turn adversely affect results of operations. ​ The physical effects of climate change and the regulation of greenhouse gas emissions and climate change could have a negative effect on our business. ​ There has been an increasing focus of international, national, state, regional and local regulatory bodies on greenhouse gas (“GHG”), including carbon dioxide and methane, emissions and climate change issues.
Future or more stringent federal or state regulation could dramatically increase operating costs for oil and natural gas companies, curtail production and 23 Table of Contents demand for oil and natural gas in areas of the world where our customers operate, and reduce the market for our services by making wells and/or oilfields uneconomical to operate, which may in turn adversely affect results of operations. ​ The physical effects of climate change and the regulation of greenhouse gas emissions and climate change could have a negative effect on our business. ​ There has been an increasing focus of international, national, state, regional and local regulatory bodies on greenhouse gas (“GHG”), including carbon dioxide and methane, emissions and climate change issues.
Technology disputes involving us or our customers or supplying vendors could have a material adverse effect on our business, financial condition, cash flows and results of operations. ​ Improvements in or new discoveries of alternative energy technologies could have a material adverse effect on our financial condition and results of operations. ​ Since our business depends on the level of activity in the oil and natural gas industry, any improvement in or new discoveries of alternative energy technologies that increase the effectiveness (economic or otherwise), use or availability of alternative forms of energy and reduce the demand for oil and natural gas could have a material adverse effect on our business, financial condition and results of operations. ​ Legal and Regulatory Risks ​ Our international business exposes us to additional risks, including risks related to geopolitical and economic factors, international laws and regulations, and compliance obligations under the Foreign Corrupt Practices Act and other applicable anti-corruption laws. ​ Our international business (including our participation in joint ventures, requirements for local content, and our global supply chain) is subject to numerous political and economic factors, legal requirements, cross-cultural considerations and other risks associated with doing business globally.
Technology disputes involving us or our customers or supplying vendors could have a material adverse effect on our business, financial condition, cash flows and results of operations. ​ Improvements in or new discoveries of alternative energy technologies could have a material adverse effect on our financial condition and results of operations. ​ Since our business depends on the level of activity in the oil and natural gas industry, any improvement in or new discoveries of alternative energy technologies that increase the effectiveness (economic or otherwise), use or availability of alternative forms of energy and reduce the demand for oil and natural gas could have a material adverse effect on our business, financial condition and results of operations. ​ 22 Table of Contents Legal and Regulatory Risks ​ Our international business exposes us to additional risks, including risks related to international laws and regulations, and compliance obligations under the Foreign Corrupt Practices Act and other applicable anti-corruption laws. ​ Our international business (including our participation in joint ventures, requirements for local content, and our global supply chain) is subject to numerous political and economic factors, legal requirements, cross-cultural considerations and other risks associated with doing business globally.
However, more aggressive efforts by governments and non-governmental organizations to reduce GHG emissions appear likely, and any such future regulations could result in increased compliance costs, additional operating restrictions or affect the demand for our customers’ products and, accordingly, our services. ​ 23 Table of Contents In addition, there have been efforts in recent years aimed at the investment community promoting the divestment of fossil fuel equities as well as to pressure lenders and other financial services companies to limit or curtail activities with companies engaged in the extraction of fossil fuel reserves.
However, more aggressive efforts by governments and non-governmental organizations to reduce GHG emissions appear likely, and any such future regulations could result in increased compliance costs, additional operating restrictions or affect the demand for our customers’ products and, accordingly, our services. ​ In addition, there have been efforts in recent years aimed at the investment community promoting the divestment of fossil fuel equities as well as to pressure lenders and other financial services companies to limit or curtail activities with companies engaged in the extraction of fossil fuel reserves.
If future cash flow estimates, based upon information available to management at the time, including oil and gas prices and expected utilization levels, indicate that the carrying value of any of our rigs may not be recoverable or if we sell assets for less than their then carrying value, we may recognize additional impairment charges on our fleet, which could adversely affect our business, financial condition, results of operations and cash flows. ​ Our financial and operating flexibility could be affected by our long-term debt and other financial commitments. ​ The 2022 Credit Agreement (as defined) is secured with a first lien security interest on all land drilling rigs and related equipment, spare parts and inventory in the contiguous U.S.
If future cash flow estimates, based upon information available to management at the time, including oil and gas prices and expected utilization levels, indicate that the carrying value of any of our rigs may not be recoverable or if we sell assets for less than their then carrying value, we may recognize additional impairment charges on our fleet, which could adversely affect our business, financial condition, results of operations and cash flows. ​ Our financial and operating flexibility could be affected by our long-term debt and other financial commitments. ​ The 2022 Credit Agreement (as defined) is secured with a first lien security interest on all land drilling rigs and related equipment, spare parts and inventory in the contiguous United States.
In addition, weather conditions, governmental regulation (both in the United States and elsewhere) related to the development/production and use of oil and natural gas, levels of consumer demand for oil and natural gas, general and global economic conditions, oil and gas production levels by non-OPEC countries, decisions by oil and gas producers to continue producing oil and gas despite excess supply, the availability and demand for drilling equipment and pipeline capacity, availability and pricing of alternative energy sources, as well as governmental programs that incentivize the use of alternative energy, and other factors beyond our control may also affect the supply of and demand for oil and natural gas, and thereby affect the price of oil and natural gas. ​ Lower oil and natural gas prices also could adversely affect our cash forecast models used to determine whether the carrying values of our long-lived assets exceed our future cash flows, which could result in future impairment to our long-lived assets.
In addition, weather conditions, governmental regulation (both in the United States and elsewhere) related to the development/production and use of oil and natural gas, levels of consumer demand for oil and natural gas, general and global economic conditions, oil and gas production levels by non-OPEC countries, decisions by oil and gas producers to continue producing oil and gas despite excess supply, the availability and demand for drilling equipment and pipeline capacity, availability and pricing of alternative energy sources, as well as governmental programs that incentivize the use of alternative energy, public perception of fossil fuel use and other factors beyond our control may also affect the supply of and demand for oil and natural gas, and thereby affect the price of oil and natural gas. ​ Lower oil and natural gas prices also could adversely affect our cash forecast models used to determine whether the carrying values of our long-lived assets exceed our future cash flows, which could result in future impairment to our long-lived assets.
If these future laws and regulations result in customers reducing their production of oil and gas, they could ultimately have an adverse effect on our business and prospects. ​ Beyond financial and regulatory effects, the projected severe effects of climate change have the potential to directly affect our facilities and operations and those of our customers. ​ We are subject to complex and evolving laws and regulations regarding data privacy and security. ​ Governments around the world have implemented, and continue to implement, laws and regulations regarding data privacy and security, including with respect to the protection and processing of personal data.
If these future laws and regulations result in customers reducing their production of oil and gas, they could ultimately have an adverse effect on our business and prospects. ​ Beyond financial and regulatory effects, the projected severe effects of climate change have the potential to directly affect our facilities and operations and those of our customers. ​ 24 Table of Contents We are subject to complex and evolving laws and regulations regarding data privacy and security. ​ Governments around the world have implemented, and continue to implement, laws and regulations regarding data privacy and security, including with respect to the protection and processing of personal data.
No assurance can be given that we will be able to access capital markets on terms acceptable to us when required to do so, which could adversely affect our business, financial condition and results of operations. ​ A downgrade in our credit rating could negatively affect our cost of and ability to access capital markets or other financing sources. ​ Our ability to access capital markets or to otherwise obtain sufficient financing may be affected by our senior unsecured debt ratings as provided by major U.S. credit rating agencies.
No assurance can be given that we will be able to access capital markets on terms acceptable to us when required to do so, which could adversely affect our business, financial condition and results of operations. ​ 20 Table of Contents A downgrade in our credit rating could negatively affect our cost of and ability to access capital markets or other financing sources. ​ Our ability to access capital markets or to otherwise obtain sufficient financing may be affected by our senior unsecured debt ratings as provided by major U.S. credit rating agencies.
Other effects of the pandemic included, and may continue to include, significant volatility and disruption of the global financial markets; adverse revenue and net income effects; disruptions to our operations, including suspension or deferral of drilling activities; customer shutdowns of oil and gas exploration and production; downward revisions to customer budgets; supply chain disruptions; inflation and other decreases in purchasing power, limitations on access to raw materials; employee impacts from illness, school closures and other community response measures; and temporary closures of our facilities or the facilities of our customers and suppliers.
Other effects of the pandemic included significant volatility and disruption of the global financial markets; adverse revenue and net income effects; disruptions to our operations, including suspension or deferral of drilling activities; customer shutdowns of oil and gas exploration and production; downward revisions to customer budgets; supply chain disruptions; inflation and other decreases in purchasing power, limitations on access to raw materials; employee impacts from illness, school closures and other community response measures; and temporary closures of our facilities or the facilities of our customers and suppliers.
These market fluctuations may decrease the market price of our common shares in the future. ​ Provisions in our organizational documents may be insufficient to thwart a coercive hostile takeover attempt; conversely, these provisions and those in our outstanding debt and Saudi joint venture documents may deter a change of control transaction and decrease the likelihood of a shareholder receiving a change of control premium. ​ Companies generally seek to prevent coercive takeovers by parties unwilling to pay fair value for the enterprise they acquire.
These market fluctuations may decrease the market price of our common shares in the future. ​ 27 Table of Contents Provisions in our organizational documents may be insufficient to thwart a coercive hostile takeover attempt; conversely, these provisions and those in our outstanding debt and Saudi joint venture documents may deter a change of control transaction and decrease the likelihood of a shareholder receiving a change of control premium. ​ Companies generally seek to prevent coercive takeovers by parties unwilling to pay fair value for the enterprise they acquire.
Such legislation incentivizes the development, use and investment in these technologies and alternative energy sources and could accelerate the shift away from traditional oil and gas. For example, the Inflation Reduction Act ("IRA") of 2022 contains tax inducements and other provisions that incentivize investment, development, and deployment of alternative energy sources and technologies.
Such legislation incentivizes the development, use and investment in these technologies and alternative energy sources and could accelerate the shift away from traditional oil and gas. For example, the Inflation Reduction Act (“IRA”) of 2022 contains tax inducements and other provisions that incentivize investment, development, and deployment of alternative energy sources and technologies.
In addition, our safety record is a competitive advantage for us and if one or more incidents were to occur it could significantly affect this advantage. ​ Our drilling contracts may in certain instances be renegotiated, suspended or terminated without an early termination payment. ​ Most of our multi-well and term drilling contracts require that an early termination payment be made to us if a contract is terminated by the customer prior to its expiration.
In addition, our safety record is a competitive advantage for us and if one or more incidents were to occur it could significantly affect this advantage. 15 Table of Contents Our drilling contracts may in certain instances be renegotiated, suspended or terminated without an early termination payment. ​ Most of our multi-well and term drilling contracts require that an early termination payment be made to us if a contract is terminated by the customer prior to its expiration.
In addition, issues with the global supply 16 Table of Contents chain whether caused by the COVID-19 pandemic, the Ukraine/Russia conflict or other reasons could make it more difficult for our suppliers to meet our requirements in a timely manner, if at all, which could ultimately result in an adverse effect on our operations. ​ Our contracts with state-owned energy companies may expose us to greater risks than we normally assume in contracts with non-governmental customers. ​ We currently own and operate rigs and rig-related equipment under contracts with state-owned energy companies (“NOCs”).
In addition, issues with the global supply chain whether caused by the COVID-19 pandemic, the Ukraine/Russia conflict or other reasons could make it more difficult for our suppliers to meet our requirements in a timely manner, if at all, which could ultimately result in an adverse effect on our operations. ​ Our contracts with state-owned energy companies may expose us to greater risks than we normally assume in contracts with non-governmental customers. ​ We currently own and operate rigs and rig-related equipment under contracts with state-owned energy companies (“NOCs”).
In addition, if we cannot repay or refinance our debt as it becomes due, we may be forced to sell assets or reduce funding in the future for working capital, capital expenditures and general corporate purposes, any of which could negatively affect our stock price or financial condition. 19 Table of Contents ​ Volatility in prices of goods and services and interest rates could expose us to risks in managing our operating and capital costs.
In addition, if we cannot repay or refinance our debt as it becomes due, we may be forced to sell assets or reduce funding in the future for working capital, capital expenditures and general corporate purposes, any of which could negatively affect our stock price or financial condition. ​ Volatility in prices of goods and services and interest rates could expose us to risks in managing our operating and capital costs.
Our competitors may also be able to develop technology independently that is similar to ours without infringing on our patents or gaining access to our trade secrets, which could adversely affect our financial condition, results of operations and cash flows. 21 Table of Contents ​ Technology disputes could negatively affect our operations or increase our costs. ​ Our services and products use proprietary technology and equipment, which can involve potential infringement of a third party’s rights, or a third party’s infringement of our rights, including patent rights.
