2022 Annual
Report
Nabors Industries Ltd.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
(cid:1409)
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2022
(cid:1407)
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number 001-32657
NABORS INDUSTRIES LTD.
(Exact name of registrant as specified in its charter)
Bermuda
(State or Other Jurisdiction of
Incorporation or Organization)
Crown House Second Floor
4 Par-la-Ville Road
Hamilton, HM08
Bermuda
(Address of principal executive offices)
98-0363970
(I.R.S. Employer
Identification No.)
N/A
(Zip Code)
Securities registered pursuant to Section 12(b) of the Securities Exchange Act of 1934:
(441) 292-1510
(Registrant’s telephone number, including area code)
Title of each class
Common shares, $.05 par value per share
Trading Symbol(s)
NBR
Name of each exchange on which registered
New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Securities Exchange Act of 1934: None.
Indicate by check mark whether the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. YES (cid:1409) NO (cid:1407)
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. YES (cid:1407) NO (cid:1409)
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for
the past 90 days. YES (cid:1409) NO (cid:1407)
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of
Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to file such reports). YES (cid:1409) NO (cid:1407)
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See
definition of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large Accelerated Filer (cid:1409)
Accelerated Filer (cid:1407)
Non-accelerated Filer (cid:1407)
Smaller Reporting Company (cid:1407)
Emerging Growth Company (cid:1407)
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or
revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. (cid:1407)
Indicate by check mark whether the Registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control
over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit
report. (cid:1409)
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the
filing reflect the correction of an error to previously issued financial statements. (cid:1407)
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received
by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). (cid:1407)
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES (cid:1407) NO (cid:1409)
The aggregate market value of the 8,933,616 common shares held by non-affiliates of the registrant outstanding as of the last business day of our most
recently completed second fiscal quarter, June 30, 2022, based on the closing price of our common shares as of such date of $133.90 per share as reported on the New
York Stock Exchange, was $1,196,211,182. Common shares held by each officer and director and by each person who owns 5% or more of the outstanding common
shares have been excluded in that such persons may be deemed affiliates. This determination of affiliate status is not necessarily a conclusive determination for other
purposes.
The number of common shares outstanding as of February 6, 2023 was 9,456,384, excluding 1,090,003 common shares held by our subsidiaries, or
10,546,387 in the aggregate.
DOCUMENTS INCORPORATED BY REFERENCE
Specified portions of the definitive Proxy
Statement to be distributed in connection with our 2023 Annual General Meeting of Shareholders (Part III).
NABORS INDUSTRIES LTD.
Form 10-K Annual Report
For the Year Ended December 31, 2022
Table of Contents
PART I
Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 1.
Item 1A. Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 1B. Unresolved Staff Comments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 2.
Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 3.
Mine Safety Disclosures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 4.
Item 5.
PART II
Market Price of and Dividends on the Registrant’s Common Equity, Related Shareholder Matters
and Issuer Purchases of Equity Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
[Reserved] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 6.
Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of Operations . . . . . . .
Item 7A. Quantitative and Qualitative Disclosures About Market Risk . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Financial Statements and Supplementary Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 8.
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure . . . . . . .
Item 9.
Item 9A. Controls and Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 9B. Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 9C. Disclosure regarding Foreign Jurisdictions that Prevent Inspections . . . . . . . . . . . . . . . . . . . . . . . . . .
PART III
Item 10.
Item 11.
Item 12.
Item 13.
Item 14.
Directors, Executive Officers and Corporate Governance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Executive Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Security Ownership of Certain Beneficial Owners and Management and Related Shareholder
Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Certain Relationships and Related Transactions and Director Independence . . . . . . . . . . . . . . . . . . . .
Principal Accounting Fees and Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 15.
Item 16.
Exhibits, Financial Statement Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Form 10-K Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PART IV
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CORPORATE INFORMATION
Our internet address is www.nabors.com. We make available free of charge through our website our annual report
on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, Proxy and Information Statements and
amendments to those reports filed or furnished pursuant to Section 13(a), 14(a) or 15(d) of the Securities Exchange Act
of 1934, as amended (the “Exchange Act”), as soon as reasonably practicable after we electronically file such material
with, or furnish it to, the Securities and Exchange Commission (the “SEC”). Reference in this document to our website
address does not constitute incorporation by reference of the information contained on the website into this annual report
on Form 10-K. The SEC maintains an internet site (www.sec.gov) that contains periodic and current reports, proxy and
information statements and other information regarding issuers that file electronically with the SEC. In addition,
documents relating to our corporate governance (such as committee charters, governance guidelines and other internal
policies) can be found on our website.
FORWARD-LOOKING STATEMENTS
We discuss expectations regarding our future markets, demand for our products and services, and our performance
in our annual, quarterly and current reports, press releases, and other written and oral statements. Statements relating to
matters that are not historical facts are “forward-looking statements” within the meaning of the safe harbor provisions of
Section 27A of the Securities Act and Section 21E of the Exchange Act. These “forward-looking statements” are based
on an analysis of currently available competitive, financial and economic data and our operating plans. They are
inherently uncertain and investors should recognize that events and actual results could turn out to be significantly
different from our expectations. By way of illustration, when used in this document, words such as “anticipate,”
“believe,” “expect,” “plan,” “intend,” “estimate,” “project,” “will,” “should,” “could,” “may,” “predict” and similar
expressions are intended to identify forward-looking statements.
Factors to consider when evaluating these forward-looking statements include, but are not limited to:
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geopolitical events, pandemics (including COVID-19) and other macro-events and their respective and
collective impact on our operations as well as oil and gas markets and prices;
fluctuations and volatility in worldwide prices of and demand for oil and natural gas;
fluctuations in levels of oil and natural gas exploration and development activities;
fluctuations in the demand for our services;
competitive and technological changes and other developments in the oil and gas and oilfield services
industries;
our ability to renew customer contracts in order to maintain competitiveness;
the existence of operating risks inherent in the oil and gas and oilfield services industries;
the possibility of the loss of one or a number of our large customers;
the impact of our long-term indebtedness and other financial commitments on our financial and operating
flexibility;
our access to, and the cost of, capital, including the impact of a downgrade in our credit rating, covenant
restrictions, availability under our secured revolving credit facility, and future issuances of debt or equity
securities;
our dependence on our operating subsidiaries and investments to meet our financial obligations;
our ability to retain skilled employees;
our ability to complete, and realize the expected benefits of, strategic transactions;
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changes in tax laws and the possibility of changes in other laws and regulations;
the possibility of political or economic instability, civil disturbance, war or acts of terrorism in any of the
countries in which we do business;
global views on and the regulatory environment related to energy transition and our ability to implement
our energy transition initiatives;
the possibility of changes to U.S. trade policies and regulations, including the imposition of trade
embargoes, sanctions or tariffs; and
general economic conditions, including the capital and credit markets.
Our business depends, to a large degree, on the level of spending by oil and gas companies for exploration,
development and production activities. Therefore, a sustained increase or decrease in the price of oil or natural gas, that
has a material impact on exploration, development and production activities, could also materially affect our financial
position, results of operations and cash flows.
The above description of risks and uncertainties is by no means all-inclusive but highlights certain factors that we
believe are important for your consideration. For a more detailed description of risk factors, please refer to
Part I, Item 1A.—Risk Factors.
ITEM 1. BUSINESS
PART I
Nabors Industries, Ltd. (NYSE: NBR) was formed as a Bermuda exempted company on December 11, 2001. Unless
the context requires otherwise, references in this annual report to “we,” “us,” “our,” “the Company,” or “Nabors” mean
Nabors Industries Ltd., together with our subsidiaries. References in this annual report to “Nabors Delaware” mean
Nabors Industries, Inc., a wholly owned subsidiary of Nabors.
Overview
Nabors owns and operates one of the world’s largest land-based drilling rig fleets and is a provider of offshore
platform rigs in the United States and international markets. Nabors also provides performance tools, directional drilling
services, tubular running services and innovative technologies for its own rig fleet and those operated by third parties. In
addition, Nabors manufactures advanced drilling equipment and provides drilling rig instrumentation. In today’s
performance-driven environment, we believe we are well positioned to seamlessly integrate downhole hardware, surface
equipment and software solutions into our AC rig designs. 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:
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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.
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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,
2021
2020
2022
Average Rigs Working:
U.S. Drilling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Canada Drilling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
International Drilling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
97.2
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74.2
171.4
70.9
6.5
67.9
145.3
67.9
9.0
75.7
152.6
Average rigs working represents a measure of the number of equivalent rigs operating during a given period. For
example, one rig operating 182.5 days during a 365-day period represents 0.5 average rigs working.
Our business consists of five reportable segments: 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
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. 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. 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 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. 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. 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. 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. Many 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. At the same time, we
actively marketed 17 platforms rigs in the international offshore drilling markets.
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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. Our tools are ideal for applications where high reliability,
precise wellbore placement and drilling efficiency are crucial. 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. 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. 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. 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:
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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. 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.
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We believe our drilling technology portfolio positions us well to address the changing market dynamic both in the
United States and internationally. 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. A daywork contract generally provides for a basic rate per
day when drilling (the dayrate for providing a rig and crew) and for lower rates when the rig is moving between drilling
locations, or when drilling operations are interrupted or restricted by equipment breakdowns, adverse weather conditions
or other conditions beyond our control. In addition, daywork contracts may provide for a lump-sum fee for the
mobilization and demobilization of the rig, which in most cases approximates our anticipated costs. 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). We also
offer performance enhancing drilling services, performance software and equipment such as managed pressure services,
directional drilling, rotary steering systems and measurement while drilling. These additional products and services are
additive to our rig charges.
Our contracts for land-based and offshore drilling have durations that are single-well, multi-well or term. Term
contracts generally have durations ranging from six months to five years. Under term contracts, our rigs are committed
to one customer. Offshore workover projects are often contracted on a single-well basis. We generally receive drilling
contracts through competitive bidding, although we occasionally enter into contracts by direct negotiation. Most of our
single-well contracts are subject to termination by the customer on short notice, while multi-well contracts and term
contracts may provide us with early termination compensation in certain circumstances. Such payments may not fully
compensate us for the loss of a contract, and in certain circumstances the customer may not be obligated, able or willing
to make an early termination payment to us. 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. 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. These contracts
are primarily operated through SANAD, our joint venture with Saudi Aramco. 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. We continue to enhance our
diverse work environment that welcomes all backgrounds, ethnicities, and experiences. Our employee base currently
represents different 89 nationalities. Based on our most recent employee engagement survey, we learned that:
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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
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Talent Management
Nabors is committed to gender and ethnicity balance in its hiring practices and workplaces. By implementing
strategic recruiting efforts, employee development streams and retention, we have made progress that outpaces the
industry. A few notable 2022 successes include:
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58% of U.S. 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.
Employee Resource Groups
Our Employee Resource Groups (ERGs), comprised of employees with shared interests, characteristics, or life
experiences, strongly influence and cultivate change. In 2022, ERGs spearheaded involvement in 13 corporate
community relations opportunities.
By recognizing disparate voices, we foster a more cohesive, high-performing, and productive workforce aligned to
achieve excellence together.
Learning and Development
Nabors is dedicated to the development and training of our worldwide workforce. Training begins at onboarding,
where employees receive job-specific instruction with integrated safety expectations, corporate ethics, and behaviors that
create an inclusive workplace. 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;
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• More than 30% employee participation and engagement at 10+ internal webinars conducted with director-
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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.
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. 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. 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.
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Health, Welfare and Retirement
We provide employees health and welfare benefits standard for the industry and their location of employment. U.S.
employees and their families receive medical, dental and vision insurance, life insurance and short-term and long-term
disability coverage, and health and dependent care flexible spending accounts. All U.S. full-time employees also are
eligible for a 401(k) plan with a Company match. This year we have enhanced our paid parental leave to foster baby
bonding and implemented two paid days per year for employees to pursue volunteer opportunities in the communities
where we live and operate.
Workplace Health and Safety
Safety is one of our core values. 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. 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. Specifically, our drilling operations in Alaska generally experience
reduced levels of activity and financial results during the second quarter of each year, due to the annual spring thaw. In
addition, our U.S. offshore market can be impacted during summer months by tropical weather systems in the Gulf of
Mexico. Global climate change could lengthen these periods of reduced activity, but currently we cannot estimate the
degree to which these activities may be affected. Our overall financial results reflect the seasonal variations experienced
in these operations, but seasonality does not materially impact the remaining portions of our business.
Research and Development
We make investments in R&D to develop new products, services, solutions and software in support of our business
and the businesses of our customers.
Patents
We own a significant number of patents important to our business and we expect to continue to file patent
applications to protect our investments in new products and services. While the patents may collectively be material to
our company, we do not believe any single patent is material to our business.
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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. 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 and are highly volatile. Relatedly,
customers may have difficulty accessing capital markets due to poor historical returns for their investments and due to
certain institutional investors choosing not to invest in fossil fuel industries. A decrease or prolonged decline in the price
of oil or natural gas or in the exploration, development and production activities of our customers could result in a
corresponding decline in the demand for our services and/or a reduction in dayrates and utilization, which could have a
material adverse effect on our financial position, results of operations and cash flows. See Part I, Item 1A.—Risk
Factors— 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, and—Our drilling contracts may in certain instances be renegotiated,
suspended or terminated without an early termination payment and Item 7.— Management’s Discussion and Analysis of
Financial Condition and Results of Operations.
The markets in which we provide our services are highly competitive. We believe that competitive pricing is a
significant factor in determining which service provider is awarded a job in these markets and customers are increasingly
sensitive to pricing during periods of market instability. Historically, the number of available rigs and drilling-related
equipment has exceeded demand in many of the markets in which we operate, resulting in strong price competition. 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. 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. Our drilling business is subject to certain additional competitive factors. For example, we
believe our ability to deliver rigs with new technology and features and, in certain international markets, our experience
operating in certain environments and strong customer relationships have been significant factors in the selection of
Nabors for the provision of drilling services. 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. Certain competitors are present in
more than one of the markets in which we operate, although no one competitor operates in all such markets. Our strategy
combines advanced drilling rig designs – complete with integrated downhole tools, surface equipment, and software –
with operational performance, industry-leading safety, and an innovative technology roadmap.
Significant competitors in our U.S. Drilling segment include Helmerich & Payne Inc., Patterson-UTI Energy Inc.,
Precision Drilling Corp., and Ensign Energy Services Inc. In the U.S. Lower 48 land drilling market, we also compete
with numerous smaller or regional drilling contractors. 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. 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. 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
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by strategic acquisitions. While we continuously consider and review strategic opportunities, including acquisitions,
divestitures, joint ventures, alliances and other strategic transactions, there can be no assurance that such opportunities
will continue to be available, that the pricing will be economical or that we will be successful in completing and
realizing the expected benefits of such transactions in the future.
We may sell a subsidiary or group of assets outside of our core markets or business if it is strategically or
economically advantageous for us to do so.
In July 2021, we sold our Canada Drilling segment assets for approximately $94.0 million. These assets included
our fleet of 35 land-based drilling rigs and related equipment and property. 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. We
know that our success is directly linked to implementing and executing a broad range of sustainable practices. Through
technological innovation, environmental impact planning, corporate safety initiatives and community relations activities,
Nabors understands that how we conduct business is as important as our results. 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. We believe we are in material
compliance with applicable environmental laws and regulations and that the cost of such compliance is not material to
our business or financial condition. For a more detailed description of the environmental laws and regulations applicable
to our operations, see Part I, Item 1A.—Risk Factors—Changes to or noncompliance with laws and regulations or
exposure to environmental liabilities could adversely affect our results of operations.
Energy Transition
Nabors has a fast-growing portfolio of technologies designed to drive energy efficiency and emissions reductions
for the Company and its customers. 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 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.
ITEM 1A. RISK FACTORS
In addition to the other information set forth elsewhere in this annual report, the following factors should be
carefully considered when evaluating Nabors. The risks described below are not the only ones we face. 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.
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• 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. 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.
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•
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. 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. Both short-term and long-
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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. 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. Worldwide military, political, public health, and economic events,
including initiatives by the Organization of Petroleum Exporting Countries (“OPEC”) and OPEC+, uncertainty in capital
and commodities markets, and the ability of oil and natural gas producers to access capital, and the extent to which they
are willing or able to deploy capital, affect both the supply of and demand for oil and natural gas. 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. Lower oil and natural gas prices also could affect our ability to retain skilled rig personnel and affect
our ability to access capital to finance and grow our business. There can be no assurances as to the future level of
demand for our services or future conditions in the oil and natural gas and oilfield services industries.
Our customers and thereby our business and profitability could be adversely affected by low oil prices and/or turmoil
in the global economy.
Changes in general economic and political conditions may negatively affect our business, financial condition, results
of operations and cash flows. As a result of the volatility of oil and natural gas prices, we are unable to fully predict the
level of exploration, drilling and production activities of our customers and whether our customers and/or suppliers will
be able to sustain their operations and fulfill their commitments and obligations. 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. Furthermore, these conditions may result in certain of our customers being
unable to pay vendors, including us. In addition, we may experience difficulties forecasting future capital expenditures
by our customers, which in turn could lead to either over capacity in deployable assets or, in the event of further
recovery in oil prices and the worldwide economy, under capacity, either of which could adversely affect our operations.
There can be no assurance that the global economic environment will not deteriorate in the future due to one or more
factors.
We operate in a highly competitive industry with excess drilling capacity, which may adversely affect our results of
operations.
The oilfield services industry is very competitive with a significant amount of excess capacity. The competitive
nature of the business is exacerbated in low oil price environments such as the one we have generally experienced over
the last decade. Contract drilling companies compete primarily on a regional basis, and competition may vary
significantly from region to region at any particular time. Rigs and drilling-related equipment can be moved from one
region to another in response to changes in levels of activity and market conditions, which may result in an oversupply
of such rigs and drilling-related equipment in certain areas, and accordingly, increased price competition. In addition, an
important factor in determining job awards is our ability to maintain a strong safety record. If we are unable to remain
competitive based on these and/or other competitive factors, we may be unable to increase or even maintain our market
share, utilization rates and/or dayrates for our services, which could adversely affect our business, financial condition,
results of operations and cash flows.
We must renew customer contracts to remain competitive.
In addition to our performance, our ability to renew existing customer contracts, or obtain new contracts, and the
terms of any such contracts depends on market conditions and our customers’ future drilling plans, which are subject to
change. Due to the highly competitive nature of the industry, which can be exacerbated during periods of depressed
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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. Any of these hazards
could result in personal injury or death, damage to or destruction of equipment and facilities, suspension of operations,
environmental and natural resources damage, reputational harm and damage to the property of others. Our offshore
operations involve the additional hazards of marine operations including pollution of coastal waters, damage to wildlife
and natural habitats, capsizing, grounding, collision, damage from hurricanes and heavy weather or sea conditions, such
as sea level rise, coastal storm surge, inland flooding, and unsound ocean bottom conditions.
Accidents may occur, we may be unable to obtain desired contractual indemnities, and our insurance may prove
inadequate in certain cases. 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. 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. We expect to continue facing upward
pressure in our insurance renewals, our premiums and deductibles may be higher, and some insurance coverage may
either be unavailable or more expensive than it has been in the past. Moreover, our insurance coverage generally
provides that we assume a portion of the risk in the form of a deductible or self-insured retention. We may choose to
increase the levels of deductibles (and thus assume a greater degree of risk) from time to time in order to minimize our
overall costs, which could exacerbate the effect of our losses on our financial condition and liquidity. 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. However, such payments may not fully compensate us for
the loss of a contract. In certain circumstances, including but not limited to, non-performance caused by significant
operational or equipment issues (such as destruction of a drilling rig that is not replaced within a specified period of
time), sustained periods of downtime due to a force majeure event, or other events beyond our control or some other
breach of our contractual obligations, our customers may not be obligated to make an early termination payment to us at
all. In addition, some contracts may be suspended, rather than terminated early, for an extended period of time, in some
cases without adequate, or any, compensation. Many of these contracts could be terminated or suspended on short notice
further exacerbating the effects on our results. The early termination or suspension of a contract may result in a rig
being idle for an extended period of time, which could have a material adverse effect on our business, financial condition
and results of operations.
During periods of depressed market conditions, we may be subject to an increased risk of our customers, including
government-controlled entities, seeking to renegotiate, repudiate or terminate their contracts and/or to otherwise exert
commercial influence to our disadvantage. Downturns in the oil price environment may result in downward pricing
pressure and decreased demand for our drilling services with existing customers, renegotiations of pricing and other
terms in our drilling contracts with certain customers and early termination of contracts by others. Our customers’ ability
to perform their obligations under the contracts, including their ability to pay us or fulfill their indemnity obligations,
may also be affected by an economic or industry downturn or other adverse conditions in the oil and gas industry. If we
were to sustain a loss and our customers were unable to honor their indemnification and/or payment obligations, it could
adversely affect our liquidity. 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
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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. 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. In addition, if a significant customer experiences liquidity constraints or other financial
difficulties it may be unable to make required payments to us or seek to renegotiate contracts, which could adversely
affect our liquidity and profitability. Financial difficulties experienced by customers could also adversely affect our
utilization rates in the affected market and may cause our counterparties to seek modifications to our contracts with
them. Furthermore, potential consolidation among oil and natural gas exploration and production companies may reduce
the number of available customers.
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 derive a significant portion of our business from global markets, including operations in the Middle East, South
America, the Far East, North Africa, central and southern Asia and Russia. These operations are subject to various risks,
including war, civil disturbances, labor strikes, nationalization, terrorist activity and governmental actions that may limit
or disrupt markets, restrict the movement of funds or result in limits or restrictions in our ability to operate or compete,
the deprivation of contractual rights or the taking of property without fair compensation, particularly in respect of
contracts with state-owned oil companies. In some countries, our operations may be subject to the additional risk of
fluctuating currency values and exchange controls. 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.
See, for example, “—Our business may be affected by changes in applicable sanctions or export controls laws and
regulations, including those targeting Russia.”
The future occurrence of one or more international events arising from the types of risks described above could have
a material adverse effect on our business, financial condition and results of operations.
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 reliance on third-party suppliers, manufacturers and service providers to provide equipment and services
exposes us to volatility in the quality, price and availability of such items. Certain components, parts and equipment that
we use in our operations may be available only from a small number of suppliers, manufacturers or service providers.
The failure of one or more third-party suppliers, manufacturers or service providers to provide equipment, components,
parts or services, whether due to capacity constraints, labor shortages or other labor-related difficulties, production or
delivery disruptions, price increases, quality control issues, recalls or other decreased availability of parts and equipment,
is beyond our control and could materially disrupt our operations or result in the delay, renegotiation or cancellation of
drilling contracts, thereby causing a loss of contract drilling backlog and/or revenues to us, as well as an increase in
operating costs.
Additionally, our suppliers, manufacturers, and service providers could be negatively affected by changes in
industry conditions or global economic conditions. If certain of our suppliers, manufacturers or service providers were to
curtail or discontinue their business as a result of such conditions, it could result in a reduction or interruption in supplies
or equipment available to us and/or a significant increase in the price of such supplies and equipment, which could
adversely affect our business, financial condition and results of operations. In addition, issues with the global supply
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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 the future, we may expand our international solutions operations and enter into additional, significant
contracts with NOCs. The terms of these contracts may contain non-negotiable provisions and may expose us to greater
commercial, political, operational and other risks than we assume in other contracts. These contracts may expose us to
materially greater environmental liability and other claims for damages (including consequential damages) and personal
injury related to our operations, or the risk that the contract may be terminated by our customer without cause on short-
term notice, contractually or by governmental action, or under certain conditions that may not provide us with an early
termination payment. We can provide no assurance that increased risk exposure will not have an adverse effect on our
future operations or that we will not increase the number of rigs contracted, or the amount of technology deployed, to
NOCs with commensurate additional contractual risks. Risks that accompany contracts with NOCs could ultimately have
a material adverse effect on our business, financial condition and results of operations.
Control of oil and natural gas reserves by NOCs may affect the demand for our services and products and create
additional risks in our operations.
Much of the world’s oil and natural gas reserves are controlled by NOCs, which may require their contractors to
meet local content requirements or other local standards, such as conducting our operations through joint ventures with
local partners that could be difficult or undesirable for us to meet. The failure to meet the local content requirements and
other local standards may adversely affect our operations in those countries. In addition, while we do not control the
actions of our joint venture partners, their actions could have an effect on our investment in the joint ventures and more
generally our overall reputation. 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. During periods of reduced revenues and/or activity, certain of our fixed costs (such as
depreciation) may not decline and often we may incur additional costs. During times of reduced utilization, reductions in
costs may not be immediate as we may not be able to fully reduce the cost of our support operations in a particular
geographic region due to the need to support the remaining drilling rigs in that region. 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. As with any joint venture arrangement, differences in views
among the joint venture participants may result in delayed decisions, the joint venture operating in a manner that is
contrary to our preference or in failures to agree on major issues. We also cannot control the actions of our joint venture
partners, including any non-performance, default, or bankruptcy of our joint venture partners. Certain of these actions
could have adverse consequences for us, legal or regulators issues in the region and/or reputational harm, including our
attractiveness as a partner in other regions. 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.
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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. 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. 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. 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. Internet service providers, cloud hosting services,
social media companies and website providers that currently allow us to utilize their platforms to communicate with
customers and the public may decide that our business or the industry in which we operate negatively affects their
business or may make business decisions or changes to their policies that negatively affect us. Such actions could
include placing restrictions on our use of their platforms or banning us from utilizing their services altogether. Our
inability to use these platforms may have a negative effect on the way we are perceived in the industry or in the media
and may adversely affect our business, financial condition, results of operations and cash flows.
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 long-term success depends on our ability to effectively address the energy transition, which will require
adapting our business to potentially changing government requirements and customer and investor preferences, as well
as engaging with our customers to develop solutions to decarbonize oil and gas operations. If the energy transition
occurs faster than anticipated or in a manner that we do not anticipate, demand for our products and services could be
adversely affected. 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. Statements related to these goals, targets and objectives reflect our current plans and do not constitute a
guarantee that they will be achieved. Our efforts to research, establish, accomplish, and accurately report on these goals,
targets, and objectives expose us to numerous operational, reputational, financial, legal, and other risks. Our ability to
achieve any stated goal, target, or objective, including with respect to emissions reduction, is subject to numerous factors
and conditions, some of which are outside of our control. 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. In addition, standards for tracking and reporting on sustainability matters,
including climate-related matters, have not been harmonized and continue to evolve. 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
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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 business may
also face increased scrutiny from investors and other stakeholders related to our sustainability activities, including the
goals, targets, and objectives that we announce, and our methodologies and timelines for pursuing them. If our
sustainability practices do not meet investor or other stakeholder expectations and standards, which continue to evolve,
our reputation, our ability to attract or retain employees, and our attractiveness as an investment or business partner
could be negatively affected. 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. 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. Prolonged periods of low utilization or low dayrates, the cold stacking of idle assets, the
sale of assets below their then-carrying value or the decline in market value of our assets may cause us to experience
further losses. 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. 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. We are also required to maintain a “minimum guarantor value” of no less than 90%
at all times. 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 minimum guarantor value is defined to
mean the percentage of book value of, minus depreciation and amortization on, property, plant and equipment owned by
Nabors and its subsidiaries, that is directly or indirectly owned by the guarantors of the 2022 Credit Agreement (other
than Nabors) and their wholly owned subsidiaries. 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. We also have various
financial commitments, such as leases, contracts and purchase commitments. Our ability to service our debt and other
financial obligations depends in large part upon the level of cash flows generated by our operating subsidiaries’
operations, our ability to monetize and/or divest non-core assets, availability under the 2022 Credit Agreement and our
ability to access the capital markets and/or other sources of financing. Our amount of indebtedness may make it more
difficult to borrow funds in the future. 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.
