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National Energy Services Reunited (NESR) Risk Analysis
Risk Overview Q2, 2026
Source: the company's latest filing for the period ended Jun 30, 2026, filed Aug 10, 2026
Risk Change Over Time
- Accounting & Financial Operations - Risk 1The matters identified under Correction of Private Warrant Classification Error, Correction of Errors from Overstatement/ (Understatement) of Assets and Liabilities and Correction of Errors in Classification of Selling, General and Administrative Expenses in Note 4, Restatements, included in Item 18. "Financial Statements," our Annual Report on Form 20-F for the year ended December 31, 2022, relating to restatement of our previously issued audited financial statements as of and for the year-ended December 31, 2020, may affect investor confidence and raise reputational issues and may subject us to additional risks and uncertainties, including increased professional costs and the increased risk from legal proceedings and regulatory inquiries.
As a consequence of the matters discussed in our Annual Report on Form 20-F for the year ended December 31, 2022, we have incurred, and may continue to incur, unanticipated costs for professional fees in connection therewith. We also have incurred significant costs in connection with or as a result of the delisting by Nasdaq of our securities in April 2023 (including in connection with communicating with Nasdaq and assessing alternatives for continued trading of our securities in the United States), and our remediation of our material weaknesses in internal control over financial reporting. See "Controls and Procedures" for additional information regarding such material weaknesses and such remediation process. We have become subject to a number of additional risks and uncertainties, including the increased risk from litigation and regulatory inquiries. For example, we are the subject of an ongoing SEC inquiry that could result in financial penalties. We have and will continue to fully cooperate with the SEC inquiry. The SEC advised us that the initiation of a request for information should not be construed as an indication by the SEC or its staff that any violation of the federal securities laws has occurred. At this stage, we are unable to predict when the SEC's inquiry will conclude or what the consequences may be. Our management believes that the risk of loss in connection with this proceeding will not have a material adverse effect on our financial condition. Any of the foregoing may affect investor confidence in the accuracy of our financial disclosures and may raise reputational risks for our business, both of which could harm our business and financial results. We continue to have material weaknesses in our internal control over financial reporting which we are in the process of remediating. If the material weaknesses persist or if we fail to develop or maintain an effective system of internal control, we may not be able to report our financial results accurately or prevent fraud, which could have a material adverse effect on our business, ordinary shares, results of operations and/or financial condition. Effective internal control is necessary for us to provide reliable and accurate financial statements and to effectively prevent fraud. As described in Item 15, "Controls and Procedures," we have concluded that our internal control over financial reporting and disclosure controls and procedures were not effective as of December 31, 2023, December 31, 2022, and December 31, 2021, due to material weaknesses in our internal control over financial reporting. Our Senior Management failed to set an appropriate tone at the top sufficient to ensure a culture of compliance with the Company's accounting, finance and internal control policies, including through: - Lack of an effective organizational structure to promote effective internal control: - Lack of effective communication protocols to ensure timely escalation and resolving of accounting issues; and - Insufficient technical accounting resources with an appropriate level of accounting knowledge, experience and training commensurate with our structure and financial reporting requirements to appropriately analyze, record and disclose accounting matters timely and accurately in accordance with U.S. GAAP. Moreover, the material weakness described above contributed to the following additional material weaknesses: - The Company's period-end financial reporting controls, specifically those over account reconciliations, were not effectively designed and implemented to detect potential misstatements and correct identified misstatements to period-end financial statements. - The Company did not design and maintain effective controls over certain accounts payable functions. Specifically, the Company did not maintain effective controls over the creation of purchase orders, the matching of goods of services received against purchase orders, and/or the review of the completeness and accuracy of accounts payable and accrued liabilities. - The Company did not design and maintain effective information technology general controls over financial reporting as privileged access users were not appropriately provisioned and inadequate monitoring controls were in place to enforce appropriate system access and segregation of duties. We are designing, implementing, and evaluating measures designed to remediate the material weaknesses. However, we cannot be certain that these measures will be successful or that we will be able to prevent future material weaknesses or significant deficiencies. Furthermore, the efforts required to remediate those material weaknesses may cause a diversion of management's time and attention, which could have a material adverse effect on our business, results of operations, financial position and cash flows.
- Debt & Financing - Risk 2We have engaged in a number of related party transactions, the termination of which may inhibit business, and such transactions present possible conflicts of interest that could have an adverse effect on us.
We rely at times upon services and products supplied by related parties if no other suitable alternatives are available. In addition, these related party transactions create the possibility of conflicts of interest. Such a conflict could cause such persons to seek to advance their economic interests above ours. Further, the appearance of conflicts of interest created by related party transactions could impair the confidence of our investors. While our Board of Directors regularly reviews these transactions, related party transactions presenting a conflict of interest could have a material adverse effect on our liquidity, results of operations and financial condition.
