Special Purpose Acquisition Companies

9 Months Ended

Sep. 30, 2023

Special Purpose Acquisition Companies

Special Purpose Acquisition Companies

Note 13 Special Purpose Acquisition Companies

Nabors is the co-sponsor of two SPACs. Each is a consolidated VIE included in the accompanying consolidated financial statements under Restricted cash held in trust and Redeemable noncontrolling interest in subsidiary. Each SPAC’s funds are held in an interest-bearing U.S. based trust account (“Trust Account”) and are invested in money market funds meeting certain conditions under Rule 2a-7 under the Investment Company Act, each of which invests only in direct U.S. government treasury obligations. The funds in the trust accounts will only be released to the SPACs upon completion by the applicable SPAC of a business combination or in connection with redemptions of any of the redeemable common shares, except with respect to interest earned on the funds which may be withdrawn to pay the SPAC’s taxes.

The company accounts for the non-controlling interest in the SPACs as subject to possible redemption in accordance with FASB ASC Topic 480 “Distinguishing Liabilities from Equity.” The SPACs’ common stock features certain redemption rights, which are considered to be outside the company’s control and subject to occurrence of uncertain future events. Nabors will recognize any future changes in redemption value immediately as they occur – i.e., adjusting the carrying amount of the instrument to its current redemption amount at each reporting period.

NETC

In November 2021, Nabors Energy Transition Corp. (“NETC”) cosponsored by Nabors and Greens Road Energy LLC completed its’ initial public offering. Greens Road Energy LLC is owned by certain members of Nabors’ board of directors and management team. As part of the initial public offering of NETC and subsequent private placement warrant transactions, $281.5 million was deposited in a Trust Account. At a special meeting held on May 11, 2023, $186.9 million was distributed from the Trust Account to NETC’s stockholders who exercised their right to redeem their shares for a pro rata portion of the funds in the Trust Account. As of September 30, 2023 and December 31, 2022, the Trust Account balance was $106.9 million and $284.8 million, respectively.

Approximately $106.9 million and $284.8 million of non-controlling interest subject to possible redemption is presented at full redemption value as temporary equity, outside of the stockholders’ equity section in the accompanying consolidated financial statements as of September 30, 2023 and December 31, 2022, respectively.

The following table summarizes NETC’s effects on changes in non-controlling interest subject to possible redemption.

	2023
	(In thousands)
Balance, beginning of year	$	284,841
Redemptions		(186,933)
Net earnings		4,715
Nabors deemed dividends to SPAC public shareholders		2,597
Noncontrolling interest deemed dividends to SPAC public shareholders		1,641
Balance as of September 30	$	106,861

In February 2023, NETC entered into a definitive agreement for a business combination with Vast Solar Pty Ltd (“Vast”), a development-stage company specializing in the design and manufacturing of concentrated solar thermal power (CSP) systems. The agreement is subject to certain customary closing conditions. The company continues to evaluate what the accounting treatment for its investment in NETC will be after the business combination is complete.

NETC has until November 19, 2023 (or up to December 19, 2023 if extended pursuant to its’ charter) to consummate a business combination.  It is uncertain that NETC will be able to consummate a business combination by this time. If a business combination is not consummated by this date, there will be a mandatory liquidation and subsequent dissolution of NETC.

NETC II

In July 2023, Nabors Energy Transition Corporation II (“NETC II”) co-sponsored by Nabors and Greens Road Energy II LLC, completed its initial public offering of 30,500,000 units at $10.00 per unit, generating gross proceeds of approximately $305.0 million. Greens Road Energy II LLC is owned by certain members of Nabors’ management team. Simultaneously with the closing of the IPO, NETC II completed the private sale of an aggregate of 9,540,000 warrants for an aggregate value of $9.5 million, of which 4,348,000 warrants were purchased by related parties including certain Nabors officers and employees, with the remainder being purchased by a subsidiary of Nabors. As part of the initial public offering of NETC II and subsequent private placement warrant transactions, $308.1 million was deposited in a Trust Account on July 18, 2023. As of September 30, 2023, the Trust Account balance was $311.3 million.

Approximately $311.3 million of non-controlling interest subject to possible redemption is presented at full redemption value as temporary equity, outside of the stockholders’ equity section in the accompanying consolidated financial statements as of September 30, 2023.

The following table summarizes NETC II’s effects on changes in non-controlling interest subject to possible redemption.

	2023
	(In thousands)
Balance, beginning of year	$	—
Initial public offering		294,474
Net earnings		3,214
Nabors deemed dividends to SPAC public shareholders		5,583
Noncontrolling interest deemed dividends to SPAC public shareholders		7,993
Balance as of September 30	$	311,264