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Volatility in prices of goods and services and interest rates could expose us to risks in managing our operating and
capital costs.
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.
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. 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. In addition, the 2022 Credit Agreement bears interest at a
floating rate and, to the extent we have borrowing outstanding under the facility, the borrowing will bear interest at
increased rates compared to our historical rates. 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. To the extent that our offsetting measures are not sufficient to offset these higher costs, our results of
operations may be adversely affected.
Our ability to access capital markets could be limited.
From time to time, we may need to access capital markets to obtain long-term and short-term financing. However,
our ability to access capital markets could be limited or adversely affected by, among other things, oil and gas prices, our
existing capital structure, our credit ratings, interest rates and the health or market perceptions of the drilling and overall
oil and gas industry and the global economy. In addition, many of the factors that affect our ability to access capital
markets, including the liquidity of the overall capital markets and the state of the economy and/or the oil and gas
industry, among others, are outside of our control. There have also been efforts in recent years aimed at the investment
community, including investment advisors, sovereign wealth funds, public pension funds, universities and other groups,
promoting the divestment of fossil fuel equities as well as pressuring lenders and other financial services companies to
limit or curtail activities with companies engaged in the extraction of fossil fuel reserves, which, if successful, could
limit our ability to access capital markets. 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. Credit rating agencies continually revise their
ratings for companies they follow. Any adverse developments in our business and operations could lead to a ratings
downgrade to our senior unsecured debt that currently has a non-investment grade rating. Factors that may affect our
credit ratings include debt levels, asset purchases or sales, as well as near-term and long-term growth opportunities and
industry conditions. Liquidity, asset quality, cost structure, market diversity, and commodity pricing levels and other
factors, are also considered by the rating agencies. 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. Growth through the building of new drilling rigs and improvement of existing rigs is not
assured.
The market for our services is characterized by continual technological developments that have resulted in, and will
likely continue to result in, substantial improvements in the functionality and performance of rigs and equipment. Our
customers increasingly demand the services of newer, higher specification drilling rigs and related equipment.
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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. 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. Customers may be financial incapable or otherwise reluctant or unwilling to adopt
our new technologies or may choose competing technologies. 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. There can be no assurance that we
will be able to successfully develop technology that our customers demand. If we are not successful keeping pace with
technological advances and trends (including trends in favor of emissions-reducing technologies) or if we fail to deliver
such technologies to our customers in a timely and cost-effective manner suitable to their needs, demand for our services
could decline and we could lose market share. Furthermore, if our equipment or proprietary technologies become
obsolete, the value of our intellectual property may be reduced, or one or more technologies that we may implement in
the future may not work as we expect and our business, financial condition, results of operations and reputation could be
adversely affected as a result. If competing technologies are viewed as superior to ours it could affect our
competitiveness. Additionally, new technologies, services or standards could render some of our services, drilling rigs
or equipment obsolete, which could reduce our competitiveness and have a material adverse effect on our business,
financial condition and results of operations.
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.
There can be no assurance that the steps we take to obtain, maintain, protect and enforce our intellectual property
rights will be adequate. Some of our products or services, and the processes we use to produce or provide them, have
been granted patent protection, have patent applications pending, or are trade secrets. Our business may be adversely
affected when our patents are unenforceable, the claims allowed under our patents are not sufficient to protect our
technology, our patent applications are denied, or our trade secrets are not adequately protected. Patent protection on
some types of technology, such as software or machine learning processes, may not be available in certain countries in
which we operate. 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.
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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 majority of the intellectual
property rights relating to our drilling rigs and related services are owned by us or certain of our supplying vendors.
However, in the event that we or one of our customers or supplying vendors becomes involved in a dispute over
infringement of intellectual property rights relating to equipment or technology owned or used by us, services performed
by us or products provided by us, we may lose access to important equipment or technology or our ability to provide
services or products, or we could be required to cease use of some equipment or technology or be forced to invest or
develop replacement technologies to enhance our equipment, technology, services or products. We could also be
required to pay license fees or royalties for the use of equipment or technology or provision of services or products. In
addition, we may lose a competitive advantage in the event we are unsuccessful in enforcing our rights against third
parties. Regardless of the merits, any such claims generally result in significant legal and other costs, including
reputational harm, and may distract management from running our business. 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. Our international business is generally subject to
both U.S. and foreign laws and regulations, including, without limitation, laws and regulations relating to export/import
controls, sanctions, technology transfers, government contracts and procurement, data privacy and protection,
investment, exchange rates and controls, the U.S. Foreign Corrupt Practices Act (the “FCPA”), the Bermuda Bribery Act
(2016) and other anti-corruption laws, anti-boycott provisions, securities laws, labor and employment, works councils
and other labor groups, anti-human trafficking, taxes, environment, immunity, security restrictions and intellectual
property. The SEC and U.S. Department of Justice have continued to focus on enforcement activities with respect to the
FCPA. While our employees and agents are required to comply with applicable anti-corruption laws, and we have
adopted policies and procedures and related training programs designed to promote and achieve compliance, we cannot
ensure that our internal policies, procedures and programs will always protect us from risks associated with unlawful
acts carried out by our employees or agents.
Failure by us, our employees, affiliates, partners or others with whom we work to comply with applicable laws and
regulations could result in administrative, civil, commercial or criminal liabilities, including suspension or debarment
from government contracts or suspension of export/import privileges. Any such penalty could have a material adverse
effect on our reputation, our ability to compete for other contracts and our financial position, results of operations and/or
cash flows.
Our international operations also subject us to other risks, including potential asset seizure, terrorist acts, piracy,
kidnapping, nationalization of assets, currency restrictions, import or export quotas, tariffs and other forms of public and
government regulation, all of which are beyond our control. 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
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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. Our costs to comply with these laws and regulations may be
substantial. Violation of environmental laws or regulations could lead to the imposition of administrative, civil or
criminal penalties, capital expenditures, delays in the permitting or performance of projects, and in some cases injunctive
relief. Violations may also result in liabilities for personal injuries, property and natural resource damage and other costs
and claims. We are not able to allocate all risks of environmental liabilities to customers, and it is possible that
customers who assume the risks will be financially unable to bear any resulting costs.
In addition, U.S. federal laws and the laws of other jurisdictions regulate the prevention of oil spills and the release
of hazardous substances and may impose liability for removal costs and natural resource, real or personal property and
certain economic damages arising from any spills. Some of these laws may impose strict and/or joint and several liability
for clean-up costs and damages without regard to the conduct of the parties. As an owner and operator of onshore and
offshore rigs and other equipment, we may be deemed to be a responsible party under federal law. In addition, we are
subject to various laws governing the containment and disposal of hazardous substances, oilfield waste and other waste
materials and the use of underground storage tanks.
Changes in environmental laws and regulations may also negatively affect the operations of oil and natural gas
exploration and production companies, which in turn could have an adverse effect on us. 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 regulation
could require industries to meet stringent standards to substantially reduce GHG emissions. Legislation to regulate GHG
emissions has periodically been introduced in the U.S. Congress. In addition, the current administration has taken steps
to further regulate GHG emissions. Those reductions could be costly and difficult to implement.
The U.S. Environmental Protection Agency (the “EPA”) has published findings that GHG emissions present an
endangerment to public health and the environment. The EPA has also issued rules requiring monitoring and reporting of
GHG emissions from the oil and natural gas sector, including onshore and offshore production activities. In November
2021, the EPA proposed new rules aimed at sharply reducing methane and other emissions from new and existing
sources in the oil and gas industry. The Bureau of Land Management also issued a rule in November 2016 requiring
reductions in methane emissions from venting, flaring, and leaking activities on public lands.
The United States is a member of the Paris Agreement, a climate accord reached at the Conference of the Parties
(“COP 21”) in Paris, that set many new goals, and many related policies are still emerging. 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. 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.
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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. Further, members of the investment community have
increased their focus on sustainability practices with regard to the oil and gas industry, including practices related to
GHGs and climate change, and an increasing number of our customers consider sustainability factors in awarding work.
These developments, and public perception relating to climate change, may curtail production and demand for oil and
natural gas by shifting demand towards lower carbon energy sources such as wind, solar and other renewables. If these
efforts are successful, our ability and the ability of our customers to access capital markets may be limited and our stock
price may be negatively affected.
Further, the federal government and certain state governments have enacted, and are expected to continue to enact,
laws and regulations that mandate or provide economic incentives for the development of technologies and sources of
energy other than oil and gas, such as wind and solar. 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. Also, in 2022, California
mandated that all new passenger cars and light trucks sold in the state be electric vehicles or other emissions-free models
by 2035. 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. 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.
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 are also
subject to complaints and allegations from former, current or prospective employees from time to time, alleging
violations of employment-related laws or other whistle blower-related matters. Lawsuits or claims could result in
decisions against us that could have an adverse effect on our financial condition or results of operations. 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”). 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.
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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. 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. 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. In addition, U.S. and other governments have
increased their oversight and enforcement activities with respect to Sanctions laws and regulations and it is expected that
the relevant agencies will continue to increase these investigative and enforcement activities. 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. Consequently, we are subject
to changes in tax laws, treaties or regulations and the interpretation or enforcement thereof in the United States and in
jurisdictions in which we or any of our subsidiaries operate or are organized, and any such changes could have a material
effect on our results of operations in the periods in which such laws and regulations become effective as well as in future
periods. In October 2021, the Group of 20 endorsed a new global minimum tax rate for large multinational companies,
which also has the support of a large number of countries and territories responsible for the overwhelming majority of
global economic output. To take effect, the minimum tax would need to be implemented by each jurisdiction. It is not
yet clear how such a minimum tax would impact our business.
The Tax Cuts and Jobs Act of 2017 (“Tax Reform Act”) adopted sweeping changes to the U.S. Internal Revenue
Code which also could have a material adverse effect on our financial condition and results of operations. In addition to
lowering the U.S. corporate income tax rate and numerous other changes, the law imposes more stringent limitations on
the deductibility of interest expense and net operating losses and imposes a type of minimum tax designed to reduce the
benefits derived from intercompany transactions and payments that result in base erosion. 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. 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. Among other
provisions, the IRA includes a 15% corporate minimum tax rate applied to certain large corporations and a 1% excise tax
on corporate stock repurchases made after December 31, 2022. 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. The Company’s ability to use its
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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”). 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. Potential future transactions involving the sale, issuance, redemption or other disposition of
common or preferred shares or other equity-based securities, the exercise of conversion or exchange options under the
terms of any convertible or exchangeable debt, the repurchase of any such debt with Company shares, in each case, by a
person owning, or treated as owning, 5% or more of the Company’s shares, or a combination of such transactions, may
cause or increase the possibility that the Company will experience an ownership change under Section 382. 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. 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. 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. 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. 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
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. We do not have any control over these
analysts, and we cannot provide any assurance that analysts will cover us or provide favorable coverage. If any of the
analysts who may cover us adversely change their recommendation regarding our stock, or provide more favorable
relative recommendations about our competitors, our stock price could materially decline. 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. In recent years, the stock market in general has experienced extreme price and volume fluctuations that
have affected the market price for many companies in industries similar to ours. Some of these fluctuations have been
unrelated to the operating performance of the affected companies. 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. Provisions in our organizational documents that are meant to help us avoid a coercive takeover include:
• Authorizing our board of directors (the “Board”) to issue a significant number of common shares and up to
25,000,000 preferred shares, as well as to determine the price, rights (including voting rights), conversion
ratios, preferences and privileges of the preferred shares, in each case without any vote or action by the
holders of our common shares;
• Limiting the ability of our shareholders to call or bring business before special meetings;
• Prohibiting our shareholders from taking action by written consent in lieu of a meeting unless the consent is
signed by all the shareholders then entitled to vote;
• Requiring advance notice of shareholder proposals for business to be conducted at general meetings and for
nomination of candidates for election to our Board; and
• Reserving to our Board the ability to determine the number of directors comprising the full Board and to
fill vacancies or newly created seats on the Board.
Certain actions taken by us could make it easier for another party to acquire control of the Company. For instance,
in June 2012 we adopted an amendment to our bye-laws to declassify the Board and in 2017, as recommended by our
shareholders, we amended our policy regarding nomination and proxy access for director candidates. Conversely, the
provisions designed to prevent hostile takeovers, or protect holders of our debt instruments and our joint venture partner,
may deter transactions in which shareholders would receive a change of control premium. For example, certain change
of control transactions could accelerate the principal amounts outstanding, and require premiums payments, under our
debt instruments, or trigger a call option to purchase our interest in SANAD, our joint venture with Saudi Aramco.
As a holding company, we depend on our operating subsidiaries and investments to meet our financial obligations.
We are a holding company with no significant assets other than the stock of our subsidiaries. In order to meet our
financial needs and obligations, we rely exclusively on repayments of interest and principal on intercompany loans that
we have made to operating subsidiaries, and income from dividends and other cash flow from such subsidiaries. There
can be no assurance that such operating subsidiaries will generate sufficient net income to pay dividends or sufficient
cash flow to make payments of interest and principal to us in respect of intercompany loans. In addition, from time to
time, such operating subsidiaries may enter into financing arrangements that contractually restrict or prohibit these types
of upstream payments. Our debt instruments do not contain covenants prohibiting any such contractual restrictions.
There may also be adverse tax consequences associated with such operating subsidiaries paying dividends. Finally, the
ability of our subsidiaries to make distributions to us may be restricted by the laws of the applicable subsidiaries’
jurisdictions of organization and other laws and regulations. If subsidiaries are unable to distribute or otherwise make
27
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. Investor sentiment and the public perception of fossil fuels have led to calls to limit
investment and lending to businesses in our industry. 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.
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. Standards for tracking and
reporting ESG matters continue to evolve, and our business may be impacted by new laws and regulations or investor
criteria in the U.S., the European Union, and around the world, related to ESG. Members of the investment community
and lenders have also begun establishing standards required of companies in which they invest or to which they provide
credit. Certain of our institutional investors use third-party benchmarks or scores to measure a company’s ESG practices
in an increasingly broad set of matters including but not limited to, environmental sustainability (including climate
change), human capital, labor, product certification and risk oversight. Such scoring and examination may expand the
nature, scope and complexity of matters that we are required to control, assess and report. In addition to potential
impacts on our operations, the cost of complying with such scrutiny by institutional investors, as well as any new laws
and regulations, including building appropriate compliance and reporting functions within our company, could be
significant and may increase our costs of operations and thereby negatively affect our financial condition. In addition, if
we are unable to meet the requirements of our investors or our lenders, our cost of capital may increase and our stock
price may be negatively affected.
We intend to set certain ESG-related initiatives, goals, and/or commitments regarding environmental matters,
diversity, and other matters. Our intention to set certain ESG-related initiatives and goals reflect our current plans and
aspirations and are not guarantees that we will be able to achieve them. These initiatives, goals, or commitments could
result in unexpected expenses, changes in our relationships with strategic partners, distributors and third-party service
providers, loss of revenue or business disruption. We could fail to achieve, or may be perceived to fail to achieve, ESG-
related initiatives, goals, or commitments and we may be criticized for the timing, scope or nature of these initiatives,
goals, or commitments, or for any revisions to them. 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 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. The outbreak triggered a sharp sell-off in energy commodities markets during the first quarter
of 2020, as economic activity tumbled as a result of government impositions of mandatory closures, quarantines and
other restrictions on, or advisories with respect to, travel, business operations and public gatherings or interactions. 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. The pandemic is continuously evolving, and the
extent to which our operating and financial results will continue to be affected will depend on various factors beyond our
28
control, such as the ultimate duration, severity and sustained geographic resurgence of the virus; the emergence of new
variants and strains of the virus; and the success of actions to contain the virus and its variants, or treat its impact, such
as the availability and acceptance of vaccines. COVID-19, and the volatile regional and global economic conditions
stemming from the pandemic, could also aggravate our other risk factors described in this Form 10-K.
Our business is subject to cybersecurity risks.
Our operations are increasingly dependent on information technologies and services. Threats to information
technology systems associated with cybersecurity risks and cyber incidents or attacks continue to grow, and include,
among other things, storms and natural disasters, terrorist attacks, utility outages, theft, viruses, phishing, malware,
design defects, human error, and complications encountered as existing systems are maintained, repaired, replaced, or
upgraded. 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.
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. 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. 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. We have employment agreements with some of our key personnel within the
company, but no assurance can be given that any employee will remain with us, whether or not they have entered into an
employment agreement. We do not carry key man insurance. In addition, our operations depend, in part, on our ability to
attract and retain experienced technical professionals and talented personnel. Competition for such professionals is
intense, and as the business environment improves, competition for personnel generally intensifies. The loss of key
executive officers and/or our inability to retain or attract experienced technical professionals and talented personnel,
could reduce our competitiveness and harm prospects for future success, which may adversely affect our business,
financial condition and results of operations.
ITEM 1B. UNRESOLVED STAFF COMMENTS
Not applicable.
29
ITEM 2. PROPERTIES
Nabors’ principal executive offices are located in Hamilton, Bermuda. We own or lease executive and
administrative office space in Houston, Texas; Anchorage, Alaska; Dubai in the United Arab Emirates; Bogota,
Colombia; Dhahran, Saudi Arabia; and Sandnes, Norway. Our principal physical properties are drilling rigs, which are
more fully described in Part I, Item 1.—Business.
Many of the international drilling rigs and some of the Alaska rigs in our fleet are supported by mobile camps which
house the drilling crews and a significant inventory of spare parts and supplies. In addition, we own various trucks,
forklifts, cranes, earth-moving and other construction and transportation equipment, which are used to support our
operations. We also own or lease a number of facilities and storage yards used in support of operations in each of our
geographic markets.
ITEM 3. LEGAL PROCEEDINGS
Nabors and its subsidiaries are defendants or otherwise involved in a number of lawsuits in the ordinary course of
business. We estimate the range of our liability related to pending litigation when we believe the amount and range of
loss can be estimated. We record our best estimate of a loss when the loss is considered probable. When a liability is
probable and there is a range of estimated loss with no best estimate in the range, we record the minimum estimated
liability related to the lawsuits or claims. As additional information becomes available, we assess the potential liability
related to our pending litigation and claims and revise our estimates. Due to uncertainties related to the resolution of
lawsuits and claims, the ultimate outcome may differ from our estimates. For matters where an unfavorable outcome is
reasonably possible and significant, we disclose the nature of the matter and a range of potential exposure, unless an
estimate cannot be made at the time of disclosure.
In the opinion of management and based on liability accruals provided, our ultimate exposure with respect to these
pending lawsuits and claims is not expected to have a material adverse effect on our consolidated financial position or
cash flows, although they could have a material adverse effect on our results of operations for a particular reporting
period. See 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
ITEM 5. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT’S COMMON EQUITY, 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
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:
Period
(In thousands, except per share amounts)
October 1 - October 31 . . . . . . . . . . . . . . . . . . .
November 1 - November 30 . . . . . . . . . . . . . . .
December 1 - December 31 . . . . . . . . . . . . . . .
Total
Number of
Shares
Repurchased
Average
Price
Paid per
Share (1)
— $ 108.59
— $ 174.03
— $ 158.33
Total Number
of Shares
Purchased as
Part of Publicly
Announced
Program
Approximated
Dollar Value of
Shares that May
Yet Be
Purchased
Under the
Program (2)
—
—
—
278,914
278,914
278,914
(1)
(2)
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. Each of the Amended and
Restated 2016 Stock Plan, the 2003 Employee Stock Plan and the 1999 Stock Option Plan for Non-Employee
Directors provide for the withholding of shares to satisfy tax obligations, but do not specify a maximum number
of shares that can be withheld for this purpose. These shares were not purchased as part of a publicly announced
program to purchase common shares.
In August 2015, our Board authorized a share repurchase program under which we may repurchase up to
$400.0 million of our common shares in the open market or in privately negotiated transactions. The program
was renewed by the Board in February 2019. Through 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. The repurchased shares are held by certain of our Bermuda subsidiaries and
are registered and tradable subject to applicable securities law limitations and have the same voting, dividend
and other rights as other outstanding shares. As of December 31, 2022, our subsidiaries held 1.1 million of our
common shares.
31
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. 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.
200
150
100
50
s
r
a
l
l
o
D
0
2017
2018
2019
2020
2021
2022
Nabors Industries Ltd.
S&P SmallCap 600 Index
Dow Jones Oil Equipment and Services Index
S&P 500 Index
Russell 3000 Index
As of December 31,
2017 2018 2019 2020 2021 2022
Nabors Industries Ltd. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100 31
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 . . . . . . . . . . . . . . . . . . . . . . . . . .
78
100 58
38
19
47
62
45
26
The foregoing graph is based on historical data and is not necessarily indicative of future performance. This graph
shall not be deemed to be “soliciting material” or “filed” with the SEC or subject to Regulations 14A or 14C under the
Exchange Act or to the liabilities of Section 18 under the Exchange Act.
Related Shareholder Matters
Bermuda has exchange controls which apply to residents in respect of the Bermuda dollar. As an exempted
company, Nabors is designated as non-resident for Bermuda exchange control purposes by the Bermuda Monetary
Authority. 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
There is no reciprocal tax treaty between Bermuda and the United States. 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. 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).
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.
ITEM 6. [Reserved]
Removed and reserved.
33
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
The following discussion and analysis of our financial condition and results of operations is based on, and should
be read in conjunction with, our consolidated financial statements and the related notes thereto included under
Part II, Item 8.—Financial Statements and Supplementary Data. This discussion and analysis contains forward-looking
statements that involve risks and uncertainties. Actual results may differ materially from those anticipated in these
forward-looking statements as a result of certain factors, including those set forth under Part I, Item 1A.—Risk Factors
and elsewhere in this annual report. See “Forward-Looking Statements.”
Management Overview
We are a leading provider of advanced technology for the energy industry. With operations in over 15 countries,
Nabors has established a global network of people, technology and equipment to deploy solutions that deliver safe,
efficient and sustainable energy production. By leveraging its core competencies, particularly in drilling, engineering,
automation, data science and manufacturing, Nabors aims to innovate the future of energy and enable the transition to a
lower carbon world.
Outlook
The demand for our services and products is a function of the level of spending by oil and gas companies for
exploration, development and production activities. The level of exploration, development and production activities is to
a large extent tied to the prices of oil and natural gas, which fluctuate significantly and tend to be highly sensitive to
supply and demand cycles. 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. 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. 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. 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. 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. 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”). The 2022 Credit Agreement replaced the 2018
Revolving Credit Facility. 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. 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 90th 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
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. 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. 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. 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. 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. 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 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. 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. 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. 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. 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
The following tables set forth certain information with respect to our reportable segments and rig activity:
Year Ended December 31,
2022
2021
Increase/(Decrease)
2022 to 2021
(In thousands, except percentages and rig activity)
U.S. Drilling
Operating revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,100,614 $
108,506 $
Adjusted operating income (loss) (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
97.2
Average rigs working (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
669,656 $ 430,958
(76,492) $ 184,998
26.3
70.9
64 %
242 %
37 %
Canada Drilling
Operating revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Adjusted operating income (loss) (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Average rigs working (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
— $
13 $
—
39,336 $ (39,336)
(2,880)
(6.5)
2,893 $
6.5
(100)%
(100)%
(100)%
International Drilling
Operating revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,199,282 $ 1,043,197 $ 156,085
(40,117) $ 39,238
Adjusted operating income (loss) (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
6.3
Average rigs working (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(879) $
74.2
67.9
15 %
98 %
9 %
Drilling Solutions
Operating revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Adjusted operating income (loss) (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
243,349 $
77,868 $
172,473 $ 70,876
32,771 $ 45,097
41 %
138 %
Rig Technologies
Operating revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Adjusted operating income (loss) (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
195,129 $
8,906 $
149,273 $ 45,856
8,748
158 $
31 %
5,537 %
(1)
(1)
Adjusted operating income (loss) is our measure of segment profit and loss. See Note 18 – Segment
Information to the consolidated financial statements included in Item 8 of the report.
Represents a measure of the average number of rigs operating during a given period. For example, one rig
operating 45 days during a quarter represents approximately 0.5 average rigs working for the quarter. On an
annual period, one rig operating 182.5 days represents approximately 0.5 average rigs working for the year.
U.S. Drilling
Operating revenues increased by $431.0 million or 64% in 2022 compared to 2021. 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. 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.
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. 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
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 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. 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. The charges was primarily due to $58.5 million of impairments recognized in 2021 attributable to the sale of
our Canada drilling assets. 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 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). This was offset by a decrease of $16.5 million in
losses from sales and retirements of assets recognized between 2021 and 2022.
Income taxes
Our worldwide income tax expense for 2022 was $61.5 million compared to $55.6 million for 2021. 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. As of December 31, 2022, we had cash and short-term investments of $452.3 million and
working capital of $404.2 million. 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. 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
(subject to the grower basket of up to $100.0 million). 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. If we fail
to perform our obligations under the covenants, the revolving credit commitments under the 2022 Credit Agreement
could be terminated, and any outstanding borrowings under the facilities could be declared immediately due and
payable. If necessary, we have the ability to manage our covenant compliance by taking certain actions including
reductions in discretionary capital or other types of controllable expenditures, monetization of assets, amending or
renegotiating the revolving credit agreement, accessing capital markets through a variety of alternative methods, or any
combination of these alternatives. We expect to remain in compliance with all covenants under the 2022 Credit
Agreement during the twelve month period following the date of this report based on our current operational and
financial projections. However, we can make no assurance of continued compliance if our current projections or material
underlying assumptions prove to be incorrect. If we fail to comply with the covenants, the revolving credit commitment
could be terminated, and any outstanding borrowings under the facility could be declared immediately due and payable.
Our ability to access capital markets or to otherwise obtain sufficient financing may be affected by our senior
unsecured debt ratings as provided by the major credit rating agencies in the United States and our historical ability to
access these markets as needed. While there can be no assurances that we will be able to access these markets in the
future, we believe that we will be able to access capital markets or otherwise obtain financing in order to satisfy any
payment obligation that might arise upon maturity, exchange or purchase of our notes and our debt facilities, loss of
availability of our revolving credit facilities and our A/R Agreements (see—Accounts Receivable Purchase and Sales
Agreements, below), and that any cash payment due, in addition to our other cash obligations, would not ultimately have
a material adverse impact on our liquidity or financial position. The major U.S. credit rating agencies have previously
downgraded our senior unsecured debt rating to non-investment grade. These and any further ratings downgrades could
adversely impact our ability to access debt markets in the future, increase the cost of future debt, and potentially require
us to post letters of credit for certain obligations. 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. Availability under
these facilities was as follows:
Credit available . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Less: Letters of credit outstanding, inclusive of financial and performance guarantees . . . . . . . . . . . . . . .
