What changed in this filing

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Item 1. Financial Statements

2020-10-28 compared with 2020-07-29 · 131 added, 112 removed, 446 unchanged (35% of the section changed)

4 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2020 2019 2020 2019

10 unchanged sentences

Impairment expense — — 144,120 5,546

Other operating expense (income) ( 285 ) ( 103 ) 704 ( 168 )

Other operating expense 51 277 755 109

135,767 145,287 540,171 405,939

Operating loss ( 1,841 ) ( 12,056 ) ( 150,910 ) ( 29,949 )

Operating income (loss) 7,090 2,876 ( 143,820 ) ( 27,073 )

Interest expense ( 3,646 ) ( 7,315 ) ( 13,095 ) ( 20,670 )

Loss on extinguishment of debt ( 383 ) — ( 383 ) —

Interest income — 17 20 66

18 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2020 2019 2020 2019

12 unchanged sentences

(In Thousands, Excluding Share Amounts)

June 30, 2020 December 31, 2019

September 30, 2020 December 31, 2019

Current assets:

30 unchanged sentences

50,000,000 shares authorized, 9,042 , shares issued and outstanding, respectively;

aggregate liquidation preference of $ 94,566 and $ 93,627 as of June 30, 2020 and December 31, 2019)

aggregate liquidation preference of $ 95,039 and $ 93,627 as of September 30, 2020 and December 31, 2019)

59,540 58,129

25 unchanged sentences

Shareholders’

Balance, March 31, 2019 $ 56,739 $ — $ 1,564,667 $ ( 728,748 ) $ ( 5,471 ) $ ( 365,870 ) $ — $ 521,317

Balance, June 30, 2019 $ 57,200 $ — $ 1,567,162 $ ( 744,058 ) $ ( 5,472 ) $ ( 364,786 ) $ — $ 510,046

Net income (loss) — — — 4,996 — — 60 5,056

1 unchanged sentence

Dividends paid — — — — — — ( 60 ) ( 60 )

Issuance of shares for acquisitions — — — — — — — —

Dividends attributable to Class A preferred shares 464 — — ( 464 ) — — — —

Share-based compensation — — 2,572 — — — — 2,572

Balance, September 30, 2019 $ 57,664 $ — $ 1,569,734 $ ( 739,526 ) $ ( 5,472 ) $ ( 376,882 ) $ — $ 505,518

Balance, June 30, 2020 $ 59,068 $ — $ 1,575,788 $ ( 911,992 ) $ ( 6,930 ) $ ( 382,315 ) $ 624 $ 334,243

Balance, March 31, 2020 $ 58,597 $ — $ 1,574,457 $ ( 918,128 ) $ ( 6,914 ) $ ( 411,619 ) $ 552 $ 296,945

Net income (loss) — — — 6,989 — — 434 7,423

3 unchanged sentences

Share-based compensation — — 1,265 — — — — 1,265

Balance, June 30, 2020 $ 59,068 $ — $ 1,575,788 $ ( 911,992 ) $ ( 6,930 ) $ ( 382,315 ) $ 624 $ 334,243

Balance, September 30, 2020 $ 59,540 $ — $ 1,577,053 $ ( 905,475 ) $ ( 6,930 ) $ ( 371,212 ) $ 636 $ 353,612

Balance, December 31, 2018 $ 56,280 $ — $ 1,562,133 $ ( 710,551 ) $ ( 1,189 ) $ ( 371,249 ) $ — $ 535,424

6 unchanged sentences

Share-based compensation — — 7,601 — ( 4,283 ) — — 3,318

Balance, June 30, 2019 $ 57,200 $ — $ 1,567,162 $ ( 744,058 ) $ ( 5,472 ) $ ( 364,786 ) $ — $ 510,046

Balance, September 30, 2019 $ 57,664 $ — $ 1,569,734 $ ( 739,526 ) $ ( 5,472 ) $ ( 376,882 ) $ — $ 505,518

Balance, December 31, 2019 $ 58,129 $ — $ 1,572,249 $ ( 771,590 ) $ ( 5,472 ) $ ( 363,173 ) $ 662 $ 490,805

4 unchanged sentences

Share-based compensation — — 4,804 — ( 1,458 ) — — 3,346

Balance, June 30, 2020 $ 59,068 $ — $ 1,575,788 $ ( 911,992 ) $ ( 6,930 ) $ ( 382,315 ) $ 624 $ 334,243

Balance, September 30, 2020 $ 59,540 $ — $ 1,577,053 $ ( 905,475 ) $ ( 6,930 ) $ ( 371,212 ) $ 636 $ 353,612

thousands) Common

Balance, December 31, 2019 9,042 169,556

Stock-based compensation — 1,022

Balance, June 30, 2020 9,042 170,578

Share-based compensation — 1,026

Balance, September 30, 2020 9,042 170,582

The accompanying notes are an integral part of these financial statements.