Our competitors may also be able to develop technology independently that is similar to ours without infringing on our patents or gaining access to our trade secrets, which could adversely affect our financial condition, results of operations and cash flows. ​ Technology disputes could negatively affect our operations or increase our costs. ​ Our services and products use proprietary technology and equipment, which can involve potential infringement of a third party’s rights, or a third party’s infringement of our rights, including patent rights.
The sale, or availability for sale, of substantial amounts of our common shares in the public market, whether directly by us or resulting from the exercise of options or warrants (and, where applicable, sales pursuant to Rule 144 under the Securities Act) or the exchange of our 0.75% Exchangeable Notes due 2024 , would be dilutive to existing shareholders, could adversely affect the prevailing market price of our common shares and could impair our ability to raise additional capital through the sale of equity securities. ​ Our common share price has been and may continue to be volatile. ​ The trading price of our common shares has fluctuated in the past and is subject to significant fluctuations in response to the following factors, some of which are beyond our control: ​ ● variations in quarterly operating results; ​ ● deviations in our earnings from publicly disclosed forward-looking guidance; ​ ● variability in our revenues; ​ ● our announcements of significant contracts, acquisitions, strategic partnerships or joint ventures; ​ ● general conditions in and market perceptions of the oil and gas industry; ​ ● uncertainty about current global economic conditions; ​ ● investor sentiment about our company and industry; ​ ● fluctuations in stock market price and volume; and ​ ● other general economic conditions. ​ 26 Table of Contents The trading market for our common stock is influenced by the research and reports that industry or securities analysts may publish about us, our business, our markets or our competitors.
The sale, or availability for sale, of substantial amounts of our common shares in the public market, whether directly by us or resulting from the exercise of options or warrants (and, where applicable, sales pursuant to Rule 144 under the Securities Act) or the exchange of our 1.75% Exchangeable Notes due 2029 , would be dilutive to existing shareholders, could adversely affect the prevailing market price of our common shares and could impair our ability to raise additional capital through the sale of equity securities. ​ Our common share price has been and may continue to be volatile. ​ The trading price of our common shares has fluctuated in the past and is subject to significant fluctuations in response to the following factors, some of which are beyond our control: ​ ● variations in quarterly operating results; ​ ● deviations in our earnings from publicly disclosed forward-looking guidance; ​ ● variability in our revenues; ​ ● our announcements of significant contracts, acquisitions, strategic partnerships or joint ventures; ​ ● general conditions in and market perceptions of the oil and gas industry; ​ ● uncertainty about current global economic conditions; ​ ● investor sentiment about our company and industry; ​ ● fluctuations in stock market price and volume; and ​ ● other general economic conditions. ​ The trading market for our common stock is influenced by the research and reports that industry or securities analysts may publish about us, our business, our markets or our competitors.
In addition, our ability to work with NOCs is subject to our ability to negotiate and agree upon acceptable contract terms. ​ Our operating expense includes fixed costs that may not decline in proportion to decreases in rig utilization and dayrates. ​ Our operating expense includes all direct and indirect costs associated with the operation, maintenance and support of our drilling and related equipment, many of which are not affected by changes in dayrates and some of which are not affected by utilization.
In addition, our ability to work with NOCs is subject to our ability to negotiate and agree upon acceptable contract terms. ​ 17 Table of Contents Our operating expense includes fixed costs that may not decline in proportion to decreases in rig utilization and dayrates. ​ Our operating expense includes all direct and indirect costs associated with the operation, maintenance and support of our drilling and related equipment, many of which are not affected by changes in dayrates and some of which are not affected by utilization.
Furthermore, if we fail or are perceived to not effectively implement an energy transition strategy, or if investors or financial institutions shift funding away from companies in fossil fuel-related industries, our access to capital or the market for our securities could be negatively impacted. ​ Our aspirations, goals and initiatives related to sustainability and emissions reduction, and our public statements and disclosures regarding them, expose us to risks. ​ We have developed, and will continue to develop and set, goals, targets, or other objectives related to sustainability matters.
Furthermore, if we fail or are perceived to not effectively implement an energy transition strategy, or if investors or financial institutions shift funding away from companies in fossil fuel-related industries, our access to capital or the market for our securities could be negatively impacted. 18 Table of Contents ​ Our aspirations, goals and initiatives related to sustainability and emissions reduction, and our public statements and disclosures regarding them, expose us to risks. ​ We have developed, and will continue to develop and set, goals, targets, or other objectives related to sustainability matters.
These factors could have a material adverse effect on the business and results of operations of our joint ventures and, in turn, our business and consolidated results of operations. ​ 17 Table of Contents Failure to realize the anticipated benefits of acquisitions, divestitures, investments, joint ventures and other strategic transactions may adversely affect our business, results of operations and financial position. ​ We undertake from time to time acquisitions, divestitures, investments, joint ventures, alliances and other strategic transactions that we expect to further our business objectives.
These factors could have a material adverse effect on the business and results of operations of our joint ventures and, in turn, our business and consolidated results of operations. ​ Failure to realize the anticipated benefits of acquisitions, divestitures, investments, joint ventures and other strategic transactions may adversely affect our business, results of operations and financial position. ​ We undertake from time to time acquisitions, divestitures, investments, joint ventures, alliances and other strategic transactions that we expect to further our business objectives.
A violation of Sanctions could result in severe criminal or civil penalties and reputational harm, which could separately adversely affect our business and results of operations. We may be subject to changes in tax laws and have additional tax liabilities. ​ We operate through various subsidiaries in numerous countries throughout the world.
A violation of Sanctions could result in severe criminal or civil penalties and reputational harm, which could separately adversely affect our business and results of operations. 25 Table of Contents ​ We may be subject to changes in tax laws and have additional tax liabilities. ​ We operate through various subsidiaries in numerous countries throughout the world.
If a Section 382 limitation applies, the limitation could cause the Company’s U.S. federal income taxes to be greater, or to be paid earlier, than they otherwise would be, and could cause a portion of the Company’s tax attributes to expire unused. Similar rules and limitations may apply for state income tax purposes.
If a Section 382 limitation applies, the limitation could cause the Company’s U.S. federal income taxes to be greater, or to be 26 Table of Contents paid earlier, than they otherwise would be, and could cause a portion of the Company’s tax attributes to expire unused. Similar rules and limitations may apply for state income tax purposes.
Both short-term and long- 13 Table of Contents term trends in oil and natural gas prices affect these activity levels. Oil and natural gas prices, as well as the level of drilling, exploration and production activity, have been highly volatile for several years and are expected to continue to be volatile for the foreseeable future.
Both short-term and long-term trends in oil and natural gas prices affect these activity levels. Oil and natural gas prices, as well as the level of drilling, exploration and production activity, have been highly volatile for several years and are expected to continue to be volatile for the foreseeable future.
Any cyber incident could have a material adverse effect on our business, financial condition and results of operations. ​ The loss of key executives or inability to attract and retain experienced technical professionals and talented personnel could reduce our competitiveness and harm prospects for future success. ​ The successful execution of our business strategies depends, in part, on the continued service of certain key executive officers and employees.
Such cyber incidents could have a material adverse effect on our business, financial condition and results of operations. ​ The loss of key executives or inability to attract and retain experienced technical professionals and talented personnel could reduce our competitiveness and harm prospects for future success. ​ The successful execution of our business strategies depends, in part, on the continued service of certain key executive officers and employees.
If oil prices decrease and/or global economic conditions deteriorate, there could be a material adverse effect on the liquidity and operations of our customers, vendors and other worldwide business partners, which in turn could have a material effect on our utilization, dayrates, results of operations and liquidity.
If oil prices decrease and/or global economic conditions deteriorate, there could be a material adverse effect on the liquidity and operations of our 14 Table of Contents customers, vendors and other worldwide business partners, which in turn could have a material effect on our utilization, dayrates, results of operations and liquidity.
The Company’s ability to use its 25 Table of Contents NOL carryforwards and certain other attributes may be limited if it experiences an “ownership change” as defined in Section 382 (“Section 382”) of the Internal Revenue Code of 1986, as amended (the “Code”).
The Company’s ability to use its NOL carryforwards and certain other attributes may be limited if it experiences an “ownership change” as defined in Section 382 (“Section 382”) of the Internal Revenue Code of 1986, as amended (the “Code”).
If our customers cancel some of our contracts, and we are unable to secure new contracts on a timely basis and/or on substantially similar terms, or if contracts are suspended for an extended period of time with 15 Table of Contents or without adequate compensation or renegotiated with pricing or other terms less favorable to us, it could adversely affect our financial condition and results of operations. ​ The loss of one or a number of our large customers could have a material adverse effect on our business, financial condition and results of operations. ​ In 2022, 2021 and 2020, we received approximately 36%, 44% and 49%, respectively, of our consolidated operating revenues from our three largest contract drilling customers (including their affiliates), with our largest customer and partner in our SANAD joint venture, Saudi Aramco, representing 26%, 31% and 29% of our consolidated operating revenues, respectively, for these periods.
If our customers cancel some of our contracts, and we are unable to secure new contracts on a timely basis and/or on substantially similar terms, or if contracts are suspended for an extended period of time with or without adequate compensation or renegotiated with pricing or other terms less favorable to us, it could adversely affect our financial condition and results of operations. ​ The loss of one or a number of our large customers could have a material adverse effect on our business, financial condition and results of operations. ​ In 2023, 2022 and 2021, we received approximately 37%, 36% and 44%, respectively, of our consolidated operating revenues from our three largest contract drilling customers (including their affiliates), with our largest customer and partner in our SANAD joint venture, Saudi Aramco, representing 26%, 26% and 31% of our consolidated operating revenues, respectively, for these periods.
In addition, in the event that NETC is able to find a suitable business combination, or if the business combination is unsuccessful, there is no assurance that we will realize the anticipated value from such transaction. ​ Financial Risks ​ We may record additional losses or impairment charges related to sold or idle drilling rigs and other assets. ​ In 2021 and 2020, we recognized impairment charges of $60.5 million and $390.0 million, respectively, related to tangible assets and equipment.
In addition, in the event that NETC II is able to find a suitable business combination, or if the business combination is unsuccessful, there is no assurance that we will realize the anticipated value from such transaction. ​ Financial Risks ​ We may record additional losses or impairment charges related to sold or idle drilling rigs and other assets. ​ In 2021, we recognized impairment charges of $60.5 million related to tangible assets and equipment.
Our customers increasingly demand the services of newer, higher specification drilling rigs and related equipment. 20 Table of Contents Accordingly, we may have to allocate a higher proportion of our capital expenditures to improve the technological aspects of our existing rigs and other equipment, purchase and construct newer, higher specification drilling rigs and other equipment to meet the increasingly sophisticated needs of our customers and develop new and improved technology and data analytics. ​ Although a component of our strategy is to develop and use advanced oil and natural gas drilling technology, changes in technology or improvements on existing technology by competitors could make our equipment less competitive.
Accordingly, we may have to allocate a higher proportion of our capital expenditures to improve the technological aspects of our existing rigs and other equipment, purchase and construct newer, higher specification drilling rigs and other equipment to meet the increasingly sophisticated needs of our customers and develop new and improved technology and data analytics. ​ Although a component of our strategy is to develop and use advanced oil and natural gas drilling technology, changes in technology or improvements on existing technology by competitors could make our equipment less competitive.
The interest coverage ratio is defined to mean the ratio of (i) EBITDA for the latest four fiscal quarters for which financial statements are required to have been delivered to (ii) the interest expense for the latest four fiscal quarters for which financial statements are required to have been delivered.
The interest coverage 19 Table of Contents ratio is defined to mean the ratio of (i) EBITDA for the latest four fiscal quarters for which financial statements are required to have been delivered to (ii) the interest expense for the latest four fiscal quarters for which financial statements are required to have been delivered.
Under the facility, we are required to maintain an “interest coverage ratio” of no less than 1.75:1.00 as of the last day of the fiscal quarter ending March 31, 2022, with such ratio periodically increasing in increments of 0.125:1.00 to a minimum interest coverage ratio of 2.75:1.00 as of the fiscal quarter ending June 30, 2024.
Under the facility, we are required to maintain an “interest coverage ratio” of no less than 2.50:1.00 as of the last day of the fiscal quarter ending December 31, 2023, with such ratio periodically increasing in increments of 0.125:1.00 to a minimum interest coverage ratio of 2.75:1.00 as of the fiscal quarter ending June 30, 2024.
Customers may be financial incapable or otherwise reluctant or unwilling to adopt our new technologies or may choose competing technologies.
Customers may be financially incapable or otherwise reluctant or unwilling to adopt our new technologies or may choose competing technologies.