Remaining availability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
December 31,
2022
(In thousands)
620,552
105,081
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. There can be no assurance that our operating subsidiaries will generate sufficient net income to
pay us dividends or sufficient cash flows to make payments of interest and principal to us. See Part I., Item 1A.—Risk
Factors—As a holding company, we depend on our operating subsidiaries and investments to meet our financial
obligations.
Accounts Receivable Purchase and Sales Agreements
On September 13, 2019, we entered into an accounts receivables sales agreement (the “A/R Sales Agreement”) and
an accounts receivables purchase agreement (the “A/R Purchase Agreement” and, together with the A/R Sales
Agreement, the “A/R Agreements”), whereby the originators, all of whom are our subsidiaries, sold or contributed, and
will on an ongoing basis continue to sell or contribute, certain of their domestic trade accounts receivables to a wholly-
owned, bankruptcy-remote special purpose entity (“SPE”). The SPE in turn, sells, transfers, conveys and assigns to third-
party financial institutions (“Purchasers”), all the rights, title and interest in and to its pool of eligible receivables.
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
On June 27, 2022, we entered into the Third Amendment to the A/R Purchase Agreement which extended the term
of the Purchase Agreement to August 13, 2024 and increased the commitments of the Purchasers from $150 million to
$250 million. Subject to Purchaser approval, the A/R Purchase Agreement allows for purchase commitments to be
increased to $300 million. 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. 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. 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.
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. 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. Purchase commitments include agreements to purchase
goods or services that are enforceable and legally binding and that specify all significant terms, including fixed or
minimum quantities to be purchased; fixed, minimum or variable pricing provisions; and the approximate timing of the
transaction. We can reduce planned expenditures if necessary or increase them if market conditions and new business
opportunities warrant it. The level of our outstanding purchase commitments and our expected level of capital
expenditures for 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. 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 20—Leases in Part II, Item 8.—Financial
Statements and Supplementary Data for additional details.
We may from time to time seek to retire or purchase our outstanding debt through cash purchases and/or exchanges
for equity or debt securities, both in open-market purchases, privately negotiated transactions or otherwise. Such
repurchases or exchanges, if any, will depend on prevailing market conditions, our liquidity requirements, contractual
restrictions and other factors and may involve material amounts.
39
We are a party to transactions, agreements or other contractual arrangements defined as “off-balance sheet
arrangements” that could have a material future effect on our financial position, results of operations, liquidity and
capital resources. The most significant of these off-balance sheet arrangements include the A/R Agreements (see —
Accounts Receivable Purchase and Sales Agreements, above) and certain agreements and obligations under which we
provide financial or performance assurance to third parties. Certain of these financial or performance assurances serve as
guarantees, including standby letters of credit issued on behalf of insurance carriers in conjunction with our workers’
compensation insurance program and other financial surety instruments such as bonds. In addition, we have provided
indemnifications, which serve as guarantees, to some third parties. These guarantees include indemnification provided
by us to our share transfer agent and our insurance carriers. We are not able to estimate the potential future maximum
payments that might be due under our indemnification guarantees, if any. Management believes the likelihood that we
would be required to perform or otherwise incur any material losses associated with any of these guarantees is remote.
The following table summarizes the total maximum amount of financial guarantees issued by Nabors:
Financial standby letters of credit and other financial surety
instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 39,073 8,397 5,127
11,739 $ 64,336
Maximum Amount
2023
2024 2025 Thereafter Total
(In thousands)
Cash Flows
Our cash flows depend, to a large degree, on the level of spending by oil and gas companies for exploration,
development and production activities. Sustained decreases in the price of oil or natural gas could have a material impact
on these activities and could also materially affect our cash flows. Certain sources and uses of cash, such as the level of
discretionary capital expenditures or acquisitions, purchases and sales of investments, loans, issuances and repurchases
of debt and of our common shares are within our control and are adjusted as necessary based on market conditions. We
discuss our 2022 and 2021 cash flows below.
Operating Activities. 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. Changes in working capital items
provided $48.3 million in cash flows during 2022 and provided $188.1 million in cash flows during 2021. As is
common in periods of growth for companies, as our businesses grew in 2022 we experienced a need for increased
working capital, which caused the decrease in cash provided from this source.
Investing Activities. 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. During 2022 and 2021, we
used cash for capital expenditures totaling $373.4 million and $234.0 million, respectively.
We received $26.7 million in proceeds from sales of assets during 2022 compared to $124.3 million in 2021. The
2021 total was primarily due to the sale of our Canada drilling assets in July 2021.
Financing Activities. 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 2021, we received net
proceeds of $700.0 million from the issuance of long-term debt and received $276.0 million from the public offering of
NETC (accounted for as restricted cash held in trust). Partially offsetting these activities, we reduced $212.5 million in
amounts borrowed under our revolving credit facilities and repaid $187.0 million on our senior notes. Additionally, we
paid dividends totaling $7.3 million to our preferred shareholders and made distributions of $58.5 million from our
SANAD joint venture to our partner.
40
Summarized Combined Financial Information for Guarantee of Securities of Subsidiaries
Nabors Delaware is an indirect, wholly owned subsidiary of Nabors. Nabors fully and unconditionally guarantees
the due and punctual payment of the principal of, premium, if any, and interest on Nabors Delaware’s registered notes,
which 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’ guarantee of Nabors
Delaware’s obligations under the Registered Notes are its unsecured and unsubordinated obligation and have the same
ranking with respect to Nabors’ indebtedness as the Registered Notes have with respect to Nabors Delaware’s
indebtedness. In the event that Nabors is required to withhold or deduct on account of any Bermudian taxes due from
any payment made under or with respect to its guarantees, subject to certain exceptions, Nabors will pay additional
amounts so that the net amount received by each holder of Registered Notes will equal the amount that such holder
would have received if the Bermudian taxes had not been required to be withheld or deducted.
The following summarized financial information is included so that separate financial statements of Nabors
Delaware are not required to be filed with the SEC. The condensed consolidating financial statements present
investments in both consolidated and unconsolidated affiliates using the equity method of accounting.
In lieu of providing separate financial statements for issuers and guarantors (the “Obligated Group”), we have
presented the accompanying supplemental summarized combined balance sheet and income statement information for
the Obligated Group based on Rule 13-01 of the SEC’s Regulation S-X that we early adopted effective April 1, 2020.
All significant intercompany items among the Obligated Group have been eliminated in the supplemental
summarized combined financial information. The Obligated Group’s investment balances in subsidiary non-guarantors
have been excluded from the supplemental combined financial information. Significant intercompany balances and
activity for the Obligated Group with other related parties, including subsidiary non-guarantors (referred to as
“affiliates”), are presented separately in the accompanying supplemental summarized financial information.
Summarized combined Balance Sheet and Income Statement information for the Obligated Group is as follows (in
thousands):
Summarized Combined Balance Sheet Information
December 31,
2022
2021
Assets
Current Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Non-Current Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Noncurrent assets - affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2,578 $
458,232
5,733,274
6,194,084
462,872
431,651
6,149,188
7,043,711
Liabilities and Stockholders' Equity
Current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Noncurrent liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Noncurrent liabilities - affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Stockholders' Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total Liabilities and Stockholders' Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
79,941
2,698,835
—
2,778,776
3,415,308
6,194,084
75,112
3,367,502
4,471
3,447,085
3,596,626
7,043,711
Summarized Combined Income Statement Information
Year Ended December 31,
2022
2021
Total revenues, earnings (loss) from consolidated affiliates and other income . . . . . . . . $ (148,523) $ (277,147)
(441,310)
Income from continuing operations, net of tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Dividends on preferred stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(3,653)
(444,963)
Net income (loss) attributable to Nabors common shareholders . . . . . . . . . . . . . . . . . . . .
(420,492)
—
(420,492)
41
Other Matters
Recent Accounting Pronouncements
See Note 2—Summary of Significant Accounting Policies in Part II, Item 8.—Financial Statements and
Supplementary Data.
Critical Accounting Estimates
The preparation of our financial statements in conformity with U.S. GAAP requires management to make certain
estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities, the
disclosures of contingent assets and liabilities at the balance sheet date and the amounts of revenues and expenses
recognized during the reporting period. We analyze our estimates based on our historical experience and various other
assumptions that we believe to be reasonable under the circumstances. However, actual results could differ from our
estimates. The following is a discussion of our critical accounting estimates. Management considers an accounting
estimate to be critical if:
•
•
it requires assumptions to be made that were uncertain at the time the estimate was made; and
changes in the estimate or different estimates that could have been selected could have a material impact on
our consolidated financial position or results of operations.
For a summary of all our significant accounting policies, see Note 2—Summary of Significant Accounting Policies
in Part II, Item 8.—Financial Statements and Supplementary Data.
Depreciation of Property, Plant and Equipment. The drilling and drilling services industries are very capital
intensive. Property, plant and equipment represented 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.
For each day a rig is operating, we depreciate it over an approximate 4,927-day period, with the exception of our jackup
rigs which are depreciated over an 8,030-day period, in each case after provision for salvage value. For each day a rig
asset is not operating, it is depreciated over an assumed depreciable life of 20 years, with the exception of our jackup
rigs, where a 30-year depreciable life is typically used, after provision for salvage value.
Depreciation on our buildings, oilfield hauling and mobile equipment, aircraft equipment, and other machinery and
equipment is computed using the straight-line method over the estimated useful life of the asset after provision for
salvage value (buildings—10 to 30 years; aircraft equipment—5 to 20 years; oilfield hauling and mobile equipment and
other machinery and equipment—3 to 10 years).
These depreciation periods and the salvage values of our property, plant and equipment were determined through an
analysis of the useful lives of our assets and based on our experience with the salvage values of these assets.
Periodically, we review our depreciation periods and salvage values for reasonableness given current conditions.
Depreciation of property, plant and equipment is therefore based upon estimates of the useful lives and salvage value of
those assets. Estimation of these items requires significant management judgment. Accordingly, management believes
that accounting estimates related to depreciation expense recorded on property, plant and equipment are critical.
There have been no factors related to the performance of our portfolio of assets, changes in technology or other
factors indicating that these estimates do not continue to be appropriate. Accordingly, for the years ended December 31,
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.
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
Impairment of Long-Lived Assets. As discussed above, the drilling and drilling services industries are very
capital intensive. We review our assets for impairment when events or changes in circumstances indicate that their
carrying amounts may not be recoverable. If the estimated undiscounted future cash flows are not sufficient to support
the asset’s recorded value, an impairment charge is recognized to the extent the carrying amount of the long-lived asset
exceeds its estimated fair value determined utilizing either a discounted cash flows or market approach model.
Management considers a number of factors such as estimated future cash flows from the assets, appraisals and current
market value analysis in determining fair value. The determination of future cash flows requires the estimation of
utilization, dayrates, operating margins, sustaining capital and remaining economic life. Such estimates can change
based on market conditions, technological advances in the industry or changes in regulations governing the industry.
The appraisals require estimation based on location, working status, asset condition and market conditions. Significant
and unanticipated changes to the assumptions could result in future impairments. A significantly prolonged period of
lower oil and natural gas prices could continue to adversely affect the demand for and prices of our services, which could
result in future impairment charges. As the determination of whether impairment charges should be recorded on our
long-lived assets is subject to significant management judgment, and an impairment of these assets could result in a
material charge on our consolidated statements of income (loss), management believes that accounting estimates related
to impairment of long-lived assets are critical.
Assumptions in the determination of future cash flows are made with the involvement of management personnel at
the operational level where the most specific knowledge of market conditions and other operating factors exists. For
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. Fair value is determined by calculating the expected sales price less any costs to sell.
Impairment of Goodwill and Intangible Assets. We review goodwill and intangible assets with indefinite lives
for impairment annually during the second quarter of each fiscal year or more frequently if events or changes in
circumstances indicate that the carrying amount of such goodwill and intangible assets may exceed their fair value. We
perform our impairment tests for goodwill for all our reporting units within our reportable segments. Our business
consists of U.S. Drilling, Canada Drilling, International Drilling, Drilling Solutions and Rig Technologies reportable
segments. Our Rig Technologies reportable segment includes our Canrig, RDS and 2TD reporting units. We initially
assess goodwill for impairment based on qualitative factors to determine whether the existence of events or
circumstances leads to a determination that it is more likely than not that the fair value of one of our reporting units is
greater than its carrying amount. 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. Based on the results of our goodwill test
performed in the first quarter of 2020, we recognized additional impairment charges to write off the remaining goodwill
balances attributable to our Drilling Solutions and Rig Technologies operating segments of $11.4 million and
$16.4 million, respectively, in the quarter ended March 31, 2020.
We also reviewed our intangible assets for impairment in the first quarter of 2020. The fair value of our intangible
assets is determined using discounted cash flow models. Based on our updated projections of future cash flows, the fair
value of our intangible assets did not support the carrying value. As such, we recognized an impairment of $83.6 million
to write off all remaining intangible assets in the quarter ended March 31, 2020.
Our estimated fair values of our reporting units incorporate judgment and the use of estimates by management. The
fair values calculated in these impairment tests were determined using discounted cash flow models, which require the
use of significant unobservable inputs, representative of a Level 3 fair value measurement. Our cash flow models involve
assumptions based on our utilization of rigs or other oil and gas service equipment, revenues and earnings from
affiliates, as well as direct costs, general and administrative costs, depreciation, applicable income taxes, capital
expenditures and working capital requirements. Our fair value estimates of these reporting units are sensitive to varying
dayrates, utilization, and costs. 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
these reporting units due to the potential impact on our estimate of our future operating results. Our discounted cash flow
projections for each reporting unit were based on financial forecasts. The future cash flows were discounted to present
value using discount rates determined to be appropriate for each reporting unit. Terminal values for each reporting unit
were calculated using a Gordon Growth methodology with a long-term growth rate of approximately 2%.
Another factor in determining whether impairment has occurred is the relationship between our market
capitalization and our book value. As part of our annual review, we compared the sum of our reporting units’ estimated
fair value, which included the estimated fair value of non-operating assets and liabilities, less debt, to our market
capitalization and assessed the reasonableness of our estimated fair value. Any of the above-mentioned factors may
cause us to re-evaluate goodwill during any quarter throughout the year.
Income Taxes. We operate in a number of countries and our tax returns filed in those jurisdictions are subject to
review and examination by tax authorities within those jurisdictions. We are currently contesting tax assessments in a
number of countries and may contest future assessments. We believe the ultimate resolution of the outstanding
assessments, for which we have not made any accrual, will not have a material adverse effect on our consolidated
financial statements. We recognize uncertain tax positions that we believe have a greater than 50 percent likelihood of
being sustained. We cannot predict or provide assurance as to the ultimate outcome of any existing or future
assessments.
Audit claims of approximately $216.9 million attributable to income tax have been assessed against us. We have
contested, or intend to contest, these assessments, including through litigation if necessary, and we believe the ultimate
resolution, for which we have not made any accrual, will not have a material adverse effect on our consolidated financial
statements. Tax authorities may issue additional assessments or pursue legal actions as a result of tax audits and we
cannot predict or provide assurance as to the ultimate outcome of such assessments and legal actions.
Applicable income and withholding taxes have not been provided on undistributed earnings of our subsidiaries. We
do not intend to repatriate such undistributed earnings except for distributions upon which incremental income and
withholding taxes would not be material.
In certain jurisdictions we have recognized deferred tax assets and liabilities. Judgment and assumptions are
required in determining whether deferred tax assets will be fully or partially utilized. When we estimate that all or some
portion of certain deferred tax assets such as net operating loss carryforwards will not be utilized, we establish a
valuation allowance for the amount ascertained to be unrealizable. We continually evaluate strategies that could allow
for future utilization of our deferred assets. Any change in the ability to utilize such deferred assets will be accounted for
in the period of the event affecting the valuation allowance. If facts and circumstances cause us to change our
expectations regarding future tax consequences, the resulting adjustments could have a material effect on our financial
results or cash flow.
Litigation and Self-Insurance Reserves. Our operations are subject to many hazards inherent in the drilling and
drilling services industries, including blowouts, cratering, explosions, fires, loss of well control, loss of or damage to the
wellbore or underground reservoir, damaged or lost drilling equipment and damage or loss from inclement weather or
natural disasters. Any of these and other hazards could result in personal injury or death, damage to or destruction of
equipment and facilities, suspension of operations, environmental and natural resources damage and damage to the
property of others. Our offshore operations are also subject to the hazards of marine operations including capsizing,
grounding, collision and other damage from hurricanes and heavy weather or sea conditions and unsound ocean bottom
conditions. Our operations are subject to risks of war or acts of terrorism, civil disturbances and other political events.
Accidents may occur, we may be unable to obtain desired contractual indemnities, and our insurance may prove
inadequate in certain cases. There is no assurance that our insurance or indemnification agreements will adequately
protect us against liability from all the consequences of the hazards described above. Moreover, our insurance coverage
generally provides that we assume a portion of the risk in the form of a deductible or self-insured retention.
Based on the risks discussed above, it is necessary for us to estimate the level of our liability related to insurance
and record reserves for these amounts in our consolidated financial statements. Reserves related to self-insurance are
based on the facts and circumstances specific to the claims and our past experience with similar claims. The actual
outcome of self-insured claims could differ significantly from estimated amounts. We maintain actuarially determined
accruals in our consolidated balance sheets to cover self-insurance retentions for workers’ compensation, employers’
liability, general liability and automobile liability claims. These accruals are based on certain assumptions developed
44
utilizing historical data to project future losses. Loss estimates in the calculation of these accruals are adjusted based
upon actual claim settlements and reported claims. These loss estimates and accruals recorded in our financial statements
for claims have historically been reasonable in light of the actual amount of claims paid.
Because the determination of our liability for self-insured claims is subject to significant management judgment and
in certain instances is based on actuarially estimated and calculated amounts, and because such liabilities could be
material in nature, management believes that accounting estimates related to self-insurance reserves are critical.
During 2022, 2021 and 2020, no significant changes were made to the methodology used to estimate insurance
reserves. 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%.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES
We may be exposed to certain market risks arising from the use of financial instruments in the ordinary course of
business. This risk arises primarily as a result of potential changes in the fair market value of financial instruments due to
adverse fluctuations in foreign currency exchange rates, credit risk, interest rates, and marketable and non-marketable
security prices as discussed below.
Foreign Currency Risk. We operate in a number of international areas and are involved in transactions
denominated in currencies other than U.S. dollars, which exposes us to foreign exchange rate risk and foreign currency
devaluation risk. 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. A
foreign exchange contract is a foreign currency transaction, defined as an agreement to exchange different currencies at a
given future date and at a specified rate. 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. Our financial instruments that potentially subject us to concentrations of credit risk consist primarily
of cash equivalents, short-term and long-term investments and accounts receivable. Cash equivalents such as deposits
and temporary cash investments are held by major banks or investment firms. Our short-term and long-term investments
are managed within established guidelines that limit the amounts that may be invested with any one issuer and provide
guidance as to issuer credit quality. We believe that the credit risk in our cash and investment portfolio is minimized as a
result of the mix of our investments. In addition, our trade receivables are with a variety of U.S., international and non-
U.S. national oil and gas companies. Management considers this credit risk to be limited due to the financial resources of
these companies. We perform ongoing credit evaluations of our customers, and we generally do not require material
collateral. We do occasionally require prepayment of amounts from customers whose creditworthiness is in question
prior to providing services to them. We maintain reserves for potential credit losses, and these losses historically have
been within management’s expectations.
Interest Rate and Marketable and Non-marketable Security Price Risk. 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. We
account for derivative financial instruments under the Derivatives Topic of the ASC. The use of derivative financial
instruments could expose us to further credit risk and market risk. Credit risk in this context is the failure of a
counterparty to perform under the terms of the derivative contract. 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
is negative, we would owe the counterparty, and therefore, we would not be exposed to credit risk. We attempt to
minimize credit risk in derivative instruments by entering into transactions with major financial institutions that have a
significant asset base. Market risk related to derivatives is the adverse effect on the value of a financial instrument that
results from changes in interest rates. 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 carrying and fair
values of these liabilities were as follows:
Effective
Interest
Rate
2022
Carrying
Value
As of December 31,
Fair
Value
Effective
Interest
Rate
(Dollars in thousands)
2021
Carrying
Value
Fair
Value
5.50% senior notes due January 2023 . . .
5.10% senior notes due September 2023 .
0.75% senior exchangeable notes due
January 2024 . . . . . . . . . . . . . . . . . . . . . .
5.75% senior notes due February 2025 . .
6.50% senior priority guaranteed notes
6.13 % $
5.46 %
— $
52,004
—
51,354
5.87 % $
5.42 %
24,446 $
82,703
24,736
84,044
0.97 %
6.02 %
177,005
474,092
164,898
454,773
5.90 %
6.03 %
259,839
548,458
257,730
508,881
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 . . . . . . . . . . . . . . . . . . . . . .
2018 revolving credit facility . . . . . . . . . .
Less: deferred financing costs . . . . . . . . .
7.70 %
— %
389,609
—
354,400
—
$ 2,559,996 $ 2,455,050
7.70 %
3.72 %
389,609
460,000
346,966
460,000
$ 3,293,600 $ 3,206,746
22,456
$ 2,537,540
30,805
$ 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. Additionally, our investment portfolio of debt and equity securities, which are carried at fair value, exposes us to
price risk.
46
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
INDEX
Report of Independent Registered Public Accounting Firm (PCAOB ID 238) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated Balance Sheets as of December 31, 2022 and 2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated Statements of Income (Loss) for the Years Ended December 31, 2022, 2021 and 2020 . . . . . . . . . . .
Consolidated Statements of Comprehensive Income (Loss) for the Years Ended December 31, 2022, 2021 and
2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated Statements of Cash Flows for the Years Ended December 31, 2022, 2021 and 2020 . . . . . . . . . . . . . .
Consolidated Statements of Changes in Equity for the Years Ended December 31, 2022, 2021 and 2020 . . . . . . . .
Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
48
50
51
52
53
54
55
47
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Shareholders of Nabors Industries Ltd.
Opinions on the Financial Statements and Internal Control over Financial Reporting
We have audited the accompanying consolidated balance sheets of Nabors Industries Ltd. and its subsidiaries (the
“Company”) as of December 31, 2022 and 2021, and the related consolidated statements of income (loss), of
comprehensive income (loss), of changes in equity and of cash flows for each of the three years in the period ended
December 31, 2022, including the related notes and financial statement schedule listed in the index appearing under
Item 15(a)(2) (collectively referred to as the “consolidated financial statements”). We also have audited the Company's
internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control -
Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission
(COSO).
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the
financial position of the Company as of December 31, 2022 and 2021, and the results of its operations and its cash flows
for each of the three years in the period ended December 31, 2022 in conformity with accounting principles generally
accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects,
effective internal control over financial reporting as of December 31, 2022, based on criteria established in Internal
Control - Integrated Framework (2013) issued by the COSO.
Basis for Opinions
The Company's management is responsible for these consolidated financial statements, for maintaining effective internal
control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting,
included in Management’s Report on Internal Control over Financial Reporting appearing under Item 9A. Our
responsibility is to express opinions on the Company’s consolidated financial statements and on the Company's internal
control over financial reporting based on our audits. We are a public accounting firm registered with the Public
Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the
Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities
and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and
perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of
material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was
maintained in all material respects.
Our audits of the consolidated financial statements included performing procedures to assess the risks of material
misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that
respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and
disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used
and significant estimates made by management, as well as evaluating the overall presentation of the consolidated
financial statements. Our audit of internal control over financial reporting included obtaining an understanding of
internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the
design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing
such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable
basis for our opinions.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding
the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with
generally accepted accounting principles. A company’s internal control over financial reporting includes those policies
and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the
transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are
recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting
principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of
management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely
48
detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the
financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.
Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may
deteriorate.
Critical Audit Matters
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated
financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to
accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially
challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way
our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical
audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it
relates.
Uncertain Tax Positions
As described in Note 11 to the consolidated financial statements, the Company has recorded liabilities for uncertain tax
positions of $62.5 million as of December 31, 2022. As disclosed by management, the Company operates in a number of
countries and is subject to highly complex tax laws, treaties and regulations. Tax returns filed in the jurisdictions where
the Company operates are subject to review and examination by tax authorities within those jurisdictions and the
Company is currently contesting tax assessments in a number of countries and may contest future assessments.
Management believes the ultimate resolution of the outstanding assessments, for which no accrual has been made, will
not have a material adverse effect on the consolidated financial statements. Management recognizes uncertain tax
positions that have a greater than 50 percent likelihood of being sustained.
The principal considerations for our determination that performing procedures relating to uncertain tax positions is a
critical audit matter are (i) the significant judgment by management when determining uncertain tax positions, including
a high degree of estimation uncertainty relative to the interpretation of numerous and complex tax laws, treaties and
regulations and potential for significant adjustments as a result of resolution of outstanding tax assessments; (ii) a high
degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating management’s timely
identification, recognition, and measurement of uncertain tax positions; (iii) the evaluation of audit evidence available to
support the uncertain tax positions is complex and resulted in significant auditor judgment as the nature of the evidence
is often highly subjective; and (iv) the audit effort involved the use of professionals with specialized skill and
knowledge.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our
overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls
relating to the identification, recognition, and measurement of material uncertain tax positions. These procedures also
included, among others (i) testing, on a sample basis, the completeness and accuracy of the information used in the
calculation of the change in uncertain tax positions by obtaining supporting documentation for intercompany
transactions, benchmark data used to support management’s position , and international filing positions; (ii) evaluating
management’s assessment of the technical merits of tax positions and estimates of the amount of tax benefit expected to
be sustained; (iii) evaluating the completeness of management’s assessment of the identification of uncertain tax
positions; and (iv) evaluating the status and resolution of tax assessments with the relevant tax authorities. Professionals
with specialized skill and knowledge were used to assist in the evaluation of the measurement of the Company’s
uncertain tax positions, including evaluating the reasonableness of management’s assessment of whether tax positions
have a greater than 50 percent likelihood of being sustained, management’s application of relevant tax laws, regulations
and administrative practices, and testing the accuracy of potential benefit to be realized and estimated interest and
penalties.
/s/ PricewaterhouseCoopers LLP
Houston, Texas
February 9, 2023
We have served as the Company’s auditor since 1987.
49
NABORS INDUSTRIES LTD. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
December 31,
2022
2021
(In thousands, except per
share amounts)
Current assets:
ASSETS
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Short-term investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accounts receivable, net of allowance of $52,895 and $67,292, respectively . . . . . .
Inventory, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other current assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Property, plant and equipment, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Restricted cash held in trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other long-term assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
991,471
17
287,572
126,448
96,301
1,501,809
3,348,498
281,523
258,631
134,903
Total assets (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 4,729,854 $ 5,525,364
451,025 $
1,290
327,397
127,947
92,964
1,000,623
3,026,100
284,841
257,320
160,970
Current liabilities:
LIABILITIES AND EQUITY
Trade accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Accrued liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income taxes payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Current lease liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other long-term liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total liabilities (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
314,041 $
247,575
27,990
6,784
596,390
2,537,540
377,671
2,858
3,514,459
253,748
247,171
18,887
5,422
525,228
3,262,795
340,347
2,773
4,131,143
Commitments and contingencies (Note 8)
Redeemable noncontrolling interest in subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
678,604
675,283
Shareholders’ equity:
Common shares, par value $0.05 per share:
Authorized common shares 32,000; issued 10,505 and 9,295, respectively . . . . . . .