2 unchanged sentences

(In Thousands)

Six Months Ended

Nine Months Ended

September 30,

Cash flows from operating activities:

3 unchanged sentences

Impairment charges 144,120 5,546

Loss on extinguishment of debt 383 —

Deferred income tax benefit ( 8,941 ) ( 14,732 )

12 unchanged sentences

Capital expenditures ( 6,244 ) ( 25,517 )

Payments related to acquisitions, net of cash acquired — ( 16,439 )

Proceeds from disposition of property, plant and equipment 3,336 5,482

5 unchanged sentences

Term loan repayments ( 31,092 ) ( 26,085 )

Debt issuance costs ( 2,583 ) ( 1,950 )

Taxes paid on vested shares ( 1,458 ) ( 4,283 )

Net cash flows provided by (used in) financing activities ( 43,639 ) 6,073

Net cash flows used in financing activities ( 79,644 ) ( 2,770 )

Effect of exchange rate changes on cash 865 ( 344 )

41 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2020 2019 2020 2019

17 unchanged sentences

We do not have significant financing components or significant payment terms.

As of June 30, 2020, for contracts that are greater than one year, the table below discloses the estimated revenues related to performance obligations that are unsatisfied (or partially unsatisfied) and when we expect to recognize the revenue (in thousands):

As of September 30, 2020, for contracts that are greater than one year, the table below discloses the estimated revenues related to performance obligations that are unsatisfied (or partially unsatisfied) and when we expect to recognize the revenue (in thousands):

For the years ending December 31,

2020 2021 2022 Thereafter Total

Revenue expected to be recognized as of June 30, 2020 $ 65,883 $ 60,430 $ 29,470 $ 11,762 $ 167,545

Revenue expected to be recognized as of September 30, 2020 $ 33,002 $ 61,031 $ 29,120 $ 11,820 $ 134,973

FAIR VALUE MEASUREMENTS

1 unchanged sentence

We believe that the carrying values of these instruments on the accompanying consolidated balance sheets approximate their fair values.

As of June 30, 2020 and December 31, 2019, we believe the carrying value of our floating-rate debt outstanding under our term loans and revolving credit facilities approximates fair value because the terms include short-term interest rates and exclude penalties for prepayment.

As of September 30, 2020 and December 31, 2019, we believe the carrying value of our floating-rate debt outstanding under our term loans and revolving credit facilities approximates fair value because the terms include short-term interest rates and exclude penalties for prepayment.

We estimated the fair value of our floating-rate term loan and revolving credit facilities using significant other observable inputs, representative of a Level 2 fair value measurement, including terms and credit spreads for these loans.

During our first quarter of 2020 and the second and fourth quarter of 2019, we wrote down certain long-lived assets to fair value.

During the first quarter of 2020 and the second and fourth quarters of 2019, we wrote down certain long-lived assets to fair value.

We also recorded goodwill impairment charges related to one of our reporting units during the first quarter of 2020 and one of our reporting units during the fourth quarter of 2019.

15 unchanged sentences

DETAILS OF SELECTED BALANCE SHEET ACCOUNTS

Additional information regarding selected balance sheet accounts at June 30, 2020 and December 31, 2019 is presented below (in thousands):

June 30, 2020 December 31, 2019

Additional information regarding selected balance sheet accounts at September 30, 2020 and December 31, 2019 is presented below (in thousands):

September 30, 2020 December 31, 2019

Accounts receivable, net:

5 unchanged sentences

Total accounts receivable, net $ 92,754 $ 99,493

(1) As of June 30, 2020, Other accounts receivable includes a $ 4.4 million receivable related to the Canada Emergency Wage Subsidy (CEWS), a subsidy implemented by the Canadian government in response to the COVID-19 pandemic.

Other income in the second quarter of 2020 includes $ 6.2 million of income related to the CEWS.

June 30, 2020 December 31, 2019

(1) As of September 30, 2020, Other accounts receivable includes a $ 2.4 million receivable related to the Canada Emergency Wage Subsidy (CEWS), a subsidy implemented by the Canadian government in response to the COVID-19 pandemic.

Other income related to the CEWS during the three and nine months ended September 30, 2020 was $ 3.6 million and $ 9.7 million, respectively.

September 30, 2020 December 31, 2019

Finished goods and purchased products $ 4,538 $ 3,982

5 unchanged sentences

FINANCIAL STATEMENTS

(in years) June 30, 2020 December 31, 2019

(in years) September 30, 2020 December 31, 2019

Property, plant and equipment, net:

9 unchanged sentences

Total property, plant and equipment, net $ 481,394 $ 590,309

During the second quarter of 2020 we reclassified $ 6.6 million of assets held for sale back into property, plant and equipment due to no longer meeting the accounting requirements.

