National Energy Services Reunited 1Q26 Post Mortem and Model Update: “Better to Be Lucky Than Smart,” Best to Be Lucky and Smart

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National Energy Services Reunited 1Q26 Post Mortem and Model Update: “Better to Be Lucky Than Smart,” Best to Be Lucky and Smart

drive an inflationary multiple re-rating in the shares should the company's growth outlook

materialize on the back of its enhanced product portfolio.

Risks to Rating and Price Target

NESR’s relative lack of scale v. primary competitors in targeted growth markets potentially

poses greater pricing and market share challenges

We think NESR’s smaller scale affords certain advantages with respect to deploying capital

nimbly to meet customer needs, attract entrepreneur partnerships, and navigate local

product qualification processes. However, large-cap service providers have access to

significantly more capital and a broader portfolio offering to leverage scale efficiencies.

NESR’s ability to penetrate targeted geographies and product/service lines and defend

margin could be negatively impacted by greater than expected competition and pricing

pressures. Larger, integrated competitors can better bundle services and bid for lump-sum

turnkey and integrated project management tenders prevalent in the MENA region,

potentially limiting NESR’s growth outlook and long-term ability to capture high-margin

scope (e.g., directional drilling technology).

MENA region tends to be among the most competitive within OFS, and larger contract

tenders increase risk of service execution and poor capital investment

NESR has a highly concentrated geographic end market exposure to the Middle East/North

Africa region. While this could be a relative advantage v. peers should the pace of NAM

onshore activity remain flatter, the MENA end market is among the most competitive within

OFS, and the large-cap diversifieds have historically held an incumbent advantage