466
3,454,563
Capital in excess of par value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(10,634)
Accumulated other comprehensive income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Retained earnings (accumulated deficit) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(1,537,988)
Less: treasury shares, at cost, 1,090 and 1,090 common shares, respectively . . . . . . .
(1,315,751)
Total shareholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
590,656
128,282
Noncontrolling interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
718,938
Total liabilities and equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 4,729,854 $ 5,525,364
525
3,536,373
(11,038)
(1,841,153)
(1,315,751)
368,956
167,835
536,791
_____________________________
(1) The consolidated balance sheets include assets and liabilities of consolidated joint ventures. See Note 13—Joint
Ventures for additional information.
The accompanying notes are an integral part of these consolidated financial statements.
50
NABORS INDUSTRIES LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (LOSS)
Revenues and other income:
Year Ended December 31,
2020
2021
2022
(In thousands, except per share amounts)
Operating revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,653,766 $ 2,017,548 $ 2,134,043
1,438
Investment income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2,135,481
Total revenues and other income . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,557
2,019,105
14,992
2,668,758
Costs and other deductions:
Direct costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
General and administrative expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Research and engineering . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(Gain)/loss on debt buybacks and exchanges . . . . . . . . . . . . . . . . . . . . . .
Impairments and other charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total costs and other deductions . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income (loss) from continuing operations before income taxes . . . . . . . . .
Income tax expense (benefit):
1,666,004
228,431
49,939
665,072
177,895
(4,597)
—
131,696
2,914,440
(245,682)
1,286,896
213,559
35,153
693,381
171,476
(13,423)
66,731
53,421
2,507,194
(488,089)
1,333,072
203,515
33,564
853,699
206,274
(228,274)
410,631
28,567
2,841,048
(705,567)
Current . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total income tax expense (benefit) . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income (loss) from continuing operations, net of tax . . . . . . . . . . . . . . . . . .
Income (loss) from discontinued operations, net of tax . . . . . . . . . . . . . . . .
Net income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less: Net (income) loss attributable to noncontrolling interest. . . . . . . .
(7,430)
64,716
57,286
(762,853)
7
(762,846)
(42,795)
Net income (loss) attributable to Nabors . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (350,261) $ (569,272) $ (805,641)
(14,611)
Net income (loss) attributable to Nabors common shareholders . . . . . . . . . $ (350,261) $ (572,925) $ (820,252)
66,327
(10,706)
55,621
(543,710)
20
(543,690)
(25,582)
54,199
7,337
61,536
(307,218)
—
(307,218)
(43,043)
Less: Preferred stock dividend . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(3,653)
—
Amounts attributable to Nabors common shareholders:
Net income (loss) from continuing operations . . . . . . . . . . . . . . . . . . . . . . . $ (350,261) $ (572,945) $ (820,259)
Net income (loss) from discontinued operations . . . . . . . . . . . . . . . . . . . . . .
7
Net income (loss) attributable to Nabors common shareholders . . . . . . . . . $ (350,261) $ (572,925) $ (820,252)
20
—
Earnings (losses) per share:
Basic from continuing operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Basic from discontinued operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Diluted from continuing operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Diluted from discontinued operations . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Weighted-average number of common shares outstanding:
(40.52) $
—
(40.52) $
(40.52) $
—
(40.52) $
(76.58) $
—
(76.58) $
(76.58) $
—
(76.58) $
(118.69)
—
(118.69)
(118.69)
—
(118.69)
Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
8,898
8,898
7,605
7,605
7,059
7,059
The accompanying notes are an integral part of these consolidated financial statements.
51
NABORS INDUSTRIES LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
2022
Year Ended December 31,
2021
(In thousands)
2020
Net income (loss) attributable to Nabors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (350,261) $ (569,272) $ (805,641)
Other comprehensive income (loss), before tax:
Translation adjustment attributable to Nabors . . . . . . . . . . . . . . . . . . . . . . . . .
Pension liability amortization and adjustment . . . . . . . . . . . . . . . . . . . . . . . . .
Unrealized gains (losses) and amortization on cash flow hedges . . . . . . . . . .
Other comprehensive income (loss), before tax . . . . . . . . . . . . . . . . . . . . . . . . . .
Income tax expense (benefit) related to items of other comprehensive
(1,993)
1,645
—
(348)
2,230
(1,692)
—
538
435
210
160
805
income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other comprehensive income (loss), net of tax . . . . . . . . . . . . . . . . . . . . . . . . . . .
Comprehensive income (loss) attributable to Nabors . . . . . . . . . . . . . . . . . . . . . .
Comprehensive income (loss) attributable to noncontrolling interest . . . . . . . .
141
664
(804,977)
42,795
Comprehensive income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (307,622) $ (543,200) $ (762,182)
56
(404)
(350,665)
43,043
48
490
(568,782)
25,582
The accompanying notes are an integral part of these consolidated financial statements.
52
NABORS INDUSTRIES LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
2022
Year Ended December 31,
2021
(In thousands)
2020
$
(307,218)
$
(543,690)
$
(762,846)
853,697
64,717
318,582
31,238
(228,274)
64,365
18,194
24,638
13,133
—
(42,795)
3,516
67,502
6,188
38,672
20,830
(142,826)
(933)
2,163
349,761
(195,523)
27,397
2,669
(165,457)
1,000,000
(1,394,043)
(28,112)
1,552,500
(1,235,000)
(22,538)
—
(5,083)
—
(15,725)
(148,001)
(3,061)
33,242
442,038
475,280
$
435,990
6,048
442,038
472,246
3,034
475,280
$
$
Cash flows from operating activities:
Net income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Adjustments to net income (loss):
Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred income tax expense (benefit) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Impairments and other charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amortization of debt discount and deferred financing costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Losses (gains) on debt buyback . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Losses (gains) on long-lived assets, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Provision (recovery) of bad debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Share-based compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign currency transaction losses (gains), net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Mark-to-market loss on warrants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Noncontrolling interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Changes in operating assets and liabilities, net of effects from acquisitions:
Accounts receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other long-term assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Trade accounts payable and accrued liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income taxes payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other long-term liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net cash provided by (used for) operating activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash flows from investing activities:
Capital expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Proceeds from sales of assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net cash (used for) provided by investing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash flows from financing activities:
Proceeds from issuance of long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Reduction in long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Debt issuance costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Proceeds from revolving credit facilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Reduction in revolving credit facilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Dividends to common and preferred shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Redeemable noncontrolling interest distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Distributions to noncontrolling interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sale of non-controlling interest - special purpose acquisition company . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net cash (used for) provided by financing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Effect of exchange rate changes on cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net increase (decrease) in cash and cash equivalents and restricted cash . . . . . . . . . . . . . . . . . . . . . . . . .
Cash and cash equivalents and restricted cash, beginning of period . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash and cash equivalents and restricted cash, end of period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
665,072
7,335
—
8,138
(4,119)
7,352
—
15,828
6,689
95,909
(43,043)
869
(54,501)
928
3,690
(11,196)
61,636
8,616
39,104
501,089
693,382
(10,711)
72,497
21,359
(13,423)
23,864
(2,515)
19,362
4,800
—
(25,582)
1,298
71,805
32,037
14,166
17,914
12,143
5,140
34,930
428,776
(373,445)
26,713
(21,976)
(368,708)
(234,040)
124,301
(7,486)
(117,225)
—
(182,601)
(3,864)
335,000
(795,000)
(65)
(10,324)
(3,489)
—
(1,189)
(661,532)
(7,219)
(536,370)
1,273,510
737,140
$
700,000
(186,958)
(16,339)
1,025,000
(1,237,500)
(7,380)
(58,524)
(3,795)
276,000
(2,083)
488,421
(1,742)
798,230
475,280
$ 1,273,510
RECONCILIATION OF CASH AND CASH EQUIVALENTS AND RESTRICTED CASH
Cash and cash equivalents, beginning of period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Restricted cash, beginning of period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash and cash equivalents and restricted cash, beginning of period . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
991,471
282,039
$ 1,273,510
$
472,246
3,034
475,280
Cash and cash equivalents, end of period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Restricted cash, end of period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash and cash equivalents and restricted cash, end of period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
451,025
286,115
737,140
991,471
282,039
$ 1,273,510
The accompanying notes are an integral part of these consolidated financial statements.
53
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T
Nabors Industries Ltd. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1 Nature of Operations
Unless the context requires otherwise, references in this annual report to “we,” “us,” “our,” “the Company,” or
“Nabors” mean Nabors Industries Ltd., together with our subsidiaries. References in this annual report to “Nabors
Delaware” mean Nabors Industries, Inc., a wholly owned subsidiary of Nabors.
Our business is comprised of our global land-based and offshore drilling rig operations and other rig related services
and technologies. We provide performance tools, directional drilling services, tubular running services and innovative
technologies for our own rig fleet and those operated by third parties. In addition, we manufacture advanced drilling
equipment and provides drilling rig instrumentation. Also, we have a portfolio of technologies designed to drive energy
efficiency and emissions reductions for us and third-party customers.
With operations in over 15 countries, we are a global provider of drilling and drilling-related services for land-based
and offshore oil and natural gas wells, with a fleet of rigs and drilling-related equipment which, as of 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.
The short- and long-term implications of the military hostilities between Russia and Ukraine, which began in early
2022, are difficult to predict at this time. We continue to actively monitor this dynamic situation. As of December 31,
2022, 1.1% of our property, plant and equipment, net was located in Russia. For the year ending December 31, 2022,
1.5% of our operating revenues was from operations in Russia. We currently have no assets or operations in Ukraine.
The consolidated financial statements and related footnotes are presented in accordance with U.S. GAAP.
Note 2 Summary of Significant Accounting Policies
Principles of Consolidation
Our consolidated financial statements include the accounts of Nabors, as well as all majority owned and
non-majority owned subsidiaries required to be consolidated under U.S. GAAP. All significant intercompany accounts
and transactions are eliminated in consolidation.
We consolidate variable interest entities (“VIE’s”) when we are determined to be the primary beneficiary of a VIE.
Determination of the primary beneficiary of a VIE is based on whether an entity has (1) the power to direct activities that
most significantly impact the economic performance of the VIE and (2) the obligation to absorb losses or the right to
receive benefits of the VIE that could potentially be significant to the VIE. Our determination of the primary beneficiary
of a VIE considers all relationships between us and the VIE. Our joint venture, SANAD, which is equally owned by
Saudi Aramco and Nabors, has been consolidated. As we have the power to direct activities that most significantly
impact SANAD’s economic performance, including operations, maintenance and certain sourcing and procurement, we
have determined Nabors to be the primary beneficiary. See Note 13—Joint Ventures.
Reclassification of Prior Year Presentation
Certain prior year amounts have been reclassified for consistency with the current period presentation. These
reclassifications had no effect on the reported results of operations.
55
Cash and Cash Equivalents
Cash and cash equivalents include demand deposits and various other short-term investments with original
maturities of three months or less.
Short-term Investments
Short-term investments consist primarily of equity securities which are stated at fair value with any changes in fair
value recognized in investment income (loss) in our consolidated statements of income (loss).
Inventory
Inventory is stated at the lower of cost or net realizable value. Cost is determined using the first-in, first-out or
weighted-average costs methods and includes the cost of materials, labor and manufacturing overhead. Inventory, which
is presented net of reserves of $23.0 million and $21.9 million as of December 31, 2022 and 2021, respectively, included
the following:
December 31,
2022
2021
(In thousands)
Raw materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 118,351 $ 105,638
Work-in-progress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,368
Finished goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
19,442
$ 127,947 $ 126,448
6,121
3,475
Property, Plant and Equipment
Property, plant and equipment, including renewals and betterments, are stated at cost, while maintenance and repairs
are expensed currently. Interest costs applicable to the construction of qualifying assets are capitalized as a component of
the cost of such assets. We provide for the depreciation of our drilling rigs using the units-of-production method. For
each day a rig is operating, we depreciate it over an approximate 4,927-day period, with the exception of our jackup rigs
which are depreciated over an 8,030-day period, after provision for salvage value. For each day a rig asset is not
operating, it is depreciated over an assumed depreciable life of 20 years, with the exception of our jackup rigs, where a
30-year depreciable life is used, in each case after provision for salvage value.
Depreciation on our buildings, oilfield hauling and mobile equipment, and other machinery and equipment is
computed using the straight-line method over the estimated useful life of the asset after provision for salvage value
(buildings—10 to 30 years; oilfield hauling and mobile equipment and other machinery and equipment—3 to 10 years).
Amortization of capitalized leases is included in depreciation and amortization expense. Upon retirement or other
disposal of fixed assets, the cost and related accumulated depreciation are removed from the respective property, plant
and equipment accounts and any gains or losses are included in our consolidated statements of income (loss).
We review our assets for impairment when events or changes in circumstances indicate that their carrying amounts
may not be recoverable. If the estimated undiscounted future cash flows are not sufficient to support the asset’s recorded
value, an impairment charge is recognized to the extent the carrying amount of the long-lived asset exceeds its estimated
fair value. Management considers a number of factors such as estimated future cash flows from the assets, appraisals and
current market value analysis in determining fair value. The determination of future cash flows requires the estimation of
utilization, dayrates, operating margins, sustaining capital and remaining economic life. Such estimates can change
based on market conditions, technological advances in the industry or changes in regulations governing the industry.
Significant and unanticipated changes to the assumptions could result in future impairments. A significantly prolonged
period of lower oil and natural gas prices could adversely affect the demand for and prices of our services, which could
result in future impairment charges. As the determination of whether impairment charges should be recorded on our
long-lived assets is subject to significant management judgment, and an impairment of these assets could result in a
material charge on our consolidated statements of income (loss), management believes that accounting estimates related
to impairment of long-lived assets are critical.
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. Fair value is determined in the same manner as a long-lived asset that is held and used.
56
Goodwill
We have historically reviewed goodwill for impairment annually during the second quarter of each fiscal year, or
more frequently if events or changes in circumstances indicate that the carrying amount of such goodwill and intangible
assets may exceed their fair value. We initially assess goodwill for impairment based on qualitative factors to determine
whether the existence of events or circumstances leads to a determination that it is more likely than not that the fair value
of one of our reporting units is greater than its carrying amount. 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
fair values calculated in these impairment tests were determined using discounted cash flow models, which require the
use of significant unobservable inputs, representative of a Level 3 fair value measurement. Our cash flow models involve
assumptions based on our utilization of rigs or other oil and gas service equipment, revenues and earnings from
affiliates, as well as direct costs, general and administrative costs, depreciation, applicable income taxes, capital
expenditures and working capital requirements. Our fair value estimates of these reporting units are sensitive to varying
dayrates, utilization and costs. Our discounted cash flow projections for each reporting unit were based on financial
forecasts. The future cash flows were discounted to present value using discount rates determined to be appropriate for
each reporting unit. Terminal values for each reporting unit were calculated using a Gordon Growth methodology with a
long-term growth rate of approximately 2%.
Another factor in determining whether impairment has occurred is the relationship between our market
capitalization and our book value. As part of our annual review, we compared the sum of our reporting units’ estimated
fair value, which included the estimated fair value of non-operating assets and liabilities, less debt, to our market
capitalization and assessed the reasonableness of our estimated fair value. Any of the above-mentioned factors may
cause us to re-evaluate goodwill during any quarter throughout the year. Due to industry conditions that existed at
March 31, 2020 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. Based on the results, we recognized a goodwill impairment of $27.8 million in the first
quarter of 2020 which represented the remaining balance of our goodwill at the time. We have not had any goodwill
assets in our financial statements since 2020. See Note 3—Impairments and Other Charges.
Litigation and Insurance Reserves
We estimate our reserves related to litigation and insurance based on the facts and circumstances specific to the
litigation and insurance claims and our past experience with similar claims. We maintain actuarially determined accruals
in our consolidated balance sheets to cover self-insurance retentions. See Note 15—Commitments and Contingencies
regarding self-insurance accruals. We estimate the range of our liability related to pending litigation when we believe the
amount and range of loss can reasonably be estimated. We record our best estimate of a loss when the loss is considered
probable. When a liability is probable and there is a range of estimated loss with no best estimate in the range, we record
the minimum estimated liability related to the lawsuits or claims. As additional information becomes available, we
assess the potential liability related to our pending litigation and claims and revise our estimates. Due to uncertainties
related to the resolution of lawsuits and claims, the ultimate outcome may differ from our estimates. For matters where
an unfavorable outcome is reasonably possible and significant, we disclose the nature of the matter and a range of
potential exposure, unless an estimate cannot be made at the time of disclosure.
Revenue Recognition
We recognize revenues and costs on daywork contracts daily as the work progresses over the contract term. For
certain contracts, we receive lump sum payments for the mobilization of rigs and other drilling equipment. We defer
revenue related to mobilization periods and recognize the revenue over the term of the related drilling contract.
Costs incurred related to a mobilization period for which a contract is secured are deferred and recognized over the
term of the related drilling contract. Costs incurred to relocate rigs and other drilling equipment to areas in which a
contract has not been secured are expensed as incurred. We defer recognition of revenue on amounts received from
customers for prepayment of services until those services are provided.
57
We recognize revenue for top drives and other capital equipment we manufacture upon transfer of control, which
generally occurs when the product has been shipped to the customer.
We recognize, as operating revenue, proceeds from business interruption insurance claims in the period that the
claim is realizable. Proceeds from casualty insurance settlements in excess of the carrying value of damaged assets are
recognized in other, net in our consolidated statement of income (loss) in the period that the applicable proof of loss
documentation is received. Proceeds from casualty insurance settlements that are expected to be less than the carrying
value of damaged assets are recognized at the time the loss is incurred and recorded in other, net in our consolidated
statement of income (loss).
We recognize reimbursements received for out of pocket expenses incurred as revenues and account for out of
pocket expenses as direct costs.
Research and Engineering
Research and engineering expenses are expensed as incurred and include costs associated with the research and
development of new products and services and costs associated with sustaining engineering of existing products and
services.
Income Taxes
We are a Bermuda exempted company and are not subject to income taxes in Bermuda. We have provided for
income taxes based on the tax laws and rates in effect in the countries where we operate and earn income. The income
taxes in these jurisdictions vary substantially. Our worldwide effective tax rate for financial statement purposes will
continue to fluctuate from year to year due to changes in the geographic mix of pre-tax earnings.
We recognize increases to our tax reserves for uncertain tax positions along with interest and penalties as an
increase to other long-term liabilities.
For U.S. and other jurisdictional income tax purposes, we have net operating loss carryforwards and other tax
attributes that we are required to assess quarterly for potential valuation allowances. We consider the sufficiency of
existing temporary differences and expected future earnings levels in determining the amount, if any, of valuation
allowance required against such carryforwards and against deferred tax assets.
Foreign Currency Translation
For certain of our foreign subsidiaries, such as those in Canada, the local currency is the functional currency, and
therefore translation gains or losses associated with foreign-denominated monetary accounts are accumulated in a
separate section of the consolidated statements of changes in equity. For our other international subsidiaries, the U.S.
dollar is the functional currency, and therefore local currency transaction gains and losses, arising from remeasurement
of payables and receivables denominated in local currency, are included in our consolidated statements of income (loss).
Special Purpose Acquisition Company
Nabors Energy Transition Corp. (“NETC”) is a consolidated VIE that is included in the accompanying consolidated
financial statements under the following captions:
Restricted cash held in trust
As part of the initial public offering of NETC and subsequent private placement warrant transactions in November 2021,
$281.5 million was deposited in an interest-bearing U.S. based trust account (“Trust Account”). As of December 31,
2022 and December 31, 2021, the Trust Account balance was $284.8 million and $281.5 million, respectively. The
funds held in the Trust Account are invested in money market funds meeting certain conditions under Rule 2a-7 under
the Investment Company Act, which invest only in direct U.S. government treasury obligations. The funds in the trust
account will only be released to NETC upon completion of a business combination or in connection with redemptions of
any of the redeemable common shares, except with respect to interest earned on the funds which may be withdrawn to
pay NETC taxes.
58
Redeemable noncontrolling interest in subsidiary
The company accounts for the non-controlling interest in NETC as subject to possible redemption in accordance
with FASB ASC Topic 480 “Distinguishing Liabilities from Equity.” NETC’s common stock features certain
redemption rights, which are considered to be outside the company’s control and subject to occurrence of uncertain
future events. Accordingly, $284.8 million and $281.5 million of non-controlling interest subject to possible redemption
is presented at full redemption value as temporary equity, outside of the stockholders’ equity section in the
accompanying consolidated financial statements as of December 31, 2022 and 2021, respectively.
Nabors will recognize any future changes in redemption value immediately as they occur – i.e., adjust the carrying
amount of the instrument to its current redemption amount at each reporting period.
Use of Estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make certain
estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities, the
disclosures of contingent assets and liabilities at the balance sheet date and the amounts of revenues and expenses
recognized during the reporting period. Actual results could differ from such estimates. Areas where critical accounting
estimates are made by management include:
•
•
•
•
•
•
depreciation of property, plant and equipment;
impairment of long-lived assets;
impairment of goodwill and intangible assets;
income taxes;
litigation and self-insurance reserves; and
fair value of assets acquired and liabilities assumed.
Recent Accounting Pronouncements Adopted
In August 2020, the Financial Accounting Standards Board (“FASB”) issued ASU 2020-06, Debt with Conversion
and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-
40). This ASU (a) simplifies an issuer’s accounting for convertible instruments by eliminating two of the three models
in ASC 470-20 that require separate accounting for embedded conversion features, (b) amends diluted EPS calculations
for convertible instruments by requiring the use of the if-converted method and (c) simplifies the settlement assessment
entities are required to perform on contracts that can potentially settle in an entity’s own equity by removing certain
requirements. ASU 2020-06 was required to be adopted on January 1, 2022. The adoption of this ASU was determined
not to be material to our condensed consolidated financial statements. Using the modified retrospective method, the
adoption of this ASU resulted in a pre-tax adjustment of $27.5 million to eliminate the remaining unamortized debt
discount within long-term debt on our condensed consolidated balance sheet. Also, we recognized the cumulative effect
of this change as a $60.7 million adjustment to the opening balance of retained earnings (accumulated deficit) and an
$81.9 million adjustment to capital in excess of par in our condensed consolidated statement of changes in equity for the
year ended December 31, 2022. We will revise our condensed consolidated statement of changes in equity for the three
months ended March 31, 2022, in future filings to correctly reflect the cumulative effect of this change as of January 1,
2022.
59
Note 3 Impairments and Other Charges
The components of impairments and other charges are provided below:
Goodwill impairments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Intangible asset impairment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
US Drilling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Canada Drilling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
International Drilling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Drilling Solutions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Rig Technologies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Oil and gas related assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Severance and transaction related costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Year Ended December 31,
2021
2020
(In thousands)
27,798
— $
83,624
—
87,333
—
—
58,545
117,113
215
28,624
—
2,936
418
24,543
—
19,070
6,228
19,590
1,325
66,731 $ 410,631
We review our assets for impairment when events or changes in circumstances indicate that their carrying amounts
may not be recoverable. If the estimated undiscounted future cash flows are not sufficient to support an asset’s recorded
value, an impairment charge is recognized to the extent the carrying amount of the long-lived asset exceeds its estimated
fair value. In determining an asset’s fair value, management considers a number of factors, such as estimated future cash
flows from the asset, appraisals, and current market value analysis. The determination of future cash flows requires the
estimation of utilization, dayrates, operating margins, sustaining capital and remaining economic life. Such estimates can
change based on market conditions, technological advances in the industry or changes in regulations governing the
industry. A significantly prolonged period of lower oil and natural gas prices could continue to adversely affect the
demand for and prices of our services, which could result in future impairment charges.
For the year ended December 31, 2021
Canada Drilling
During 2021, we recognized an impairment of $58.5 million related to the sale of the Canada Drilling assets in July
2021. See Note 5—Acquisitions and Dispositions for additional details.
Severance and transaction related costs
During 2021, we recognized charges of $6.2 million due to severance and reorganization costs from ongoing cost
cutting and consolidation measures that we enacted in response to the challenging industry environment.
For the year ended December 31, 2020
Goodwill impairments
We have historically performed our annual goodwill impairment test during the second quarter of each year. In
addition to our annual impairment test, we are required to regularly assess whether a triggering event has occurred which
would require interim impairment testing. Due to industry conditions during the first quarter of 2020 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. Based on the results of our goodwill test performed, we recognized impairment charges to write off the
remaining goodwill balances attributable to our Drilling Solutions and Rig Technologies operating segments of
$11.4 million and $16.4 million, respectively.
60
Intangible asset impairments
We also reviewed our intangible assets for impairment in the first quarter of 2020 as a result of industry conditions.
The fair value of our intangible assets is determined using discounted cash flow models. Based on our updated
projections of future cash flows, the fair value of our intangible assets did not support the carrying value. As such, we
recognized an impairment of $83.6 million to write off all remaining intangible assets attributable to our Drilling
Solutions and Rig Technologies operating segments.
US Drilling
Due to the sharp decline in activity in the US in the first part of 2020, we recorded impairments of $33.3 million and
functionally retired $54.0 million of our lower specification rigs in the Lower 48 and Alaska markets totaling
approximately $87.3 million. We determined that the assets were either functionally obsolete, would be no longer used,
or the carrying value was not fully recoverable and was in excess of its fair value.
International Drilling
We impaired $30.5 million and wrote down or retired $86.6 million totaling $117.1 million during 2020, which
represented most of our rig and drilling-related equipment in several international markets which have been negatively
affected by current market conditions and other factors, including Venezuela, Iraq, Algeria and certain offshore markets
in the eastern hemisphere. Due to our lack of work in these markets and limited visibility to any possibility of further
work, we have taken steps to relocate these assets to other markets, or in some cases, to retire, sell or otherwise dispose
of these assets.
Drilling Solutions
We impaired or retired $28.6 million of fixed assets, equipment and inventory in our Drilling Solutions segment as a
result of the significant decline in utilization experienced over the first half of 2020. We determined that the assets were
either functionally obsolete, would be no longer used, or the carrying value was not fully recoverable and was in excess
of its fair value.
Rig Technologies
As a result of our periodic analysis on inventories for our Rig Technologies segment, we recorded a $2.9 million
provision for obsolescence.
Oil & gas related assets
During 2020, we recognized an impairment of $24.5 million to various assets related to our retained interest in the
oil and gas properties located on the North Slope of Alaska.
Severance and transaction related costs
During 2020, we recognized charges of $19.1 million due to severance and other related costs incurred to right-size
our cost structure.
Other assets
In 2020, we wrote down or provided for $19.6 million of certain other assets including receivables related to our
operations. The charges were primarily attributable to markets which have been adversely impacted by foreign sanctions
or other political risk issues as well as bankruptcies or other financial problems.
