What changed in this filing

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Item 2. Management’s Discussion and Analysis

2021-10-28 compared with 2021-07-30 · 197 added, 187 removed, 416 unchanged (48% of the section changed)

34 unchanged sentences

However, oil prices remained at depressed levels throughout most of 2020, before modest improvement late in the year and into early 2021.

As global oil demand recovered in the second quarter of 2021, oil supply did not keep up, resulting in falling inventories and a significant increase in oil prices continuing into July 2021.

Global oil demand has continued to recover throughout 2021 as COVID-19 lockdowns have begun to be lifted and other fossil fuels are experiencing supply shortages.

Oil supply has not kept up with the increase in demand in 2021, exacerbated by the impacts of Hurricane Ida in the Gulf of Mexico earlier this year, resulting in falling inventories and a significant increase in oil prices continuing into October 2021.

In July 2021, OPEC+ agreed to phase out 5.8 million barrels per day of oil production cuts by September 2022.

In October 2021, OPEC+ declined requests from the Biden administration to accelerate production to help mitigate the growing deficit between oil supply and demand and address short-term fluctuations in the market.

We continue to closely monitor the COVID-19 situation and have taken measures to help ensure the health and well-being of our employees, guests and contractors, including screening of individuals that enter our facilities, social distancing practices, enhanced cleaning and deep sanitization, the suspension of nonessential employee travel and implementation of work-from-home policies, where applicable.

8 unchanged sentences

Recent legal issues with the Canadian government and First Nation groups have been resolved for the time being.

The Canadian federal government acquired the TMX pipeline in 2018, approved the expansion of the project and is currently working through a revised construction timeline to adjust for recent delays related to legal hurdles and the COVID-19 pandemic.

WCS prices in the second quarter of 2021 averaged $53.27 per barrel compared to $19.73 in the second quarter of 2020.

The WCS Differential decreased from $15.35 per barrel at the end of the fourth quarter of 2020 to $13.95 at the end of the second quarter of 2021.

WCS prices in the third quarter of 2021 averaged $57.58 per barrel compared to an average of $31.15 in the third quarter of 2020.

The WCS Differential decreased from $15.35 per barrel at the end of the fourth quarter of 2020 to $11.62 at the end of

the third quarter of 2021.

In 2018, the Government of Alberta announced it would mandate temporary curtailments of the province’s oil production.

However, monthly production limits were put on hold in December 2020 until further notice, allowing operators to produce freely at their discretion while the government monitors production and inventory levels.

forecasts show storage inventories approaching maximum capacity, the government may reintroduce production limits.

As of July 26, 2021, the WTI price was $71.91 and the WCS price was $58.27, resulting in a WCS Differential of $13.64.

Should forecasts show storage inventories approaching maximum capacity, the government may reintroduce production limits.

As of October 25, 2021, the WTI price was $84.26 and the WCS price was $67.80, resulting in a WCS Differential of $16.46.

Together with the initial spread of COVID-19, the depressed price levels of both WTI and WCS materially impacted 2020 maintenance and production spending and activity by Canadian operators and, therefore, demand for our hospitality services.

Customers began increasing production activity in the fourth quarter of 2020 and into the first half of 2021.

Customers began increasing production activity in the fourth quarter of 2020 and into the first nine months of 2021.

Continued uncertainty, including about the impact of COVID-19, and commodity price volatility and regulatory complications could cause our Canadian oil sands and pipeline customers to reduce production, delay expansionary and maintenance spending and defer additional investments in their oil sands assets.

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In Australia, 82% of our rooms are located in the Bowen Basin of Queensland, Australia and primarily serve met coal mines in that region.

Met coal pricing and production growth in the Bowen Basin region is predominantly influenced by the levels of global steel production, which increased by 14.4% during the first half of 2021 compared to the same period of 2020.

As of July 26, 2021, met coal spot prices were $215 per metric tonne.

Met coal pricing and production growth in the Bowen Basin region is predominantly influenced by the levels of global steel production, which increased by 7.8% during the first nine months of 2021 compared to the same period of 2020.

As of October 25, 2021, met coal spot prices were $398 per metric tonne.

Long-term demand for steel is expected to be driven by global infrastructure spending and increased steel consumption per capita in developing economies, such as China and India, whose current consumption per capita is a fraction of developed countries.

In 2020, the impact of the outbreak of COVID-19 led to a high level of uncertainty for demand of iron ore and met coal.

However, due to strong global steel demand, supply disruptions in other countries and limited COVID-19 cases in Australia, Australian met coal and iron ore activity was relatively buoyant in 2020 and the first half of 2021.

An increase in global infrastructure spending to stimulate economies is expected to support demand for raw materials, particularly met coal and iron ore.

Currently, China and Australia are in a trade dispute that has led to China implementing a trade embargo on Australian coal.

China has historically accounted for approximately 22% of Australia’s met coal exports.

The continuing uncertainty in the Chinese demand for Australian met coal has led to volatile Australian met coal spot pricing.

The Chinese trade embargo and volatile Australian met coal spot pricing have created a shuffling of global export trade flows.