June 30, 2020 December 31, 2019

During the second quarter of 2020, we reclassified $ 6.6 million of assets held for sale back into property, plant and equipment due to no longer meeting the accounting requirements of held for sale assets.

September 30, 2020 December 31, 2019

Accrued liabilities:

16 unchanged sentences

Based on the assessment, the carrying values of certain asset groups were determined to not be fully recoverable, and we proceeded to compare the estimated fair value of these asset groups to their respective carrying values.

As a result, certain asset groups were written down to their estimated fair values of $ 43.5 million and we recorded impairment expense of $ 38.1 million related to long-lived assets in our Canadian segment.

As a result, certain asset groups were written down to their estimated fair values of $ 43.5 million and we recorded impairment expense of $ 38.1 million related to certain long-lived assets in our Canadian segment.

Also, as a result of the decline in global oil prices and forecasts for a potentially protracted period of lower prices, we reviewed all asset groups in our U.S.

1 unchanged sentence

We determined that certain asset groups within the segment had experienced an indicator of impairment, and thus we assessed the carrying values of our long-lived assets in

CIVEO CORPORATION

NOTES TO UNAUDITED CONSOLIDATED

FINANCIAL STATEMENTS

to determine if they continued to be recoverable based on estimated future cash flows.

8 unchanged sentences

Accordingly, the assets were written down to their estimated fair values of $ 0.5 million.

As a result of the analysis described above, we recorded an impairment expense of $ 4.5 million.

As a result of the analysis described above, we recorded impairment expense of $ 4.5 million.

Additionally, during the second quarter of 2019, we identified a liability related to an asset retirement obligation (ARO) at one of our villages in Australia that should have been recorded in 2011.

We determined that the error was not material to our previously issued financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2018, and therefore, corrected the error in the second quarter of 2019.

Specifically, we recorded the following amounts in our second quarter 2019 unaudited consolidated statement of operations related to prior periods:

(1) additional accretion expense related to the ARO of $ 0.9 million, (2) additional depreciation and amortization expense of $ 0.5 million related to amortization of the related asset retirement cost and (3) additional impairment expense related to the impairment of the asset retirement cost of $ 1.0 million offset by recognition of an ARO liability totaling $ 2.3 million as of June 30, 2019.

Specifically, we recorded the following amounts in the second quarter 2019 unaudited consolidated statement of operations related to prior periods:

(i) additional accretion expense related to the ARO of $ 0.9 million, (ii) additional depreciation and amortization expense of $ 0.5 million related to amortization of the related asset retirement cost and (iii) additional impairment expense related to the impairment of the asset retirement cost of $ 1.0 million offset by recognition of an ARO liability totaling $ 2.3 million as of June 30, 2019.

On July 1, 2019, we acquired Action, a provider of catering and managed services to the mining industry in Western Australia.

7 unchanged sentences

During the second quarter of 2020, $ 5.0 million in cash was released to us from escrow to cover certain agreed upon indemnification claims.

As a result of this settlement, we recorded $ 4.7 million in Other income in the accompanying unaudited consolidated statements of operations for the three and six months ended June 30, 2020.

As a result of this settlement, we recorded $ 4.7 million in Other income in the accompanying unaudited consolidated statements of operations for the nine months ended September 30, 2020.

CIVEO CORPORATION

6 unchanged sentences

The calculation of earnings per share attributable to Civeo common shareholders is presented below for the periods indicated (in thousands, except per share amounts):

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2020 2019 2020 2019

11 unchanged sentences

(1) Computations may reflect rounding adjustments.

For the three months ended June 30, 2020, we excluded 3.7 million share based awards from the computation of diluted earnings per share because their effect was anti-dilutive.

For the three months ended September 30, 2020 and 2019, we excluded 2.4 million and 4.5 million share-based awards, respectively, from the computation of diluted earnings per share because their effect was anti-dilutive.

When an entity has a net loss from continuing operations, it is prohibited from including potential common shares in the computation of diluted per share amounts.

For the three months ended June 30, 2019 and the six months ended June 30, 2020 and 2019, we excluded from the computation of diluted loss per share 6.6 million, 5.0 million and 7.5 million share-based awards, respectively, since the effect would have been anti-dilutive.

Additionally, for the three and six months ended June 30, 2020 and 2019, we excluded from the computation the impact of converting the Preferred Shares into 28.7 million and 28.1 million common shares, since the effect would have been anti-dilutive.

For the nine months ended September 30, 2020 and 2019, we excluded from the computation of diluted loss per share 4.9 million and 6.9 million share-based awards, respectively, since the effect would have been anti-dilutive.

Additionally, for the three and nine months ended September 30, 2020 and 2019, we excluded from the computation the impact of converting the Preferred Shares into 28.8 million and 28.2 million common shares, respectively, since the effect would have been anti-dilutive.