Note 4 Accounts Receivable Purchase and Sales Agreements
The Company has entered into an accounts receivable sales agreement (the “A/R Sales Agreement”) and an
accounts receivable purchase agreement (the “A/R Purchase Agreement,” and, together with the A/R Sales Agreement,
the “A/R Agreements”). As part of the A/R Agreements, the Company continuously sells designated eligible pools of
receivables
61
as they are originated by it and certain U.S. subsidiaries to a separate, bankruptcy-remote, special purpose entity (“SPE”)
pursuant to the A/R Sales Agreement. Pursuant to the A/R Purchase Agreement, the SPE in turn sells, transfers, conveys
and assigns to unaffiliated third party financial institutions (the “Purchasers”) all the rights, title and interest in and to its
pool of eligible receivables (the “Eligible Receivables”). The sale of the Eligible Receivables qualifies for sale
accounting treatment in accordance with ASC 860 – Transfers and Servicing. During the period of this program, cash
receipts from the Purchasers at the time of the sale are classified as operating activities in our consolidated statement of
cash flows and the associated receivables are derecognized from the Company’s consolidated balance sheet at the time
of the sale. The remaining receivables held by the SPE were pledged to secure the collectability of the sold Eligible
Receivables. Subsequent collections on the pledged receivables, which have not been sold, will be classified as operating
cash flows in our consolidated statement of cash flows at the time of collection. The amount of receivables pledged as
collateral as of December 31, 2022 and December 31, 2021 is approximately $62.3 million and $44.2 million,
respectively.
In July 2021, we entered into the First Amendment to the A/R Purchase Agreement (the “First Amendment”), which
reduced the commitments of the third-party financial institutions (the “Purchasers”) from $250 million to $150 million
and extended the term of the agreements by two years, to August 13, 2023.
In June 2022, we entered into the Third Amendment to the A/R Purchase Agreement which extended the term of the
A/R Purchase Agreement to August 13, 2024 and increased the commitments of the Purchasers under the A/R Purchase
Agreement from $150 million to $250 million. Subject to Purchaser approval, the commitments of the Purchasers may
be increased to $300 million. The expiration of the 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 $88.5 million 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 sale to the Purchasers under the A/R Purchase Agreement fluctuates over time based on
the total amount of Eligible Receivables generated during the normal course of business after excluding excess
concentrations and certain other ineligible receivables. As of December 31, 2022, approximately $208.0 million had
been sold to and as yet uncollected by the Purchasers. As of December 31, 2021, the corresponding number was
approximately $113.0 million.
Note 5 Acquisitions and Dispositions
In July 2021, we closed on the sale of our Canada Drilling segment assets for approximately $94.0 million. These
assets included our fleet of land-based drilling rigs and related equipment and property. This transaction did not
represent a strategic shift in our operations and will not have a major effect on our operations and financial results going
forward.
Note 6 Fair Value Measurements
Fair value is the price that would be received upon sale of an asset or paid upon transfer of a liability in an orderly
transaction between market participants at the measurement date (exit price). We utilize market data or assumptions that
market participants would use in pricing the asset or liability, including assumptions about risk and the risks inherent in
the inputs to the valuation technique. These inputs can be readily observable, market-corroborated, or generally
unobservable. We primarily apply the market approach for recurring fair value measurements and endeavor to utilize the
best information available. Accordingly, we employ valuation techniques that maximize the use of observable inputs and
minimize the use of unobservable inputs.
The use of unobservable inputs is intended to allow for fair value determinations in situations where there is little, if
any, market activity for the asset or liability at the measurement date. We are able to classify fair value balances utilizing
a fair value hierarchy based on the observability of those inputs.
Under the fair value hierarchy:
• Level 1 measurements include unadjusted quoted market prices for identical assets or liabilities in an active
market;
• Level 2 measurements include quoted market prices for identical assets or liabilities in an active market
that have been adjusted for items such as effects of restrictions for transferability and those that are not
62
quoted but are observable through corroboration with observable market data, including quoted market
prices for similar assets; and
• Level 3 measurements include those that are unobservable and of a subjective nature.
Recurring Fair Value Measurements
Our financial assets that are accounted for at fair value on a recurring basis as of December 31, 2022 and 2021
consisted of short term investments and restricted cash held in trust. During 2022, there were no transfers of our financial
assets between Level 1 and Level 2 measures. Our financial assets are classified in their entirety based on the lowest
level of input that is significant to the fair value measurement. As of December 31, 2022 and 2021, our restricted cash
held in trust was carried at fair market value and totaled $284.8 million and $281.5 million, respectively, and consisted
of Level 1 measurements. No material Level 2 or Level 3 measurements existed for our financial assets for any of the
periods presented.
Our financial liabilities that are accounted for at fair value on a recurring basis as of December 31, 2022 consisted of
the Warrants and are included in other long-term liabilities in the accompanying consolidated financial statements.
During the first quarter of 2022, the Warrants began using Level 1 inputs instead of Level 3 inputs due to increased
trading volume. As of December 31, 2022, the Warrants were carried at fair market value and totaled $80.9 million.
The fair value of the Warrants was initially measured at fair value using a Monte Carlo option pricing model. As of
December 31, 2021, the estimated fair value of the Warrants was determined using Level 3 inputs. Inherent in the option
pricing simulation are assumptions related to expected stock-price volatility, expected life and risk-free interest rate.
The Company estimates the volatility of the Warrants based on implied and historical volatility of the company’s traded
common stock. The risk-free interest rate is based on the U.S. Treasury zero-coupon yield curve on the grant date for a
maturity similar to the expected remaining life of the warrants. The expected life of the Warrants is based on the
Company’s ability to initiate expiration, subject to a 20 business day notice period. As of December 31, 2021, the
Warrants were valued at $0.1 million.
Nonrecurring Fair Value Measurements
We applied fair value measurements to our nonfinancial assets and liabilities measured on a nonrecurring basis,
which consist of measurements primarily to assets held-for-sale, goodwill, intangible assets and other long-lived assets
and assets acquired and liabilities assumed in a business combination. Based upon our review of the fair value hierarchy,
the inputs used in these fair value measurements were considered Level 3 inputs.
Fair Value of Debt Instruments
We estimate the fair value of our debt instruments in accordance with U.S. GAAP. The fair value of our long-term
debt and revolving credit facilities is estimated based on quoted market prices or prices quoted from third-party financial
institutions, thus a Level 2 measurement. The carrying and fair values of these liabilities were as follows:
63
Effective
Interest
Rate
2022
Carrying
Value
As of December 31,
Fair
Value
Effective
Interest
Rate
(Dollars in thousands)
2021
Carrying
Value
Fair
Value
5.50% senior notes due January 2023 . . .
5.10% senior notes due September 2023 .
0.75% senior exchangeable notes due
January 2024 . . . . . . . . . . . . . . . . . . . . . .
5.75% senior notes due February 2025 . .
6.50% senior priority guaranteed notes
6.13 % $
5.46 %
— $
52,004
—
51,354
5.87 % $
5.42 %
24,446 $
82,703
24,736
84,044
0.97 %
6.02 %
177,005
474,092
164,898
454,773
5.90 %
6.03 %
259,839
548,458
257,730
508,881
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 . . . . . . . . . . . . . . . . . . . . . .
2018 revolving credit facility . . . . . . . . . .
Less: deferred financing costs . . . . . . . . .
7.70 %
— %
354,400
389,609
—
—
$ 2,559,996 $ 2,455,050
7.70 %
3.72 %
389,609
460,000
346,966
460,000
$ 3,293,600 $ 3,206,746
22,456
$ 2,537,540
30,805
$ 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.
Note 7 Share-Based Compensation
Total share-based compensation expense, which includes stock options and restricted shares, was $15.8 million,
$19.2 million and $24.6 million for 2022, 2021 and 2020, respectively. Compensation expense related to awards of
restricted shares totaled $15.8 million, $19.1 million and $23.6 million for 2022, 2021 and 2020, respectively, which is
included in general and administrative and research and engineering expenses in our consolidated statements of income
(loss). Share-based compensation expense has been allocated to our various reportable segments. See Note 18—Segment
Information.
In addition to the time-based restricted stock share-based awards, historically we have provided two types of
performance share awards: the first, based on our performance measured against pre-determined performance metrics
(“Performance Shares”) and the second, based on market conditions measured against a predetermined peer group
(“TSR Shares”).
In 2020, under the Amended and Restated 2016 Stock Plan, the company introduced new Performance-Based
Restricted Stock Units (“PSUs”) to move away from Performance Shares. PSUs are granted at the beginning of the one-
year performance period and they are earned at the end of the same period, depending on performance.
Stock Option Plans
As of December 31, 2022, we had several stock plans under which options to purchase our common shares could be
granted to key officers, directors and managerial employees of Nabors and its subsidiaries. Options granted under the
plans have fair market value on the date of the grant. Options granted under the plans generally are exercisable in
varying cumulative periodic installments after one year. In the case of certain key executives and directors, options
granted may vest immediately on the grant date. Options granted under the plans expire ten years from the date of grant.
There are approximately 0.4 million common shares available for issuance in the form of either restricted shares or stock
options, under these plans as of December 31, 2022.
64
The fair value of each option award is estimated on the date of grant using the Black-Scholes option-pricing model
which uses assumptions for the risk-free interest rate, volatility, dividend yield and the expected term of the options. The
risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant for a period equal to the
expected term of the option. Expected volatilities are based on implied volatilities from traded options on Nabors’
common shares, historical volatility of Nabors’ common shares, and other factors. We use historical data to estimate the
expected term of the options and employee terminations within the option-pricing model; separate groups of employees
that have similar historical exercise behavior are considered separately for valuation purposes. The expected term of the
options represents the period of time that the options granted are expected to be outstanding.
Stock option transactions under our various stock-based employee compensation plans are presented below:
Weighted-
Average
Exercise
Weighted-
Average
Remaining
Contractual
Aggregate
Intrinsic
Options
Options outstanding as of December 31, 2021 . . . . . . . . . . . . . . . . . . . . . . .
Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Expired . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Options outstanding as of December 31, 2022 . . . . . . . . . . . . . . . . . . . . . . .
Options exercisable as of December 31, 2022 . . . . . . . . . . . . . . . . . . . . . . .
Shares Price
Term
Value
(In thousands, except exercise price and term)
16 $ 419.22
1
147.66
734.90
(1)
16 $ 391.76
16 $ 391.76
4.91 years $
4.91 years $
211
211
No options were awarded during 2020. During 2021, we awarded options vesting immediately to purchase 963 of
our common stock to certain of our directors. During 2022, we awarded options vesting immediately to purchase 1,056
of our common stock to certain of our directors. There were no unvested options outstanding at the end of 2020, 2021 or
2022.
The fair value of stock options granted during 2022 and 2021 was calculated using the Black-Scholes option pricing
model and the following weighted-average assumptions:
Weighted average fair value of options granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Weighted average risk free interest rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Dividend yield . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Volatility (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Expected life (in years) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2022
111.23 $
3.69%
0.00%
111.50%
4.0
2021
72.69
0.72%
0.00%
102.50%
4.0
(1)
Expected volatilities are based on implied volatilities from publicly traded options to purchase Nabors’
common shares, historical volatility of Nabors’ common shares and other factors.
There were no options exercised during 2022, 2021 or 2020. The total fair value of options that vested during the
years ended December 31, 2022 and 2021 was $0.2 million and $0.1 million, respectively.
Restricted Shares
Our stock plans allow grants of restricted shares. Restricted shares are issued on the grant date but cannot be sold or
transferred. Restricted share values are based on stock value at grant date. Restricted shares vest in varying periodic
installments ranging up to four years.
65
A summary of our restricted shares as of December 31, 2022, and the changes during the year then ended, is
presented below:
Restricted shares
Weighted-Average
Grant-Date Fair
Outstanding
Value
(In thousands, except fair value)
Unvested as of December 31, 2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Vested . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Forfeited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Unvested as of December 31, 2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
102 $
112
(45)
(6)
163 $
127.00
132.30
142.59
120.59
126.26
During 2022, 2021 and 2020, we awarded 112,203, 82,722 and 4,156 restricted shares, respectively, to our
employees and directors. These awards had an aggregate value at their date of grant of $14.8 million, $8.7 million and
$0.1 million, respectively, and were scheduled to vest over a period of up to four years. The fair value of restricted
shares that vested during 2022, 2021 and 2020 was $6.3 million, $2.5 million and $2.6 million, respectively.
As of December 31, 2022, there was $14.3 million of total future compensation cost related to unvested restricted
share awards that are expected to vest. That cost is expected to be recognized over a weighted-average period of 2.65
years.
Restricted Shares Based on Performance Conditions
The Performance Share awards granted were based upon achievement of specific financial or operational objectives.
During January 2020, we awarded 59,490 restricted shares with an aggregate fair value at their date of grant of $8.8
million. The number of shares granted was determined by the percentage of performance goals achieved during fiscal
year 2019 and had vesting over a period of three years to some of our executives.
The following table sets forth information regarding outstanding restricted shares based on performance conditions
as of December 31, 2022:
Performance based restricted shares
Weighted-Average
Grant-Date Fair
Outstanding
Value
Outstanding as of December 31, 2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Vested . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Outstanding as of December 31, 2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(In thousands, except fair value)
$
56
(36)
20 $
150.02
151.13
148.00
During 2022, 2021 and 2020, we granted awards to certain of our executive officers covering a total of 49,065,
95,902 and 31,204 PSUs, respectively. The number of earned PSUs that ultimately vest over three years, following
conclusion of the performance period, is determined based upon on achievement of specific financial or operational
goals. The number of PSUs that can be earned, range from a minimum of 30% of the PSU awards to a maximum of
200%, of the PSUs granted.
The following table sets forth information regarding outstanding PSUs based on performance conditions as of
December 31, 2022:
Restricted Stock Units
Weighted-Average
Grant-Date Fair
Outstanding
Value
Outstanding as of December 31, 2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Vested . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Outstanding as of December 31, 2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
66
(In thousands, except fair value)
$
107
49
(43)
113 $
94.26
81.09
102.94
85.31
Restricted Shares Based on Market Conditions
During 2022, 2021 and 2020, we granted awards for 47,622, 61,997 and 22,931 TSR Shares, respectively, which are
equity classified awards and will vest on our performance compared to our peer group over a three-year period. These
awards had an aggregate fair value at their date of grant of $2.3 million, $2.2 million and $2.5 million, respectively, after
consideration of all assumptions.
The grant date fair value of these awards was based on a Monte Carlo model, using the following assumptions:
Year Ended December 31,
2021
2020
2022
Risk free interest rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Expected volatility. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Closing stock price at grant date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 81.09 $
Expected term (in years) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1.03%
92.00%
0.18%
108.00%
1.57%
74.00%
60.62 $ 148.00
3.0
3.0
3.0
The following table sets forth information regarding outstanding restricted shares based on market conditions as of
December 31, 2022:
Market based restricted shares
Weighted-Average
Grant-Date Fair
Value
Outstanding
Outstanding as of December 31, 2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Outstanding as of December 31, 2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(In thousands, except fair value)
55.29
49
53.03
85
48
133 $
$
As of December 31, 2022, there was $2.3 million of total future compensation cost related to unvested TSR Share
awards. The TSR Shares will amortize over a weighted average remaining period of 1.68 years.
Note 8 Property, Plant and Equipment
The major components of our property, plant and equipment are as follows:
December 31,
2022
2021
(In thousands)
Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Buildings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Drilling rigs and related equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Oilfield hauling and mobile equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other machinery and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less: accumulated depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
22,672 $
134,063
11,722,404
233,708
216,233
22,955
130,917
11,718,450
243,850
200,740
$ 12,329,080 $ 12,316,912
(8,968,414)
$ 3,026,100 $ 3,348,498
(9,302,980)
Depreciation expense included in depreciation and amortization expense in our consolidated statements of income
(loss) totaled $663.1 million, $689.2 million and $851.8 million during 2022, 2021 and 2020, respectively.
Repair and maintenance expense included in direct costs in our consolidated statements of income (loss) totaled
$202.5 million, $153.9 million and $154.2 million during 2022, 2021 and 2020, respectively.
Note 9 Financial Instruments and Risk Concentration
We may be exposed to certain market risks arising from the use of financial instruments in the ordinary course of
business. These risks arise primarily as a result of potential changes in the fair market value of financial instruments that
would result from adverse fluctuations in foreign currency exchange rates, credit risk, interest rates, and marketable and
non-marketable security prices as discussed below.
67
Foreign Currency Risk
We operate in a number of international areas and are involved in transactions denominated in currencies other than
U.S. dollars, which exposes us to foreign exchange rate risk or foreign currency devaluation risk. 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. A
foreign exchange contract is a foreign currency transaction, defined as an agreement to exchange different currencies at a
given future date and at a specified rate.
Credit Risk
Our financial instruments that potentially subject us to concentrations of credit risk consist primarily of cash
equivalents, short-term and long-term investments and accounts receivable. Cash equivalents such as deposits and
temporary cash investments are held by major banks or investment firms. Our short-term and long-term investments are
managed within established guidelines that limit the amounts that may be invested with any one issuer and provide
guidance as to issuer credit quality. We believe that the credit risk in our cash and investment portfolio is minimized as a
result of the mix of our investments. In addition, our trade receivables are with a variety of U.S., international and non-
U.S. national oil and gas companies.
As of December 31, 2022, approximately 33% and 13% of our net accounts receivable balance was related to our
operations in Saudi Arabia and Mexico, respectively. Management considers this credit risk to be limited due to the
financial resources of these companies. We perform ongoing credit evaluations of our customers, and we generally do
not require material collateral. We do occasionally require prepayment of amounts from customers whose
creditworthiness is in question prior to providing services to them. We maintain reserves for potential credit losses, and
these losses historically have been within management’s expectations.
Interest Rate and Marketable and Non-marketable Security Price Risk
Our financial instruments that are potentially sensitive to changes in interest rates include our floating rate debt
instruments comprised of the 2022 Credit Agreement and 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 and 7.375% and 9.00%
senior priority guaranteed notes.
We may utilize derivative financial instruments that are intended to manage our exposure to interest rate risks. The
use of derivative financial instruments could expose us to further credit risk and market risk. Credit risk in this context is
the failure of a counterparty to perform under the terms of the derivative contract. 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.
We attempt to minimize credit risk in derivative instruments by entering into transactions with major financial
institutions that have a significant asset base. Market risk related to derivatives is the adverse effect on the value of a
financial instrument that results from changes in interest rates. 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.
68
Note 10 Debt
Debt consisted of the following:
December 31, December 31,
2022
2021
(In thousands)
— $
5.50% senior notes due January 2023 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
5.10% senior notes due September 2023 (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
0.75% senior exchangeable notes due January 2024 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5.75% senior notes due February 2025 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6.50% senior priority guaranteed notes due February 2025 . . . . . . . . . . . . . . . . . . . . . . . . .
9.00% senior priority guaranteed notes due February 2025 . . . . . . . . . . . . . . . . . . . . . . . . .
7.25% senior guaranteed notes due January 2026 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
7.375% senior priority guaranteed notes due May 2027 . . . . . . . . . . . . . . . . . . . . . . . . . . .
7.50% senior guaranteed notes due January 2028 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2018 revolving credit facility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
24,446
82,703
259,839
548,458
50,485
218,082
559,978
700,000
389,609
460,000
$ 2,559,996 $ 3,293,600
30,805
Less: deferred financing costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,537,540 $ 3,262,795
52,004
177,005
474,092
—
209,384
557,902
700,000
389,609
—
22,456
(1) The 5.10% senior notes due September 2023 were classified as long-term as of December 31, 2022 because we had
the ability and intent to refinance this obligation utilizing our 2022 Credit Agreement.
As of December 31, 2022, the principal amount and maturities of our primary debt for each of the five years
following 2022 and thereafter are as follows:
2023 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
2024 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2025 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2026 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2027 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
52,092 (1)
177,005 (2)
683,476 (3)
557,902 (4)
700,000 (5)
389,609 (6)
$
2,560,084
Paid at Maturity
(In thousands)
(1) Represents our 5.10% senior notes due September 2023.
(2) Represents our 0.75% senior notes due January 2024.
(3) Represents our 5.75% senior notes due February 2025 and our 9.0% senior priority guaranteed notes due February
2025.
(4) Represents our 7.25% senior notes due January 2026 and our 2022 credit agreement.
(5) Represents our 7.375% senior priority guaranteed notes due May 2027.
(6) Represents our 7.50% senior notes due January 2028.
Nabors Delaware’s fixed rate 5.10%, and 5.75% senior unsecured notes are fully and unconditionally guaranteed by
us. The notes rank equal in right of payment to all Nabors Delaware’s existing and future senior unsubordinated debt.
The notes rank senior in right of payment to all Nabors Delaware’s existing and future senior subordinated and
subordinated debt, if any. Our guarantee of the notes is unsecured and ranks equal in right of payment to all our
unsecured and unsubordinated indebtedness from time to time outstanding. The notes are subject to redemption by
Nabors Delaware, in whole or in part, at any time generally at a redemption price equal to the greater of (i) 100% of the
principal amount of the notes then outstanding to be redeemed; or (ii) the sum of the present values of the remaining
69
scheduled payments of principal and interest, determined in the manner set forth in the applicable indenture. In the event
of a change in control triggering event, as defined in the indenture, the holders of notes may require Nabors Delaware to
purchase all or any part of each note in cash equal to 101% of the principal amount plus accrued and unpaid interest, if
any, to the date of purchase, except to the extent Nabors Delaware has previously exercised its right to redeem the notes.
The notes have customary covenants, including limitations on the incurrence of liens and entering into sale and
leaseback transactions as well as customary events of default.
During 2022, 2021 and 2020, we repurchased $99.3 million, $105.9 million and $372.0 million (excluding the
January 2020 Tender Offers), aggregate principal amount of our senior unsecured notes for approximately $98.5 million,
$93.8 million and $300.9 million, respectively, in cash, reflecting principal, accrued and unpaid interest. Also, during
the year ended December 31, 2022, $131.7 million in maturity value of our notes were tendered by warrant holders, and
retired, in connection with exercises of the common stock warrants. In January 2022, we repaid the remaining
outstanding aggregate principal balance of the 6.5% senior priority guaranteed notes due February 2025 of $50.5 million,
and in November, we repaid the remaining outstanding aggregate principal balance of the 5.50% senior notes due
January 2023 of $19.7 million. In connection with such repurchases, during 2022, 2021 and 2020, we recognized a net
gain of approximately $4.6 million, $13.4 million and $69.2 million, respectively.
Exchange Transactions
During the first quarter of 2021, we entered into two private exchange transactions in which Nabors Delaware
exchanged 9.0% senior priority guaranteed notes due 2025 (the “9.0% Exchange Notes”) for various amounts of existing
outstanding notes. Nabors Delaware did not receive any cash proceeds from the issuance of the Exchange Notes.
Collectively from the series of exchanges, Nabors Delaware issued $26.1 million aggregate principal amount of the 9.0%
Exchange Notes in exchange for $40.0 million aggregate principal amount of various Notes.
We recorded a minimal gain in connection with the exchange transactions, which was accounted for in accordance
with ASC 470-60, Troubled Debt Restructuring by Debtors. Under ASC 470-60, a gain is recorded in an amount equal
to the sum of the future undiscounted payments (principal and interest) related to the new Exchange Notes plus the costs
incurred in connection with the transaction, less the carrying value of the notes that were exchanged. In relation to the
transactions, we recorded $9.4 million related to future contractual interest payments on the new Exchange Notes and
have included this amount in accrued liabilities and other long-term liabilities.
The aggregate principal amounts and recognized gain for such transactions were as follows:
Exchanged
0.75% senior exchangeable notes due January 2024 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5.75% senior notes due February 2025 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Aggregate principal amount exchanged . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Aggregate principal amount of debt issued in exchanges. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
0.75% Senior Exchangeable Notes Due January 2024
Year ended December
31,
2021
(in thousands)
$
35,000
5,000
40,000
26,050
In January 2017, Nabors Delaware issued $575.0 million in aggregate principal amount of 0.75% exchangeable
senior unsecured notes due 2024, which are fully and unconditionally guaranteed by Nabors. The notes bear interest at a
rate of 0.75% per year payable semiannually on January 15 and July 15 of each year, beginning on July 15, 2017. As of
December 31, 2022 and December 31, 2021, there was approximately $177.0 million and $287.3 million in aggregate
principal amount that remained outstanding, respectively.
The exchangeable notes are currently exchangeable, under certain conditions, at an exchange rate of .8018 common
shares of Nabors per $1,000 principal amount of exchangeable notes (equivalent to an exchange price of approximately
$1,247.19 per common share). As a result of an amendment to the notes, upon any exchange, Nabors Delaware will
settle its exchange obligation in cash. The exchangeable notes were originally bifurcated for accounting purposes into
debt and equity components of $411.2 million and $163.8 million, respectively, based on the terms of the notes and the
relative fair value at the issuance date. The adoption of ASU 2020-06 effective January 1, 2022 resulted in a pre-tax
adjustment of $27.5 million to eliminate the remaining unamortized debt discount.
70
2018 Revolving Credit Facility
In October 2018, Nabors Delaware and Nabors Drilling Canada Limited (“Nabors Canada” and together with
Nabors Delaware, the “Borrowers”) entered into a credit agreement dated October 11, 2018 by and among the
Borrowers, the guarantors identified therein, HSBC Bank Canada, as the Canadian lender, the issuing banks and other
lenders party thereto (the “U.S. Lenders”) and Citibank, N.A., as administrative agent solely for the U.S. Lenders (as
amended, restated, supplemented or otherwise modified from time to time, the “2018 Revolving Credit Facility”). On
January 21, 2022, we repaid all amounts outstanding under the 2018 Revolving Credit Facility and the 2018 Revolving
Credit Facility was terminated.
2022 Credit Agreement
On January 21, 2022, Nabors Delaware entered into a revolving credit agreement between Nabors Delaware, the
guarantors from time to time party thereto, the issuing banks (the “Issuing Banks”) and other lenders party thereto (the
“Lenders”) and Citibank, N.A., as administrative agent (the “2022 Credit Agreement”). Under the 2022 Credit
Agreement, the Lenders have committed to provide to Nabors Delaware up to an aggregate principal amount at any time
outstanding not in excess of $350.0 million (with an accordion feature for an additional $100.0 million, subject to lender
approval) under a secured revolving credit facility, including sub-facilities provided by certain of the Lenders for letters
of credit in an aggregate principal amount at any time outstanding not in excess of $100.0 million.
The 2022 Credit Agreement permits the incurrence of additional indebtedness secured by liens, which may include
liens on the collateral securing the facility, in an amount up to $150.0 million as well as a grower basket for term loans in
an amount not to exceed $100.0 million secured by liens not on the collateral. The Company is required to maintain an
interest coverage ratio (EBITDA/interest expense), which increases on a quarterly basis, and a minimum guarantor
value, requiring the guarantors (other than the Company) and their subsidiaries to own at least 90% of the consolidated
property, plant and equipment of the Company. The facility matures on the earlier of (a) January 21, 2026 and (b) (i) to
the extent any principal amount of Nabors Delaware’s existing 5.1% senior notes due 2023 or 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 90th 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 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.