Accordingly, a decline in revenues due to lower dayrates and/or utilization may not be offset by a corresponding decrease in drilling services and solutions expense, which could have a material adverse effect on our business, financial condition and results of operations. ​ Actions of and disputes with our joint venture partners could have a material adverse effect on the business and results of operations of our joint ventures and, in turn, our business and consolidated results of operations. ​ We conduct some operations through joint ventures.
Accordingly, a decline in revenues due to lower dayrates and/or utilization may not be offset by a corresponding decrease in drilling services and solutions expense, which could have a material adverse effect on our business, financial condition and results of operations. ​ Actions of and disputes with our joint venture partners could have a material adverse effect on the business and results of operations of our joint ventures and, in turn, our business and consolidated results of operations. ​ We conduct some operations through joint ventures, from which we derived 24% of our operating revenue during 2023.
Although the Tax Reform Act has not had a material effect on our financial statements to date, if these tax laws, treaties or regulations change or any tax authority successfully challenges our assessment of the effects of such laws, treaties and regulations in any country, including our operational structure, intercompany pricing policies or the taxable presence of our subsidiaries in certain countries, this could have a material adverse effect on us, resulting in a higher effective tax rate on our consolidated earnings or a reclassification of the tax effects of our significant corporate restructuring transactions. ​ On August 16, 2022, the Inflation Reduction Act (“IRA”) was signed into law in the United States.
If these tax laws, treaties or regulations change or any tax authority successfully challenges our assessment of the effects of such laws, treaties and regulations in any country, including our operational structure, intercompany pricing policies or the taxable presence of our subsidiaries in certain countries, this could have a material adverse effect on us, resulting in a higher effective tax rate on our consolidated earnings or a reclassification of the tax effects of our significant corporate restructuring transactions. ​ On August 16, 2022, the Inflation Reduction Act (“IRA”) was signed into law in the United States.
The interest coverage ratio and the minimum guarantor value requirement are not measures of operating performance or liquidity defined by U.S. GAAP and may not be comparable to similarly titled measures presented by other companies. ​ As of December 31, 2022, our consolidated total outstanding indebtedness was $2.5 billion.
The interest coverage ratio and the minimum guarantor value requirement are not measures of operating performance or liquidity defined by U.S. GAAP and may not be comparable to similarly titled measures presented by other companies. ​ As of December 31, 2023, our consolidated total outstanding indebtedness was $3.1 billion.
Replacing significant customers is difficult. The loss of one or more of our larger customers would have a material adverse effect on our business, financial condition, results of operations and ability to meet our obligations.
The loss of one or more of our larger customers would have a material adverse effect on our business, financial condition, results of operations and ability to meet our obligations.
If any analyst who may cover us were to cease coverage of our Company or fail to regularly publish reports on us, we could lose visibility in the financial markets, which in turn could cause our stock price or trading volume to materially decline. ​ During 2022, our stock price on the NYSE ranged from a high of $200.02 per common share to a low of $90.95 per common share.
If any analyst who may cover us were to cease coverage of our Company or fail to regularly publish reports on us, we could lose visibility in the financial markets, which in turn could cause our stock price or trading volume to materially decline. ​ During 2023, our stock price on the NYSE ranged from a high of $190.90 per common share to a low of $75.64 per common share.
The occurrence of an event for which we are not sufficiently insured or indemnified, or the failure or inability of a customer or insurer to meet its indemnification or insurance obligations, could result in substantial losses that could adversely affect our business, financial condition and liquidity. In addition, insurance may not be available to cover certain risks.
The occurrence of an event for which we are not sufficiently insured or indemnified, or the failure or inability of a customer or insurer to meet its indemnification or insurance obligations, could result in substantial losses that could adversely affect our business, financial condition and liquidity.
We have been unable to obtain regulatory approvals to recognize our acquisition of the Tesco subsidiary in Russia. ​ The anticipated benefits of the Saudi joint venture, the Tesco acquisition, and other strategic transactions may not be fully realized, or may be realized more slowly than expected, and may result in operational and financial consequences, including, but not limited to, the loss of key customers, suppliers or employees, or the disposition of certain assets or operations, which may have an adverse effect on our business, financial condition and results of operations. ​ Decisions by internet service, cloud host service and related providers to restrict or ban our ability to use their platforms could adversely affect our ability to promote and conduct our business and inform investors. ​ We utilize the internet to provide services and to promote our business and services to current and potential customers and to provide information and updates to our investors.
The anticipated benefits of acquisitions, divestitures, investments, joint ventures and other strategic transactions may not be fully realized, or may be realized more slowly than expected, and may result in operational and financial consequences, including, but not limited to, the loss of key customers, suppliers or employees, or the disposition of certain assets or operations, which may have an adverse effect on our business, financial condition and results of operations. ​ Decisions by internet service, cloud host service and related providers to restrict or ban our ability to use their platforms could adversely affect our ability to promote and conduct our business and inform investors. ​ We utilize the internet to provide services and to promote our business and services to current and potential customers and to provide information and updates to our investors.
The Company’s ability to use its NOL carryforwards will also depend on the amount of taxable income it generates in future periods. ​ Share Capital and Corporate Structure Risks ​ Significant issuances of common shares could adversely affect the market price of our common shares. ​ As of February 6, 2023, we had 32,000,000 authorized common shares, of which 10,546,387 shares were outstanding and entitled to vote, including 1,090,003 million held by our subsidiaries.
The Company’s ability to use its NOL carryforwards and other tax attributes will also depend on the amount of taxable income it generates in future periods. ​ Share Capital and Corporate Structure Risks ​ Significant issuances of common shares could adversely affect the market price of our common shares. ​ As of February 6, 2024, we had 32,000,000 authorized common shares, of which 10,633,331 shares were outstanding and entitled to vote, including 1,161,283 million held by our subsidiaries.
Declines in oil prices are primarily caused by, among other things, an excess of supply of crude oil in relation to demand, in addition to significant shocks to regional and global economies such as the COVID-19 pandemic and Russia invasion of Ukraine.
Declines in oil prices are primarily caused by, among other things, an excess of supply of crude oil in relation to demand, in addition to significant shocks to regional and global economies such as the COVID-19 pandemic and regional and global conflicts, especially in significant oil-producing regions around the world.
Our business, results of operations and financial condition have been and may continue to be adversely affected by global public health epidemics, including the strain of coronavirus known as COVID-19, and future adverse effects could be material and difficult to predict. ​ The global spread of the strain of coronavirus known as COVID-19 and its variants, which was declared a global pandemic by the World Health Organization on March 11, 2020, impacted our operations and the operations of our customers and suppliers.
Our actual or perceived failure to achieve our ESG-related initiatives, goals, or commitments could negatively impact our reputation or otherwise materially harm our business. ​ Our business, results of operations and financial condition have been and may continue to be adversely affected by global public health epidemics, including COVID-19 and its’ various variants, and future adverse effects could be material and difficult to predict. ​ The global spread of the strain of coronavirus known as COVID-19 and its variants, which was declared a global pandemic by the World Health Organization on March 11, 2020, impacted our operations and the operations of our customers and suppliers.
Our processes and controls for reporting sustainability matters may not always comply with evolving and disparate standards for identifying, measuring, and reporting such metrics, including sustainability-related disclosures that may be required of public 18 Table of Contents companies by the SEC, and such standards may change over time, which could result in significant revisions to our current goals, reported progress in achieving such goals, or ability to achieve such goals in the future.
Our processes and controls for reporting sustainability matters may not always comply with evolving and disparate standards for identifying, measuring, and reporting such metrics and such standards may change over time, which could result in significant revisions to our current goals, reported progress in achieving such goals, or ability to achieve such goals in the future.
Changes to, or noncompliance with laws and regulations regarding environmental matters or exposure to environmental liabilities, could adversely affect our results of operations. ​ Drilling of oil and natural gas wells is subject to various laws and regulations in the jurisdictions where we operate, including comprehensive and frequently changing laws and regulations relating to the protection of the environment and human health, such as those regulating the spill, release, transport, storage, use, treatment, disposal and remediation of, and exposure to, hazardous and solid wastes and materials.
Economic sanctions or an oil embargo, for example, could have significant impact on activity in the oil and natural gas industry and, correspondingly, us should we operate in an area subject to any sanctions or embargo, or in the surrounding region to the extent any sanctions or embargo disrupts its operations. ​ Changes to, or noncompliance with laws and regulations regarding environmental matters or exposure to environmental liabilities, could adversely affect our results of operations. ​ Drilling of oil and natural gas wells is subject to various laws and regulations in the jurisdictions where we operate, including comprehensive and frequently changing laws and regulations relating to the protection of the environment and human health, such as those regulating the spill, release, transport, storage, use, treatment, disposal and remediation of, and exposure to, hazardous and solid wastes and materials.
Tax laws, treaties and regulations are highly complex and subject to interpretation. Our income tax expense is based upon our interpretation of the tax laws in effect in various countries at the time that the expense is incurred.
Our income tax expense is based upon our interpretation of the tax laws in effect in various countries at the time that the expense is incurred.
The Paris Agreement requires set GHG emission reduction goals every five years beginning in 2020. Stronger GHG emission targets were set at the Conference of Parties in Glasgow (“COP 26”) in November 2021. ​ It is not possible to predict the timing and effect of climate change or whether additional GHG regulations will be adopted.
Stronger GHG emission targets were set at the Conference of Parties in Glasgow (“COP 26”) in November 2021 and were reaffirmed at the Conference of Parties in Dubai (“COP 28”) in December 2023. ​ It is not possible to predict the timing and effect of climate change or whether additional GHG regulations will be adopted.
We do not expect the IRA to have a material impact to the Company. ​ The Company’s ability to use its net operating loss carryforwards, and possibly other tax attributes, to offset future taxable income for U.S. federal income tax purposes may be significantly limited due to various circumstances, including future transactions involving the sale or issuance of Company equity securities, or if taxable income does not reach sufficient levels. ​ As of December 31, 2022, the Company reported consolidated federal net operating loss (“NOL”) carryforwards of approximately $727.1 million and certain other favorable federal income tax attributes.
We have recorded a deferred tax asset of $171.9 million for the Bermuda net operating losses generated from 2020 through 2023 with an offsetting valuation allowance of $171.9 million . ​ The Company’s ability to use its net operating loss carryforwards, and possibly other tax attributes, to offset future taxable income for U.S. federal income tax purposes may be significantly limited due to various circumstances, including future transactions involving the sale or issuance of Company equity securities, or if taxable income does not reach sufficient levels. ​ As of December 31, 2023, the Company reported consolidated federal net operating loss (“NOL”) carryforwards of approximately $588.9 million and certain other favorable federal income tax attributes.
We may also have difficulty negotiating satisfactory terms for our technology services or may be unable to secure prices sufficient to obtain expected returns on our investment in the research and development of new technologies. ​ Development of new technology is critical to maintaining our competitiveness.
We may also have difficulty negotiating satisfactory terms for our technology services or may be unable to secure prices sufficient to obtain expected returns on our investment in the research and development of new technologies. ​ 21 Table of Contents Furthermore, we expect our competitors to continue to improve their own technology systems.
It may also be necessary for us to take certain actions, including suspending or winding down our operations in Russia, in order to maintain compliance with, or satisfy obligations under, applicable Sanctions.
It may also be necessary for us to take certain actions, including suspending or winding down our operations in Russia, in order to maintain compliance with, or satisfy obligations under, applicable Sanctions. ​ We are committed to compliance with all applicable Sanctions and have implemented and maintain dedicated policies and procedures that we believe to be customary and appropriate to promote and maintain our compliance with applicable Sanctions.
As a service provider to energy companies in the fossil fuel industry, if any of these efforts continue or increase, our ability to raise capital could be negatively affected, which could lead to a reduction in our stock price.
As a service provider to energy companies in the fossil fuel 28 Table of Contents industry, if any of these efforts continue or increase, our ability to raise capital could be negatively affected, which could lead to a reduction in our stock price. ​ Similarly, there are calls by certain investors for companies to increase their ESG initiatives, and for more robust reporting on such initiatives.
If we procure such coverage in the future, we cannot ensure that it will be sufficient to cover any particular losses we may experience as a result of such cyberattacks.
As a result, the occurrence of a cyber incident could go unnoticed for a period time. ​ We do not presently maintain insurance coverage to protect against cybersecurity risks. If we procure such coverage in the future, we cannot ensure that it will be sufficient to cover any particular losses we may experience as a result of such cyberattacks.
The full scale of the impact of the Sanctions Measures and Russia’s responses to the Sanctions Measures (such as counter-sanctions and the potential nationalization of assets in Russia) is currently unclear but such developments could adversely affect our operations and the oil and gas sector generally, which could have a material adverse effect on our business, results of operations, financial condition and cash flow.
