Business Context and Reporting Period
Company: National Energy Services Reunited Corp. (NESR)
Filing Type: Form 10-Q (Quarterly Report)
Period Ended: June 30, 2026
Business Overview: NESR is a leading oilfield services provider in the Middle East and North Africa (MENA) region, operating through two segments: Production Services and Drilling and Evaluation Services. The company serves upstream and midstream oil and natural gas customers.
Key Financial Metrics
| Metric (in thousands) | Q2 2026 (3 Months) | Q2 2025 (3 Months) | YTD 2026 (6 Months) | YTD 2025 (6 Months) |
|---|---|---|---|---|
| Revenues | $520,752 | $327,368 | $925,338 | $630,470 |
| Gross Profit | $81,292 | $43,884 | $133,123 | $81,339 |
| Operating Income | $64,841 | $27,091 | $100,876 | $48,032 |
| Net Income | $44,017 | $15,201 | $67,844 | $25,592 |
| Diluted EPS | $0.43 | $0.16 | $0.66 | $0.26 |
| Cash from Operations (YTD) | $204,758 | $118,971 | ||
| Capital Expenditures (YTD) | ||||
| Cash & Equivalents (End of Period) | $174,994 | |||
| Total Debt (Outstanding) | $274,600 |
Note: Gross margins improved to 15.6% in Q2 2026 from 13.4% in Q2 2025. Operating cash flow for the six months ended June 30, 2026, was $204.8 million.
Material Changes vs. Prior Period
- Revenue Growth: Revenue increased 59% year-over-year for the quarter and 47% year-over-year for the six-month period. This was driven primarily by increased hydraulic fracturing stages in Saudi Arabia (Production Services) and increased well testing and wireline logging activity (Drilling and Evaluation Services).
- Profitability: Net income surged 189% for the quarter and 165% for the six-month period compared to the prior year, reflecting higher revenue and improved cost absorption.
- Cost Structure: Cost of services as a percentage of revenue decreased to 84.4% in Q2 2026 from 86.6% in Q2 2025, indicating operational leverage.
- Debt Reduction: Total outstanding borrowings decreased to $274.6 million from $310.1 million at year-end 2025. The company did not extend its $59.2 million Secured Revolving Credit Facility in February 2026 due to sufficient liquidity.
- Working Capital: Accounts payable and accrued expenses increased significantly ($181.5 million impact on cash flow), attributed to better timing of payments relative to terms.
Guidance, Outlook, and Risks
- Capital Return Program: In May 2026, the company approved a program including a quarterly cash dividend (anticipated to commence Q4 2026 at $0.10/share) and a $50.0 million share repurchase authorization.
- Refinancing: The company is working with lenders to refinance and extend the 2021 Secured Facilities Agreement. Subsequent to June 30, 2026, it received an additional $18.0 million in working capital commitments.
- Geopolitical Risks: Management notes that while the conflict involving the U.S., Israel, and Iran has not yet materially impacted operations, future escalation, sanctions, or supply disruptions could affect commodity prices and customer spending.
- Legal Contingencies: The company faces legal proceedings in Qatar and the UAE regarding historical profits of a deconsolidated subsidiary. Management estimates a potential loss range of $1.2 million to $11.8 million but believes it has strong grounds to defend its position.
- Capital Expenditures: Committed capital expenditures were $70.6 million as of June 30, 2026, expected to be settled in 2026 and 2027.
Investor Verification Checklist
- Debt Covenant Compliance: Verify continued compliance with the Net Debt/EBITDA (max 3.50) and Interest Coverage (min 4.00) covenants under the 2021 Secured Facilities Agreement.
- Geopolitical Exposure: Assess the sensitivity of the MENA region revenue (99.5% of total revenue) to regional instability and oil price volatility.
- Legal Exposure: Monitor the status of the Qatar/UAE legal proceedings and the potential impact of the estimated $1.2M–$11.8M loss range.
- Capital Allocation: Track the execution of the new $50M share repurchase program and the timing of the first dividend payment.
- Refinancing Progress: Confirm the terms and timeline for the refinancing of the Secured Term Loan and Working Capital Facility.