NESR Hits $400M Revenue Milestone Amid Record Growth and $2B Run Rate Hopes

Date of Call: Feb 17, 2026

Financials Results

• Revenue: $398.3 million, up 34.9% sequentially and 15.9% year-over-year
• EPS: $0.32 adjusted diluted earnings per share
• Operating Margin: 21.2% adjusted EBITDA margin, broadly in line with prior quarter

Guidance:

• Q1 2026 revenue seasonality expected to be muted, with Ramadan fully in Q1.
• Q1 2026 margins expected to be weakest of the year, with sequential improvement expected through 2026.
• Full year 2026 EBITDA margins expected to remain broadly consistent with 2025 (21.3%).
• Full year 2026 revenue growth expected to be best ever, exiting 2026 with ~$2B annualized run rate.
• Full year 2026 capital expenditures expected to be ~$165 million.
• Full year 2026 free cash flow projected at 35-40% conversion from adjusted EBITDA.

Business Commentary:

Record Revenue and Financial Performance:

• NESR reported record revenue of $398.3 million for Q4 2025, representing an increase of 34.9% sequentially and 15.9% year-over-year.
• The growth was driven by the mobilization of the new Jafurah contract, strong activity in North Africa, and higher activity levels in several countries including Saudi Arabia, Kuwait, Iraq, Egypt, and Libya.

Kuwait's Upstream Investment and Activity Growth:

• Kuwait plans to invest $8 billion to $10 billion annually in upstream activities through 2030, aiming to expand oil capacity to 4 million barrels per day by 2035.
• This is expected to significantly boost NESR's operations in Kuwait, which is set to become the company's second-largest country after Saudi Arabia.

Libya's Energy Sector Development:

• Libya has seen a surge in activity with recent investments and partnerships, including a $20 billion commitment from IOCs over 25 years.
• NESR is positioned to play a key role in Libya's capacity expansion plans, which include increasing oil production from 1.4 million to 2 million barrels per day by 2030.

Jafurah Frac Project Initiation:

• NESR initiated operations at the Jafurah frac project on time in early November 2025, ramping up stages as planned with a focus on cost control and efficiency.
• The project leverages strategic planning and local partnerships to ensure supply chain reliability and operational efficiency.

Strong Cash Flow and Low Leverage:

• NESR achieved exceptionally strong cash flow in Q4 2025, reducing bank debt and maintaining a net debt-to-adjusted EBITDA ratio of 0.66, well below the target threshold of 1x.
• The company's disciplined investment strategy and strong operational performance have strengthened its balance sheet, supporting future growth initiatives.

Sentiment Analysis:

Overall Tone: Positive

• Management expressed strong optimism with statements such as 'tremendous '25 with even stronger-than-expected results,' 'record high for revenue and free cash flow,' and 'we now have our sights set on even much greater heights.' Forward guidance is robust, projecting 2026 as 'the best year ever from a growth and from numbers.'

Q&A:

• Question from John Anderson (Barclays Bank PLC): Regarding Jafurah frac project ramp-up, where are we today in reaching the 500,000 horsepower target and the path to the $2B run rate?
  Response: Ramping up in coordination with Aramco; expect to reach steady state by Q2 2026, with additional fleets added in Q3/Q4, and run rate clearly visible in Q3.

• Question from John Anderson (Barclays Bank PLC): What are the current supply chain concerns and how are they navigated?
  Response: All supply chain, logistics, and tariff issues are solved; ready to meet customer needs with equipment and partners aligned.

• Question from John Anderson (Barclays Bank PLC): Medium-term outlook and key areas to exceed $2B target?
  Response: Confident in doubling company size in a couple of years; large tender pipeline (~$2-3B) across region, with contracts expected to be awarded in 2026.

• Question from Saurabh Pant (BofA Securities): Where will incremental efficiencies and optimizations come from at Jafurah and the expected margin profile?
  Response: Expect ~20% efficiency gains from optimizing stages, rig-up, and maintenance; state-of-the-art facility in SPARK (ready Q3) will drive 'cruise control' and margin improvement.

• Question from Saurabh Pant (BofA Securities): How critical is Kuwait's $8-10B upstream spending, and what's the line of sight for contract awards?
  Response: Spending is already underway; won contracts and tenders pending awards in 2026 (Q1-Q3), with contracts for 5-7 years, enabling rapid mobilization due to countercyclical preparation.

• Question from Joshua Silverstein (UBS): What investments are needed to support growth, and how do acquisitions/technology development play into the strategy?
  Response: CapEx expected to remain ~$150-200M; technology development pursued via VC-style partnerships to commercialize innovations, e.g., in directional drilling and decarbonization.

• Question from Joshua Silverstein (UBS): What is the right level of leverage, and thoughts on shareholder returns (buybacks vs. dividends)?
  Response: Target leverage ratio of 1x or below; formal capital allocation framework (including dividends, buybacks) to be announced next quarter.

• Question from Derek Podhaizer (Piper Sandler): State of legacy business in Saudi Arabia outside Jafurah and outlook for 2026?
  Response: Saudi activity is ramping up with rig additions; expect to gain market share proportionate to industry growth and benefit from lump sum turnkey tender backlog.

• Question from Derek Podhaizer (Piper Sandler): Clarification on Q1 margin guidance and progression through 2026.
  Response: Q1 2026 margins will be lower but with muted seasonality; full year 2026 margins expected similar to 2025, improving sequentially.