However, we can provide no assurances that these policies and procedures will always be effective in identifying Sanctions Targets and their property interests or in preventing violations of applicable Sanctions by us or employees, agents or other persons acting on our behalf. ​ The full scale of the impact of the Sanctions Measures and Russia’s responses to the Sanctions Measures (such as counter-sanctions and the potential nationalization of assets in Russia) is currently unclear but such developments could adversely affect our operations and the oil and gas sector generally, which could have a material adverse effect on our business, results of operations, financial condition and cash flow.
Technology Risks ​ New technologies may cause our drilling methods and equipment to become less competitive and it may become necessary to incur higher levels of operating and capital expenditures in order to keep pace with the disruptive trends in the drilling industry.
Any fluctuation in our credit rating, could affect our cost of capital and ability to access capital markets or other financing sources in the future, any of which could adversely affect our financial condition, results of operations and cash flows. ​ Technology Risks ​ New technologies may cause our drilling methods and equipment to become less competitive and it may become necessary to incur higher levels of operating and capital expenditures in order to keep pace with the disruptive trends in the drilling industry.
Our international operations expose us to compliance obligations and risks under applicable economic sanctions, export controls and trade embargoes, such as those imposed, administered and enforced by the United States and the United Kingdom and other relevant sanctions authorities (collectively, “Sanctions”).
See “Item 3—Legal Proceedings” for a discussion of certain existing legal proceedings. ​ Our business may be affected by changes in applicable sanctions or export controls laws and regulations, including those targeting Russia. ​ Our international operations expose us to compliance obligations and risks under applicable economic sanctions, export controls and trade embargoes, such as those imposed, administered and enforced by the United States and the United Kingdom and other relevant sanctions authorities (collectively, “Sanctions”).
As a result, to the extent we incur additional indebtedness the interest rates we are charged may be significantly higher than our interest rates in prior years, which increases our cost to operate our business.
We expect these inflationary pressures to continue to impact our margins and more generally, our business in 2024. As a result, the interest rates on our borrowings we are charged may be significantly higher than our interest rates in prior years, which increases our cost to operate our business.
In addition, 493,601 common shares were reserved for issuance pursuant to stock option and employee benefit plans and 3,937,659 shares are reserved for issuance upon exercise of outstanding warrants.
In addition, 406,235 common shares were reserved for issuance pursuant to stock option and employee benefit plans, 3,937,641 shares are reserved for issuance upon exercise of outstanding warrants and 1,441,075 shares were reserved for issuance under the 1.75% senior exchangeable notes due 2029.
Similarly, there are calls by certain investors for companies to increase their ESG initiatives, and for more robust reporting on such initiatives. The European Union has implemented ESG reporting requirements on EU market participants, and similar regulations are pending in various states in the United States.
The European Union has implemented ESG reporting requirements on EU market participants, and similar regulations are pending in various states in the United States.
Failure to comply with these laws and regulations could subject us to significant liability, including fines, penalties, and potential criminal sanctions. ​ Legal proceedings and governmental investigations could affect our financial condition and results of operations. ​ We are subject to legal proceedings and governmental investigations from time to time that include employment, tort, intellectual property and other claims, and purported class action and shareholder derivative actions.
Similar statutes have been passed in a variety of states in the United States. ​ Legal proceedings and governmental investigations could affect our financial condition and results of operations. ​ We are subject to legal proceedings and governmental investigations from time to time that include employment, tort, intellectual property and other claims, and purported class action and shareholder derivative actions.
We also are subject to various laws and regulations that govern the operation and taxation of our business and the import and export of our equipment from country to country, the imposition, application and interpretation of which can prove to be uncertain. ​ The initiation of conflicts in certain regions or by certain agitators, such as the invasion of Ukraine by Russia, may also lead to the imposition of regulatory sanctions that could limit our ability to operate in a specific region or country.
We also are subject to various laws and regulations that govern the operation and taxation of our business and the import and export of our equipment from country to country, the imposition, application and interpretation of which can prove to be uncertain. ​ 16 Table of Contents The initiation of conflicts in certain regions or by certain agitators, including, but not limited to, the invasion of Ukraine by Russia or the conflicts in the Middle East and around the Red Sea, can have an adverse effect on us should they become more intense and/or widespread.
Our insurance also may not cover losses associated with pandemics such as the COVID-19 pandemic. Even if available, insurance may be inadequate or insurance premiums or other costs may increase significantly in the future, making insurance prohibitively expensive.
In addition, insurance may not be available to cover certain risks, including war and political risks. Even if available, insurance may be inadequate or insurance premiums or other costs may increase significantly in the future, making insurance prohibitively expensive.
Further, the increased interest rates could affect our clients’ businesses and borrowing costs, which in turn could impact their ability to make payments to us. Our attempts to offset these increasing costs, such as increases in our dayrates and operational improvements, may not be successful.
Our attempts to offset these increasing costs, such as increases in our dayrates and operational improvements, may not be successful.
In 2022, inflationary pressures resulting from COVID-19 relief and aid programs, supply chain constraints and generally improved economic conditions increased our costs for commodities, labor, energy and other components necessary to operate our business. We expect these inflationary pressures to continue to impact our margins and more generally, our business in 2023.
In 2023, inflationary pressures, supply chain constraints and generally improved economic conditions increased our costs for commodities, labor, energy and other components necessary to operate our business. Throughout 2022 and 2023, in an effort to combat inflation, central banks throughout the world have raised, and may further raise, interest rates in response to concerns about inflation.
These laws and regulations vary from jurisdiction to jurisdiction, and we are obligated to comply in all jurisdictions in which we conduct business.
These laws and regulations vary from jurisdiction to jurisdiction, and we are obligated to comply in all jurisdictions in which we conduct business. Failure to comply with these laws and regulations could subject us to significant liability, including fines, penalties, and potential criminal sanctions. Including, for example, the European Union’s General Data Protection Regulation (“EU GDPR”).
Moreover, we have no control over the information technology systems of our customers, suppliers, and others with which our systems may connect and communicate. As a result, the occurrence of a cyber incident could go unnoticed for a period time. ​ We do not presently maintain insurance coverage to protect against cybersecurity risks.
Although we utilize various procedures and controls to mitigate our exposure to such risk, cybersecurity attacks and other cyber events are evolving and unpredictable. Moreover, we have no control over the information technology systems of our customers, suppliers, and others with which our systems may connect and communicate.
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For example, in October 2016, we announced an agreement to form a new joint venture in the Kingdom of Saudi Arabia, which commenced operations in December 2017.
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Replacing significant customers is difficult, and it is unlikely we would be able to replace such a loss in revenue from a single or a few larger customers, especially Saudi Aramco.
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The long-term success of the Saudi joint venture depends, to a large degree, on the satisfactory performance of our joint venture partner’s obligations, including contributions of capital, drilling rigs and related equipment, and our ability to maintain an effective, working relationship with our joint venture partner. ​ We also completed the acquisition of Tesco in December 2017.
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In addition, conflicts have led to and could lead to the imposition of sanctions that could limit our ability to operate in certain regions.
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After almost 10 years of low interest rate environments, inflationary pressures and efforts in the U.S. and around the world to combat inflation have resulted in increased interest rates by central banks globally.
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As of December 31, 2023, we had no borrowings under this facility.

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Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeSee Note 15—Commitments and Contingencies in Part II, Item 8.—Financial Statements and Supplementary Data for a description of such proceedings. ​ ITEM 4. MINE SAFETY DISCLOSURES ​ Not applicable. ​ PART II ​
Biggest changeSee Note 15—Commitments and Contingencies in Part II, Item 8.—Financial Statements and Supplementary Data for a description of such proceedings. ​ ITEM 4. MINE SAFETY DISCLOSURES ​ Not applicable. ​ 32 Table of Contents PART II ​

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeMARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT’S COMMON EQUIT Y, RELATED SHAREHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES ​ Market Information. ​ Our common shares, par value $0.05 per share, are publicly traded on the New York Stock Exchange (the “NYSE”) under the symbol “NBR”. ​ On February 6, 2023, the closing price of our common shares as reported on the NYSE was $170.43. ​ Holders. ​ On February 6, 2023, there were approximately 1,678 shareholders of record of our common shares. ​ Dividends. ​ The declaration and payment of future dividends will be at the discretion of the Board and will depend, among other things, on future earnings, general financial condition and liquidity, success in business activities, capital requirements and general business conditions in addition to legal requirements. ​ 30 Table of Contents See Part I, Item 1A.—Risk Factors— As a holding company, we depend on our operating subsidiaries and investments to meet our financial obligations. ​ Issuer Purchases of Equity Securities. ​ The following table provides information relating to our repurchase of common shares during the three months ended December 31, 2022: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Approximated ​ ​ ​ ​ ​ ​ ​ Total Number ​ Dollar Value of ​ ​ ​ ​ ​ ​ ​ of Shares ​ Shares that May ​ ​ Total ​ Average ​ Purchased as ​ Yet Be ​ ​ Number of ​ Price ​ Part of Publicly ​ Purchased Period ​ Shares ​ Paid per ​ Announced ​ Under the (In thousands, except per share amounts) Repurchased Share (1) Program Program (2) October 1 - October 31 — ​ $ 108.59 — 278,914 ​ November 1 - November 30 — ​ $ 174.03 — 278,914 ​ December 1 - December 31 — ​ $ 158.33 — 278,914 ​ (1) Shares were withheld from employees and directors to satisfy certain tax withholding obligations due in connection with grants of shares under our Amended and Restated 2016 Stock Plan.
Biggest changeOur warrants are publicly traded on OTC Markets (“OTC”) under the symbol “NBRWF”. ​ On February 6, 2024, the closing price of our common shares as reported on the NYSE was $81.28. ​ Holders. ​ On February 6, 2024, there were approximately 1,641 shareholders of record of our common shares. ​ Dividends. ​ The declaration and payment of future dividends will be at the discretion of the Board and will depend, among other things, on future earnings, general financial condition and liquidity, success in business activities, capital requirements and general business conditions in addition to legal requirements. ​ See Part I, Item 1A.—Risk Factors— As a holding company, we depend on our operating subsidiaries and investments to meet our financial obligations. ​ Issuer Purchases of Equity Securities. ​ The following table provides information relating to our repurchase of common shares during the three months ended December 31, 2023: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Approximated ​ ​ ​ ​ ​ ​ ​ Total Number ​ Dollar Value of ​ ​ ​ ​ ​ ​ ​ of Shares ​ Shares that May ​ ​ Total ​ Average ​ Purchased as ​ Yet Be ​ ​ Number of ​ Price ​ Part of Publicly ​ Purchased Period ​ Shares ​ Paid per ​ Announced ​ Under the (In thousands, except per share amounts) Repurchased Share (1) Program Program (2) October 1 - October 31 — ​ $ 122.11 — 278,914 ​ November 1 - November 30 — ​ $ 92.65 — 278,914 ​ December 1 - December 31 — ​ $ 86.82 — 278,914 ​ (1) Shares were withheld from employees and directors to satisfy certain tax withholding obligations due in connection with grants of shares under our Amended and Restated 2016 Stock Plan.
Pursuant to our non-resident status, there are no Bermuda restrictions on our ability to transfer funds (other than funds denominated in Bermuda dollars) in and out of Bermuda or to pay dividends to non-residents who are holders of our common shares in all other currencies, including currency of the United States. 32 Table of Contents ​ There is no reciprocal tax treaty between Bermuda and the United States.
Pursuant to our non-resident status, there are no Bermuda restrictions on our ability to transfer funds (other than funds denominated in Bermuda dollars) in and out of Bermuda or to pay dividends to non-residents who are holders of our common shares in all other currencies, including currency of the United States. 34 Table of Contents ​ There is no reciprocal tax treaty between Bermuda and the United States.
Through December 31, 2022, we had repurchased 0.3 million of our common shares for an aggregate purchase price of approximately $121.1 million under this program. As of December 31, 2022, we had approximately $278.9 million that remained authorized under the program that may be used to repurchase shares.
Through December 31, 2023, we had repurchased 0.3 million of our common shares for an aggregate purchase price of approximately $121.1 million under this program. As of December 31, 2023, we had approximately $278.9 million that remained authorized under the program that may be used to repurchase shares.
As of December 31, 2022, our subsidiaries held 1.1 million of our common shares. ​ 31 Table of Contents Performance Graph ​ The following graph illustrates comparisons of five-year cumulative total returns among Nabors, the S&P 500 Index, S&P SmallCap 600 Index, Russell 3000 Index and Dow Jones Oil Equipment and Services Index. We present all these indices.
As of December 31, 2023, our subsidiaries held 1.2 million of our common shares. 33 Table of Contents Performance Graph ​ The following graph illustrates comparisons of five-year cumulative total returns among Nabors, the S&P 500 Index, S&P SmallCap 600 Index, Russell 3000 Index and Dow Jones Oil Equipment and Services Index. We present all these indices.