- Corporate Activity and Growth - Risk 3If we do not effectively or efficiently integrate the operations of businesses or companies we acquire, including the integration of the operations of our Subsidiaries, our future growth will be limited.
We may not achieve expected returns and other benefits as a result of various factors, including integration and collaboration challenges. The success of any acquisition is subject to various risks, including: - the inability to integrate the operations of recently acquired assets; - the diversion of management's attention from other business concerns; - the failure to realize expected volumes, revenues, profitability, or growth; - the failure to realize any expected synergies and cost savings; - the coordination of geographically disparate organizations, systems, and facilities; - the assumption of unknown liabilities; - the loss of customers or key employees; and - potential environmental or regulatory liabilities and title problems. The assessment by our management of these risks is inexact and may not reveal or resolve all existing and potential risks. Realization of any of these risks could adversely affect our financial condition, results of operations and cash flows.
Risk Highlights Q2, 2026
Risk Word Cloud
Risk Factors Full Breakdown - Total Risks 52
- Share Price & Shareholder Rights - Risk 1The owners of NESR ordinary shares are subject to tax risks due to the possibility of changes in tax rules and regulations in foreign countries.
Holders of our ordinary shares may be subject to taxation in multiple jurisdictions, including the jurisdictions in which we operate and in which our subsidiaries are organized. Changes in tax laws, regulations, treaties, or administrative interpretations in any relevant jurisdiction, including changes in the tax treatment of dividends, capital gains, withholding taxes, or other distributions, could adversely affect the tax consequences of an investment in our ordinary shares. In addition, changes to cross-border tax rules, anti-avoidance measures, minimum tax regimes, or information-reporting requirements could increase compliance burdens or result in additional taxes for shareholders. These developments may reduce the after-tax return on an investment in our ordinary shares and could adversely affect the market price of our shares. Prospective investors are urged to consult their own tax advisors regarding the tax consequences of an investment in our ordinary shares in light of their particular circumstances.
- Share Price & Shareholder Rights - Risk 2Future sales of our ordinary shares could reduce our stock price, and any additional capital raised by us through the sale of equity or convertible securities may dilute your ownership in us.
We may sell additional securities in subsequent public or private offerings. On December 31, 2025, 100,787,173 ordinary shares were outstanding. We cannot predict the size of future issuances of our ordinary shares or the effect, if any, that future issuances and sales of shares of our ordinary shares will have on the market price of our ordinary shares. Sales of substantial amounts of our ordinary shares (including shares issued in connection with an acquisition), or the perception that such sales could occur, may adversely affect prevailing market prices of our ordinary shares.
- Share Price & Shareholder Rights - Risk 3The market price of our ordinary shares may decline.
Fluctuations in the price of our ordinary shares could contribute to the loss of all or part of your investment. The trading price of our ordinary shares could be volatile and subject to wide fluctuations in response to various factors, some of which are beyond our control. Any of the factors listed below could have a material adverse effect on your investment and our ordinary shares may trade at prices significantly below the price you paid for them. In such circumstances, the trading price of our ordinary shares may not recover and may experience a further decline. Factors affecting the trading price of our ordinary shares may include: - actual or anticipated fluctuations in our quarterly financial results or the quarterly financial results of companies perceived to be similar to us; - changes in the market's expectations about our operating results; - success of competitors; - our operating results failing to meet the expectation of securities analysts or investors in a particular period; - changes in financial estimates and recommendations by securities analysts concerning us or the market in general; - operating and stock price performance of other companies that investors deem comparable to us; - our ability to market new and enhanced products on a timely basis; - changes in laws and regulations affecting our business; - commencement of, or involvement in, litigation or regulatory inquiries involving us; - changes in our capital structure, such as future issuances of securities or the incurrence of additional debt; - the volume of securities available for public sale; - any major change in our board or management; - the sale of a substantial amount of our ordinary shares by our directors, executive officers or significant stockholders or the perception that such sales could occur; and - general economic and political conditions such as recession, world health events, changes in interest rates, fuel prices, international currency fluctuations, and acts of war or terrorism. Many of the factors listed above are beyond our control. In addition, broad market and industry factors may materially harm the market price of our ordinary shares irrespective of our operating performance. The stock market in general, including the Nasdaq Capital Market, has experienced price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of the particular companies affected. The trading prices and valuations of our ordinary shares, which currently trade on the Nasdaq Capital Market, may not be predictable. A loss of investor confidence in the market for retail stocks or the stocks of other companies which investors perceive to be similar to us could depress the price of our securities regardless of our business, prospects, financial conditions or results of operations. A decline in the market price of our ordinary shares also could adversely affect our ability to issue additional securities and our ability to obtain additional financing in the future.
- Share Price & Shareholder Rights - Risk 4If securities or industry analysts do not publish or cease publishing research or reports about us, our business, or our market, or if they change their recommendations regarding our securities adversely, the price and trading volume of our ordinary shares could decline.