CIVEO CORPORATION

1 unchanged sentence

FINANCIAL STATEMENTS

As of June 30, 2020 and December 31, 2019, long-term debt consisted of the following (in thousands):

June 30, 2020 December 31, 2019

Canadian term loan, which matures on November 30, 2021;

As of September 30, 2020 and December 31, 2019, long-term debt consisted of the following (in thousands):

September 30, 2020 December 31, 2019

Canadian term loan, which matures on May 30, 2023;

3.125 % of aggregate principal repayable per quarter;

weighted average interest rate of 4.4 % f or the six-month period ended June 30, 2020 (1)

weighted average interest rate of 4.0 % for the nine month period ended September 30, 2020

$ 187,371 $ 224,963

revolving credit facility, which matures on November 30, 2021), weighted average interest rate of 7.0 % for the six-month period ended June 30, 2020 (1)

Canadian revolving credit facility, which matures on November 30, 2021, weighted average interest rate of 4.5 % for the six-month period ended June 30, 2020 (1)

revolving credit facility, which matures on May 30, 2023, weighted average interest rate of 5.6 % for the nine month period ended September 30, 2020

Canadian revolving credit facility, which matures on May 30, 2023, weighted average interest rate of 4.2 % for the nine month period ended September 30, 2020

55,478 134,117

Australian revolving credit facility, which matures on November 30, 2021, weighted average interest rate of 4.2 % for the six-month period ended June 30, 2020 (1)

Australian revolving credit facility, which matures on May 30, 2023, weighted average interest rate of 3.6 % for the nine month period ended September 30, 2020

272,546 359,080

3 unchanged sentences

Long-term debt, less current maturities $ 236,876 $ 321,792

(1) As of June 30, 2020, one lender had an outstanding Canadian term loan of $ 5.9 million and an outstanding Canadian revolver loan of $ 8.7 million that matures on November 30, 2020.

Another lender had an outstanding Canadian revolver loan of $ 12.5 million that matures on November 30, 2020.

Maturities in 2020 are not classified as current as of June 30, 2020 and December 31, 2019, since we are able, and have the intent, to repay the outstanding 2020 maturities by borrowing amounts equal to such maturities under our existing revolving credit facility, which matures on November 30, 2021.

We did not have any capitalized interest to net against interest expense for the three and six months ended June 30, 2020 or 2019.

Credit Agreement

As of June 30, 2020, our Credit Agreement (as then amended to date, the Credit Agreement), provided for:

We did not have any capitalized interest to net against interest expense for the three and nine months ended September 30, 2020 or 2019.

Amended Credit Agreement

As of December 31, 2019, our Credit Agreement, as then amended, provided for:

(i) a $ 263.5 million revolving credit facility scheduled to mature on November 30, 2021 for certain lenders, allocated as follows:

4 unchanged sentences

and (ii) a $ 285.4 million term loan facility scheduled to mature on November 30, 2021 for certain lenders in favor of Civeo.

We are required to maintain, if a qualified offering of indebtedness with gross proceeds in excess of $ 150 million has been consummated, a maximum leverage ratio of 4.00 to 1.00 and, if such qualified offering has not been consummated, a maximum leverage ratio not to exceed the ratios set forth in the following table:

Period Ended Maximum Leverage Ratio

June 30, 2020 & September 30, 2020 3.75 :

December 31, 2020 and thereafter 3.50 :

dollar amounts outstanding under the facilities provided by the Credit Agreement bear interest at a variable rate equal to the London Inter-Bank Offered Rate (LIBOR) plus a margin of 2.25 % to 4.00 %, or a base rate plus 1.25 % to 3.00 %, in each case based on a ratio of our total debt to consolidated EBITDA (as defined in the Credit Agreement).

Canadian dollar

On September 3, 2020, the third amendment to the Credit Agreement (as so amended, the Amended Credit Agreement) became effective, which, among other things:

• Extended the maturity date by 18 months of the commitments and loans of each lender remaining a lender following the effectiveness of the Amended Credit Agreement to May 30, 2023.

Certain lenders are not extending the maturity date of their commitments and loans;

the loans of the non-extending lenders were paid in full primarily with borrowings under the facility, and their commitments terminated on the date the Amended Credit Agreement became effective.

• Increased the margin applicable to loans and the commitment fee payable on the commitments of the lenders.

Prior to entering into the Amended Credit Agreement, (i) the margin applicable to Eurocurrency loans, BBSY rate loans and B/A loans ranged from 2.25 % to 4.00 %, (ii) the margin applicable to ABR loans, Canadian Prime rate loans and U.S.

Base rate loans ranged from 1.25 % to 3.00 % and (iii) the commitment fee ranged from 0.51 % to 0.90 %, in each case increasing as the total leverage ratio of the parent borrower and its subsidiaries increased from less than 2.00 to 1.00 to greater than 4.00 to 1.00.