Furthermore, no Bermuda tax is levied on the sale or transfer (including by gift and/or on the death of the shareholder) of Nabors common shares (other than by shareholders resident in Bermuda).
Under current Bermuda law, there is no Bermuda withholding tax on dividends or other distributions. Furthermore, no Bermuda tax is levied on the sale or transfer (including by gift and/or on the death of the shareholder) of Nabors common shares (other than by shareholders resident in Bermuda).
Total return assumes $100 invested on December 31, 2017 in shares of Nabors and in the aforementioned indices noted above assuming reinvestment of dividends at the end of each calendar year, presented in the table below. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As of December 31, ​ 2017 2018 2019 2020 2021 2022 Nabors Industries Ltd. 100 31 45 19 26 49 S&P 500 Index 100 96 126 149 192 157 S&P SmallCap 600 Index 100 92 112 125 159 133 Russell 3000 Index 100 95 124 150 189 152 Dow Jones Oil Equipment and Services Index ​ 100 58 62 38 47 78 ​ The foregoing graph is based on historical data and is not necessarily indicative of future performance.
Total return assumes $100 invested on December 31, 2018 in shares of Nabors and in the aforementioned indices noted above assuming reinvestment of dividends at the end of each calendar year, presented in the table below. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As of December 31, ​ 2018 2019 2020 2021 2022 2023 Nabors Industries Ltd. 100 146 61 84 161 85 S&P 500 Index 100 131 156 200 164 207 S&P SmallCap 600 Index 100 123 137 173 145 169 Russell 3000 Index 100 131 158 199 161 203 Dow Jones Oil Equipment and Services Index ​ 100 108 66 82 136 140 ​ The foregoing graph is based on historical data and is not necessarily indicative of future performance.
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Under current Bermuda law, there is no Bermuda withholding tax on dividends or other distributions, nor any Bermuda tax computed on profit or income payable by Nabors or its operations.
Added
ITEM 5. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT’S COMMON EQUIT Y, RELATED SHAREHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES ​ Market Information. ​ Our common shares, par value $0.05 per share, are publicly traded on the New York Stock Exchange (the “NYSE”) under the symbol “NBR”.
Removed
Nabors has received an undertaking from the Minister of Finance in Bermuda that, in the event of any taxes being imposed, Nabors will be exempt from taxation in Bermuda until March 31, 2035. ​
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On December 18, 2023, Bermuda enacted a 15% corporate income tax regime (the “Bermuda CIT”) that applies to Bermuda businesses that are part of multinational enterprise groups with annual revenue of €750 million or more and is effective for tax years beginning on or after January 1, 2025. ​ ITEM 6. [Reserved] ​ Removed and reserved. ​

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeDrilling ​ ​ ​ ​ ​ ​ Operating revenues ​ ​ ​ $ 1,100,614 ​ $ 669,656 ​ $ 430,958 64 % Adjusted operating income (loss) (1) ​ ​ ​ $ 108,506 ​ $ (76,492) ​ $ 184,998 242 % Average rigs working (2) ​ ​ ​ 97.2 ​ 70.9 ​ 26.3 37 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Canada Drilling ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Operating revenues ​ ​ ​ $ — ​ $ 39,336 ​ $ (39,336) (100) % Adjusted operating income (loss) (1) ​ ​ ​ $ 13 ​ $ 2,893 ​ $ (2,880) (100) % Average rigs working (2) ​ ​ ​ — ​ 6.5 ​ (6.5) (100) % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ International Drilling ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Operating revenues ​ ​ ​ $ 1,199,282 ​ $ 1,043,197 ​ $ 156,085 15 % Adjusted operating income (loss) (1) ​ ​ ​ $ (879) ​ $ (40,117) ​ $ 39,238 98 % Average rigs working (2) ​ ​ ​ 74.2 ​ 67.9 ​ 6.3 9 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Drilling Solutions ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Operating revenues ​ ​ ​ $ 243,349 ​ $ 172,473 ​ $ 70,876 41 % Adjusted operating income (loss) (1) ​ ​ ​ $ 77,868 ​ $ 32,771 ​ $ 45,097 138 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Rig Technologies ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Operating revenues ​ ​ ​ $ 195,129 ​ $ 149,273 ​ $ 45,856 31 % Adjusted operating income (loss) (1) ​ ​ ​ $ 8,906 ​ $ 158 ​ $ 8,748 5,537 % (1) Adjusted operating income (loss) is our measure of segment profit and loss.
Biggest changeDrilling ​ ​ ​ ​ ​ ​ ​ Operating revenues ​ ​ ​ $ 1,207,629 ​ $ 1,100,614 ​ $ 107,015 10 % ​ Adjusted operating income (loss) (1) ​ ​ ​ $ 262,353 ​ $ 108,506 ​ $ 153,847 142 % ​ Average rigs working (2) ​ ​ ​ 86.3 ​ 97.2 ​ (10.9) (11) % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ International Drilling ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Operating revenues ​ ​ ​ $ 1,345,249 ​ $ 1,199,282 ​ $ 145,967 12 % ​ Adjusted operating income (loss) (1) ​ ​ ​ $ 40,868 ​ $ (879) ​ $ 41,747 n/m (3) ​ ​ Average rigs working (2) ​ ​ ​ 77.6 ​ 74.2 ​ 3.4 5 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Drilling Solutions ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Operating revenues ​ ​ ​ $ 301,757 ​ $ 243,349 ​ $ 58,408 24 % ​ Adjusted operating income (loss) (1) ​ ​ ​ $ 110,957 ​ $ 77,868 ​ $ 33,089 42 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Rig Technologies ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Operating revenues ​ ​ ​ $ 242,768 ​ $ 195,129 ​ $ 47,639 24 % ​ Adjusted operating income (loss) (1) ​ ​ ​ $ 19,529 ​ $ 8,906 ​ $ 10,623 119 % ​ (1) Adjusted operating income (loss) is our measure of segment profit and loss.
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 2022, 2021 and 2020, no significant changes were made to the methodology used to estimate insurance reserves.
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 2023, 2022 and 2021, no significant changes were made to the methodology used to estimate insurance reserves.
Drilling, Canada 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.
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 the event that Nabors is required to withhold or deduct on account of any Bermudian taxes due from any payment made under or with respect to its guarantees, subject to certain exceptions, Nabors will pay additional amounts so that the net amount received by each holder of Registered Notes will equal the amount that such holder would have received if the Bermudian taxes had not been required to be withheld or deducted. ​ The following summarized financial information is included so that separate financial statements of Nabors Delaware are not required to be filed with the SEC.
In the event that Nabors is required to withhold or deduct on account of any Bermudian taxes due from any payment made under or with respect to its guarantees, subject to certain exceptions, Nabors will pay additional amounts so that the net amount received by each holder of Registered Notes will equal the amount that such holder would have received if the Bermudian taxes had not been required to be withheld or deducted. ​ 42 Table of Contents The following summarized financial information is included so that separate financial statements of Nabors Delaware are not required to be filed with the SEC.
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 $216.9 million attributable to income tax have been assessed against us.
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 $144.9 million attributable to income tax have been assessed against us.
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.
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 44 Table of Contents 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.
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 2022 and 2021 cash flows below. ​ Operating Activities.
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 2023 and 2022 cash flows below. ​ Operating Activities.
Accordingly, for the years ended December 31, 2022, 2021 and 2020, 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.
Accordingly, for the years ended December 31, 2023, 2022 and 2021, 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.
The SPE in turn, sells, transfers, conveys and assigns to third-party financial institutions (“Purchasers”), all the rights, title and interest in and to its pool of eligible receivables. ​ On July 13, 2021, we entered into the First Amendment to the A/R Purchase Agreement which, among other things, reduced the commitments of the third-party financial institutions (the “Purchasers”) from $250 million to $150 million. ​ 38 Table of Contents On June 27, 2022, we entered into the Third Amendment to the A/R Purchase Agreement which extended the term of the Purchase Agreement to August 13, 2024 and increased the commitments of the Purchasers from $150 million to $250 million.
The SPE in turn, sells, transfers, conveys and assigns to third-party financial institutions (“Purchasers”), all the rights, title and interest in and to its pool of eligible receivables. ​ On July 13, 2021, we entered into the First Amendment to the A/R Purchase Agreement which, among other things, reduced the commitments of the third-party financial institutions (the “Purchasers”) from $250 million to $150 million. ​ On June 27, 2022, we entered into the Third Amendment to the A/R Purchase Agreement which extended the term of the Purchase Agreement to August 13, 2024 and increased the commitments of the Purchasers from $150 million to $250 million.
See Note 18 – Segment Information to the consolidated financial statements included in Item 8 of the report. ​ (1) 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.
See Note 18 – 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.
For 2022, 2021 and 2020, no significant changes have been made to the methodology utilized to determine future cash flows. ​ For an asset classified as held for sale, we consider the asset impaired when its carrying amount exceeds fair value less its cost to sell.
For 2023, 2022 and 2021, no significant changes have been made to the methodology utilized to determine future cash flows. ​ For an asset classified as held for sale, we consider the asset impaired when its carrying amount exceeds fair value less its cost to sell.
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. ​ 39 Table of Contents 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.
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.
A significantly prolonged period of lower oil and natural gas prices, other than those assumed in developing our forecasts, or changes in laws and regulations could adversely affect the demand for and prices of our services, which could in turn result in future goodwill and other intangible asset impairment charges for 43 Table of Contents these reporting units due to the potential impact on our estimate of our future operating results.
A significantly prolonged period of lower oil and natural gas prices, other than those assumed in developing our forecasts, or changes in laws and regulations could adversely affect the demand for and prices of our services, which could in turn result in future goodwill and other intangible asset impairment charges for these reporting units due to the potential impact on our estimate of our future operating results.
Additionally, the Company is subject to certain covenants (which are subject to certain exceptions) and include, among others, (a) a covenant restricting our ability to incur liens (subject to the additional liens basket of up to $150.0 million), (b) a covenant restricting our 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 37 Table of Contents (subject to the grower basket of up to $100.0 million).
Additionally, the Company is subject to certain covenants (which are subject to certain exceptions) and include, among others, (a) a covenant restricting our ability to incur liens (subject to the additional liens basket of up to $150.0 million), (b) a covenant restricting our ability to pay dividends or make other distributions with respect to its capital stock and to repurchase certain indebtedness, and (c) a covenant restricting the ability of the Company’s subsidiaries to incur debt (subject to the grower basket of up to $100.0 million).
We expect to remain in compliance with all covenants under the 2022 Credit Agreement during the twelve month period following the date of this report based on our current operational and financial projections. However, we can make no assurance of continued compliance if our current projections or material underlying assumptions prove to be incorrect.
We expect to remain in compliance with all covenants under the 2022 Credit Agreement during the twelve-month period following the date of this report based on 39 Table of Contents 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.
A reconciliation of adjusted operating income to net income (loss) from continuing operations before income taxes can be found in Note 18—Segment Information in Part II, Item 8.—Financial Statements and Supplementary Data. ​ 35 Table of Contents The following tables set forth certain information with respect to our reportable segments and rig activity: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ Increase/(Decrease) ​ ​ ​ ​ 2022 ​ 2021 ​ 2022 to 2021 ​ ​ ​ ​ (In thousands, except percentages and rig activity) U.S.
A reconciliation of adjusted operating income to net income (loss) from continuing operations before income taxes can be found in Note 18—Segment Information in Part II, Item 8.—Financial Statements and Supplementary Data. ​ 37 Table of Contents The following tables set forth certain information with respect to our reportable segments and rig activity: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ Increase/(Decrease) ​ ​ ​ ​ ​ 2023 ​ 2022 ​ 2023 to 2022 ​ ​ ​ ​ ​ (In thousands, except percentages and rig activity) U.S.
Unforeseen changes in operations or technology could substantially alter management’s assumptions regarding our ability to realize the return on our investment in operating assets and therefore affect the useful lives and salvage values of our assets. ​ 42 Table of Contents Impairment of Long-Lived Assets. As discussed above, the drilling and drilling services industries are very capital intensive.
Unforeseen changes in operations or technology could substantially alter management’s assumptions regarding our 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.
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.
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. ​ 45 Table of Contents Applicable income and withholding taxes have not been provided on undistributed earnings of our subsidiaries.
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.
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 43 Table of Contents estimates. The following is a discussion of our critical accounting estimates.
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) from continuing operations before income taxes, interest expense, earnings (losses) from unconsolidated affiliates, investment income (loss), (gain)/loss on debt buybacks and exchanges, impairments and other charges and other, net.
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) from continuing operations before income taxes, interest expense, earnings (losses) from unconsolidated affiliates, investment income (loss), impairments and other charges and other, net.
