National Energy Services Reunited Corp. (NESR)

EXECUTIVE
OVERVIEW

Drivers
of Our Financial Condition and Results of Operations

As of the end of the three-month and six-month periods covered by this
Quarterly Report, the conflict involving the United States, Israel and Iran, and the associated volatility in Brent crude oil prices,
have not had a material adverse impact on our results of operations or financial condition. Demand for our services has remained resilient,
supported in large part by continued customer investment in Saudi Arabia, including the Jufurah unconventional field, as well as sustained
activity in certain of our other operating locations. However, the duration, scope and ultimate trajectory of the conflict remain uncertain,
and any de-escalation or further escalation of the conflict, as well as related sanctions, supply disruptions or other geopolitical developments,
could materially affect commodity prices, customer capital spending, and our results of operations and financial condition in future periods. For a full discussion
of the drivers of our financial condition and results of operations, see the section entitled “Drivers of Our Financial Condition
and Results of Operations” in Part II, Item 7 of our 2025 Annual Report.

Key
Performance Indicators

As
of the end of the three-month and six-month periods covered by this Quarterly Report, there have been no material changes regarding our
key performance indicators. The following table shows rig count (Source: Baker Hughes Published Rig Count
Data) and oil prices (Source: U.S. Energy Information Administration - Brent – Europe) as of the dates indicated. For a full discussion
of our key performance indicators, see the section entitled “Key Performance Indicators” in Part II, Item 7 of our
2025 Annual Report.

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RESULTS
OF OPERATIONS

We
operate our business through two operating segments and report our results of operations through two reporting segments, Production Services
and Drilling and Evaluation Services, which aggregate services performed during distinct stages of a typical life-cycle of an oil well.

Production
Services. Our Production Services segment includes the results of operations from services that are generally offered and performed
during the production stage of a well’s lifecycle. These services mainly include hydraulic fracturing, coiled tubing, stimulation
and pumping, cementing, nitrogen services, filtration services, pipelines and industrial services, production assurance, artificial lift
services, completions and integrated production management. Our Production Services accounted for 63%, 63%, 62%, and 62% of our revenues
for the three-month period ended June 30, 2026, the three-month period ended June 30, 2025, the six-month period ended June 30, 2026,
and the six-month period ended June 30, 2025, respectively.

Drilling
and Evaluation Services. Our Drilling and Evaluation Services segment includes the results of operations from services that are generally
offered and performed during pre-production stages of a well’s lifecycle and related mainly to the operation of oil rigs. The services
mainly include rigs and integrated services, fishing and downhole tools, thru-tubing intervention, tubular running services, directional
drilling, drilling and completion fluids, pressure control, well testing services, wireline logging services and slickline services.
Our Drilling and Evaluation Services accounted for 37%, 37%, 38%, and 38%, of our revenues for the three-month period ended June 30,
2026, the three-month period ended June 30, 2025, the six-month period ended June 30, 2026, and the six-month period ended June 30, 2025,
respectively.

For
a full discussion of our reportable segments, see the section entitled “Business” in Part I, Item 1 of our 2025 Annual
Report.

Key
Components of Revenues and Expenses

As
of the end of the three-month and six-month periods covered by this Quarterly Report, there have been no material changes to our key
components of revenues and expenses. See the section entitled “Key Components of Revenues and Expenses” in Part II,
Item 7 of our 2025 Annual Report for more information.

2026
compared to 2025

The
following table presents our Condensed Consolidated Statements of Operations (Unaudited) data for the periods indicated (in US$
thousands):

Revenue.
Revenue was $520.8 million for the three-month period ended June 30, 2026, compared to $327.4 million for the three-month period
ended June 30, 2025, and $925.3 million for the six-month period ended June 30, 2026, compared to $630.5 million for the six-month period
ended June 30, 2025.

The
table below presents our revenue by segment for the periods indicated (in US$ thousands):

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Production
Services revenue was $329.7 million for the three-month period ended June 30, 2026, compared to $205.1 million for the three-month period
ended June 30, 2025, and $570.8 million for the six-month period ended June 30, 2026, compared to $393.1 million for the six-month period
ended June 30, 2025. The change in revenue was primarily due to increased hydraulic fracturing stages in Saudi Arabia.