Additionally, the Company is subject to covenants, which are subject to certain exceptions and include, among
others, (a) a covenant restricting our ability to incur liens (subject to the additional liens basket of up to $150.0 million),
(b) a covenant restricting its ability to pay dividends or make other distributions with respect to its capital stock and to
repurchase certain indebtedness and (c) a covenant restricting the ability of the Company’s subsidiaries to incur debt
(subject to the grower basket of up to $100.0 million). The agreement also includes a collateral coverage requirement
that the collateral rig fair value is to be no less than the collateral coverage threshold, as defined in the agreement. This
requirement includes an independent appraisal report to be delivered every 6 months following the closing date.
As of December 31, 2022, we had no borrowings outstanding under our 2022 Credit Agreement. The weighted
average interest rate on borrowings under the 2022 Credit Agreement at December 31, 2022 was 5.05%. In order to
make any future borrowings under the 2022 Credit Agreement, Nabors and certain of its wholly owned subsidiaries are
subject to compliance with the conditions and covenants contained therein, including compliance with applicable
financial ratios.
As of the date of this report, we were in compliance with all covenants under the 2022 Credit Agreement. We
expect to remain in compliance with all covenants under the 2022 Credit Agreement during the twelve month period
following the date of this report based on our current operational and financial projections. However, we can make no
assurance of continued compliance if our current projections or material underlying assumptions prove to be incorrect. If
we fail to comply with the covenants, the revolving credit commitment could be terminated, and any outstanding
borrowings under the facility could be declared immediately due and payable.
71
Letters of Credit
We had 18 letter-of-credit facilities with various banks as of December 31, 2022. Availability and borrowings under
our letter-of-credit facilities are as follows:
Credit available . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Less: Letters of credit outstanding, inclusive of financial and performance guarantees . . . . . . . . . . . . . . .
Remaining availability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
December 31,
2022
(In thousands)
620,552
105,081
515,471
Note 11 Income Taxes
Income (loss) from continuing operations before income taxes consisted of the following:
United States and Other Jurisdictions
2022
Year Ended December 31,
2021
(In thousands)
2020
United States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Other jurisdictions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(19,820) $ (153,243) $ (182,706)
(522,861)
(334,846)
(225,862)
Income (loss) from continuing operations before income taxes . . . . . $ (245,682) $ (488,089) $ (705,567)
Income tax expense (benefit) from continuing operations consisted of the following:
Current:
U.S. federal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Outside the U.S. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
State . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
Deferred:
2022
Year Ended December 31,
2021
(In thousands)
2020
1,320 $
48,837
4,042
54,199 $
(1,905) $
60,318
7,914
66,327 $
(39,268)
33,858
(2,020)
(7,430)
U.S. federal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Outside the U.S. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
State . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
Income tax expense (benefit) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
681 $
(241)
6,897
7,337 $
61,536 $
(4,669) $
(3,608)
(2,429)
(10,706) $
55,621 $
67,909
(4,992)
1,799
64,716
57,286
A reconciliation of our statutory tax rate to our worldwide effective tax rate consists of the following:
Income tax provision at statutory (Bermuda rate of 0%) . . . . . . . . . . . . . . $
Taxes (benefit) on U.S. and other international earnings (losses) at
greater than the Bermuda rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Increase (decrease) in valuation allowance . . . . . . . . . . . . . . . . . . . . . . . . .
Impact of foreign exchange rates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Prior year adjustments to provision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Tax reserves and interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
State income taxes (benefit) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income tax expense (benefit) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Effective tax rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2022
Year Ended December 31,
2021
(In thousands)
2020
— $
— $
—
25,685
43,060
(32,108)
15,959
2,080
266
6,594
61,536 $
(25.0%)
23,395
8,276
—
—
26,266
(2,316)
—
55,621 $
(11.4%)
62,751
(9,759)
—
—
861
3,433
—
57,286
(8.1%)
72
Our worldwide income tax expense for 2022 was $61.5 million compared to $55.6 million for 2021. 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.
The components of our net deferred taxes consisted of the following:
Deferred tax assets:
December 31,
2022
2021
(In thousands)
Net operating loss carryforwards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 3,878,344 $ 3,676,333
Tax credit and other attribute carryforwards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
84,624
Accrued interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
118,151
Depreciation and amortization for tax in excess of book expense . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
135,729
4,014,837
Subtotal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(3,754,207)
Valuation allowance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
260,630
Deferred tax assets: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Deferred tax liabilities:
84,812
13,302
20,431
100,316
4,097,205
(3,839,885)
257,320 $
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Deferred tax liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Net deferred tax assets (liabilities) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
2,858 $
2,858 $
254,462 $
4,772
4,772
255,858
Balance Sheet Summary:
Net noncurrent deferred tax asset . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Net noncurrent deferred tax liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net deferred tax asset (liability) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
257,320 $
(2,858)
254,462 $
258,631
(2,773)
255,858
As of December 31, 2022, we had federal, state, and foreign net operating loss (“NOL”) carryforwards of
approximately $727.1 million, $820.3 million and $14.9 billion, respectively. Of those amounts, $8.0 billion will expire
between 2023 and 2042 if not utilized. We provide a valuation allowance against NOL carryforwards in various tax
jurisdictions based on our consideration of existing temporary differences and expected future earning levels in those
jurisdictions. A valuation allowance of approximately $3.5 billion as of December 31, 2022 has been recognized related
to certain NOL carryforwards as we believe it is more likely than not that the benefit of these NOL carryforwards will
not be realized.
The following is a reconciliation of our uncertain tax positions:
Balance as of January 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 45,988
806
(1,342)
Balance as of December 31 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 45,452
Additions for tax positions of prior years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Reductions for tax positions for prior years . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(In thousands)
$ 26,704 $ 25,770
1,887
(953)
$ 45,988 $ 26,704
19,760
(476)
2022
2021
2020
If the unrecognized tax benefits of $45.5 million are realized, this would favorably impact the worldwide effective
tax rate. As of December 31, 2022, 2021 and 2020, we had approximately $17.0 million, $14.4 million and $7.6 million,
respectively, of interest and penalties related to uncertain tax positions. During 2022, 2021 and 2020, we accrued and
recognized estimated interest and penalties related to uncertain tax positions of approximately $2.6 million, $6.9 million
and ($0.6) million, respectively. We include potential interest and penalties related to uncertain tax positions within our
global operations in the income tax expense (benefit) line item in our consolidated statements of income (loss).
It is reasonably possible that our existing liabilities related to our reserve for uncertain tax positions may increase or
decrease in the next twelve months primarily due to the completion of open audits or the expiration of statutes of
limitation. However, we cannot reasonably estimate a range of changes in our existing liabilities due to various
uncertainties, such as the unresolved nature of various audits.
73
We conduct business globally and, as a result, we file numerous income tax returns in the U.S. and non-U.S.
jurisdictions. In the normal course of business we are subject to examination by taxing authorities throughout the world,
including major jurisdictions such as Colombia, Mexico, Saudi Arabia, Norway and the United States. We are no longer
subject to U.S. Federal income tax examinations for years before 2019 and non-U.S. income tax examinations for years
before 2007.
Note 12 Shareholders’ Equity
Common shares
Our authorized share capital consists of 57.0 million shares of which 32.0 million are common shares, par value
$0.05 per share, and 25.0 million are preferred shares, par value $0.001 per share. The preferred shares are issuable in
one or more classes or series, full, limited or no voting rights, designations, preferences, special rights, qualifications,
limitations and restrictions, as may be determined by the Board.
During 2020, we repurchased 34 thousand shares of our common stock for an aggregate price of approximately $1.7
million, all of which are held by our subsidiaries, and which are accounted for as treasury stock.
On July 19, 2021, we issued 147,974 shares of our common stock, valued at approximately $12.9 million, in
connection with the purchase of certain development stage technologies in the energy transition space. Of the shares
issued, 71,280 shares are forfeitable if certain milestones are not achieved over the next two years.
During 2022, we issued 1.1 million common shares in connection with the Company’s common stock warrants. See
below for discussion on the Warrants.
From time to time, treasury shares may be reissued subject to applicable securities law limitations. When shares are
reissued, we use the weighted-average-cost method for determining cost. The difference between the cost of the shares
and the issuance price is added to or deducted from our capital in excess of par value account. No shares have been
reissued during 2022, 2021 or 2020.
Common stock warrants
On May 27, 2021, the Board declared a distribution of warrants to purchase its common shares (the “Warrants”) to
holders of the Company’s common shares. Holders of Nabors common shares received two-fifths of a warrant per
common share held as of the record date (rounded down for any fractional warrant). Nabors issued approximately 3.2
million Warrants on June 11, 2021 to shareholders of record as of June 4, 2021. As of December 31, 2022, 2.5 million
Warrants remain outstanding and 1.1 million common shares have been issued in settlement of exercises of Warrants.
Each Warrant represents the right to purchase one common share at an initial exercise price of $166.66667 per
Warrant, subject to certain adjustments (the “Exercise Price”). In addition, Warrants submitted for exercise prior to
April 25, 2022 may have been eligible to receive an additional one-third common share due to the incentive share
component of the Warrant. The incentive share was an extra amount of common shares that Nabors would award when
the volume weighted average price of Nabors’ common shares on the day before any Warrant holder exercises its
Warrants multiplied by three was at least 6% higher than the sum of the volume weighted average prices of Nabors’
common shares on each of the second, third and fourth days before any Warrant holder exercised its Warrants. Effective
as of April 25, 2022, Warrant holders were no longer entitled to receive any incentive shares when exercising the
Warrants. Payment for common shares on exercise of Warrants may be in (a) cash or (b)“Designated Notes,” which the
Company initially defined as (x) Nabors Delaware’s (i) 5.10% Notes due 2023, (ii) 0.75% Exchangeable Notes due
2024, (iii) 5.75% Notes due 2025 and (y) the Company’s 7.25% Notes due 2026, subject to compliance with applicable
procedures with respect to the delivery of the Warrants and Designated Notes. Effective March 21, 2022, the 0.75%
Exchangeable Notes due 2024 were removed from the list of Designated Notes. The Exercise Price and the number of
common shares issuable upon exercise are subject to anti-dilution adjustments, including for share dividends, splits,
subdivisions, spin-offs, consolidations, reclassifications, combinations, noncash distributions, cash dividends (other than
regular quarterly cash dividends not exceeding a permitted threshold amount), certain pro rata shares repurchases, and
similar transactions, including certain issuances of common shares (or securities exercisable or convertible into or
exchangeable for common shares) at a price (or having a conversion price) that is less than 95% of the market price of
the common
74
shares. The Warrants expire on June 11, 2026, but the expiration date may be accelerated at any time by the Company
upon 20-days’ prior notice. The Warrants are traded on the over-the-counter market.
The Warrants are recognized as derivative liabilities in accordance with ASC 815-40. Accordingly, the Company
recognizes the Warrant instruments as liabilities at fair value and adjusts the instruments to fair value at each reporting
period. The liabilities are subject to re-measurement at each balance sheet date until exercised, and any change in fair
value is recognized in the Company’s statement of operations. The fair value of the Warrants was initially measured at
fair value using a Monte Carlo pricing model due to the level of market activity. As of December 31, 2022, the fair
value of the Warrants was measured using their trading price. On December 31, 2022 and 2021, the fair value of the
Warrants was approximately $80.9 million and $0.1 million. During the years ended December 31, 2022 and 2021,
approximately $99.2 million of loss and $2.6 million of gain has been recognized for the change in liability and included
in Other, net in our consolidated statements of income (loss), respectively.
Note 13 Joint Ventures
During 2016, we entered into an agreement with Saudi Aramco to form a new joint venture, SANAD, to own,
manage and operate onshore drilling rigs in the Kingdom of Saudi Arabia. SANAD, which is equally owned by Saudi
Aramco and Nabors, began operations during the fourth quarter of 2017.
During 2017, Nabors and Saudi Aramco each contributed $20 million in cash for the purpose of capitalizing the
joint venture upon formation. In addition, since inception Nabors and Saudi Aramco have each contributed a
combination of drilling rigs, drilling rig equipment and other assets, including cash, each with a value of approximately
$394 million to the joint venture. The contributions were received in exchange for redeemable ownership interests which
accrue interest annually, have a twenty-five year maturity and are required to be converted to authorized capital should
certain events occur, including the accumulation of specified losses. In the accompanying condensed consolidated
balance sheet, Nabors has reported Saudi Aramco’s share of authorized capital as a component of noncontrolling interest
in equity and Saudi Aramco’s share of the redeemable ownership interests as redeemable noncontrolling interest in
subsidiary, classified as mezzanine equity. As of December 31, 2022, the amount included in redeemable noncontrolling
interest was $393.8 million. The accrued interest on the redeemable ownership interest is a non-cash financing activity
and is reported as an increase in the redeemable noncontrolling interest in subsidiary line in our condensed consolidated
balance sheet. In 2022 and 2021, SANAD settled approximately $20.6 million and $120 million, respectively, of the
accrued interest from inception, by making cash payments to each partner for their respective amounts. The assets and
liabilities included in the condensed balance sheet below are (a) assets that can either be used to settle obligations of the
VIE or be made available in the future to the equity owners through dividends, distributions or in exchange of the
redeemable ownership interests (upon mutual agreement of the owners) or (b) liabilities for which creditors do not have
recourse to other assets of Nabors.
The condensed balance sheet of SANAD, as included in our consolidated balance sheet, is presented below.
Assets:
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accounts receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other current assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Property, plant and equipment, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other long-term assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Liabilities:
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
December 31,
2022
2021
(In thousands)
$
$
$
$
302,949 $
92,922
14,750
489,358
21,278
921,257 $
293,037
88,174
6,662
467,587
19,010
874,470
62,409 $
6,639
36,312
105,360 $
61,278
6,021
26,300
93,599
75
Note 14 Related-Party Transactions
Nabors and certain current and former key employees, including Mr. Petrello, entered into split-dollar life insurance
agreements, pursuant to which we pay a portion of the premiums under life insurance policies with respect to these
individuals and, in some instances, members of their families. These agreements provide that we are reimbursed for the
premium payments upon the occurrence of specified events, including the death of an insured individual. Any recovery
of premiums paid by Nabors could be limited to the cash surrender value of the policies under certain circumstances. As
such, the values of these policies are recorded at their respective cash surrender values in our consolidated balance
sheets. We have made premium payments to date totaling $6.6 million related to these policies. The cash surrender value
of these policies of approximately $5.1 million and $5.3 million is included in other long-term assets in our consolidated
balance sheets as of December 31, 2022 and 2021.
Under the Sarbanes-Oxley Act of 2002, the payment of premiums by Nabors under the agreements could be deemed
to be prohibited loans by us to these individuals. Consequently, we have paid no premiums related to our agreements
with these individuals since the adoption of the Sarbanes-Oxley Act.
In November 2021, Nabors Energy Transition Corporation (“NETC”), a special purpose acquisition company,
commonly referred to as a “SPAC”, co-sponsored by Nabors and Greens Road Energy LLC, completed its initial public
offering of 27,600,000 units. Greens Road Energy LLC is owned by certain members of Nabors’ board of directors and
management team. Simultaneously with the closing of the IPO, NETC completed the private sale of an aggregate of
13,730,000 warrants with a fair value of $1 per warrant, of which 6,288,500 warrants were purchased by related parties
including certain Nabors board members, officers and employees, with the remainder being purchased by a subsidiary of
Nabors.
In the ordinary course of business, we enter into various rig leases, rig transportation and related oilfield services
agreements with our unconsolidated affiliates at market prices. Historically, these transactions primarily related to our
former equity method investment in Nabors Arabia. During 2017, our joint venture with Saudi Aramco, SANAD, began
operations. As such, we have included transactions with Saudi Aramco effective as of the commencement of operations
of SANAD. See Note 13—Joint Ventures. Revenues from business transactions with these affiliated entities totaled
$682.7 million, $617.5 million and $612.7 million for 2022, 2021 and 2020, respectively. Additionally, we had accounts
receivable from these affiliated entities of $97.0 million and $99.3 million as of December 31, 2022 and 2021.
In addition, Mr. Crane, one of our independent directors, is Chairman and Chief Executive Officer of Crane Capital
Group Inc. (“CCG”), an investment company that indirectly owns a majority interest in several operating companies,
some of which have provided services to us in the ordinary course of business, including international logistics and
electricity. During 2022, 2021 and 2020, we incurred costs for these services of $11.4 million, $5.8 million and
$6.2 million, respectively. We had accounts payable to these CCG-related companies of $2.7 million and $0.3 million as
of December 31, 2022 and 2021.
Note 15 Commitments and Contingencies
Commitments
Under the joint venture agreement with Saudi Aramco, the agreement requires us to backstop our share of the joint
venture’s obligations to purchase the first 25 drilling rigs in the event that there is insufficient cash in the joint venture or
third party financing available. Although we currently anticipate that the future rig purchase needs will be met by cash
flows from the joint venture and/or third party financing, no assurance can be given that the joint venture will not require
us to fund our backstop.
Leases
Nabors and its subsidiaries occupy various facilities and lease certain equipment under various lease agreements.
Rental expense relating to operating leases with terms greater than 30 days amounted to $15.0 million, $9.3 million and
$12.4 million for the years ended December 31, 2022, 2021 and 2020, respectively. See Note 20—Leases for more
information on the minimum rental commitments under non-cancelable operating leases.
76
Contingencies
Income Tax Contingencies
We operate in a number of countries and our tax returns filed in those jurisdictions are subject to review and
examination by tax authorities within those jurisdictions. We do not recognize the benefit of income tax positions we
believe are more likely than not to be disallowed upon challenge by a tax authority. If any tax authority successfully
challenges our operational structure, intercompany pricing policies or the taxable presence of our subsidiaries in certain
countries, if the terms of certain income tax treaties are interpreted in a manner that is adverse to our structure, or if we
lose a material tax dispute in any country, our effective tax rate on our worldwide earnings could change substantially.
Litigation
Nabors and its subsidiaries are defendants or otherwise involved in a number of lawsuits in the ordinary course of
business. We estimate the range of our liability related to pending litigation when we believe the amount and range of
loss can be estimated. We record our best estimate of a loss when the loss is considered probable. When a liability is
probable and there is a range of estimated loss with no best estimate in the range, we record the minimum estimated
liability related to the lawsuits or claims. As additional information becomes available, we assess the potential liability
related to our pending litigation and claims and revise our estimates. Due to uncertainties related to the resolution of
lawsuits and claims, the ultimate outcome may differ from our estimates. For matters where an unfavorable outcome is
reasonably possible and significant, we disclose the nature of the matter and a range of potential exposure, unless an
estimate cannot be made at the time of disclosure. In the opinion of management and based on liability accruals
provided, our ultimate exposure with respect to these pending lawsuits and claims is not expected to have a material
adverse effect on our consolidated financial position or cash flows, although they could have a material adverse effect on
our results of operations for a particular reporting period.
In March 2011, the Court of Ouargla entered a judgment of approximately $20.6 million (at December 31, 2022
exchange rates) against us relating to alleged violations of Algeria’s foreign currency exchange controls, which require
that goods and services provided locally be invoiced and paid in local currency. The case relates to certain foreign
currency payments made to us by CEPSA, a Spanish operator, for wells drilled in 2006. Approximately $7.5 million of
the total contract amount was paid offshore in foreign currency, and approximately $3.2 million was paid in local
currency. The judgment includes fines and penalties of approximately four times the amount at issue. We have appealed
the ruling based on our understanding that the law in question applies only to resident entities incorporated under
Algerian law. An intermediate court of appeals upheld the lower court’s ruling, and we appealed the matter to the
Supreme Court. On September 25, 2014, the Supreme Court overturned the verdict against us, and the case was reheard
by the Ouargla Court of Appeals on March 22, 2015 in light of the Supreme Court’s opinion. On March 29, 2015, the
Ouargla Court of Appeals reinstated the initial judgment against us. We appealed this decision again to the Supreme
Court, which again overturned the appeals court’s decision. The case was moved back to the court of appeals, which,
once again, reinstated the verdict, failing to abide by the Supreme Court’s ruling. Accordingly, we are appealing once
more to the Supreme Court to try to get a final ruling on the matter. While our payments were consistent with our
historical operations in the country, and, we believe, those of other multinational corporations there, as well as
interpretations of the law by the Central Bank of Algeria, the ultimate resolution of this matter could result in a loss of up
to $12.6 million in excess of amounts accrued.
Off-Balance Sheet Arrangements (Including Guarantees)
We are a party to some transactions, agreements or other contractual arrangements defined as “off-balance sheet
arrangements” that could have a material future effect on our financial position, results of operations, liquidity and
capital resources. The most significant of these off-balance sheet arrangements include the A/R Agreements (see Note
4—Accounts Receivable Purchase and Sales Agreements) and certain agreements and obligations under which we
provide financial or performance assurance to third parties. Certain of these financial or performance assurances serve as
guarantees, including standby letters of credit issued on behalf of insurance carriers in conjunction with our workers’
compensation insurance program and other financial surety instruments such as bonds. In addition, we have provided
indemnifications, which serve as guarantees, to some third parties. These guarantees include indemnification provided
by Nabors to our share transfer agent and our insurance carriers. We are not able to estimate the potential future
maximum payments that might be due under our indemnification guarantees.
77
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:
Financial standby letters of credit and other financial surety
instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 39,073 8,397 5,127
11,739 $ 64,336
Maximum Amount
2023
2024
2025
(In thousands)
Thereafter Total
Note 16 Earnings (Losses) Per Share
ASC 260, Earnings per Share, requires companies to treat unvested share-based payment awards that have
nonforfeitable rights to dividends or dividend equivalents as a separate class of securities in calculating earnings (losses)
per share. We have granted and expect to continue to grant to employees restricted stock grants that contain
nonforfeitable rights to dividends. Such grants are considered participating securities under ASC 260. As such, we are
required to include these grants in the calculation of our basic earnings (losses) per share and calculate basic earnings
(losses) per share using the two-class method. The two-class method of computing earnings per share is an earnings
allocation formula that determines earnings per share for each class of common stock and participating security
according to dividends declared and participation rights in undistributed earnings. The participating security holders are
not contractually obligated to share in losses. Therefore, losses are not allocated to the participating security holders.
Basic earnings (losses) per share is computed utilizing the two-class method and is calculated based on the
weighted-average number of common shares outstanding during the periods presented.
Diluted earnings (losses) per share is computed using the weighted-average number of common and common
equivalent shares outstanding during the periods utilizing the two-class method for stock options and unvested restricted
stock.
78
A reconciliation of the numerators and denominators of the basic and diluted earnings (losses) per share
computations is as follows:
Year Ended December 31,
2021
(In thousands, except per share amounts)
2020
2022
BASIC EPS:
Net income (loss) (numerator):
Income (loss) from continuing operations, net of tax . . . . . . . . . . . . . . . . . . . $ (307,218) $ (543,710) $ (762,853)
Less: net (income) loss attributable to noncontrolling interest . . . . . . . . . . . .
(42,795)
Less: preferred stock dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(14,611)
Less: accrued distribution on redeemable noncontrolling interest in
(25,582)
(3,653)
(43,043)
—
subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(10,324)
(9,445)
(17,442)
Less: distributed and undistributed earnings allocated to unvested
shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
—
(125)
Numerator for basic earnings per share:
Adjusted income (loss) from continuing operations, net of tax - basic . . . . . $ (360,585) $ (582,390) $ (837,826)
Income (loss) from discontinued operations, net of tax . . . . . . . . . . . . . . . . . . $
7
20 $
— $
Weighted-average number of shares outstanding - basic . . . . . . . . . . . . . . . . . . .
Earnings (losses) per share:
8,898
7,605
7,059
Basic from continuing operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Basic from discontinued operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
DILUTED EPS:
Adjusted income (loss) from continuing operations, net of tax - diluted . . . . . . $ (360,585) $ (582,390) $ (837,826)
Income (loss) from discontinued operations, net of tax . . . . . . . . . . . . . . . . . . . . $
7
(40.52) $ (76.58) $ (118.69)
—
(40.52) $ (76.58) $ (118.69)
20 $
— $
—
—
Weighted-average number of shares outstanding - diluted . . . . . . . . . . . . . . . . .
Earnings (losses) per share:
Diluted from continuing operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Diluted from discontinued operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
8,898
7,605
7,059
(40.52) $ (76.58) $ (118.69)
—
(40.52) $ (76.58) $ (118.69)
—
—
For all periods presented, the computation of diluted earnings (losses) per share excludes outstanding stock options
with exercise prices greater than the average market price of Nabors’ common shares, shares issuable upon the
conversion of mandatory convertible preferred shares and shares related to the outstanding Warrants, because their
inclusion would be anti-dilutive and because they are not considered participating securities. In any period during which
the average market price of Nabors’ common shares exceeds the exercise prices of the stock options, such stock options
will be included in our diluted earnings (losses) per share computation using the if-converted method of accounting.
Restricted stock is included in our basic and diluted earnings (losses) per share computation using the two-class method
of accounting in all periods because such stock is considered participating securities. For periods in which we experience
a net loss from continuing operations, all potential common shares have been excluded from the calculation of weighted-
average shares outstanding, because their inclusion would be anti-dilutive. The average number of shares from options,
shares issuable upon conversion of preferred shares and shares related to outstanding Warrants that were excluded from
diluted earnings (losses) per share that would potentially dilute earnings per share in the future were as follows (in
thousands):
2022
Year Ended December 31,
2021
(In thousands)
4,436
3,369
2020
808
Potentially dilutive securities excluded as anti-dilutive . . . . . . . . . . . . . . . . . . . .
79
Note 17 Supplemental Balance Sheet, Income Statement and Cash Flow Information
Accrued liabilities include the following:
Accrued compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Deferred revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other taxes payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Workers’ compensation liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Litigation reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other accrued liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
Investment income (loss) includes the following:
December 31,
2022
2021
(In thousands)
64,926 $
37,808
39,621
6,588
69,174
18,681
10,777
247,575 $
51,993
59,816
34,333
6,588
71,814
14,939
7,688
247,171
2022
Year Ended December 31,
2021
(In thousands)
2020
Interest and dividend income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 15,474 $
Gains (losses) on marketable securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(482)
$ 14,992 $
1,527 $
30
1,557 $
4,705
(3,267)
1,438
Other, net includes the following:
Losses (gains) on sales, disposals and involuntary conversions of long-lived
2022
Year Ended December 31,
2021
(In thousands)
2020
assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Purchase of technology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Warrant and derivative valuation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Litigation expenses and reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign currency transaction losses (gains) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other losses (gains) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
7,350 $ 23,883 $ 12,363
—
14,733
—
—
4,249
8,290
12,125
4,807
(170)
1,708
$ 131,696 $ 53,421 $ 28,567
—
95,876
15,160
6,689
6,621
80
The changes in accumulated other comprehensive income (loss), by component, include the following:
Gains
(losses) on
cash flow
hedges
Defined
benefit
pension plan
items
Foreign
currency
items
(In thousands (1) )
Total
As of January 1, 2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Other comprehensive income (loss) before reclassifications . . . . . .
Amounts reclassified from accumulated other comprehensive
income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net other comprehensive income (loss) . . . . . . . . . . . . . . . . . . . . . . .