If this dispute continues, it could continue to impact pricing volatility, and demand for Australian met coal and consequently lead to reduced occupancy at our Australian villages.

The Chinese embargo on Australian coal continues, without any resolution foreseeable in the near term.

However, Australian met coal producers have found new markets, including India and Europe, for their premium product.

This has led to a rebalancing of the market globally, with China relying on domestic production along with much higher imports of U.S.

and Canadian coal in 2021.

With the backdrop of continuing strong steel demand and met coal supply constraints, the spot price for met coal has surged to record highs in October 2021.

Analysts expect elevated met coal prices to persist in the short-term, while steel demand and prices remain strong and until met coal supply issues are resolved.

Additionally, if the trade impasse with China remains unresolved, there remains a possibility of further volatility in the short-medium term.

Civeo's activity in Western Australia is driven primarily by iron ore production, which is a key steel-making ingredient.

As of July 26, 2021, iron ore spot prices were $197.30 per metric tonne.

As of October 22, 2021, iron ore spot prices were $119.70 per metric tonne.

Our integrated services business provides catering and managed services to the mining industry in Western Australia.

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Only 267 oil rigs were active at the end of 2020.

As oil prices began to recover in 2021, oil rig count and drilling activity recovered somewhat, with 372 oil rigs active at the end of the second quarter 2021.

As oil prices began to recover in 2021, oil rig count and drilling activity recovered somewhat, with 421 oil rigs active at the end of the third quarter 2021.

The Permian Basin remains the most active U.S.

unconventional play, representing 62% of the oil rigs active in the U.S.

at the end of the second quarter of 2021.

at the end of the third quarter of 2021.

The lower U.S.

rig count and decline in oil prices resulted in decreased U.S.

oil production from an average of 12.2 million barrels per day in 2019 to an average of 11.3 million barrels per day in 2020 and to an average of 11.2 million barrels per day through the first five months of 2021.

As of July 23, 2021, there were 387 active oil rigs in the U.S.

oil production from an average of 12.2 million barrels per day in 2019 to an average of 11.3 million barrels per day in 2020.

For the first seven months of 2021, the average barrels per day stayed constant at 11.3 million.

As of October 25, 2021, there were 443 active oil rigs in the U.S.

(as measured by Bakerhughes.com).

2 unchanged sentences

Those assets were either sold or transported to our Permian Basin and Mid-Continent district locations.

This process is underway and we expect it to be complete during the third quarter of 2021.

oil shale drilling and completion activity will continue to be dependent on sustained higher WTI oil prices, pipeline capacity and sufficient capital to support E&P drilling and completion plans.

8 unchanged sentences

(per tonne) Iron

Third Quarter through July 26, 2021

Fourth Quarter through October 25, 2021

$ 80.83 $ 66.82 $ 392.80 $ 124.27

12 unchanged sentences

9/30/2018 69.61 41.58 188.46 61.91

6/30/2018 67.97 49.93 189.41 62.58

WTI crude prices are from U.S.

11 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2021 2020 Change Percentage 2021 2020 Change Percentage

3 unchanged sentences

dollar $0.735 $0.716 0.02 2.6% $0.759 $0.677 $0.08 12.1%

June 30, 2021 December 31, 2020 Change Percentage

September 30, 2021 December 31, 2020 Change Percentage

Canadian dollar to U.S.

9 unchanged sentences

Results of Operations

Unless otherwise indicated, discussion of results for the three months ended June 30, 2021, is based on a comparison to the corresponding period of 2020.

Results of Operations – Three Months Ended June 30, 2021 Compared to Three Months Ended June 30, 2020

Unless otherwise indicated, discussion of results for the three months ended September 30, 2021, is based on a comparison to the corresponding period of 2020.

Results of Operations – Three Months Ended September 30, 2021 Compared to Three Months Ended September 30, 2020

Three Months Ended

September 30,

2021 2020 Change

13 unchanged sentences

Impairment expense — — —

Other operating expense (income) 30 (285) 315

Other operating expense 21 51 (30)

Total costs and expenses 149,053 135,767 13,286

Operating income (loss) 2,129 (1,841) 3,970

Operating income 6,010 7,090 (1,080)

Interest expense, net (3,582) (4,029) 447

Other income 788 12,642 (11,854)

(Loss) income before income taxes (482) 6,951 (7,433)

Income tax benefit (expense) 492 (122) 614

Other (expense) income 364 4,542 (4,178)

Income before income taxes 2,792 7,603 (4,811)

Income tax (expense) (1,770) (180) (1,590)

Net income 1,022 7,423 (6,401)

2 unchanged sentences

Dividends attributable to preferred shares 482 472 10

Net (loss) income attributable to Civeo common shareholders $ (467) $ 6,136 $ (6,603)

We reported net loss attributable to Civeo for the quarter ended June 30, 2021 of $0.5 million, or $0.03 per diluted share.

As further discussed below, net loss included a $7.9 million pre-tax loss resulting from the impairment of fixed assets included in Impairment expense.

We reported net income attributable to Civeo for the quarter ended June 30, 2020 of $6.1 million, or $0.37 per diluted share.