Following entry into the Amended Credit Agreement, these ranges have increased to (i) 3.50 % to 4.50 %, (ii) 2.50 % to 3.50 % and (iii) 0.875 % to 1.125 %, respectively, in each case as the total leverage ratio increases from less than 2.50 to 1.00 to greater than 3.50 to 1.00.

CIVEO CORPORATION

1 unchanged sentence

FINANCIAL STATEMENTS

amounts outstanding bear interest at a variable rate equal to a B/A Discount Rate (as defined in the Credit Agreement) based on the Canadian Dollar Offered Rate (CDOR) plus a margin of 2.25 % to 4.00 %, or a Canadian Prime rate plus a margin of 1.25 % to 3.00 %, in each case based on a ratio of our total debt to consolidated EBITDA.

Australian dollar amounts outstanding under the Credit Agreement bear interest at a variable rate equal to the Bank Bill Swap Bid Rate plus a margin of 2.25 % to 4.00 %, based on a ratio of our total debt to consolidated EBITDA.

The future transitions from LIBOR and CDOR as interest rate benchmarks is addressed in the Credit Agreement and at such time the transition from LIBOR or CDOR takes place, we will endeavor with the administrative agent to establish an alternate rate of interest to LIBOR or CDOR that gives due consideration to (1) the then prevailing market convention for determining a rate of interest for syndicated loans in the United States at such time for the replacement of LIBOR and (2) any evolving or then existing convention for similar Canadian Dollar denominated syndicated credit facilities for the replacement of CDOR.

The Credit Agreement contains customary affirmative and negative covenants that, among other things, limit or restrict:

• Decreased (i) the U.S.

revolving commitments from $ 20.0 million to $ 10.0 million, (ii) the maximum permitted amount of U.S.

L/C exposure from $ 15.0 million to $ 10.0 million to match the reduction in the U.S.

revolving commitments, (iii) the Canadian revolving commitments from $ 183.5 million to $ 122.3 million and (iv) the Australian revolving commitments from $ 60.0 million to $ 35.0 million.

Period Ended Maximum Leverage Ratio

September 30, 2020 3.75 :

December 31, 2020 and thereafter 3.50 :

dollar amounts outstanding under the facilities provided by the Amended Credit Agreement bear interest at a variable rate equal to the London Inter-Bank Offered Rate (LIBOR) plus a margin of 3.50 % to 4.50 %, or a base rate plus 2.50 % to 3.50 %, in each case based on a ratio of our total debt to consolidated EBITDA (as defined in the Amended Credit Agreement).

Canadian dollar amounts outstanding bear interest at a variable rate equal to a B/A Discount Rate (as defined in the Amended Credit Agreement) based on the Canadian Dollar Offered Rate (CDOR) plus a margin of 3.50 % to 4.50 %, or a Canadian Prime rate plus a margin of 2.50 % to 3.50 %, in each case based on a ratio of our total debt to consolidated EBITDA.

Australian dollar amounts outstanding under the Amended Credit Agreement bear interest at a variable rate equal to the Bank Bill Swap Bid Rate plus a margin of 3.50 % to 4.50 %, based on a ratio of our total debt to consolidated EBITDA.

The future transitions from LIBOR and CDOR as interest rate benchmarks is addressed in the Amended Credit Agreement and at such time the transition from LIBOR or CDOR takes place, we will endeavor with the administrative agent to establish an alternate rate of interest to LIBOR or CDOR that gives due consideration to (1) the then prevailing market convention for determining a rate of interest for syndicated loans in the United States at such time for the replacement of LIBOR and (2) any evolving or then existing convention for similar Canadian Dollar denominated syndicated credit facilities for the replacement of CDOR.

The Amended Credit Agreement contains customary affirmative and negative covenants that, among other things, limit or restrict:

(i) indebtedness, liens and fundamental changes;

5 unchanged sentences

and (vii) investments and other restricted payments, including dividends and other distributions.

In addition, we must maintain an interest coverage ratio, defined as the ratio of consolidated EBITDA to consolidated interest expense, of at least 3.0 to 1.0 and our maximum leverage ratio, defined as the ratio of total debt to consolidated EBITDA, of no greater than 3.75 to 1.0 (as of June 30, 2020).

As noted above, the permitted maximum leverage ratio changes over time.

As noted above, the permitted maximum leverage ratio decreases to 3.5 to 1.0 beginning December 31, 2020.

Following a qualified offering of indebtedness with gross proceeds in excess of $ 150 million, we will be required to maintain a maximum senior secured ratio less than 2.50 to 1.0.

Each of the factors considered in the calculations of these ratios are defined in the Credit Agreement.

Each of the factors considered in the calculations of these ratios are defined in the Amended Credit Agreement.

EBITDA and consolidated interest, as defined, exclude goodwill and asset impairments, debt discount amortization, amortization of intangibles and other non-cash charges.