As of December 31, 2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
(1) All amounts are net of tax.
2 $ (3,616) $ (7,510) $ (11,124)
—
330
(1,900)
2,230
160
(1,740)
—
160
—
490
2 $ (5,356) $ (5,280) $ (10,634)
—
2,230
Defined
benefit
Gains
(losses) on
cash flow pension plan
hedges
items
Foreign
currency
items
(In thousands (1) )
Total
As of January 1, 2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Other comprehensive income (loss) before reclassifications . . . . . . .
Amounts reclassified from accumulated other comprehensive
income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net other comprehensive income (loss) . . . . . . . . . . . . . . . . . . . . . . . .
As of December 31, 2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
(1) All amounts are net of tax.
The line items that were reclassified to net income include the following:
Line item in consolidated statement of income (loss)
2 $ (5,356) $ (5,280) $ (10,634)
—
(564)
(1,993)
1,429
—
160
—
(404)
2 $ (3,767) $ (7,273) $ (11,038)
—
(1,993)
160
1,589
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
General and administrative expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total income (loss) from continuing operations before income tax . . . . . . . . . . . .
Tax expense (benefit) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Reclassification adjustment for (gains)/ losses included in net income (loss) . . . $
Supplemental cash flow information includes the following:
2020
2022
Year Ended December 31,
2021
(In thousands)
—
208
(208)
(48)
(160) $
—
208
(208)
(48)
(160) $
160
210
(370)
(141)
(229)
2022
Year Ended December 31,
2021
(In thousands)
2020
Cash paid for income taxes (refunded), net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 29,191 $ 11,221 $ (17,505)
Cash paid for interest, net of capitalized interest . . . . . . . . . . . . . . . . . . . . . . . . . . $ 189,755 $ 161,932 $ 157,437
9,713 $ (1,188)
Net change in accounts payable related to capital expenditures . . . . . . . . . . . . . . $
8,615 $
(1)
Note 18 Segment Information
Our business consists of five reportable segments: U.S. Drilling, Canada Drilling, International Drilling, Drilling
Solutions and Rig Technologies. The accounting policies of the segments are the same as those described in Note 2—
Summary of Significant Accounting Policies. Inter-segment sales are recorded at cost or cost plus a profit margin. We
evaluate the performance of our segments based on several criteria, including adjusted operating income (loss).
81
The following table sets forth financial information with respect to our reportable operating segments:
Operating revenues:
2022
Year Ended December 31,
2021
(In thousands)
2020
U.S. Drilling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,100,614 $
Canada Drilling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
International Drilling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Drilling Solutions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Rig Technologies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other reconciling items (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
713,057
54,753
1,131,673
149,834
131,555
(46,829)
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,653,766 $ 2,017,548 $ 2,134,043
669,656 $
39,336
1,043,197
172,473
149,273
(56,387)
—
1,199,282
243,349
195,129
(84,608)
2022
Year Ended December 31,
2021
(In thousands)
2020
Adjusted operating income (loss): (2)
U.S. Drilling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Canada Drilling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
International Drilling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Drilling Solutions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Rig Technologies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total segment adjusted operating income (loss) . . . . . . . . . . . . . . . . . . $
108,506 $
13
(879)
77,868
8,906
194,414 $
(76,492) $
2,893
(40,117)
32,771
158
(96,176)
(11,766)
(56,205)
6,167
(13,481)
(80,787) $ (171,461)
Reconciliation of segment adjusted operating income (loss) to net income
2022
Year Ended December 31,
2021
(In thousands)
2020
(loss):
Net income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (307,218) $ (543,690) $ (762,846)
Income (loss) from discontinued operations, net of tax . . . . . . . . . . . . . .
(7)
Income (loss) from continuing operations, net of tax . . . . . . . . . . . . . . . .
(762,853)
57,286
Income tax expense (benefit) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income (loss) from continuing operations before income taxes . . . . . . . $ (245,682) $ (488,089) $ (705,567)
(1,438)
(1,557)
206,274
171,476
(228,274)
(13,423)
410,631
66,731
28,567
53,421
118,346
130,654
(80,787) $ (171,461)
Investment (income) loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gain/(loss) on debt buybacks and exchanges . . . . . . . . . . . . . . . . . . . . .
Impairments and other charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other reconciling items (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total segment adjusted operating income (loss) (2) . . . . . . . . . . . . . . . . . . $
(14,992)
177,895
(4,597)
—
131,696
150,094
194,414 $
(20)
(543,710)
55,621
—
(307,218)
61,536
2022
Year Ended December 31,
2021
(In thousands)
2020
Depreciation and amortization
U.S. Drilling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Canada Drilling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
International Drilling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Drilling Solutions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Rig Technologies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other reconciling items (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
311,759 $
—
329,335
20,829
5,794
(2,645)
665,072 $
326,361 $
11,604
323,431
26,660
8,191
(2,866)
693,381 $
398,326
24,784
377,599
40,074
15,299
(2,383)
853,699
82
2022
Year Ended December 31,
2021
(In thousands)
2020
Capital expenditures:
U.S. Drilling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Canada Drilling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
International Drilling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Drilling Solutions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Rig Technologies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other reconciling items (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
118,017 $
—
222,099
19,946
15,660
5,765
381,487 $
53,875 $
2,938
173,078
9,919
2,790
1,089
243,689 $
44,606
2,018
127,888
12,306
2,637
251
189,706
December 31,
2022
2021
(In thousands)
Total assets:
U.S. Drilling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,389,459 $ 1,606,683
Canada Drilling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,392
International Drilling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2,380,703
Drilling Solutions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
65,899
Rig Technologies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
190,489
Other reconciling items (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,280,198
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 4,729,854 $ 5,525,364
372
2,273,766
63,652
207,345
795,260
(1) Represents the elimination of inter-segment transactions related to our Rig Technologies operating segment.
(2) 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. Management evaluates the performance of our
operating segments using adjusted operating income (loss), which is a segment performance measure, because it
believes that this financial measure reflects our ongoing profitability and performance. In addition, securities
analysts and investors use this measure as one of the metrics on which they analyze our performance. A
reconciliation to income (loss) from continuing operations before income taxes is provided in the above table.
(3) Represents the elimination of inter-segment transactions and unallocated corporate expenses, assets and capital
expenditures.
The following table sets forth financial information with respect to Nabors’ operations by geographic area based on
the location of service provided:
Operating revenues
2022
Year Ended December 31,
2021
(In thousands)
2020
U.S. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,323,531 $
Outside the U.S. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,330,235
841,531
1,292,512
$ 2,653,766 $ 2,017,548 $ 2,134,043
804,807 $
1,212,741
Property, plant and equipment, net:
U.S. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,437,333 $ 1,648,622 $ 1,917,203
2,068,504
Outside the U.S. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 3,026,100 $ 3,348,498 $ 3,985,707
1,699,876
1,588,767
During the years ended December 31, 2022, 2021 and 2020, $712.8 million, $645.0 million and $642.7 million of
our consolidated operating revenue was from Saudi Arabia. No other individual country outside of the U.S. was material
to our consolidated operating revenue during any of the three periods presented.
83
One customer accounted for approximately 26%, 31% and 29% of our consolidated operating revenues during the
years ended December 31, 2022, 2021 and 2020, respectively, and is included primarily in our International Drilling
reportable segment.
Note 19 Revenue Recognition
We recognize revenue when control of a good or service promised in a contract (i.e., performance obligation) is
transferred to a customer. Control is obtained when a customer has the ability to direct the use of and obtain substantially
all the remaining benefits from that good or service. Contract drilling revenues are recorded over time utilizing the input
method based on time elapsed. The measurement of progress considers the transfer of the service to the customer as we
provide daily drilling services. We receive payment after the services have been performed by billing customers
periodically (typically monthly). However, a portion of our revenues are recognized at a point-in-time as control is
transferred at a distinct point in time such as with the sale of our top drives and other capital equipment. Within our
drilling contracts, we have identified one performance obligation in which the transaction price is allocated.
Disaggregation of revenue
In the following table, revenue is disaggregated by geographical region. The table also includes a reconciliation of
the disaggregated revenue with the reportable segments:
Year Ended
December 31, 2022
U.S.
Drilling
Canada
Drilling
Lower 48 . . . . . . . . . . . . . . . . . . . . . . . . . $ 913,932 $
U.S. Offshore Gulf of Mexico . . . . . . . . .
Alaska . . . . . . . . . . . . . . . . . . . . . . . . . . .
Canada . . . . . . . . . . . . . . . . . . . . . . . . . .
Middle East & Asia . . . . . . . . . . . . . . . . .
Latin America . . . . . . . . . . . . . . . . . . . . .
Europe, Africa & CIS . . . . . . . . . . . . . . .
Eliminations & other . . . . . . . . . . . . . . . .
122,536
64,146
—
—
—
—
—
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,100,614 $
— $
—
—
—
—
—
—
—
— $
International
Drilling
Drilling
Solutions
(In thousands)
— $ 157,709 $
—
—
—
805,944
309,320
84,018
—
10,665
1,734
1,521
41,257
29,515
948
—
1,199,282 $ 243,349 $
U.S.
Drilling
Canada
Drilling
Lower 48 . . . . . . . . . . . . . . . . . . . . . . . . $ 512,880
128,323
U.S. Offshore Gulf of Mexico . . . . . . . .
28,453
Alaska . . . . . . . . . . . . . . . . . . . . . . . . . .
—
Canada . . . . . . . . . . . . . . . . . . . . . . . . .
—
Middle East & Asia . . . . . . . . . . . . . . . .
—
Latin America . . . . . . . . . . . . . . . . . . . .
—
Europe, Africa & CIS . . . . . . . . . . . . . .
—
Eliminations & other . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 669,656
$
—
—
—
39,336
—
—
—
—
$ 39,336
$
International
Drilling
Year Ended
December 31, 2021
Drilling
Solutions
(In thousands)
— $ 97,354 $
—
—
—
706,267
251,153
85,777
—
8,787
753
1,342
40,492
22,104
1,641
—
$
1,043,197 $ 172,473 $
Rig
Technologies Other Total
111,197 $
— $ 1,182,838
133,201
—
65,880
—
7,247
—
911,940
—
340,338
—
96,930
—
(84,608)
(84,608)
195,129 $ (84,608) $ 2,653,766
—
—
5,726
64,739
1,503
11,964
—
Rig
Technologies Other Total
69,250 $
—
59
4,379
60,319
228
15,038
—
— $ 679,484
137,110
—
29,265
—
45,057
—
807,078
—
273,485
—
102,456
—
(56,387)
(56,387)
149,273 $ (56,387) $ 2,017,548
84
Year Ended
December 31, 2020
U.S.
Drilling
Canada
Drilling
Lower 48 . . . . . . . . . . . . . . . . . . . . . . . . . . $ 548,859 $
U.S. Offshore Gulf of Mexico . . . . . . . . . .
Alaska . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Canada . . . . . . . . . . . . . . . . . . . . . . . . . . .
Middle East & Asia . . . . . . . . . . . . . . . . . .
Latin America . . . . . . . . . . . . . . . . . . . . . .
Europe, Africa & CIS . . . . . . . . . . . . . . . .
Eliminations & other . . . . . . . . . . . . . . . . .
126,292
37,906
—
—
—
—
—
— $
—
—
54,753
—
—
—
—
International
Drilling
Drilling
Solutions
(In thousands)
— $ 88,919 $
—
—
—
728,983
228,930
173,760
—
9,309
1,296
1,137
40,255
6,578
2,340
—
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 713,057 $ 54,753 $
1,131,673 $ 149,834 $
Contract balances
Rig
Technologies Other Total
54,185 $
—
19
3,571
58,263
177
15,340
—
— $ 691,963
135,601
—
39,221
—
59,461
—
827,501
—
235,685
—
191,440
—
(46,829)
(46,829)
131,555 $ (46,829) $ 2,134,043
We perform our obligations under a contract with a customer by transferring goods or services in exchange for
consideration from the customer. We recognize a contract asset or liability when we transfer goods or services to a
customer and bill an amount which differs from the revenue allocated to the related performance obligations.
The timing of revenue recognition may differ from the timing of invoicing to customers and these timing differences
result in receivables, contract assets, or contract liabilities (deferred revenue) on our consolidated balance sheet. In
general, we receive payments from customers based on dayrates as stipulated in our contracts (i.e. operating rate,
standby rate). The invoices billed to the customer are based on the varying rates applicable to the operating status on
each rig. Accounts receivable are recorded when the right to consideration becomes unconditional.
Dayrate contracts also may contain fees charged to the customer for up-front rig modifications, mobilization and
demobilization of equipment and personnel. These fees are associated with contract fulfillment activities, and the related
revenue (subject to any constraint on estimates of variable consideration) is allocated to a single performance obligation
and recognized ratably over the initial term of the contract. Mobilization fees are generally billable to the customer in the
initial phase of a contract and generate contract liabilities until they are recognized as revenue. Demobilization fees are
generally received at the end of the contract and generate contract assets when they are recognized as revenue prior to
becoming receivables from the customer.
We receive reimbursements from our customers for the purchase of supplies, equipment, personnel services and
other services provided at their request. Reimbursable revenues are variable and subject to uncertainty as the amounts
received and timing thereof are dependent on factors outside of our influence. Accordingly, these revenues are
constrained and not recognized until the uncertainty is resolved, which typically occurs when the related costs are
incurred on behalf of the customer. We are generally considered a principal in these transactions and record the
associated revenues at the gross amounts billed to the customer.
The opening and closing balances of our receivables, contract assets and current and long-term contract liabilities
are as follows:
Contract Contract
Assets
Contract Contract
Liabilities Liabilities
Assets
Contract
Receivables (Current) (Long-term) (Current) (Long-term)
As of December 31, 2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 350.0 $ 24.9 $
As of December 31, 2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 401.9 $ 23.6 $
1.9 $ 42.9 $
0.1 $ 29.2 $
29.3
3.2
(In millions)
Approximately 55% of the contract liability balance at the beginning of the period was recognized as revenue during
2022 and 30% is expected to be recognized during 2023. The remaining 15% of the contract liability balance at the
beginning of the period is expected to be recognized as revenue during 2024 or thereafter.
85
Additionally, 84% of the contract asset balance at the beginning of the period was recognized as expense during
2022 and 13% is expected to be recognized during 2023. The remaining 3% of the contract asset balance at the
beginning of the period is expected to be recognized as expense during 2024 or thereafter. This disclosure does not
include variable consideration allocated entirely to a wholly unsatisfied performance obligation or promise to transfer a
distinct good or service that forms part of a single performance obligation.
Note 20 Leases
Prior to January 1, 2019, we accounted for leases under ASC 840 and did not record any right of use asset or
corresponding lease liability. We adopted ASC 842 using a modified retrospective approach with an effective date of
January 1, 2019. As such, financial information for prior periods has not been adjusted and continues to be reported
under ASC 840. Effective with the adoption of ASC 842, we have changed our accounting policy for leases as detailed
below.
We have evaluated the provisions of ASC 842, including certain practical expedients allowed. The significant
practical expedients we adopted include the following:
• We elected the practical expedient to apply the transition approach as of the beginning of the period of adoption
and not restate comparative periods;
• We elected to utilize the “package of three” expedients, as defined in ASC 842, whereby we did not reassess
whether contracts existing prior to the effective date contain leases, nor did we reassess lease classification
determinations nor whether initial direct costs qualify for capitalization;
• We elected the practical expedient to not capitalize any leases with initial terms of twelve months or less on our
condensed consolidated balance sheet;
• For all underlying classes of leased assets, we elected the practical expedient to not separate lease and non-lease
components; and
• We elected the practical expedient to continue to account for land easements (also known as “rights of way”)
that were not previously accounted for as leases consistent with prior accounting until such contracts are
modified or replaced, at which time they would be assessed for lease classification under ASC 842.
As of the date of implementation on January 1, 2019, the impact of the adoption of ASC 842 resulted in the
recognition of a right of use asset and lease payable obligation on our condensed consolidated balance sheet of
approximately $42.8 million. As the right of use asset and the lease payable obligation were the same, there was no
cumulative effect impact on retained earnings.
Our leases primarily consist of office space and equipment used globally within our operations. We determine
whether a contract is or contains a lease at inception of the contract based on answers to a series of questions that address
whether an identified asset exists and whether we have the right to obtain substantially all the benefit of the assets and to
control its use over the full term of the agreement. When available, we use the rate implicit in the lease to discount lease
payments to present value; however, most of our leases do not provide a readily determinable implicit rate. Therefore,
we must estimate our incremental borrowing rate using a credit notching approach to discount the lease payments based
on information available at lease commencement. Certain of our lease agreements include options to extend and options
to terminate the lease, which we do not include in our minimum lease terms unless management is reasonably certain to
exercise. We do not separate lease and nonlease components of contracts. There are no material residual value
guarantees nor any restrictions or covenants included in our lease agreements. Certain of our leases include provisions
for variable payments. These variable payments are typically determined based on a measure of throughput or actual
days or another measure of usage and are not included in the calculation of lease liabilities and right-of-use assets.
86
Lease Position
The table below presents the lease related assets and liabilities recorded on our condensed consolidated balance
sheet:
Assets
Classification on the Balance Sheet
(In thousands)
Year Ended December 31,
2022
2021
Operating lease assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total lease assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other long-term assets
$ 34,504 $ 23,049
$ 34,504 $ 23,049
Liabilities
Current liabilities:
Operating lease liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Current lease liabilities
$
6,784 $
5,422
Noncurrent liabilities:
Operating lease liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total lease liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other long-term liabilities $ 27,785 $ 18,722
$ 34,569 $ 24,144
Lease Costs
The table below presents certain information related to the lease costs for our operating leases:
Year Ended
December 31,
2022
2021
(In thousands)
Operating lease cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Short-term lease cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Variable lease cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total lease cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
10,047 $
596
115
10,758 $
9,848
593
143
10,584
Other Information
The table below presents supplemental cash flow information related to leases:
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
10,047 $
9,848
Lease Terms and Discount Rates
The table below presents certain information related to the weighted average remaining lease terms and weighted
average discount rates for our operating leases:
Year Ended December 31,
2022
2021
(In thousands)
Weighted-average remaining lease term - operating leases . . . . . . . . . . . . . . . . . . . . . . . . .
Weighted-average discount rate - operating leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6.96
6.81%
8.6
6.19%
Year Ended December 31,
2022
2021
87
Undiscounted Cash Flows
The table below reconciles the undiscounted cash flows for each of the first five years and the total remaining years
to the operating lease liabilities recorded on the condensed consolidated balance sheet:
December 31, 2022
(In thousands)
2023 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
2024 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2025 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2026 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2027 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total undiscounted lease liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less: amount of lease payments representing interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Long-term lease obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
8,927
6,540
5,993
5,965
4,705
11,063
43,193
(8,624)
34,569
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not applicable.
ITEM 9A. CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
We maintain a set of disclosure controls and procedures (as such term is defined in Rule 15d-15(e) under the
Exchange Act) designed to provide reasonable assurance that information required to be disclosed in our reports filed or
submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in
the SEC’s rules and forms, and that such information is accumulated and communicated to management as appropriate
to allow timely decisions regarding required disclosure. We have investments in certain unconsolidated entities that we
do not control or manage. Because we do not control or manage these entities, our disclosure controls and procedures
with respect to these entities are necessarily more limited than those we maintain with respect to our consolidated
subsidiaries.
The Company’s management, with the participation of the Chief Executive Officer and the Chief Financial Officer,
has evaluated the effectiveness of the Company’s disclosure controls and procedures as of the end of the period covered
by this annual report. Based on this evaluation, the Chief Executive Officer and the Chief Financial Officer have
concluded that, as of December 31, 2022, the Company’s disclosure controls and procedures were effective at the
reasonable assurance level.
Management’s Report on Internal Control over Financial Reporting
Management is responsible for establishing and maintaining adequate internal control over financial reporting. Our
internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external purposes in accordance with U.S. GAAP. Our
internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of
records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the
Company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial
statements in accordance with U.S. GAAP, and that receipts and expenditures of the Company are being made only in
accordance with authorizations of management and directors of the Company; and (iii) provide reasonable assurance
regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company’s assets that
could have a material effect on the financial statements.
Internal control over financial reporting cannot provide absolute assurance of achieving financial reporting
objectives because of its inherent limitations. Internal control over financial reporting is a process that involves human
diligence and compliance and is subject to lapses in judgment and breakdowns resulting from human failures. Internal
88
control over financial reporting also can be circumvented by collusion or improper management override. Because of
these limitations, there is a risk that material misstatements may not be prevented or detected on a timely basis by
internal control over financial reporting. However, these inherent limitations are known features of the financial
reporting process. Therefore, it is possible to design into the process safeguards to reduce, though not eliminate, this risk.
Management conducted an evaluation of the effectiveness of the Company’s internal control over financial reporting
based on the criteria set forth in the Internal Control—Integrated Framework issued in 2013 by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO). Based on this evaluation, management concluded that
the Company’s internal control over financial reporting was effective as of December 31, 2022.
PricewaterhouseCoopers LLP has issued a report on the effectiveness of the Company’s internal control over
financial reporting as of December 31, 2022, which is included in Part II, Item 8 of this annual report.
Changes in Internal Control over Financial Reporting
There have been no changes in internal control over financial reporting during the quarter ended December 31, 2022
that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial
reporting.
ITEM 9B. OTHER INFORMATION
Not applicable.
ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
Not applicable.
89
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
The information called for by this item will be contained in the definitive Proxy Statement to be distributed in
connection with our 2023 annual general meeting of shareholders under the captions “Director Nominees,” “Election of
Directors”, “Other Executive Officers”, “Meetings of the Board and Committees” and “Section 16(a) Beneficial
Ownership Reporting Compliance” and is incorporated into this document by reference.
We have adopted a Code of Business Conduct (the “Code of Conduct”) that applies to all directors, employees,
including our principal executive officer and principal financial and accounting officer. The Code of Conduct satisfies
the SEC’s definition of a “Code of Ethics” and is posted on our website at www.nabors.com. We intend to disclose on
our website any amendments to the Code of Conduct and any waivers of the Code of Conduct that apply to our principal
executive officer, principal financial officer, or principal accounting officer.
On June 22, 2022, we filed with the New York Stock Exchange the Annual CEO Certification regarding our
compliance with the New York Stock Exchange’s Corporate Governance listing standards as required by Section 303A-
12(a) of the New York Stock Exchange’s Listed Company Manual.
ITEM 11. EXECUTIVE COMPENSATION
The information called for by this item will be contained in various sections of our definitive Proxy Statement to be
distributed in connection with our 2023 annual general meeting of shareholders, including under the captions
“Compensation Discussion and Analysis,” “2022 Summary Compensation Table,” “2022 Grants of Plan-Based
Awards,” “2022 Outstanding Equity Awards at Fiscal Year End,” “2022 Option Exercises and Shares Vested,” “2022
Non-Qualified Deferred Compensation,” “Required Pay-Ratio Disclosure,” “Pay v. Performance,” “2022 Potential
Payouts upon Termination or Change in Control,” “Non-Employee Director Compensation,” “Risk Assessment,”
“Compensation Committee Interlocks and Insider Participation,” and “Compensation Committee Report,” and except
as specified in the following sentence, is incorporated into this document by reference. Information in our definitive
Proxy Statement not deemed to be “soliciting material” or “filed” with the SEC under its rules, including the
Compensation Committee Report, is not deemed to be incorporated by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED SHAREHOLDER MATTERS
The information called for by this item will be contained in our definitive Proxy Statement to be distributed in
connection with our 2023 annual general meeting of shareholders, including under the captions “Share Ownership” and
“Securities Authorized for Issuance under Equity Compensation Plans” and is incorporated into this document by
reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE
The information called for by this item will be contained in our definitive Proxy Statement to be distributed in
connection with our 2023 annual general meeting of shareholders, including under the captions “Certain Relationships
and Related Transactions” and “Overview of Key Governance Topics – Director Independence,” is incorporated into
this document by reference.
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
The information called for by this item will be contained in our definitive Proxy Statement to be distributed in
connection with our 2023 annual general meeting of shareholders, including under the caption “Independent Auditor
Fees” and is incorporated into this document by reference.
90
PART IV
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
(a)
The following documents are filed as part of this annual report:
(1)
Financial Statements
Consolidated Balance Sheets as of December 31, 2022 and 2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated Statement of Income (Loss) for the Years Ended December 31, 2022, 2021 and 2020 . . . . . .
Consolidated Statement of Comprehensive Income (Loss) for the Years Ended December 31, 2022, 2021
Page No.
50
51
52
and 2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated Statement of Cash Flows for the Years Ended December 31, 2022, 2021 and 2020 . . . . . . . .
Consolidated Statement of Changes in Equity for the Years Ended December 31, 2022, 2021 and 2020 . . .
Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
53
54
55
(2)
Financial Statement Schedule
Schedule II—Valuation and Qualifying Accounts for the Years Ended December 31, 2022, 2021 and 2020 . .
Page No.
92
All other supplemental schedules are omitted because of the absence of the conditions under which they would be
required or because the required information is included in the financial statements or related notes.
(b)
Exhibit Index
See the Exhibit Index for a list of those exhibits filed herewith, which Exhibit Index also includes and identifies
management contracts or compensatory plans or arrangements required to be filed as exhibits to this Form 10-K by
Item 601 of Regulation S-K.
ITEM 16. FORM 10-K SUMMARY
None.
91
SCHEDULE II — VALUATION AND QUALIFYING ACCOUNTS
Years Ended December 31, 2022, 2021 and 2020
Balance at
Beginning
of Period
Charged to
Costs and
Other
Deductions Accounts
Charged to
Other
Balance at
End of
Period
Deductions
(In thousands)
929
1,107
—
52,895
(192) (15,133) $
— $
23,038
— $ 3,839,885
—
85,678
2,870
392
(393)
418
— 137,327
(4,993) $
(2,356) $
67,291
21,931
— $ 3,754,207
18,929
5,082
(329) (10,575) $
— (16,653) $
69,807
23,477
— $ 3,616,880
— 836,879
2022
67,291
Allowance for doubtful accounts . . . . . . . . . . . . . . . . . . . $
Inventory reserve . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
21,931
Valuation allowance on deferred tax assets . . . . . . . . . . . $ 3,754,207
2021
69,807
Allowance for doubtful accounts . . . . . . . . . . . . . . . . . . . $
Inventory reserve . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
23,477
Valuation allowance on deferred tax assets . . . . . . . . . . . $ 3,616,880
2020
61,782
Allowance for doubtful accounts . . . . . . . . . . . . . . . . . . . $
Inventory reserve . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
35,048
Valuation allowance on deferred tax assets . . . . . . . . . . . $ 2,780,001
92
Exhibit No.
Description
Exhibit Index
3.1
3.2
3.3
4.1
4.2
4.3
4.4
Memorandum of Association of Nabors Industries Ltd. (incorporated by reference to Annex II to the
proxy statement/prospectus included in our Registration Statement on Form S-4 (File No. 333-76198)
filed with the SEC on May 10, 2002, as amended).