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 18 letter-of-credit facilities with various banks outstanding as of December 31, 2022.
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 8 letter-of-credit facilities with various banks outstanding as of December 31, 2023.
These accruals are based on certain assumptions developed 44 Table of Contents 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 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.
The level of exploration, development and production activities is to a large extent tied to the prices of oil and natural gas, which fluctuate significantly and tend to be highly sensitive to supply and demand cycles.
The level of exploration, development and production activities is to a large extent tied to the prices of oil and natural gas, which can fluctuate significantly, are highly volatile and tend to be highly sensitive to supply and demand cycles.
The drilling and drilling services industries are very capital intensive. Property, plant and equipment represented 64% of our total assets as of December 31, 2022, and depreciation and amortization constituted 23% of our total costs and other deductions in 2022. ​ Depreciation for our primary operating assets, drilling rigs, is calculated based on the units-of-production method.
The drilling and drilling services industries are very capital intensive. Property, plant and equipment represented 55% of our total assets as of December 31, 2023, and depreciation and amortization constituted 22% of our total costs and other deductions in 2023. ​ Depreciation for our primary operating assets, drilling rigs, is calculated based on the units-of-production method.
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, 2022 totaled approximately $247.3 million, primarily for rig-related enhancements, sustaining capital expenditures, operating expenses, and purchases of inventory. $247.2 million of the outstanding commitments are expected to be paid in 2023.
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, 2023 totaled approximately $351.4 million, primarily for rig-related enhancements, sustaining capital expenditures, operating expenses, and purchases of inventory. $336.5 million of the outstanding commitments are expected to be paid in 2024.
Nabors fully and unconditionally guarantees the due and punctual payment of the principal of, premium, if any, and interest on Nabors Delaware’s registered notes, which are its (a) 5.10% Senior Notes due 2023 (the “5.10% 2023 Notes”) and (b) 5.75% Senior Notes due 2025 (the “2025 Notes” and, together with the 5.10% 2023 Notes, the “Registered Notes”), and any other obligations of Nabors Delaware under the Registered Notes when and as they become due and payable, whether at maturity, upon redemption, by acceleration or otherwise, if Nabors Delaware is unable to satisfy these obligations.
Nabors fully and unconditionally guarantees the due and punctual payment of the principal of, premium, if any, and interest on Nabors Delaware’s registered notes, which, as of December 31, 2023, are its 5.75% Senior Notes due 2025 (the “Registered Notes”), and any other obligations of Nabors Delaware under the Registered Notes when and as they become due and payable, whether at maturity, upon redemption, by acceleration or otherwise, if Nabors Delaware is unable to satisfy these obligations.
The maximum purchase commitment of the Purchasers under the A/R Agreements is approximately $250.0 million and the amount of receivables purchased by the third-party Purchasers as of December 31, 2022 was $208.0 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.
The maximum purchase commitment of the Purchasers under the A/R Agreements is approximately $250.0 million and the amount of receivables purchased by the third-party Purchasers as of December 31, 2023 was $145.0 million. 40 Table of Contents ​ The originators, Nabors Delaware, the SPE, and the Company provide representations, warranties, covenants and indemnities under the A/R Agreements and the Indemnification Guarantee.
See further details at Note 4—Accounts Receivable Purchase and Sales Agreements. ​ Other Indebtedness ​ See Note 10, 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 and the facilities under our 2022 Credit Agreement are expected to adequately finance our purchase commitments, capital expenditures, acquisitions, scheduled debt service requirements, and all other expected cash requirements for the foreseeable future including the repayment of the $52.1 million of outstanding 5.10% senior notes due September 2023.
See further details at Note 4—Accounts Receivable Purchase and Sales Agreements. ​ Other Indebtedness ​ See Note 10, 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 and the facilities under our 2022 Credit Agreement are expected to adequately finance our purchase commitments, capital expenditures, acquisitions, scheduled debt service requirements, and all other expected cash requirements for the foreseeable future.
For purposes of earnings sensitivity analysis, if the December 31, 2022 reserves were adjusted by 10%, total costs and other deductions would change by $10.8 million, or 0.37%. ​
For purposes of earnings sensitivity analysis, if the December 31, 2023 reserves were adjusted by 10%, total costs and other deductions would change by $8.7 million, or 0.30%. ​
This is primarily reflective of an increase in research and development activities, along with increased engineering support costs for the higher general operating activity levels, as market conditions have improved. ​ Depreciation and amortization expense in 2022 was $665.1 million, representing a decrease of $28.3 million, or 4%, from 2021.
This is primarily reflective of an increase in research and development activities, along with increased engineering support costs for the higher general operating activity levels, as market conditions have improved. ​ Depreciation and amortization expense in 2023 was $645.3 million, representing a decrease of $19.8 million, or 3%, from 2022.
The level of our outstanding purchase commitments and our expected level of capital expenditures for 2023 represent a number of capital programs that are currently underway or planned. ​ As of December 31, 2022, we had approximately $2.5 billion of net book value of long-term debt outstanding with $2.6 billion in aggregate principal.
The level of our outstanding purchase commitments and our expected level of capital expenditures for 2023 represent a number of capital programs that are currently underway or planned. ​ As of December 31, 2023, we had approximately $3.1 billion of net book value of long-term debt outstanding with $3.2 billion in aggregate principal with $629.6 million due in the next twelve months.
Availability under these facilities was as follows: ​ ​ ​ ​ ​ ​ ​ December 31, ​ ​ 2022 ​ ​ (In thousands) Credit available ​ $ 620,552 ​ Less: Letters of credit outstanding, inclusive of financial and performance guarantees ​ 105,081 ​ Remaining availability ​ $ 515,471 ​ ​ 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.
Availability under these facilities was as follows: ​ ​ ​ ​ ​ ​ ​ December 31, ​ ​ 2023 ​ ​ (In thousands) Credit available ​ $ 313,667 ​ Less: Letters of credit outstanding, inclusive of financial and performance guarantees ​ 114,937 ​ Remaining availability ​ $ 198,730 ​ ​ 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.
As of December 31, 2021, we had cash and short-term investments of $991.5 million and working capital of $1.0 billion. ​ At December 31, 2022, we had no borrowings outstanding under the 2022 Credit Agreement, which has a total borrowing capacity of $350.0 million. ​ The 2022 Credit Agreement requires us to maintain an interest coverage ratio (EBITDA/interest expense), which increases on a quarterly basis, and a minimum guarantor value, requiring the guarantors (other than the Company) and their subsidiaries to own at least 90% of the consolidated property, plant and equipment of the Company.
As of December 31, 2022, we had cash and short-term investments of $452.3 million and working capital of $404.2 million. ​ At December 31, 2023, we had no borrowings outstanding under the 2022 Credit Agreement, which has a total borrowing capacity of $350.0 million. ​ The 2022 Credit Agreement requires us to maintain an interest coverage ratio (EBITDA/interest expense) of 2.50:1:00, which increases to 2.75:1:00 by June 30, 2024 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.
For a more detailed description of operating results see “ —Segment Results of Operations,” below. ​ Net loss from continuing operations attributable to Nabors common shareholders totaled $350.3 million for 2022 ($40.52 per diluted share) compared to a net loss from continuing operations attributable to Nabors common shareholders of $572.9 million ($76.58 per diluted share) in 2021, or a $222.7 million decrease in the net loss.
For a more detailed description of operating results see “ —Segment Results of Operations,” below. ​ Net loss from continuing operations attributable to Nabors common shareholders totaled $11.8 million for 2023 ($5.49 loss per diluted share) compared to a net loss from continuing operations attributable to Nabors common shareholders of $350.3 million ($40.52 loss per diluted share) in 2022, or a $338.5 million decrease in the net loss.
Management believes the likelihood that we would be required to perform or otherwise incur any material losses associated with any of these guarantees is remote. ​ The following table summarizes the total maximum amount of financial guarantees issued by Nabors: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Maximum Amount ​ 2023 2024 2025 Thereafter Total ​ ​ (In thousands) Financial standby letters of credit and other financial surety instruments ​ $ 39,073 8,397 5,127 11,739 ​ $ 64,336 ​ ​ 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.
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. 41 Table of Contents ​ The following table summarizes the total maximum amount of financial guarantees issued by Nabors: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Maximum Amount ​ 2024 2025 2026 Thereafter Total ​ ​ (In thousands) Financial standby letters of credit and other financial surety instruments ​ $ 34,011 61 9,057 4,109 ​ $ 47,238 ​ ​ 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.
The increase in tax expense was primarily attributable to changes in the operating income and the geographic mix of our pre-tax earnings (losses) in the jurisdictions in which we operate, partially offset by tax expense recorded in 2021 attributable to a liability for uncertain tax positions of $26.3 million. ​ Liquidity and Capital Resources ​ Financial Condition and Sources of Liquidity ​ Our primary sources of liquidity are cash and investments, availability under the 2022 Credit Agreement and cash generated from operations.
The increase in tax expense was primarily attributable to changes in the amount and the geographic mix of our pre-tax earnings (losses) in the jurisdictions in which we operate. ​ Liquidity and Capital Resources ​ Financial Condition and Sources of Liquidity ​ Our primary sources of liquidity are cash and investments, availability under the 2022 Credit Agreement and cash generated from operations.
The increase is also partially attributable to an increase in day rates, as pricing for our services has improved. ​ Drilling Solutions ​ Operating revenues increased by $70.9 million or 41% in 2022 compared to 2021 as market conditions and demand for our services have rebounded and drilling activity has increased since the prior year. ​ Rig Technologies ​ Operating revenues increased by $45.9 million or 31% in 2022 compared to 2021 as market conditions and demand for our services have improved since the prior year. 36 Table of Contents ​ Other Financial Information ​ Interest expense ​ Interest expense for 2022 was $177.9 million, representing an increase of $6.4 million, or 4%, compared to 2021.
The increase is attributable to an increase in day rates, as pricing for our services has improved and a 5% increase in the average rigs working, reflecting increased drilling activity as market conditions and demand for our drilling services have increased since the prior year. ​ Drilling Solutions ​ Operating revenues increased by $58.4 million or 24% in 2023 compared to 2022 as market conditions and demand for our services have rebounded. ​ Rig Technologies ​ Operating revenues increased by $47.6 million or 24% in 2023 compared to 2022 as market conditions and demand for our services have improved since the prior year. ​ 38 Table of Contents Other Financial Information ​ Interest expense ​ Interest expense for 2023 was $185.3 million, representing an increase of $7.4 million, or 4%, compared to 2022.
This is reflective of increases in workforce costs and general operating costs as market conditions have improved and operating levels have increased. ​ Research and engineering expenses in 2022 totaled $49.9 million, representing an increase of $14.8 million, or 42%, from 2021.
This is reflective of increases in workforce costs, general operating costs and inflationary pressures as market conditions have improved and operating levels have increased. ​ Research and engineering expenses in 2023 totaled $56.3 million, representing an increase of $6.4 million, or 13%, from 2022.
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 increased by $431.0 million or 64% in 2022 compared to 2021.
On an annual period, one rig operating 182.5 days represents approximately 0.5 average rigs working for the year. ​ (3) The percentage is so large that it is not meaningful. ​ U.S. Drilling ​ Operating revenues increased by $107.0 million or 10% in 2023 compared to 2022.
Significant intercompany balances and activity for the Obligated Group with other related parties, including subsidiary non-guarantors (referred to as “affiliates”), are presented separately in the accompanying supplemental summarized financial information. ​ Summarized combined Balance Sheet and Income Statement information for the Obligated Group is as follows (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, Summarized Combined Balance Sheet Information 2022 ​ 2021 ​ ​ ​ ​ ​ ​ ​ Assets ​ ​ ​ ​ ​ ​ Current Assets ​ $ 2,578 ​ $ 462,872 Non-Current Assets ​ 458,232 ​ 431,651 Noncurrent assets - affiliates ​ 5,733,274 ​ 6,149,188 Total Assets ​ 6,194,084 ​ 7,043,711 ​ ​ ​ ​ ​ ​ Liabilities and Stockholders' Equity ​ ​ ​ ​ ​ Current liabilities ​ 79,941 ​ 75,112 Noncurrent liabilities ​ 2,698,835 ​ 3,367,502 Noncurrent liabilities - affiliates ​ — ​ 4,471 Total Liabilities ​ ​ 2,778,776 ​ ​ 3,447,085 Stockholders' Equity ​ ​ 3,415,308 ​ ​ 3,596,626 Total Liabilities and Stockholders' Equity ​ ​ 6,194,084 ​ ​ 7,043,711 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, Summarized Combined Income Statement Information 2022 ​ 2021 Total revenues, earnings (loss) from consolidated affiliates and other income ​ $ (148,523) ​ $ (277,147) Income from continuing operations, net of tax ​ (420,492) ​ ​ (441,310) Dividends on preferred stock ​ — ​ ​ (3,653) Net income (loss) attributable to Nabors common shareholders ​ (420,492) ​ ​ (444,963) ​ 41 Table of Contents 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.