We were in compliance with our covenants as of June 30, 2020.

Borrowings under the Credit Agreement are secured by a pledge of substantially all of our assets and the assets of our subsidiaries.

The obligations under the Credit Agreement are guaranteed by our significant subsidiaries.

As of June 30, 2020, we had ten lenders that were parties to the Credit Agreement, with total commitments (including both revolving commitments and term commitments) ranging from $ 24.9 million to $ 85.4 million.

As of June 30, 2020, we had outstanding letters of credit of $ 0.3 million under the U.S.

We were in compliance with our covenants as of September 30, 2020.

Borrowings under the Amended Credit Agreement are secured by a pledge of substantially all of our assets and the assets of our subsidiaries.

The obligations under the Amended Credit Agreement are guaranteed by our significant subsidiaries.

As of September 30, 2020, we had eight lenders that were parties to the Amended Credit Agreement, with total commitments (including both revolving commitments and term commitments) ranging from $ 22.4 million to $ 71.1 million.

As of September 30, 2020, we had outstanding letters of credit of $ 0.3 million under the U.S.

facility, $ 0.5 million under the Australian facility and $ 2.6 million under the Canadian facility.

1 unchanged sentence

We have provided for income taxes based upon the tax laws and rates in the countries in which operations are conducted and income is earned.

We operate primarily in three jurisdictions, Canada, Australia and the U.S., where statutory tax rates range from 21 % to 30 %.

We operate in three jurisdictions, Canada, Australia and the U.S., where statutory tax rates range from 21 % to 30 %.

Our effective tax rate will vary from period to period based on changes in earnings mix between these different jurisdictions.

CIVEO CORPORATION

NOTES TO UNAUDITED CONSOLIDATED

FINANCIAL STATEMENTS

We compute our quarterly taxes under the effective tax rate method by applying an anticipated annual effective rate to our year-to-date income, except for significant unusual or extraordinary transactions.

Income taxes for any significant and unusual or extraordinary transactions are computed and recorded in the period in which the specific transaction occurs.

As of June 30, 2020, Canada and the U.S.

were considered loss jurisdictions for tax accounting purposes and were removed from the annual effective tax rate computation for purposes of computing the interim tax provision.

As of June 30, 2019, Australia and the U.S.

As of September 30, 2020, Canada and the U.S.

were considered loss jurisdictions for tax accounting purposes and were removed from the annual effective tax rate computation for purposes of computing the interim tax provision.

Our income tax expense for the three months ended June 30, 2020 totaled $ 0.1 million, or 1.8 % of pretax loss, compared to a benefit of $ 2.9 million, or 16.1 % of pretax loss, for the three months ended June 30, 2019.

For the three months ended June 30, 2020, we recorded a tax expense of $ 0.1 million related to foreign withholding taxes.

As of September 30, 2019, the U.S.

was considered a loss jurisdiction for tax accounting purposes and was removed from the 2019 annual effective tax rate computation for purposes of computing the interim tax provision.

Our income tax expense for the three months ended September 30, 2020 totaled $ 0.2 million, or 2.4 % of pretax loss, compared to a benefit of $ 6.6 million, or 421.4 % of pretax income, for the three months ended September 30, 2019.

For the three months ended September 30, 2020, we recorded a tax expense of $ 0.1 million related to foreign withholding and U.S.

state income taxes.

Additionally, the effective tax rate for the three months ended September 30, 2019 was impacted by a tax benefit of $ 3.0 million related to a reduction in the Alberta, Canada income tax rate, as well as a $ 2.1 million tax benefit related to the change in the valuation allowance in Australia resulting from the acquisition of Action.

Under ASC 740-270, "Accounting for Income Taxes," the quarterly tax provision is based on our current estimate of the annual effective tax rate less the prior quarter's year-to-date provision.

Our income tax benefit for the six months ended June 30, 2020 totaled $ 8.7 million, or 5.9 % of pretax loss, compared to a benefit of $ 7.3 million, or 18.7 % of pretax loss, for the six months ended June 30, 2019.

For the six months ended June 30, 2020, we recorded a deferred tax benefit of $ 9.6 million offset by a valuation allowance of $ 0.7 million against the Canadian net deferred tax assets.

Our effective tax rate for the six months ended June 30, 2020 was impacted by considering Canada and the U.S.

Our income tax benefit for the nine months ended September 30, 2020 totaled $ 8.5 million, or 6.1 % of pretax loss, compared to a benefit of $ 14.0 million, or 34.2 % of pretax loss, for the nine months ended September 30, 2019.

Our effective tax rate for the nine months ended September 30, 2020 was impacted by considering Canada and the U.S.

loss jurisdictions.