Drilling
and Evaluation Services revenue was $191.0 million for the three-month period ended June 30, 2026, compared to $122.3 million for the
three-month period ended June 30, 2025, and $354.6 million for the six-month period ended June 30, 2026, compared to $237.3 million for
the six-month period ended June 30, 2025. The change in revenue was primarily due to increased well testing and to a lesser extent, wireline
logging activity in Saudi Arabia.

Cost
of services. Cost of services was $439.5 million for the three-month period ended June 30, 2026, compared to $283.5 million for
the three-month period ended June 30, 2025, and $792.2 million for the six-month period ended June 30, 2026, compared to $549.1 million
for the six-month period ended June 30, 2025. Cost of services as a percentage of total revenue was 84.4%, 86.6%, 85.6% and 87.1% for
the three-month period ended June 30, 2026, the three-month period ended June 30, 2025, the six-month period ended June 30, 2026, and
the six-month period ended June 30, 2025, respectively. The change in cost of services as a percentage of total revenue is mainly due
to increased activity levels in the period ended June 30, 2026, as compared to the prior year period, reflecting improved cost absorption
as revenue scaled. Cost of services included depreciation expense of $31.7 million, $29.3 million, $60.8 million and $58.8 million for
the three-month period ended June 30, 2026, the three-month period ended June 30, 2025, the six-month period ended June 30, 2026, and
the six-month period ended June 30, 2025, respectively.

Gross
profit. Gross profit was $81.3 million for the three-month period ended June 30, 2026, compared to $43.9 million for the three-month
period ended June 30, 2025, and $133.1 million for the six-month period ended June 30, 2026, compared to $81.3 million for the six-month
period ended June 30, 2025. Gross profit as a percentage of total revenue was 15.6%, 13.4%, 14.4% and 12.9% for the three-month period
ended June 30, 2026, the three-month period ended June 30, 2025, the six-month period ended June 30, 2026, and the six-month period ended
June 30, 2025, respectively. The change in trend is described under “Revenue” and “Cost of services.”

SG&A
expense. SG&A expense, which represents costs associated with managing and supporting our operations, was $12.0 million for
the three-month period ended June 30, 2026, compared to $12.1 million for the three-month period ended June 30, 2025, and $23.1 million
for the six-month period ended June 30, 2026, compared to $23.9 million for the six-month period ended June 30, 2025. SG&A expense
as a percentage of total revenue was 2.3%, 3.7%, 2.5% and 3.8% for the three-month period ended June 30, 2026, the three-month period
ended June 30, 2025, the six-month period ended June 30, 2026, and the six-month period ended June 30, 2025, respectively. The decrease
in SG&A expense in the six months ended June 30, 2026, was primarily attributable to lower spending on activities related to the
remediation of the Company’s material weakness, as the Company completed remediation as of June 30, 2025, and therefore incurred
significant remediation-related costs during the six-month period ended June 30, 2025.

Amortization
expense. Amortization expense was $4.4 million for the three-month period ended June 30, 2026, compared to $4.7 million for the
three-month period ended June 30, 2025, and $9.1 million for the six-month period ended June 30, 2026, compared to $9.4 million for the
six-month period ended June 30, 2025. Amortization expense is driven mainly by acquired intangible assets resulting from acquisitions.

Interest
expense, net. Interest expense, net, was $7.0 million for the three-month period ended June 30, 2026, compared to $8.6 million
for the three-month period ended June 30, 2025, and $13.6 million for the six-month period ended June 30, 2026, compared to $16.8 million
for the six-month period ended June 30, 2025. Interest expense, net, decreased period-over-period, due to lower debt levels during 2026
as compared to 2025.

Other
income, net. Other income, net, was $1.1 million for the three-month period ended June 30, 2026, compared to $0.9 million for
the three-month period ended June 30, 2025, and $2.6 million for the six-month period ended June 30, 2026, compared to $2.0 million for
the six-month period ended June 30, 2025.