The trading market for our ordinary shares relies in part on the research and reports that industry or financial analysts publish about us or our business. We do not control these analysts. Furthermore, if one or more of the analysts who do cover us downgrade or provide negative outlook on our stock or our industry, or the stock of any of our competitors, or publish inaccurate or unfavorable research about our business, the price of our ordinary shares could decline. If one or more of these analysts cease coverage of our business or fail to publish reports on us regularly, we could lose visibility in the market, which in turn could cause our stock price or trading volume to decline.
- Share Price & Shareholder Rights - Risk 5An investment in our securities may result in uncertain U.S. federal income tax consequences.
An investment in our securities may result in uncertain U.S. federal income tax consequences. Prospective investors are urged to consult their tax advisers with respect to these and other tax consequences when purchasing, holding or disposing of our securities.
- Share Price & Shareholder Rights - Risk 6Investors may face difficulties in protecting their interests, and their ability to protect their rights through the U.S. federal courts may be limited, because we are formed under BVI law.
We are a company formed under the laws of the BVI. As a result, it may be difficult for investors to enforce judgments obtained in the U.S. courts against some of our directors or officers. Our corporate affairs are governed by our Memorandum and Articles of Association, as amended and restated, the BVI Business Companies Act, 2004, as amended (the "Companies Act") and the common law of the BVI. The rights of shareholders to take action against the directors, actions by minority shareholders and the fiduciary responsibilities of our directors to us under BVI law are governed by the Companies Act and the common law of the BVI. The common law of the BVI is derived from English common law, and while the decisions of the English courts are of persuasive authority, they are not binding on a court in the BVI. The rights of our shareholders and the fiduciary responsibilities of our directors under BVI law may not be as clearly established as they would be under statutes or judicial precedent in some jurisdictions in the U.S. In particular, the BVI has a less developed body of securities laws as compared to the U.S., and some states, such as Delaware, have more fully developed and judicially interpreted bodies of corporate law. In addition, while statutory provisions do exist in BVI law for derivative actions to be brought in certain circumstances, shareholders in BVI companies may not have standing to initiate a shareholder derivative action in a federal court of the U.S. The circumstances in which any such action may be brought, and the procedures and defenses that may be available in respect to any such action, may result in the rights of shareholders of a BVI company being more limited than those of shareholders of a company organized in the U.S. Accordingly, shareholders may have fewer alternatives available to them if they believe that corporate wrongdoing has occurred. The BVI Courts are also unlikely: - to recognize or enforce against us judgments of courts of the U.S. based on certain civil liability provisions of U.S. securities laws where that liability is in respect of penalties, taxes, fines or similar fiscal or revenue obligations of the company; and - to impose liabilities against us, in original actions brought in the BVI, based on certain civil liability provisions of U.S. securities laws that are penal in nature. There is no statutory recognition in the BVI of judgments obtained in the U.S., although the courts of the BVI will in certain circumstances recognize such a foreign judgment and treat it as a cause of action in itself which may be sued upon as a debt at common law so that no retrial of the issues would be necessary provided that: - the U.S. court issuing the judgment had jurisdiction in the matter and the company either submitted to such jurisdiction or was resident or carrying on business within such jurisdiction and was duly served with process; - the judgment is final and for a liquidated sum; - the judgment given by the U.S. court was not in respect of penalties, taxes, fines or similar fiscal or revenue obligations of the company; - in obtaining judgment there was no fraud on the part of the person in whose favor judgment was given or on the part of the court; - recognition or enforcement of the judgment would not be contrary to public policy in the BVI; and - the proceedings pursuant to which judgment was obtained were not contrary to natural justice. In appropriate circumstances, a BVI Court may give effect in the BVI to other kinds of final foreign judgments such as declaratory orders, orders for performance of contracts and injunctions. As a result of all of the above, public shareholders may have more difficulty in protecting their interests in the face of actions taken by management or controlling shareholders than they would as public shareholders of a U.S. company.
- Share Price & Shareholder Rights - Risk 7Our Memorandum and Articles of Association, as amended and restated, permit the Board of Directors by resolution to create additional classes of securities, including shares with rights, preferences, designations and limitations as they determine which may have an anti-takeover effect.
Our Memorandum and Articles of Association, as amended and restated, permits the Board of Directors by resolution to amend the Memorandum and Articles of Association, as amended and restated, to designate rights, preferences, designations and limitations attaching to the preferred shares as they determine in their discretion, without shareholder approval with respect to the terms or the issuance. If issued, the rights, preferences, designations and limitations of the preferred shares would be set by the Board of Directors and could operate to the disadvantage of the outstanding ordinary shares the holders of which would not have any pre-emption rights in respect of such an issue of preferred shares. Such terms could include, among others, preferences as to dividends and distributions on liquidation, or could be used to prevent possible corporate takeovers.
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