Although Australia is not considered a loss jurisdiction for the six months ended June 30, 2020, our effective tax rate is impacted by utilization of deferred tax assets and a release of the corresponding valuation allowance in

CIVEO CORPORATION

NOTES TO UNAUDITED CONSOLIDATED

FINANCIAL STATEMENTS

Australia, resulting in no income tax expense for that jurisdiction.

For the six months ended June 30, 2019, Australia and the U.S.

were considered loss jurisdictions.

Additionally, although Australia was not considered a loss jurisdiction for the nine months ended September 30, 2020, our effective tax rate was impacted by utilization of deferred tax assets and a release of the corresponding valuation allowance in Australia, resulting in no income tax expense for that jurisdiction.

For the nine months ended September 30, 2020, we recorded a deferred tax benefit of $ 9.0 million, offset by a valuation allowance of $ 0.1 million, against the Canadian net deferred tax assets.

Our effective tax rate for the nine months ended September 30, 2019 was impacted by a reduction in the Alberta, Canada income tax rate, as well as a change in the valuation allowance in Australia resulting from the acquisition of Action.

COMMITMENTS AND CONTINGENCIES

2 unchanged sentences

ACCUMULATED OTHER COMPREHENSIVE LOSS

Our accumulated other comprehensive loss increased $ 19.1 million from $ 363.2 million at December 31, 2019 to $ 382.3 million at June 30, 2020, as a result of foreign currency exchange rate fluctuations.

Changes in other comprehensive loss during the first six months of 2020 were primarily driven by the Australian dollar and Canadian dollar decreasing in value compared to the U.S.

Excluding intercompany balances, our Canadian dollar and Australian dollar functional currency net assets totaled approximately C$ 0.1 billion and A$ 0.3 billion, respectively, at June 30, 2020.

Changes in the carrying amount of goodwill from December 31, 2019 to June 30, 2020 are as follows (in thousands):

Our accumulated other comprehensive loss increased $ 8.0 million from $ 363.2 million at December 31, 2019 to $ 371.2 million at September 30, 2020, as a result of foreign currency exchange rate fluctuations.

Changes in other comprehensive loss during the nine months of 2020 were primarily driven by the Australian dollar increasing in value compared to the U.S.

dollar, partially offset by the Canadian dollar decreasing in value compared to the U.S.

Excluding intercompany balances, our Canadian dollar and Australian dollar functional currency net assets totaled approximately C$ 0.2 billion and A$ 0.3 billion, respectively, at September 30, 2020.

CIVEO CORPORATION

NOTES TO UNAUDITED CONSOLIDATED

FINANCIAL STATEMENTS

Changes in the carrying amount of goodwill from December 31, 2019 to September 30, 2020 are as follows (in thousands):

Canada Australia U.S.

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Goodwill impairment (1) ( 93,606 ) — — ( 93,606 )

Goodwill, net of $ 113.5 million accumulated impairment loss as of June 30, 2020

Goodwill, net of $ 113.5 million accumulated impairment loss as of September 30, 2020

$ — $ 8,086 $ — $ 8,086

3 unchanged sentences

The Civeo Plan authorizes our Board of Directors and the Compensation Committee of our Board of Directors to approve grants of options, awards of restricted shares, performance awards, phantom share awards and dividend equivalents, awards of deferred shares, and share payments to our employees and non-employee directors.

No more than 28.7 million Civeo common shares may be issued under the Civeo Plan.

No more than 28.7 million Civeo common shares are authorized to be issued under the Civeo Plan.

Outstanding Awards

Restricted Share Awards / Restricted Share Units / Deferred Share Awards.

Compensation expense associated with restricted share awards, restricted share units and deferred share awards recognized in the three months ended June 30, 2020 and 2019 totaled $ 0.8 million and $ 1.4 million, respectively.

Compensation expense associated with restricted share awards, restricted share units and deferred share awards recognized in the six months ended June 30, 2020 and 2019 totaled $ 2.0 million and $ 2.8 million, respectively.

The total fair value of restricted share awards, restricted share units and deferred share awards that vested during the three months ended June 30, 2020 and 2019 was $ 0.2 million and $ 0.4 million, respectively.

The total fair value of restricted share awards, restricted share units and deferred share awards that vested during the six months ended June 30, 2020 and 2019 was $ 2.6 million and $ 3.9 million, respectively.

At June 30, 2020, unrecognized compensation cost related to restricted share awards, restricted share units and deferred share awards was $ 2.8 million, which is expected to be recognized over a weighted average period of 1.2 years.

CIVEO CORPORATION

NOTES TO UNAUDITED CONSOLIDATED

FINANCIAL STATEMENTS

Compensation expense associated with restricted share awards, restricted share units and deferred share awards recognized in the three months ended September 30, 2020 and 2019 totaled $ 0.7 million and $ 1.5 million, respectively.

