NABORS INDUSTRIES LTD Leases Disclosure
Note 19 Leases
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. |
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 non-lease 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.
Lease Position
The table below presents the lease related assets and liabilities recorded on our condensed consolidated balance sheet:
| Year Ended December 31, | ||||||
2025 |
| 2024 | |||||
Classification on the Balance Sheet | (In thousands) | ||||||
Assets | |||||||
Operating lease assets | $ | 40,086 | $ | 28,688 | |||
Total lease assets | $ | 40,086 | $ | 28,688 | |||
Liabilities | |||||||
Current liabilities: | |||||||
Operating lease liabilities | Current lease liabilities | $ | 9,740 | $ | 6,768 | ||
Noncurrent liabilities: | |||||||
Operating lease liabilities | $ | 30,473 | $ | 22,145 | |||
Total lease liabilities | $ | 40,213 | $ | 28,913 | |||
Lease Costs
The table below presents certain information related to the lease costs for our operating leases:
Year Ended December 31, | |||||||||
2025 | | 2024 | | 2023 | |||||
(In thousands) | |||||||||
Operating lease cost |
| 12,711 |
| 7,941 |
| 9,688 | |||
Short-term lease cost |
| 3,864 |
| 763 |
| 150 | |||
Variable lease cost |
| 168 |
| 25 |
| 39 | |||
Total lease cost | $ | 16,743 | $ | 8,729 | $ | 9,877 | |||
Other Information
The table below presents supplemental cash flow information related to leases:
Year Ended December 31, | |||||||||
| 2025 | | 2024 | | 2023 | ||||
(In thousands) | |||||||||
Cash paid for amounts included in the measurement of lease liabilities: | |||||||||
Operating cash flows for operating leases | $ | 12,711 | $ | 7,941 | $ | 9,688 | |||
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, | ||||||
| 2025 |
| 2024 | ||||
Weighted-average remaining lease term - operating leases | 5.55 | 5.57 | |||||
Weighted-average discount rate - operating leases | 7.49% | 7.25% | |||||
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, 2025 |
| ||
| (In thousands) |
| ||
2026 | $ | 12,565 | ||
2027 |
| 10,394 | ||
2028 |
| 7,361 | ||
2029 |
| 6,047 | ||
2030 |
| 3,670 | ||
Thereafter |
| 9,011 | ||
Total undiscounted lease liability | 49,048 | |||
Less: amount of lease payments representing interest | (8,835) | |||
Long-term lease obligations | $ | 40,213 | ||
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 13, 2026 | Showing above |
| 2024 | Feb 13, 2025 | |
| 2023 | Feb 12, 2024 | |
| 2022 | Feb 9, 2023 | |
| 2021 | Feb 18, 2022 | |
| 2020 | Feb 24, 2021 | |
| 2019 | Feb 25, 2020 | |
About Leases Disclosures
Lease disclosures under ASC 842 provide a comprehensive view of a company's leased asset portfolio, including the split between operating and finance leases, discount rates used to present-value future payments, and the maturity schedule of lease obligations. This section reveals a significant source of off-balance-sheet commitments that were largely hidden before the current standard.
Key signals: the weighted-average discount rate affects the size of recorded lease liabilities — a higher rate reduces the reported obligation, so compare the chosen rate against the company's incremental borrowing rate. The operating versus finance lease mix affects both EBITDA and operating income presentation. Watch the maturity table for concentration risk: large payment cliffs in specific years may create cash flow pressure. Variable lease payments excluded from the liability measurement represent real obligations that do not appear on the balance sheet. Compare total lease costs against prior-year operating lease expense to assess the true economic burden.