completion of several large liquified natural gas terminals currently under construction on the U.S. Gulf Coast could lead to greater demand for natural gas, and in turn, related oilfield services.
Recent Developments
1.75% Senior Exchangeable Notes Due June 2029
In February 2023, Nabors Delaware issued $250.0 million in aggregate principal amount of 1.75% senior exchangeable notes due 2029, which are fully and unconditionally guaranteed by Nabors. The notes bear interest at a rate of 1.75% per year payable semiannually on June 15 and December 15 of each year, beginning on December 15, 2023.
The exchangeable notes are currently exchangeable, under certain conditions, at an exchange rate of 4.7056 common shares of Nabors per $1,000 principal amount of exchangeable notes (equivalent to an exchange price of approximately $212.51 per common share). Upon any exchange, Nabors will settle its exchange obligation in cash, common shares of Nabors, or a combination of cash and common shares, at our election.
NETC Merger Agreement
In February 2023, NETC entered into a definitive agreement for a business combination with 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, including that Vast meet a minimum cash requirement mandating that it hold at least $50 million at closing, after giving effect to transaction-related expenses and any redemptions by NETC’s public stockholders, of the non-controlling interest redeemable shares. Depending on the levels of redemption by public shareholders, it may be necessary to secure third-party PIPE financing in order to meet the minimum cash requirement for closing.
Comparison of the three months ended March 31, 2023 and 2022
Operating revenues for the three months ended March 31, 2023 totaled $779.1 million, representing an increase of $210.6 million, or 37%, compared to the three months ended March 31, 2022. All of our operating segments experienced an increase in operating revenues over this period. For a more detailed description of operating results, see Segment Results of Operations below.
Net income attributable to Nabors totaled $49.2 million ($4.11 per diluted share) for the three months ended March 31, 2023 compared to a net loss attributable to Nabors of $184.5 million ($22.51 per diluted share) for the three months ended March 31, 2022, or a $233.7 million increase in net income. The increase in net income is attributable to improved market conditions, which has resulted in an increase of approximately $110.8 million in adjusted operating income across all of our segments from the prior year. In addition, gains related to mark-to-market activity for the common share warrants and debt buybacks during the three months ended March 31, 2023 contributed approximately $132.4 million to the increase in net income. See Other Financial Information —Other, net below for additional discussion.
General and administrative expenses for the three months ended March 31, 2023 totaled $61.7 million, representing an increase of $8.1 million, or 15%, compared to the three months ended March 31, 2022. This is reflective of increases in workforce costs and general operating costs as market conditions have improved and operating levels have increased.
Research and engineering expenses for the three months ended March 31, 2023 totaled $15.1 million, representing an increase of $3.4 million, or 29%, compared to the three months ended March 31, 2022. This is primarily reflective of an increase in research and development activities, along with increased engineering support costs for the higher general operating activity levels, as market conditions have improved.
Depreciation and amortization expense for the three months ended March 31, 2023 was $163.0 million, representing a decrease of $1.3 million, or 1%, compared to the three months ended March 31, 2022. The decrease is a result of the limited capital expenditures over recent years coupled with a higher amount of older assets reaching the end of their useful lives.