• Question from Sherif Elmaghrabi (BTIG): Low mobilization costs in Oman and any equipment movement; opportunities outside existing footprint?
  Response: Oman costs were one-time write-offs for legacy items; equipment is new for that scope. Exploring opportunities in Syria and Libya, with potential entry into Syria post-sanctions and Libya's capacity expansion.

• Question from Tate Sullivan (Maxim Group): Pros/cons of Saudi easing foreign investment restrictions?
  Response: No direct impact as NESR is not listed on Saudi Tadawul; overall positive for regional market openness and investment, which benefits NESR's operations.

• Question from Tate Sullivan (Maxim Group): Opportunities in critical minerals sector?
  Response: Actively involved in critical minerals via NEDA, piloting lithium and other extractions from produced water with Aramco and Maaden; sees this as a major future pillar.

• Question from Jeffrey Robertson (Water Tower Research): Margin profile of tender pipeline ($2-3B outstanding)?
  Response: Did not disclose specifics; indicated contracts would maintain company's current margin profile.

• Question from Jeffrey Robertson (Water Tower Research): Timing of tender awards (2026 vs. beyond)?
  Response: All awards expected in 2026 (Q1-Q4), with contracts for 5-7 years; revenue impact will be seen in 2026 and into 2027.

• Question from Jeffrey Robertson (Water Tower Research): Will tender volume increase over the next several years?
  Response: 2025/2026 are high tender years; clients are securing capacity for 5-7 years, ensuring pipeline remains solid through 2030-2032.

Contradiction Point 1

Jafurah Project Ramp-up Timeline and Steady State

Contradiction on when the project will reach its planned production rate of 500,000 horsepower, impacting expectations for operational milestones.

What are your thoughts on the recent earnings report? - John Anderson (Barclays Bank PLC)

2025Q4: Operations started on time in early November... The steady state is expected by Q2 2026. - Sherif Foda(CEO)

What is the current progress toward 500,000 horsepower in the Jafurah project, and what steps are needed to reach the $2 billion annual run rate? - John Anderson (Barclays Bank PLC, Research Division)

2025Q3: The project involves a significant increase in stages... The plan is to deliver stages as required by Aramco, with the capability to perform over 1,000 stages per month and scale up to 1,500 if needed, using a flexible crew model. - Sherif Foda(CEO)

Contradiction Point 2

Incremental EBITDA from Jafurah Contract for 2026

Contradiction on the expected incremental EBITDA contribution from the Jafurah project for the 2026 fiscal year, affecting financial performance forecasts.

What is the question from John Anderson of Barclays Bank PLC? - John Anderson (Barclays Bank PLC)

2025Q4: The company sees a clear path to doubling its size in a couple of years. - Sherif Foda(CEO)

What are the key drivers of medium-term growth beyond the $2 billion target? - John Anderson (Barclays Bank PLC, Research Division)

2025Q3: The incremental EBITDA for 2026 is approximately $100 million, assuming the same margin as the full year 2025. - Stefan Angeli(CFO)

Contradiction Point 3

Timing of Jafurah Contract Announcements

Contradiction on when results of key tender evaluations will be announced, creating uncertainty about project progress and outcomes.

What were the key drivers of the quarter's performance? - John Anderson (Barclays Bank PLC)

2025Q4: The steady state is expected by **Q2 2026**, with potential for additional fleet additions in Q3/Q4. Stage run rates will be clearer in **Q3 2026**. - Sherif Foda(CEO)

What is the current progress toward 500,000 horsepower at Jafurah, and what steps are needed to achieve the $2 billion annual run rate? - John Anderson (Barclays)

2025Q2: Expect results to be announced in the **next couple of months**, similar to the pattern seen with other tenders. - Sherif Foda(CEO)

Contradiction Point 4

Capital Expenditure Guidance

Contradiction in the annual CapEx forecast required to support growth, affecting investors' understanding of the company's financial planning and investment needs.

What is your outlook? - Joshua Silverstein (UBS Investment Bank)

2025Q4: CapEx is planned around **$150–180 million** annually, potentially up to **$200 million**. - Sherif Foda(CEO)

What investment is needed to support increased activity, and how do acquisitions or new technologies contribute? - Arvind Sanger (GeoSphere Capital)

2025Q2: Full-year 2025 CapEx is expected to be **~$125 million (±$20 million)**, depending on tender award results. - Stefan Angeli(CFO)

Contradiction Point 5

Saudi Arabia's Conventional Activity Outlook and NESR's Growth Exposure

Contradictory statements on the softness of the conventional market in Saudi Arabia and NESR's growth positioning, impacting expectations for the company's legacy business performance.

What are your key growth strategies for the upcoming quarter? - Derek Podhaizer (Piper Sandler & Co.)

2025Q4: Activity in Saudi Arabia is ramping up. Rig counts are expected to increase (**40–60 rigs in 2026**), and there is a large LSTK tender backlog. NESR expects to gain market share in line with overall growth. - Sherif Foda(CEO)

What is the 2026 forecast for legacy operations outside Jafurah in Saudi Arabia? - J. David Anderson (Barclays Bank PLC)

2025Q1: Conventional activity will continue to drop in 2025, with no pickup expected in the second half. Unconventional activity is proceeding as planned... Conventional activity will continue to drop in 2025... Companies not involved in gas or unconventionals may see a ~20% year-on-year drop. - Sherif Foda(CEO)