Income
tax expense. Income tax expense was $14.9 million for the three-month period ended June 30, 2026, compared to $4.3 million
for the three-month period ended June 30, 2025, and $22.0 million for the six-month period ended June 30, 2026, c

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

The
following discussion and analysis is provided to increase the understanding of, and should be read in conjunction with the
accompanying consolidated financial statements and related notes. In addition, see Item 1A, “Risk Factors” and the “Forward-Looking
Statements” included in this Annual Report. for a discussion of the risks, uncertainties and assumptions associated with these statements.
Unless otherwise noted, all amounts discussed herein are consolidated.

EXECUTIVE OVERVIEW

Drivers
of Our Financial Condition and Results of Operations

We
are a provider of services to the oil and natural gas industry primarily in the MENA region. We currently operate in 16 countries,
with a strong presence in Saudi Arabia, Oman, Kuwait, UAE, Iraq, Egypt, Libya, and Algeria. Our company was founded with a vision of
creating a regional provider for oilfield services that offers a full portfolio of solutions for our customers with a focus on
supporting the economies in which we operate. ESG considerations are central to our Company, and we believe that employing local
staff and fully integrating with regional economies is a critical part of the social component of our ESG philosophy. In addition,
we have found that promoting high local content in our operations optimizes our cost structure, enhancing our ability to generate
free cash flow in various commodity price environments.

Customer
investment in oil and natural gas exploration, field development, and production is driven by multiple factors, including global energy
supply and demand forecasts, geopolitical and economic conditions in key operating regions, and expectations for future oil and natural
gas prices.

During
the years ended December 31, 2025, 2024, and 2023, approximately 99%, 99%, and 99%, respectively, of our revenue was generated from operations
in the MENA region. According to the Energy Institute Statistical Review of World Energy 2025 (74th edition), the Middle East
accounts for nearly one-third of global oil production, underscoring the region’s critical role in global energy supply. NESR’s
strong presence in these markets provides a unique competitive advantage. Many MENA economies are structurally dependent on the energy
sector as their primary source of national revenue and therefore maintain consistent production and development activity, even in periods
of lower commodity prices. With some of the lowest break-even costs of production globally, Middle Eastern producers continue to invest
through cycles, enabling NESR to benefit from a stable demand base and long-term customer relationships. This strategic geographic focus
positions NESR to deliver resilient financial performance and sustainable growth, even amid broader market volatility.

Key
Performance Indicators

Historically,
we have monitored two principal non-financial performance indicators that serve as key drivers of our results of operations: oil prices
and rig count.

Oil
price trends are significant because the level of spending by our customers is heavily influenced by expectations of future oil prices,
which reflect anticipated global supply and demand dynamics. Fluctuations in spending directly affect the demand for our services.

Rig
count, particularly in the regions where we operate, serves as an indicator of the level of drilling activity and capital investment.
Historically, changes in rig count have correlated closely with our financial performance and operational activity levels.

In
recent years, our customers, particularly in certain parts of the MENA region, have increased their focus on natural gas development,
including the commercialization of unconventional gas resources. Over time, we expect the natural gas market to become an additional
key performance indicator for the Company, reflecting its growing importance in regional energy strategies and our expanding participation
in that segment.

The
following table shows rig count (Source: Baker Hughes Published Rig Count Data) and oil prices (Source: U.S. Energy Information Administration
- Brent – Europe) as of the dates indicated:

RESULTS
OF OPERATIONS

We
operate our business through two operating segments and report our results of operations through two reporting segments, Production Services
and Drilling and Evaluation Services, which aggregate services performed during distinct stages of a typical life cycle of an oil and
gas well.

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Production
Services. Our Production Services segment includes the results of operations from services that are generally offered and
performed during the completion and production stages of a well’s lifecycle. These services mainly include hydraulic
fracturing, coiled tubing, stimulation and pumping, cementing, nitrogen services, filtration services, pipelines and industrial
services, production assurance, artificial lift services, completions and integrated production management. Our Production Services
segment accounted for 62%, 67%, and 69%, of our revenues for the years ended December 31, 2025, 2024, and 2023,
respectively.