Significant intercompany balances and activity for the Obligated Group with other related parties, including subsidiary non-guarantors (referred to as “affiliates”), are presented separately in the accompanying supplemental summarized financial information. ​ Summarized combined Balance Sheet and Income Statement information for the Obligated Group is as follows (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, Summarized Combined Balance Sheet Information 2023 ​ 2022 ​ ​ (In thousands) Assets ​ ​ ​ ​ ​ ​ Current Assets ​ $ 17,142 ​ $ 2,578 Non-Current Assets ​ 474,387 ​ 458,232 Noncurrent assets - affiliates ​ 7,012,016 ​ 5,733,274 Total Assets ​ $ 7,503,545 ​ $ 6,194,084 ​ ​ ​ ​ ​ ​ Liabilities and Stockholders’ Equity ​ ​ ​ ​ ​ Current liabilities ​ $ 692,805 ​ $ 79,941 Noncurrent liabilities ​ 2,596,001 ​ 2,698,835 Total Liabilities ​ ​ 3,288,806 ​ ​ 2,778,776 Stockholders’ Equity ​ ​ 4,214,739 ​ ​ 3,415,308 Total Liabilities and Stockholders’ Equity ​ $ 7,503,545 ​ $ 6,194,084 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, Summarized Combined Income Statement Information 2023 ​ 2022 ​ ​ (In thousands) Total revenues, earnings (loss) from consolidated affiliates and other income ​ $ 330,247 ​ $ (148,523) Income (loss), net of tax ​ 226,022 ​ ​ (420,492) Net income (loss) attributable to Nabors ​ 226,022 ​ ​ (420,492) ​ 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.
The majority of the decrease in net loss is attributable to improved market conditions, which has resulted in a $255.8 million improvement in adjusted operating income from the prior year.
The decrease in net loss is attributable to improved market conditions, which has resulted in an increase of approximately $239.3 million in adjusted operating income across all of our segments from the prior year.
We have expected aggregate future interest payments of $616.0 million related to the outstanding debt with $156.0 million due in the next twelve months. See Note 10—Debt in Part II, Item 8.—Financial Statements and Supplementary Data for additional details. Our obligations for operating leases total $43.2 million with $8.9 million of the obligations coming due in the upcoming year.
See Note 10—Debt in Part II, Item 8.—Financial Statements and Supplementary Data for additional details. Our obligations for operating leases total $38.1 million with $7.6 million of the obligations coming due in the upcoming year.
All of our operating segments, with the exception of Canada Drilling due to its sale in 2021, experienced an increase in operating revenues over this period.
All of our operating segments experienced an increase in operating revenues over this period.
Net cash used for financing activities totaled $661.5 million during 2022. During 2022, we reduced $460.0 million in amounts borrowed under our revolving credit facilities and repaid $182.6 million on our senior notes. Additionally, we had distributions of $10.3 million from our SANAD joint venture to our partner. ​ Net cash provided by financing activities totaled $488.4 million during 2021.
During 2022, we reduced $460.0 million in amounts borrowed under our revolving credit facilities and repaid $182.6 million on our senior notes. Additionally, we had distributions of $10.3 million from our SANAD joint venture to our partner. ​ Summarized Combined Financial Information for Guarantee of Securities of Subsidiaries ​ Nabors Delaware is an indirect, wholly owned subsidiary of Nabors.
Net cash used for investing activities totaled $368.7 million during 2022 compared to net cash used of $117.2 million in 2021. 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.
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 2023 and 2022, we used cash for capital expenditures totaling $540.9 million and $373.4 million, respectively. We received $14.1 million in proceeds from sales of assets during 2023 compared to $26.7 million in 2022.
The increase was primarily due to an additional $101.0 million of loss recognized in 2022 related to common stock warrant valuation (see Note 12 — Shareholders’ Equity in Part II, Item 8.—Financial Statements and Supplementary Data for discussion of the common stock warrants).
(see Note 12 — Shareholders’ Equity in Part II, Item 8.—Financial Statements and Supplementary Data for discussion of the common stock warrants). ​ Income taxes ​ Our worldwide income tax expense for 2023 was $79.2 million compared to $61.5 million for 2022.
The expiration of the A/R Purchase Agreement can be accelerated to June 17, 2023 if any of the 5.1% Senior Notes remain outstanding as of such date; or, to October 17, 2023 if 50% or more of the outstanding aggregate principal amount of the 0.75% Senior Exchangeable Notes remain outstanding and not refinanced as of such date. ​ The amount available for purchase under the A/R Agreements fluctuates over time is based on the total amount of eligible receivables generated during the normal course of business after excluding excess concentrations and certain other ineligible receivables.
Subject to Purchaser approval, the A/R Purchase Agreement allows for purchase commitments to be increased to $300 million. ​ The amount available for purchase under the A/R Agreements fluctuates over time is based on the total amount of eligible receivables generated during the normal course of business after excluding excess concentrations and certain other ineligible receivables.
Net cash provided by operating activities totaled $501.1 million during 2022, compared to net cash provided of $428.8 million during 2021. Operating cash flows are our primary source of capital and liquidity. 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.
Net cash provided by operating activities totaled $637.9 million during 2023, compared to net cash provided of $501.1 million during 2022. Operating cash flows are our primary source of capital and liquidity. Changes from operating results (before working capital changes) totaled $648.8 million during 2023, an increase of $195.9 million when compared to $452.8 million in 2022.
We had $66.2 million of letters of credit outstanding under the 2022 Credit Agreement. ​ As of the date of this report, we were in compliance with all covenants under the 2022 Credit Agreement.
We had $47.8 million of letters of credit outstanding under the 2022 Credit Agreement. ​ As of the date of this report, we were in compliance with all covenants under the 2022 Credit Agreement, including those regarding the required interest coverage ratio and minimum guarantor value, which were 5.17:1.00 and 99.77%, respectively, as of December 31, 2023.
If the carrying amount exceeds the fair value, an impairment charge will be recognized in an amount equal to the excess; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. ​ Due to industry conditions and the corresponding impact on future expectations of demand for our products and services, including the effect on our stock price, we determined a triggering event had occurred and performed a quantitative impairment assessment of our goodwill as of March 31, 2020.
If the carrying amount exceeds the fair value, an impairment charge will be recognized in an amount equal to the excess; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. ​ Our estimated fair values of our reporting units incorporate judgment and the use of estimates by management.
The decrease is attributable to the combination of (a) a reduction in depreciation as a result of the many assets that have recently reached the end of their useful lives, (b) limited capital expenditures over recent years, and (c) the sale of Canada Drilling assets in July 2021. ​ Segment Results of Operations ​ Our business consists of five reportable segments: U.S.
The decrease is a result of the limited capital expenditures over recent years coupled with a higher amount of older assets reaching the end of their useful lives. ​ Segment Results of Operations ​ During the years ended December 31, 2023 and 2022, our business consisted of four reportable segments: U.S.
Additionally, some oil and gas companies may limit their capital spending to a percentage of their operating cash flows. ​ During 2020, global oil markets experienced unprecedented volatility primarily as a result of the advent of the COVID-19 pandemic.
Additionally, some oil and gas companies may intentionally limit their capital spending to a percentage of their operating cash flows. ​ Since late 2022 and through 2023, global energy commodity markets have experienced high levels of volatility. In the U.S., operators generally reacted to this market by reducing their drilling activity.
The increase is also attributable to an increase in day rates, as pricing for our services has improved during 2022. ​ Canada Drilling ​ We had no operating revenues in Canada Drilling in 2022 due to the sale of the Canada Drilling assets in July 2021 .
The increase is primarily attributable to an increase in day rates, as pricing for our services has improved. Adjusted operating income increased by $153.8 million. The component of the revenue increase driven by the day rates contributed directly to the increase in adjusted operating income.
However, we can make no assurances that our current operational and financial projections will prove to be correct, especially in light of the effects the Russia/Ukraine Conflict, global inflationary pressures, including increasing interest rates, and the COVID-19 pandemic has had on oil and natural gas prices and, in turn, our business .
However, we can make no assurances that our current operational and financial projections will prove to be correct .
Also, we recognized $6.2 million in severance and transaction related costs in 2021 as the company was responding to the challenging industry environment. ​ Other, net ​ Other, net for the year ended December 31, 2022 was a loss of $131.7 million, compared to $53.4 million of loss during 2021.
The increase was primarily due to an increase in our effective interest rate levels on our outstanding debt throughout 2023 as compared 2022. ​ Other, net ​ Other, net for the year ended December 31, 2023 was a gain of $0.7 million, compared to $127.1 million of loss during 2022.
Removed
As a result, we experienced a significant reduction in demand for our services throughout 2020 and into 2021, both in the US and in many international markets. The US drilling rig market began to stabilize during the second half of 2020 and has improved at a measured rate since 2020 through 2022.
Added
Recent production actions announced by certain large international oil producers have been supportive of both oil prices and oil-focused activity broadly, especially in international markets. Natural gas prices, particularly in the United States, declined significantly through 2023. ​ Coming into 2023 economic sentiment was overshadowed by a pervasive concern that a global recession would take hold. The U.S.
Removed
We expect continued modest increases in activity throughout 2023 for the US market. In our International markets since 2020, we have seen a substantial resumption of overall activity to near pre-COVID-19 levels.
Added
Federal Reserve’s tightening of interest rates reduced capital availability in the U.S energy market. Rig counts in the U.S. Lower 48 continued to decline throughout the year. Despite the reduction in rig count, rig pricing discipline remained intact. ​ Entering 2024 U.S. oil and gas production has proved resilient in the face of reduced drilling activity.
Removed
In certain key markets, activity has been restored to pre-COVID levels. ​ More recently, several global commodity markets, including oil and gas, have been impacted by the effects of the war in Ukraine.
Added
Internationally, we see the expansion of production capacity as well as the widespread development of unconventional resources driving an expected increase in oilfield activity across those markets. ​ 35 Table of Contents Recent Developments ​ 1.75% Senior Exchangeable Notes Due June 2029 ​ In February 2023, Nabors Delaware issued $250.0 million in aggregate principal amount of 1.75% senior exchangeable notes, which are fully and unconditionally guaranteed by Nabors.
Removed
These consequences include severe economic sanctions against the Russian government as well as certain Russian businesses and individuals, in addition to a reorientation of the global sources of oil and gas supply and a significant increase in the related commodity prices. Government actions, as well as those by large producers, also continue to impact energy markets.
Added
The notes bear interest at a rate of 1.75% per year payable semiannually on June 15 and December 15 of each year, beginning on December 15, 2023.
Removed
The ultimate outcome of these events and the impact on our business remains uncertain. ​ Recent Developments ​ 2022 Credit Agreement ​ On January 21, 2022, we entered into a revolving credit agreement between Nabors Delaware, the guarantors from time to time party thereto, the issuing banks (the “Issuing Banks”) and other lenders party thereto (the “Lenders”) and Citibank, N.A., as administrative agent (the “2022 Credit Agreement”).
Added
The notes have a maturity date of June 15, 2029. ​ The exchangeable notes are currently exchangeable, under certain conditions, at an exchange rate of 4.7056 common shares of Nabors per $1,000 principal amount of exchangeable notes (equivalent to an exchange price of approximately $212.51 per common share).
Removed
The 2022 Credit Agreement replaced the 2018 Revolving Credit Facility.
Added
Upon any exchange, Nabors will settle its exchange obligation in cash, common shares of Nabors, or a combination of cash and common shares, at our election. ​ NETC Merger Agreement ​ In February 2023, Nabors Energy Transition Corp.
Removed
Under the 2022 Credit Agreement, the Lenders have committed to provide up to an aggregate principal amount at any time outstanding not in excess of $350.0 million (with an accordion feature for an additional $100.0 million subject to lender consent) to Nabors Delaware under a secured revolving credit facility, including sub-facilities provided by certain of the Lenders for letters of credit in an aggregate principal amount at any time outstanding not in excess of $100.0 million.
Added
(“NETC”) entered into a definitive agreement for a business combination with Vast Renewables Limited (“Vast”), a development-stage company specializing in the design and manufacturing of concentrated solar thermal power (CSP) systems. The business combination was completed in December 18, 2023 with NETC merging with and into a wholly owned subsidiary of Vast.