Compensation expense associated with restricted share awards, restricted share units and deferred share awards recognized in the nine months ended September 30, 2020 and 2019 totaled $ 2.7 million and $ 4.3 million, respectively.

The total fair value of restricted share awards, restricted share units and deferred share awards that vested during the three months ended September 30, 2020 and 2019 was less than $ 0.1 million.

The total fair value of restricted share awards, restricted share units and deferred share awards that vested during the nine months ended September 30, 2020 and 2019 was $ 2.6 million and $ 4.0 million, respectively.

At September 30, 2020, unrecognized compensation cost related to restricted share awards, restricted share units and deferred share awards was $ 2.0 million, which is expected to be recognized over a weighted average period of 1.0 years.

Phantom Share Awards.

1 unchanged sentence

We also granted 1,221,725 phantom share awards under the Canadian Long-Term Incentive Plan, which vest in three equal annual installments beginning on February 25, 2021.

During the three months ended June 30, 2020 and 2019, we recognized compensation expense associated with phantom shares totaling $ 0.4 million and $ 0.3 million, respectively.

During the six months ended June 30, 2020 and 2019, we recognized compensation expense associated with phantom shares totaling $ 0.7 million and $ 3.4 million, respectively.

At June 30, 2020, unrecognized compensation cost related to phantom shares was $ 3.0 million, as remeasured at June 30, 2020, which is expected to be recognized over a weighted average period of 2.5 years.

During the three months ended September 30, 2020 and 2019, we recognized compensation expense associated with phantom shares totaling $ 0.5 million and $ 0.1 million, respectively.

During the nine months ended September 30, 2020 and 2019, we recognized compensation expense associated with phantom shares totaling $ 1.2 million and $ 3.5 million, respectively.

At September 30, 2020, unrecognized compensation cost related to phantom shares was $ 2.9 million, as remeasured at September 30, 2020, which is expected to be recognized over a weighted average period of 2.3 years.

Performance Awards.

During the three months ended June 30, 2020 and 2019, we recognized compensation expense associated with performance awards totaling $ 0.6 million and $ 1.1 million, respectively.

During the six months ended June 30, 2020 and 2019, we recognized compensation expense associated with performance awards totaling $ 1.5 million and $ 2.2 million, respectively.

The total fair value of performance share awards that vested during the three months ended June 30, 2020 and 2019 was zero .

The total fair value of performance share awards that vested during the six months ended June 30, 2020 and 2019 was $ 1.9 million and $ 10.1 million, respectively.

At June 30, 2020, unrecognized compensation cost related to performance shares was $ 2.8 million, which is expected to be recognized over a weighted average period of 1.4 years.

During the three months ended September 30, 2020 and 2019, we recognized compensation expense associated with performance awards totaling $ 0.6 million and $ 1.1 million, respectively.

During the nine months ended September 30, 2020 and 2019, we recognized compensation expense associated with performance awards totaling $ 2.1 million and $ 3.3 million, respectively.

The total fair value of performance share awards that vested during the three months ended September 30, 2020 and 2019 was zero .

The total fair value of performance share awards that vested during the nine months ended September 30, 2020 and 2019 was $ 1.9 million and $ 10.1 million, respectively.

CIVEO CORPORATION

1 unchanged sentence

FINANCIAL STATEMENTS

At September 30, 2020, unrecognized compensation cost related to performance shares was $ 2.2 million, which is expected to be recognized over a weighted average period of 1.2 years.

SEGMENT AND RELATED INFORMATION

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Canada, Australia and U.S., which represent our strategic focus on hospitality services and workforce accommodations.

Financial information by business segment for each of the three and six months ended June 30, 2020 and 2019 is summarized in the following table (in thousands):

Financial information by business segment for each of the three and nine months ended September 30, 2020 and 2019 is summarized in the following table (in thousands):

revenues Depreciation

1 unchanged sentence

(loss) Capital

Three months ended June 30, 2020

Three months ended September 30, 2020

Canada $ 71,785 $ 13,266 $ 1,007 $ 362 $ 691,634

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Total $ 142,857 $ 24,820 $ 7,090 $ 2,397 $ 732,936

Three months ended June 30, 2019

Three months ended September 30, 2019

Canada $ 91,071 $ 18,219 $ 2,919 $ 2,851 $ 843,818

3 unchanged sentences

Total $ 148,163 $ 31,196 $ 2,876 $ 4,309 $ 1,010,823

Six months ended June 30, 2020

Nine months ended September 30, 2020

Canada $ 204,119 $ 39,812 $ ( 142,343 ) $ 1,203 $ 691,634

3 unchanged sentences

Total $ 396,351 $ 72,527 $ ( 143,820 ) $ 6,244 $ 732,936

Six months ended June 30, 2019

Nine months ended September 30, 2019

Canada $ 235,943 $ 50,574 $ ( 14,437 ) $ 19,294 $ 843,818

19 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements