Nabors Energy Transition Corp. II SEC 10-K Report

Nabors Energy Transition Corp. II, a blank check company focused on facilitating the global energy sector's shift from fossil-based systems to renewable energy sources, has released its annual 10-K report. The report provides a comprehensive overview of the company's financial performance, business operations, strategic initiatives, and the challenges it faces as it seeks to complete a significant business combination.

Financial Highlights

• Net Income: $11.95 million, primarily due to interest income on marketable securities held in the trust account.
• Net Income Per Share, Class A ordinary shares: $0.31, reflecting the earnings allocated to Class A ordinary shares.
• Net Income Per Share, Class F ordinary shares: $0.31, reflecting the earnings allocated to Class F ordinary shares.

Business Highlights

• Business Model: Nabors Energy Transition Corp. II is a blank check company formed to effect a merger, amalgamation, share exchange, asset acquisition, share purchase, reorganization, or similar business combination with one or more businesses or entities.
• Initial Public Offering: On July 18, 2023, the company completed its IPO of 30,500,000 units at $10.00 per unit, generating gross proceeds of approximately $305.0 million.
• Private Placement: Simultaneously with the IPO, a private placement of 9,540,000 private placement warrants was consummated, generating gross proceeds of $9.5 million.
• Trading Symbols: The Class A ordinary shares and public warrants trade on the Nasdaq Global Market under the symbols 'NETD' and 'NETDW', respectively.
• Business Strategy: The company aims to identify solutions, opportunities, companies, or technologies that facilitate the global energy sector's shift to renewable energy sources, focusing on sectors like alternative energy, energy storage, emissions reduction, and carbon capture.
• Sponsor and Management: The sponsor is Nabors Energy Transition Sponsor II LLC, managed and co-owned by Nabors, a public corporation with extensive experience in the energy sector.
• Future Outlook: The company plans to focus on acquisition opportunities with meaningful growth prospects, particularly those advancing the energy transition, leveraging Nabors' expertise and global presence.
• Initial Business Combination Timeline: The company has up to 24 months from the IPO closing to consummate an initial business combination, focusing on acquiring businesses that align with its strategic goals.

Strategic Initiatives

• Strategic Initiatives: Nabors Energy Transition Corp. II is focused on completing a business combination with e2, as outlined in the Business Combination Agreement. This involves merging with e2, which will become a wholly owned subsidiary, and renaming the company to New e2. The company is also planning to domesticate as a Delaware corporation prior to the merger. These steps are part of the company's broader strategy to identify and acquire businesses that advance the energy transition.
• Capital Management: The company raised $305 million through its IPO and an additional $9.54 million from the sale of private placement warrants. It also secured $3.05 million in overfunding loans from its sponsor, which are convertible into warrants. The funds raised are held in a trust account and are intended to be used for the business combination. The company has incurred transaction costs of approximately $17.97 million related to the IPO. Additionally, the company has a commitment to pay $15,000 per month for office space and administrative support to an affiliate of its sponsor.
• Future Outlook: The company faces a mandatory liquidation deadline of July 18, 2025, if it does not complete a business combination by then, raising substantial doubt about its ability to continue as a going concern. Management plans to consummate the business combination with e2 before this deadline. The company also anticipates incurring significant costs in pursuit of its acquisition plans and may need additional financing to complete the business combination or to redeem a significant number of public shares.

Challenges and Risks

• Risk Factors: The company faces significant risks related to the proposed business combination with e2, including the potential inability to complete the transaction due to conditions such as shareholder approvals and regulatory approvals. Additionally, e2's business is subject to various uncertainties, such as the loss of key customers, challenges in converting project backlogs into revenue, and regulatory complexities across jurisdictions. The reliance on third-party suppliers and consultants, as well as the potential for competition from alternative energy sources, further compounds these risks.
• SPAC-Related Risks: The company highlights the risks associated with its status as a special purpose acquisition company (SPAC), including the lack of operating history and the potential inability to complete a business combination within the prescribed timeframe, which could lead to liquidation and the loss of shareholder investments. The competitive landscape for SPACs has intensified, making it more challenging to find attractive targets and negotiate favorable terms.
• Regulatory Risks: Regulatory risks are also prominent, with potential reviews by entities like the Committee on Foreign Investment in the United States (CFIUS) posing a threat to completing business combinations. The recent adoption of the SEC's SPAC Final Rules could further complicate the process by increasing disclosure requirements and potential liabilities.
• Management's Discussion and Analysis: Management acknowledges the competitive pressures in the SPAC market and the challenges in securing a suitable business combination target. They emphasize the importance of strategic partnerships and maintaining flexibility in negotiations to mitigate these risks. The company is also focused on managing its financial resources effectively to ensure it can sustain operations until a business combination is completed.
• Market Risks: The company is exposed to market risks, including fluctuations in interest rates and potential changes in market conditions that could affect the availability and cost of capital. These factors could impact the company's ability to finance a business combination or support the operations of a target business post-combination.

SEC Filing: Nabors Energy Transition Corp. II [ NETD ] - 10-K - Mar. 28, 2025