Removed
The facility matures on the earlier of (a) January 21, 2026 and (b) (i) to the extent any principal amount of Nabors Delaware’s existing 5.5% senior notes due 2023 and 5.75% senior notes due 2025 remains outstanding on the date that is 90 days prior to the applicable maturity date for such indebtedness, then such 90 th day or (ii) to the extent 50% or more of the outstanding (as of the closing date) aggregate principal amount of the 0.75% senior 34 Table of Contents exchangeable notes due 2024 remains outstanding and not refinanced or defeased on the date that is 90 days prior to the maturity date for such indebtedness, then such 90th day. ​ Financial Results ​ Comparison of the years ended December 31, 2022 and 2021 ​ Operating revenues in 2022 totaled $2.7 billion, representing an increase of $636.2 million, or 32%, from 2021.
Added
Following the merger, Nabors now has a significant non-controlling equity investment in Vast. ​ Nabors Energy Transition Corporation II ​ In July 2023, Nabors Energy Transition Corp.
Removed
Results from 2022 included approximately $95.9 million in mark-to-market losses on warrants, which was offset by the absence of any impairments or purchase of technology, both of which negatively impacted 2021 by approximately $81.5 million. ​ General and administrative expenses in 2022 totaled $228.4 million, representing an increase of $14.9 million, or 7% from 2021.
Added
II (“NETC II”), a special purpose acquisition company, commonly referred to as a “SPAC”, co-sponsored by Nabors completed its initial public offering of 30,500,000 units at $10.00 per unit, generating gross proceeds of approximately $305.0 million.
Removed
This increase was due to a 37% increase in the average rigs working, reflecting increased drilling activity as market conditions and demand for our drilling services have rebounded and increased since the prior year.
Added
Simultaneously with the closing of the IPO, NETC II completed the private sale of an aggregate of 9,540,000 warrants for an aggregate value of $9.5 million and issued unsecured promissory notes for an aggregate amount of $3.1 million. $308.1 million of the amount received at closing was placed into a trust account. ​ NETC II was formed for the sole purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses with significant growth potential and to create value by supporting the company in the public markets.
Removed
In 2021, Canada Drilling revenues were $39.3 million. ​ International Drilling ​ Operating revenues increased by $156.1 million or 15% in 2022 compared to 2021. This increase was due to a 9% increase in the average rigs working, reflecting increased drilling activity as market conditions and demand for our drilling services have rebounded and increased since the prior year.
Added
NETC II intends to identify solutions, opportunities, companies or technologies that focus on advancing the energy transition; specifically ones that facilitate, improve or complement the reduction of carbon or greenhouse gas emissions while satisfying growing energy consumption across markets globally .
Removed
The increase was primarily due to the issuance in November 2021 of $700 million in 7.375% senior priority guaranteed notes due May 2027, partially offset by a reduction of over $400 million to our overall debt levels since December 31, 2020. ​ Gain on debt buybacks and exchanges ​ Gain on debt buybacks and exchanges in 2022 was $4.6 million, representing a decrease of $8.8 million compared to 2021.
Added
NETC II is accounting for as a consolidated VIE. ​ 9.125% Senior Priority Guaranteed Notes due January 2030 ​ In November 2023, Nabors issued $650.0 million in aggregate principal amount of 9.125% senior priority guaranteed notes, which are fully and unconditionally guaranteed by Nabors and certain of Nabors’ indirect wholly-owned subsidiaries.
Removed
The decrease is primarily attributable to fewer open market purchases of debt in 2022, as the debt discount levels have reduced. ​ Impairments and other charges ​ During the year ended December 31, 2021, we recognized impairments and other charges of approximately $66.7 million.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

7 edited+2 added−0 removed10 unchanged
Biggest changeThe carrying and fair values of these liabilities were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As of December 31, ​ ​ 2022 ​ ​ 2021 ​ ​ ​ Effective ​ ​ ​ ​ ​ ​ ​ Effective ​ ​ ​ ​ ​ ​ ​ ​ Interest ​ Carrying ​ Fair ​ Interest ​ Carrying ​ Fair ​ ​ Rate ​ Value ​ Value ​ Rate ​ Value ​ Value ​ (Dollars in thousands) 5.50% senior notes due January 2023 6.13 % $ — ​ $ — 5.87 % $ 24,446 ​ $ 24,736 5.10% senior notes due September 2023 5.46 % 52,004 ​ 51,354 5.42 % 82,703 ​ 84,044 0.75% senior exchangeable notes due January 2024 0.97 % 177,005 ​ 164,898 5.90 % 259,839 ​ 257,730 5.75% senior notes due February 2025 ​ 6.02 % 474,092 ​ 454,773 6.03 % 548,458 ​ 508,881 6.50% senior priority guaranteed notes due February 2025 ​ — % — ​ — 6.50 % 50,485 ​ 50,490 9.00% senior priority guaranteed notes due February 2025 ​ 9.00 % ​ 209,384 ​ ​ 213,507 ​ 9.00 % ​ 218,082 ​ 226,914 7.25% senior guaranteed notes due January 2026 ​ 7.52 % 557,902 ​ 529,432 7.52 % 559,978 ​ 522,079 7.375% senior priority guaranteed notes due May 2027 ​ 7.74 % 700,000 ​ 686,686 7.74 % 700,000 ​ 724,906 7.50% senior guaranteed notes due January 2028 ​ 7.70 % 389,609 ​ 354,400 7.70 % 389,609 ​ 346,966 2018 revolving credit facility — % — ​ — 3.72 % 460,000 ​ 460,000 ​ ​ ​ ​ $ 2,559,996 ​ $ 2,455,050 ​ ​ ​ $ 3,293,600 ​ $ 3,206,746 Less: deferred financing costs ​ ​ ​ ​ 22,456 ​ ​ ​ ​ ​ ​ ​ 30,805 ​ ​ ​ ​ ​ ​ ​ $ 2,537,540 ​ ​ ​ ​ ​ ​ $ 3,262,795 ​ ​ ​ ​ The fair values of our cash equivalents, trade receivables and trade payables approximate their carrying values due to the short-term nature of these instruments. ​ Our investments in debt securities and a portion of our long-term investments are sensitive to changes in interest rates.
Biggest changeThe carrying and fair values of these liabilities were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As of December 31, ​ ​ 2023 ​ ​ 2022 ​ ​ ​ Effective ​ ​ ​ ​ ​ ​ ​ Effective ​ ​ ​ ​ ​ ​ ​ ​ Interest ​ Carrying ​ Fair ​ Interest ​ Carrying ​ Fair ​ ​ Rate ​ Value ​ Value ​ Rate ​ Value ​ Value ​ (In thousands) 5.10% senior notes due September 2023 — % $ — ​ $ — 5.46 % $ 52,004 ​ $ 51,354 0.75% senior exchangeable notes due January 2024 0.84 % 155,529 ​ 154,989 0.97 % 177,005 ​ 164,898 5.75% senior notes due February 2025 ​ 5.97 % 474,092 ​ 474,120 6.02 % 474,092 ​ 454,773 9.00% senior priority guaranteed notes due February 2025 ​ — % ​ — ​ ​ — ​ 9.00 % ​ 209,384 ​ 213,507 7.25% senior guaranteed notes due January 2026 ​ 7.53 % 555,902 ​ 535,328 7.52 % 557,902 ​ 529,432 7.375% senior priority guaranteed notes due May 2027 ​ 7.72 % 700,000 ​ 687,526 7.74 % 700,000 ​ 686,686 7.50% senior guaranteed notes due January 2028 ​ 7.69 % 389,609 ​ 334,090 7.70 % 389,609 ​ 354,400 1.75% senior exchangeable notes due June 2029 2.26 % 250,000 ​ 185,383 — % — ​ — 9.125% senior priority guaranteed notes due January 2030 9.40 % 650,000 ​ 656,871 — % — ​ — ​ ​ ​ ​ $ 3,175,132 ​ $ 3,028,307 ​ ​ ​ $ 2,559,996 ​ $ 2,455,050 Less: current portion ​ ​ ​ ​ 629,621 ​ ​ ​ ​ ​ ​ ​ — ​ ​ ​ Less: deferred financing costs ​ ​ ​ ​ 33,992 ​ ​ ​ ​ ​ ​ ​ 22,456 ​ ​ ​ ​ ​ ​ ​ $ 2,511,519 ​ ​ ​ ​ ​ ​ $ 2,537,540 ​ ​ ​ ​ The fair values of our cash equivalents, trade receivables and trade payables approximate their carrying values due to the short-term nature of these instruments.
Our financial instruments that are potentially sensitive to changes in interest rates include our floating rate debt instruments (our 2022 Credit Agreement), our fixed rate debt securities comprised of our 5.10% and 5. 75% senior notes; 0.75% senior exchangeable notes; 7.25% and 7.50% senior guaranteed notes; 7.375% and 9.00% senior priority guaranteed notes; our investments in debt securities (including corporate and mortgage-CMO debt securities); and our investments in overseas funds that invest primarily in a variety of public and private U.S. and non-U.S. securities (including asset-backed and mortgage-backed securities, global structured-asset securitizations, whole-loan mortgages and participations in whole loans and whole-loan mortgages), which are classified as long-term investments. ​ We may utilize derivative financial instruments that are intended to manage our exposure to interest rate risks.
Our financial instruments that are potentially sensitive to changes in interest rates include our floating rate debt instruments (our 2022 Credit Agreement), our fixed rate debt securities comprised of our 5. 75% senior notes; 0.75% and 1.75% senior exchangeable notes; 7.25% and 7.50% senior guaranteed notes; 7.375% and 9.125% senior priority guaranteed notes; our investments in debt securities (including corporate and mortgage-CMO debt securities); and our investments in overseas funds that invest primarily in a variety of public and private U.S. and non-U.S. securities (including asset-backed and mortgage-backed securities, global structured-asset securitizations, whole-loan mortgages and participations in whole loans and whole-loan mortgages), which are classified as long-term investments. ​ We may utilize derivative financial instruments that are intended to manage our exposure to interest rate risks.
When the fair value of a derivative contract is positive, the counterparty would owe us, which can create credit risk for us. When the fair value of a derivative contract 45 Table of Contents is negative, we would owe the counterparty, and therefore, we would not be exposed to credit risk.
When the fair value of a derivative contract is positive, the counterparty would owe us, which can create credit risk for us. When the fair value of a derivative contract is negative, we would owe the counterparty, and therefore, we would not be exposed to credit risk.
A hypothetical 10% increase in the value of all our foreign currencies relative to the U.S. dollar as of December 31, 2022 would result in a $6.2 million increase in the fair value of our net monetary liabilities denominated in currencies other than U.S. dollars. ​ Credit Risk.
A hypothetical 10% increase in the value of our foreign currencies relative to the U.S. dollar as of December 31, 2023 would result in a $3.9 million increase in the fair value of our net monetary liabilities denominated in currencies other than U.S. dollars. ​ Credit Risk.
Additionally, our investment portfolio of debt and equity securities, which are carried at fair value, exposes us to price risk. ​ 46 Table of Contents
Our warrants are carried at fair market value. ​ Our investments in debt securities and a portion of our long-term investments are sensitive to changes in interest rates. Additionally, our investment portfolio of debt and equity securities, which are carried at fair value, exposes us to price risk. ​ 48 Table of Contents
We try to manage market risk associated with interest-rate contracts by establishing and monitoring parameters that limit the type and degree of market risk that we undertake. ​ Fair Value of Financial Instruments. The fair value of our fixed rate long-term debt and revolving credit facilities is estimated based on quoted market prices or prices quoted from third-party financial institutions.
The fair value of our fixed rate long-term debt and revolving credit facilities is estimated based on quoted market prices or prices quoted from third-party financial institutions.
The most significant exposures arise in connection with our operations in Argentina, Norway and Canada, which usually are substantially unhedged. ​ At various times, we utilize local currency borrowings (foreign currency denominated debt), the payment structure of customer contracts and foreign exchange contracts to selectively hedge our exposure to exchange rate fluctuations in connection with monetary assets, liabilities, cash flows and commitments denominated in certain foreign currencies.
GAAP, which is defined as cumulative inflation rates exceeding 100% in the most recent three-year period based on inflation data published by the respective governments. ​ At various times, we utilize local currency borrowings (foreign currency denominated debt), the payment structure of customer contracts and foreign exchange contracts to selectively hedge our exposure to exchange rate fluctuations in connection with monetary assets, liabilities, cash flows and commitments denominated in certain foreign currencies.
Added
The most significant exposures arise in connection with our operations in Argentina and Russia, which usually are substantially unhedged. ​ 46 Table of Contents We have experienced certain risks specific to our operations in Argentina. Argentina’s economy is currently considered highly inflationary under U.S.
Added
We try to manage market risk associated with interest-rate contracts by establishing and monitoring parameters that limit the type and degree of market risk that we undertake. ​ 47 Table of Contents Fair Value of Financial Instruments.

Other NBR 10-K year-over-year comparisons