Certificate of Deposit of Memorandum of Increase of Share Capital (incorporated by reference to
Exhibit 3.1 to our Form 10-Q (File No. 001-32657) filed with the SEC on May 8, 2020).
Amended and Restated Bye-laws of Nabors Industries Ltd. (incorporated by reference to Exhibit 3.1 to
our Form 8-K (File No. 001-32657) filed with the SEC on April 22, 2020).
Description of Share Capital (incorporated by reference to Exhibit 4.1 to our Annual Report on Form
10-K (File No. 001-32657) filed with the SEC on February 18, 2022).
Warrant Agreement (including Form of Warrant), dated June 10, 2021, between the Company and
Computershare Trust Company, N.A., as Warrant Agent (incorporated by reference to Exhibit 10.1 to
our Form 8-K (File No. 001-32657) filed with the SEC on June 10, 2021).
Indenture related to the 2.35% Senior Notes due 2016 and 5.10% Senior Notes due 2023, dated as of
September 12, 2013, among Nabors Industries, Inc. as Issuer, Nabors Industries Ltd. as Guarantor,
Wilmington Trust, National Association as Trustee and Citibank, N.A. as Securities Administrator
(including form of 2.35% Senior Note due 2016 and form of 5.10% Senior Note due 2023)
(incorporated by reference to Exhibit 4.1 to Nabors Industries Ltd. Form 8-K (File No. 001-32657) filed
with the SEC on September 13, 2013).
Indenture, dated as of January 13, 2017, by and among Nabors Industries, Inc., as issuer, Nabors
Industries Ltd., as guarantor, Citibank, N.A., as securities administrator and Wilmington Trust, National
Association, as trustee with respect to Nabors Industries, Inc.’s 0.75% Exchangeable Senior Notes due
2024 (incorporated by reference to Exhibit 4.1 to our Form 8-K (File No. 001-32657) filed with the
SEC on January 13, 2017).
4.4(a) Supplemental Indenture, dated as of October 29, 2020 by and among Nabors Industries Inc., as Issuer,
4.5
4.6
4.7
Nabors Industries, Ltd., as Guarantor, Wilmington Trust, National Association., as trustee and Citibank,
N.A., as securities administrator with respect to Nabors Industries, Inc.’s 0.75% Exchangeable Senior
Notes due 2024 (incorporated by reference to Exhibit 4.2 to our Current Report on Form 8-K (File No.
001-32657) filed with the SEC on November 3, 2020).
Indenture, dated as of January 23, 2018, by and among Nabors Industries, Inc., Nabors Industries Ltd.,
as Guarantor, Citibank, N.A., as securities administrator and Wilmington Trust National Association, as
trustee with respect to Nabors Industries, Inc.’s 5.75% Senior Notes due 2025 (incorporated by
reference to Exhibit 4.1 to our Form 8-K (File No. 001-32657) filed with the SEC on January 23, 2018).
Indenture, dated as of January 10, 2020 by and among Nabors Industries Ltd., as Issuer, Nabors
Industries, Inc., as Guarantor, Nabors International Finance Inc., as Guarantor, Nabors Lux Finance 1,
as Guarantor, Nabors Global Holdings Limited, as Guarantor, Nabors Drilling Holdings Inc., as
Guarantor, Nabors Holdings Ltd., as Guarantor, and Wells Fargo Bank, N.A., as trustee, with respect to
Nabors’ Industries Ltd.’s 7.25% Senior Guaranteed Notes due 2026 and 7.50% Guaranteed Notes due
2028, including as exhibits thereto the form of Notes (incorporated by reference to Exhibit 4.1 to our
form 8-K (File No. 00132657) filed with the SEC on January 14, 2020).
Indenture, dated as of December 1, 2020 by and among Nabors Industries, Inc., as Issuer, the guarantors
party thereto, and Wilmington Trust, National Association, as trustee with respect to Nabors Industries,
Inc.’s 9.00% Senior Priority Guaranteed Notes due 2025 (incorporated by reference to Exhibit 4.1 to
our Form 8-K (File No. 001-32657) filed with the SEC on December 4, 2020).
93
Exhibit No.
Description
4.8
Indenture, dated as of November 23, 2021 by and among Nabors Industries, Inc., as Issuer, the
guarantors party thereto, and Wilmington Trust, National Association, as trustee with respect to Nabors
Industries, Inc.’s 7.375% Senior Priority Guaranteed Notes due 2027 (incorporated by reference to
Exhibit 4.1 to our Form 8-K (File No. 001-32657) filed with the SEC on November 26, 2021).
10.1 Call Option Transaction Confirmation, dated as of January 9, 2017, between Nabors Industries Ltd.,
Nabors Industries, Inc. and Citigroup Global Markets Inc. (incorporated by reference to Exhibit 10.2 to
our Form 8-K (File No. 001-32657) filed with the SEC on January 11, 2017).
10.7
10.4
10.5
10.3
10.6
10.2 Call Option Transaction Confirmation, dated as of January 9, 2017, between Nabors Industries Ltd.,
Nabors Industries, Inc. and Goldman, Sachs & Co. (incorporated by reference to Exhibit 10.3 to our
Form 8-K (File No. 001-32657) filed with the SEC on January 11, 2017).
Additional Call Option Transaction Confirmation, dated as of January 10, 2017, between Nabors
Industries Ltd., Nabors Industries, Inc. and Citigroup Global Markets Inc. (incorporated by reference to
Exhibit 10.1 to our Form 8-K (File No. 001-32657) filed with the SEC on January 13, 2017).
Additional Call Option Transaction Confirmation, dated as of January 10, 2017, between Nabors
Industries Ltd., Nabors Industries, Inc. and Goldman, Sachs & Co. (incorporated by reference to Exhibit
10.2 to our Form 8-K (File No. 001-32657) filed with the SEC on January 13, 2017).
Shareholders’ Agreement, dated October 31, 2016, between Saudi Aramco Development Company and
Nabors International Netherlands B.V. (incorporated by reference to Exhibit 10.20 to our Form 10-K
(File No. 001-32657) filed with the SEC on February 28, 2017).
Credit Agreement, dated as of January 21, 2022, among Nabors Industries, Inc., as Borrower, Nabors
Industries Ltd., as Holdings, the other Guarantors from time to time party thereto, the Issuing Banks and
other Lenders party thereto and Citibank, N.A., as Administrative Agent (incorporated by reference to
Exhibit 10.1 to our Form 8-K (File No. 001-32657) filed with the SEC on January 24, 2022).**
Receivables Purchase Agreement dated as of September 13, 2019, by and among Nabors A.R.F., LLC,
certain operating subsidiaries of Nabors Industries Ltd., and Nabors Industries, Inc., (incorporated by
reference to Exhibit 10.1 to our Form 8-K (File No. 001-32657) filed with the SEC on September 18,
2019).
Receivables Sale Agreement dated as of September 13, 2019, by and among Nabors A.R.F., LLC,
Nabors Industries, Inc., the purchasers party thereto, and Wells Fargo Bank, N.A., as Administrative
Agent (incorporated by reference to Exhibit 10.2 to our Form 8-K (File No. 001-32657) filed with the
SEC on September 18, 2019).
First Amendment to the Receivables Purchase Agreement, dated as of July 13, 2021, by and among
Nabors A.R.F., LLC, Nabors Industries, Inc., Arab Banking Corporation B.S.C. New York Branch, and
Wells Fargo Bank, N.A. (incorporated by reference to Exhibit 10.1 to our Form 8-K (File No. 001-
32657) filed with the SEC on July 16, 2021).
Third Amendment to the Receivables Purchase Agreement, dated as of June 27, 2022, by and among
Nabors A.R.F., LLC, Nabors Industries, Inc., Arab Banking Corporation B.S.C. New York Branch,
Nomura Corporate Funding Americas, LLC, and Wells Fargo Bank, N.A. (incorporated by reference to
Exhibit 10.1 to our Form 8-K (File No. 001-32657) filed with the SEC on June 27, 2022).
Indemnification Agreement, dated as of September 13, 2019, between Nabors Industries Ltd. and Wells
Fargo Bank, N.A. (incorporated by reference to Exhibit 10.3 to our Form 8-K (File No. 001-32657)
filed with the SEC on September 18, 2019).
Executive Employment Agreement by and among Nabors Industries Ltd., Nabors Industries, Inc. and
Anthony G. Petrello, effective as of January 1, 2013 (incorporated by reference to Exhibit 99.1 to our
Form 8-K (File No. 001-32657) filed with the SEC on March 11, 2013).
10.7(a)
10.7(b)
10.7(c)
10.7(d)
10.8(+)
94
Exhibit No.
10.8(a)(+)
Description
First Amendment to Executive Employment Agreement, dated December 19, 2014, among Nabors
Industries Ltd., Nabors Industries, Inc. and Anthony G. Petrello (incorporated by reference to
Exhibit 99.1 to our Form 8-K (File No. 001-32657) filed with the SEC on December 19, 2014).
Second Amendment to Executive Employment Agreement, dated as of June 5, 2015, among Nabors
Industries Ltd., Nabors Industries, Inc. and Anthony G. Petrello (incorporated by reference to
Exhibit 99.1 to our Form 8-K (File No. 001-32657) filed with the SEC on June 8, 2015).
Third Amendment to Executive Employment Agreement, dated as of December 31, 2015, among
Nabors Industries Ltd., Nabors Industries, Inc. and Anthony G. Petrello (incorporated by reference to
Exhibit 99.1 to our Form 8-K (File No. 001-32657) filed with the SEC on January 5, 2016).
Fourth Amendment to Executive Employment Agreement, dated June 10, 2016, among Nabors
Industries Ltd., Nabors Industries, Inc. and Anthony G. Petrello (incorporated by reference to Exhibit
99.1 to our Form 8-K (File No. 001-32657) filed with the SEC on June 13, 2016).
Fifth Amendment to Executive Employment Agreement, dated October 15, 2018, among Nabors
Industries Ltd., Nabors Industries, Inc. and Anthony G. Petrello (incorporated by reference to Exhibit
10.3 to our Form 10-Q (File No. 001-32657) filed with the SEC on November 7, 2018).
Sixth Amendment to Executive Employment Agreement, dated December 31, 2018, among Nabors
Industries Ltd., Nabors Industries, Inc. and Anthony G. Petrello (incorporated by reference to Exhibit
10.1 to our Form 8-K (File No. 001-32657) filed with the SEC on January 4, 2019).
Seventh Amendment to Executive Employment Agreement, dated January 2, 2020, among Nabors
Industries Ltd., Nabors Industries, Inc. and Anthony G. Petrello (incorporated by reference to Exhibit
10.1 to our Form 8-K (File No. 001-32657) filed with the SEC on January 8, 2020).
Eighth Amendment to Executive Employment Agreement, dated April 6, 2020, among Nabors
Industries Ltd., Nabors Industries, Inc. and Anthony G. Petrello (incorporated by reference to Exhibit 10
Exhibit 10.1 to our Form 8-K (File No. 00132657) filed with the SEC on April 9, 2020).
Amended and Restated Executive Employment Agreement, dated January 2, 2020, among Nabors
Industries Ltd., Nabors Industries, Inc. and William Restrepo. (incorporated by reference to Exhibit 10.2
to our Form 8-K (File No. 001-32657) filed with the SEC on January 8, 2020).
First Amendment to Amended and Restated Employment Agreement, dated April 6, 2020, among
Nabors Industries Ltd., Nabors Industries, Inc. and William Restrepo (incorporated by reference to
Exhibit 10.2 to our Form 8-K (File No. 00132657) filed with the SEC on April 9, 2020).
Second Amendment to Amended and Restated Executive Employment Agreement, dated January 1,
2022, among Nabors Industries Ltd., Nabors Industries, Inc. and William Restrepo (incorporated by
reference to Exhibit 10.1 to our Form 8-K (File No. 001-32657) filed with the SEC on January 6, 2022).
Form of Indemnification Agreement entered into between Nabors Industries Ltd. and the directors and
executive officers (incorporated by reference to Exhibit 10.28 to our Form 10-K (File No. 000-49887)
filed with the SEC on March 31, 2003).
Form of Director Cash Award Agreement (incorporated by reference to Exhibit 10.13 to our Form 10-Q
(File No. 001-32657) filed with the SEC on August 4, 2020).
Amended and Restated 1999 Stock Option Plan for Non-Employee Directors (amended on May 2,
2003) (incorporated by reference to Exhibit 10.29 to our Form 10-Q (File No. 000-49887) filed with the
SEC on May 12, 2003).
Form of Stock Option Agreement to the Amended and Restated 1999 Stock Option Plan for Non-
Employee Directors (incorporated by reference to Exhibit 10.2 to our Form 10-Q (File No. 001-32657)
filed with the SEC on April 28, 2017).
Nabors Industries Ltd. Amended and Restated 2003 Employee Stock Plan (incorporated by reference to
Exhibit A of our Proxy Statement (File No. 001-32657) filed with the SEC on May 4, 2006).
10.8(b)(+)
10.8(c)(+)
10.8(d)(+)
10.8(e)(+)
10.8(f)(+)
10.8(g)(+)
10.8(h)(+)
10.9(+)
10.9(a)(+)
10.9(b)(+)
10.10(+)
10.11(+)
10.12(+)
10.12(a)(+)
10.13(+)
95
Exhibit No.
10.13(a)(+)
Description
Form of Stock Option Agreement—Petrello/Isenberg (incorporated by reference to Exhibit 10.03 to our
Form 8-K (File No. 000-49887) filed with the SEC on March 2, 2005).
Form of Stock Option Agreement—Others (incorporated by reference to Exhibit 10.04 to our Form 8-K
(File No. 000-49887) filed with the SEC on March 2, 2005).
Amended and Restated Nabors Industries Ltd. 2016 Stock Plan (incorporated by reference to Annex B
to Nabors Industries Ltd.’s Definitive Proxy Statement (File No. 001-32657) filed with the SEC on
April 23, 2020).
Form of Nabors Industries Ltd. TSR Stock Agreement – Anthony G. Petrello (2020), pursuant to the
Amended and Restated 2016 Stock Plan (incorporated by reference to Exhibit 10.7 to our Form 10-Q
(File No. 001-32657) filed with the SEC on August 4, 2020).
Form of Nabors Corporate Services, Inc. TSR Stock Agreement – Anthony G. Petrello (2020), pursuant
to the Amended and Restated 2016 Stock Plan (incorporated by reference to Exhibit 10.8 to our Form
10-Q (File No. 001-32657) filed with the SEC on August 4, 2020).
Form of Nabors Industries Ltd. TSR Stock Agreement – William Restrepo (2020), pursuant to the
Amended and Restated 2016 Stock Plan (incorporated by reference to Exhibit 10.9 to our Form 10-Q
(File no. 001-32657) filed with the SEC on August 4, 2020).
Form of Nabors Corporate Services, Inc. TSR Stock Agreement – William Restrepo (2020), pursuant to
the Amended and Restated 2016 Stock Plan (incorporated by reference to Exhibit 10.10 to our
Form 10-Q (File no. 001-32657) filed with the SEC on August 4, 2020).
Form of CEO Performance-Based Restricted Stock Unit Agreement (2021), pursuant to the Amended
and Restated 2016 Stock Plan (incorporated by reference to Exhibit 10.1 to our Form 8-K (File No. 001-
32657) filed with the SEC on January 8, 2021).
Form of CFO Performance-Based Restricted Stock Unit Agreement (2021), pursuant to the Amended
and Restated 2016 Stock Plan (incorporated by reference to Exhibit 10.2 to our Form 8-K (File No. 001-
32657) filed with the SEC on January 8, 2021).
Form of Restricted Stock Agreement – Directors, pursuant to the Amended and Restated Nabors
Industries Ltd. 2016 Stock Plan (incorporated by reference to Exhibit 10.2 to our Registration Statement
on Form S-8 (File No. 333-239325) filed with the SEC on June 19, 2020).
Form of Restricted Stock Agreement – Others, pursuant to the Amended and Restated Nabors Industries
Ltd. 2016 Stock Plan (incorporated by reference to Exhibit 10.3 to our Registration Statement on Form
S-8 (File No. 333-239325) filed with the SEC on June 19, 2020).
Form of Stock Option Agreement – Others, pursuant to the 2016 Stock Plan (incorporated by reference
to Exhibit 10.1(b) to our Form 10-Q (File No. 001-32657) filed with the SEC on April 28, 2017).
Form of Nabors Industries Ltd. TSR Grant Agreement – Executive, pursuant to the 2016 Stock Plan and
the 2013 Stock Plan (incorporated by reference to Exhibit 10.15(n) to our Form 10-K (File No. 001-
32657) filed with the SEC on February 28, 2019).
Form of Nabors Corporate Services, Inc. TSR Grant Agreement – Executive, pursuant to the 2016
Stock Plan and the 2013 Stock Plan (incorporated by reference to Exhibit 10.15(o) to our Form 10-K
(File No. 001-32657) filed with the SEC on February 28, 2019).
Form of Nabors Industries Ltd. TSR Stock Grant Agreement – Anthony G. Petrello (2020)
(incorporated by reference to Exhibit 10.3 to our form 8-K (File No. 001-32657) filed with the SEC on
January 8, 2020).
Form of Nabors Corporate Services, Inc. TSR Stock Grant Agreement – Anthony G. Petrello (2020)
(incorporated by reference to Exhibit 10.4 to our form 8-K (File No. 001-32657) filed with the SEC on
January 8, 2020).
Form of CEO Performance Based Stock Restricted Unit Agreement (2020) (incorporated by reference
to Exhibit 10.5 to our form 8-K (File No. 001-32657) filed with the SEC on January 8, 2020).
10.13(b)
10.14(+)
10.14(a)(+)
10.14(b)(+)
10.14(c)(+)
10.14(d)(+)
10.14(e)(+)
10.14(f)(+)
10.14(g)(+)
10.14(h)(+)
10.14(i)(+)
10.14(j)(+)
10.14(k)(+)
10.14(l)(+)
10.14(m)(+)
10.14(n)(+)
96
Exhibit No.
10.14(o)(+)
10.14(p)(+)
10.14(q)(+)
10.14(r)(+)
10.14(s)(+)
10.15(+)
10.15(a)(+)
10.15(b)(+)
10.16(+)
10.16(a)(+)
10.16(b)(+)
10.17
Description
Form of CFO Performance Based Stock Restricted Unit Agreement (2020) (incorporated by reference
to Exhibit 10.6 to our form 8-K (File No. 001-32657) filed with the SEC on January 8, 2020).
Form of CEO Performance Based Restricted Stock Unit Agreement (2022) (incorporated by reference
to Exhibit 10.14(p) to our Annual Report on Form 10-K (File No. 001-32657) filed with the SEC on
February 18, 2022).
Form of CFO Performance Based Restricted Stock Unit Agreement (2022) (incorporated by reference
to Exhibit 10.14(q) to our Annual Report on Form 10-K (File No. 001-32657) filed with the SEC on
February 18, 2022).
Form of CEO TSR Stock Grant Agreement (2022) (incorporated by reference to Exhibit 10.14(r) to our
Annual Report on Form 10-K (File No. 001-32657) filed with the SEC on February 18, 2022).
Form of CFO TSR Stock Grant Agreement (2022) (incorporated by reference to Exhibit 10.14(s) to our
Annual Report on Form 10-K (File No. 001-32657) filed with the SEC on February 18, 2022).
Nabors Industries, Inc. Executive Deferred Compensation Plan (as Amended and Restated Effective as
of April 1, 2017) (incorporated by reference to Exhibit 10.3(a) to our Form 10-Q (File No. 001-32657)
filed with the SEC on April 28, 2017).
Amendment No. 1 to Nabors Industries, Inc. Executive Deferred Compensation Plan (incorporated by
reference to Exhibit 10.5 to our form 10-Q (File No. 001-32657) filed with the SEC on November 1,
2019).
Form of Deferred Bonus Agreement under the Nabors Industries, Inc. Executive Deferred
Compensation Plan (incorporated by reference to Exhibit 10.3(b) to our Form 10-Q (File No. 001-
32657) filed with the SEC on April 28, 2017).
Nabors Industries, Inc. Deferred Compensation Plan (as Amended and Restated Effective as of
January 1, 2017) (incorporated by reference to Exhibit 10.4 to our Form 10-Q (File No. 001-32657)
filed with the SEC on April 28, 2017).
Amendment No. 1 to Nabors Industries, Inc. Deferred Compensation Plan (incorporated by reference to
Exhibit 10.6 to our form 10-Q (File No. 001-32657) filed with the SEC on November 1, 2019).
Amendment No. 2 to Nabors Industries, Inc. Deferred Compensation Plan (incorporated by reference to
Exhibit 10.7 to our form 10-Q (File No. 001-32657) filed with the SEC on November 1, 2019).
Amending Agreement, dated July 29, 2021, by and among Nabors Drilling Canada Limited, Nabors
Industries Ltd., and HSBC Canada Bank (incorporated by reference to Exhibit 10.5 to our Form 10-Q
(File No. 001-32657) filed with the SEC on August 2, 2021).
21 Significant Subsidiaries.*
22
Issuer of Registered Guaranteed Debt Securities.*
23.1 Consent of Independent Registered Public Accounting Firm—PricewaterhouseCoopers LLP.*
Rule 13a-14(a)/15d-14(a) Certification of Anthony G. Petrello, Chairman, President and Chief
31.1
Executive Officer.*
31.2 Rule 13a-14(a)/15d-14(a) Certification of William Restrepo, Chief Financial Officer.*
32.1
Certifications required by Rule 13a-14(b) or Rule 15d-14(b) and Section 1350 of Chapter 63 of Title 18
of the United States Code (18 U.S.C. 1350), executed by Anthony G. Petrello, Chairman, President and
Chief Executive Officer and William Restrepo, Chief Financial Officer.*
Inline XBRL Instance Document*
Inline XBRL Schema Document*
Inline XBRL Calculation Linkbase Document*
Inline XBRL Label Linkbase Document*
Inline XBRL Presentation Linkbase Document*
Inline XBRL Definition Linkbase Document*
101.INS
101.SCH
101.CAL
101.LAB
101.PRE
101.DEF
97
Exhibit No.
Description
104
Cover Page Interactive Data File (the cover page XBRL tags are embedded in the Inline XBRL
document)
* Filed herewith.
** Certain schedules and exhibits have been omitted in accordance with Item 601(a)(5) of Regulation S-K. A copy of
any omitted schedule and/or exhibit will be furnished supplementally to the Securities and Exchange Commission
upon request.
(+) Management contract or compensatory plan or arrangement.
98
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has
duly caused this annual report to be signed on its behalf by the undersigned, thereunto duly authorized.
SIGNATURES
NABORS INDUSTRIES LTD.
By:
/s/ ANTHONY G. PETRELLO
Anthony G. Petrello
Chairman, President and
Chief Executive Officer
(Principal Executive Officer)
By:
/s/ WILLIAM RESTREPO
William Restrepo
Chief Financial Officer
(Principal Financial Officer and Accounting Officer)
Date:
February 9, 2023
Pursuant to the requirements of the Securities Exchange Act of 1934, this annual report has been signed below
by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
Signature
Title
Date
/s/ ANTHONY G. PETRELLO
Anthony G. Petrello
Chairman, President and Chief Executive
Officer
February 9, 2023
/s/ WILLIAM RESTREPO
William Restrepo
Chief Financial Officer
February 9, 2023
/s/ TANYA S. BEDER
Tanya S. Beder
Director
/s/ ANTHONY R. CHASE
Anthony R. Chase
Director
/s/ JAMES R. CRANE
James R. Crane
Director
/s/ MICHAEL C. LINN
Michael C. Linn
Director
/s/ JOHN P. KOTTS
John P. Kotts
Director
/s/ JOHN YEARWOOD
John Yearwood
Director
99
February 9, 2023
February 9, 2023
February 9, 2023
February 9, 2023
February 9, 2023
February 9, 2023
BOARD OF DIRECTORS
LEADERSHIP TEAM
Anthony G. Petrello
Nabors Chairman of the Board, President & Chief
Executive Officer
Tanya S. Beder
Chair & CEO of SBCC Group, Inc.
Anthony R. Chase
Chair & CEO of ChaseSource, L.P.
James R. Crane
Chair & CEO of Crane Capital Group, Inc.
John P. Kotts
Private investor and entrepreneur
Michael C. Linn
President & CEO of MCL Ventures, LLC
John Yearwood
Lead Director, Retired President,
CEO & COO of Smith International, Inc.
Anthony G. Petrello
Chairman, President & Chief Executive Officer
William Restrepo
Chief Financial Officer
Mark D. Andrews
Corporate Secretary
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Siggi Meissner
President, Energy Transition and Industrial
Automation
Don Prejean
Senior Vice President, Canrig
Travis Purvis
Senior Vice President,
Global Drilling Operations
Michael Rasmuson
Senior Vice President, General Counsel
& Chief Compliance Officer
SHAREHOLDER INFORMATION
Subodh Saxena
Senior Vice President, Nabors Drilling Solutions
Jade Strong
Senior Vice President & Chief Administrative
Officer
Yehya Altameimi
Chief Executive Officer
Saudi Aramco Nabors Drilling (SANAD)
Corporate Address
Crown House
Second Floor
4 Par-la-Ville Road Hamilton,
Bermuda HM 08
Telephone: (441) 292-1510
FAX: (441) 292-1334
Mailing Address
P.O. Box HM3349
Hamilton, HMPX
Bermuda
Form 10-K
Our Form 10-K is available on our website at www.nabors.com within the
“Investor Relations” section. Copies may be obtained at no charge by writing
to our Corporate Secretary at Nabors’ corporate office.
Transfer Agent
Computershare Trust Company, N.A.
www.computershare.com/investor
Shareholder correspondence should be mailed to:
Computershare
P.O. Box 43006
Providence, RI 02940-3006
Overnight correspondence should be sent to:
Computershare
150 Royall Street, Suite 101
Canton, Massachusetts, 02021
United States
Shareholder online inquiries:
https://www-us.computershare.com/investor/Contact
Investor Relations Contact:
William C. Conroy
Vice President of Corporate Development & Investor Relations
William.Conroy@Nabors.com
Independent Registered Public Accounting Firm
PricewaterhouseCoopers LLP Houston, Texas
On April 10, 2023, the closing price of our common shares as reported on the
New York Stock Exchange (“NYSE”) was $123.21, and there were
approximately 1,717 shareholders of record of our common shares. The
common shares are listed on the NYSEunder the symbol “NBR.”
For additional information regarding corporate governance, historical
financial data, investor presentations and global rig fleet, please visit
www.nabors.com.
This annual report includes forward-looking statements within the meaning
of the Securities Act of 1933 and the Securities Exchange Act of 1934. Such
forward-looking statements are subject to a number of risks and
uncertainties, as disclosed by Nabors from time to time in its filings with the
Securities and Exchange Commission. As a result of these factors, Nabors’
actual results may differ materially from those indicated or implied by such
forward-looking statements. The forward-looking statements contained in
this annual report reflect management’s estimates and beliefs as of the date
this annual report is first made available to shareholders. Nabors does not
undertake to update these forward-looking statements.
Crown House
Second Floor
4 Par-la-Ville Road
Hamilton, Bermuda HM 08
WWW.NABORS.COM
2022 ANNUAL REPORT