Drilling
and Evaluation Services. Our Drilling and Evaluation Services segment includes the results of operations from services that are
generally offered and performed during the well construction stage of a well’s lifecycle and related mainly to the operation
of drilling rigs. The services mainly include rigs and integrated services, fishing and downhole tools, thru-tubing intervention,
tubular running services, directional drilling, drilling and completion fluids, pressure control, well testing services, wireline
logging services and slickline services. Our Drilling and Evaluation Services accounted for 38%, 33%, and 31%, of our revenues for
the years ended December 31, 2025, 2024, and 2023, respectively. Please see “Principal Activities” within Item 1,
“Business” in this Annual Report for additional description of our reportable segments.

Key
Components of Revenues and Expenses

Revenues

We
earn revenue from our broad suite of oilfield services, including coiled tubing, hydraulic fracturing, cementing, stimulation and pumping,
well testing services, drilling services and rental, fishing and remediation, drilling and workover rigs, nitrogen services, wireline
logging services, turbines drilling, directional drilling, filtration services and slickline services, among others. Revenues are recognized
when performance obligations are satisfied in accordance with contractual terms, in an amount that reflects the consideration the Company
expects to be entitled to in exchange for services rendered or rentals provided. A performance obligation arises under contracts with
customers to render services or provide rentals and is the unit of account under Accounting Standards Update (ASU) 2014-09, Revenue
from Contracts with Customers. The Company accounts for services rendered and rentals provided separately if they are distinct, and
the service or rental is separately identifiable from other items provided to a customer and if a customer can benefit from the services
rendered or rentals provided on its own or with other resources that are readily available to the customer. A contract’s transaction
price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied.
A contract’s standalone selling prices are determined based on the prices that the Company charges for its services rendered and
rentals provided. Most of the Company’s performance obligations are satisfied over time, which is generally represented by a period
of 30 days or less. The Company’s payment terms vary by the type of products or services offered. The term between invoicing and
when the payment is due is typically 30-60 days per contract.

Cost
of services

Cost
of services primarily includes staff costs for service personnel, purchase of non-capitalized material, equipment and supplies (such
as tools and rental equipment), depreciation relating to capital assets used in our operations, vehicle and equipment rental and maintenance
and repair.

Selling,
general and administrative (excluding Amortization) (“SG&A”) expense

SG&A
expense, excluding Amortization, which is presented separately, primarily includes salary and employee benefits for non-production personnel
(primarily management and administrative personnel), professional service fees, office facilities and equipment, office supplies and
non-capitalized office equipment and depreciation of office furniture and fixtures.

Amortization

Amortization
expense primarily includes amortization of intangible assets associated with acquired customer contracts, trademarks and tradenames.

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Interest
expense, net

Interest
expense primarily consists of interest on outstanding debt, net of interest income.

Other
income / (expense), net

Other
income / (expense), net primarily consists of inventory scrap sales, bank charges and foreign exchange gains and losses.

The
discussions below relating to significant line items from our consolidated statements of operations are based on available information
and represent our analysis of significant changes or events that impact the fluctuations in or comparability of reported amounts. Where
appropriate, we have identified specific events and changes that affect comparability or trends. In addition, the discussions below for
revenues are on an aggregate basis for each fiscal period, as the business drivers for all services are similar. All amounts in tables
are in US$ thousands, except share data and per share amounts.

Fiscal
Year 2025 compared to Fiscal Year 2024

The
following table presents our Consolidated Statements of Operations data for the periods indicated:

Revenue. Revenue
was $1,324 million for the year ended December 31, 2025, compared to $1,301.7 million for the year ended December 31,
2024.

The
table below presents our revenue by segment for the periods indicated:

Production
Services revenue was $816.0 million for the year ended December 31, 2025, compared to $878.1 million for the year ended December 31,
2024. The change in revenue was primarily due to reduced hydraulic fracturing stages upon contract transition coupled with reduced
coiled tubing activity in Saudi Arabia, and offset in part by higher specia

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