As further discussed below, net income included $4.7 million of income associated with the settlement of a representations and warranties claim related to the Noralta acquisition included in Other income.

Consolidated revenues increased $39.5 million, or 34%, in the second quarter of 2021 compared to the second quarter of 2020.

This increase was primarily due to (i) higher billed rooms at our Canadian oil sands lodges related to turnaround activities by a number of customers, (ii) increased mobile asset activity from a pipeline project in Canada, (iii) increased occupancy at our Australian integrated services villages, (iv) increased activity levels in certain U.S.

Net income attributable to Civeo common shareholders $ 62 $ 6,517 $ (6,455)

We reported net income attributable to Civeo for the quarter ended September 30, 2021 of $0.1 million, or $0.00 per diluted share compared to net income attributable to Civeo for the quarter ended September 30, 2020 of $6.5 million, or $0.39 per diluted share.

Consolidated revenues increased $12.2 million, or 9%, in the third quarter of 2021 compared to the third quarter of 2020.

This increase was primarily due to (i) higher billed rooms at our Canadian oil sands lodges related to turnaround activities by a number of customers, (ii) increased mobile asset activity from pipeline projects in Canada, (iii) increased occupancy at our Australian integrated services villages, (iv) increased activity levels in certain U.S.

markets and (v) a stronger Australian and Canadian dollar relative to the U.S.

dollar in the second quarter of 2021 compared to the second quarter of 2020.

These items were partially offset by (i) reduced occupancy at our Canadian Sitka Lodge related to the COVID-19 pandemic and the British Columbia health order, (ii) reduced food service activity, as an overflow site supporting a LNG-related project in 2020 is no longer required, (iii) decreased activity at our Bowen Basin villages and Western Australia villages and (iv) decreased activity at our U.S.

wellsite business.

dollar in the third quarter of 2021 compared to the third quarter of 2020.

These items were partially offset by (i) reduced food service activity in Canada, as an overflow site supporting a LNG-related project in 2020 is no longer required, (ii) decreased activity at our Bowen Basin villages and Gunnedah Basin villages in Australia and (iii) decreased activity at our U.S.

offshore fabrication business.

See the discussion of segment results of operations below for further information.

Cost of Sales and Services.

Our consolidated cost of sales and services increased $24.9 million, or 30%, in the second quarter of 2021 compared to the second quarter of 2020.

This increase was primarily due to (i) increased occupancy at our Canadian oil sands lodges related to turnaround activities by a number of customers, (ii) increased mobile asset activity from a pipeline project in Canada, (iii) increased occupancy at our Australian integrated services villages and increased cost of temporary labor due to ongoing labor shortages in Australia, (iv) increased activity levels in certain U.S.

Our consolidated cost of sales and services increased $14.0 million, or 14%, in the third quarter of 2021 compared to the third quarter of 2020.

This increase was primarily due to (i) increased occupancy at our Canadian oil sands lodges related to turnaround activities by a number of customers, (ii) increased mobile asset activity from pipeline projects in Canada, (iii) increased occupancy at our Australian integrated services villages and the increased cost of

temporary labor due to ongoing labor shortages in Australia, (iv) increased activity levels in certain U.S.

markets and (v) a stronger Australian and Canadian dollar relative to the U.S.

dollar in the second quarter of 2021 compared to the second quarter of 2020.

wellsite business.

dollar in the third quarter of 2021 compared to the third quarter of 2020.

These items were partially offset by (i) reduced food service activity in Canada, as an overflow site supporting a LNG-related project in 2020 is no longer required and (ii) decreased activity at our U.S.

offshore fabrication business.

See the discussion of segment results of operations below for further information.

Selling, General and Administrative Expenses.

SG&A expense increased $3.2 million, or 28%, in the second quarter of 2021 compared to the second quarter of 2020.

This increase was primarily due to higher incentive compensation costs, share-based compensation expense and compensation expense.

In addition, SG&A expense increased approximately $1.0 million due to a stronger Australian and Canadian dollar relative to the U.S.

dollar in the second quarter of 2021 compared to the second quarter of 2020.

The increase in share-based compensation was due to an increase in our stock price during the second quarter of 2021 compared to the second quarter of 2020.

SG&A expense increased $3.9 million, or 29%, in the third quarter of 2021 compared to the third quarter of 2020.

This increase was primarily due to higher share-based compensation expense, compensation expense and professional fees related to the Company's recent debt offering efforts.

The increase in share-based compensation expense was due to an increase in our stock price during the third quarter of 2021 compared to the third quarter of 2020.

Depreciation and Amortization Expense.

Depreciation and amortization expense decreased $0.8 million, or 4%, in the second quarter of 2021 compared to the second quarter of 2020.

The decrease was primarily due to certain assets and intangibles becoming fully depreciated during 2020 and the extension of the remaining life of certain long-lived assets in the U.S.

during the second quarter of 2020.

These items were partially offset by a stronger Australian and Canadian dollar relative to the U.S.

dollar in the second quarter of 2021 compared to the second quarter of 2020.

Impairment Expense.

We recorded pre-tax impairment expense of $7.9 million in the second quarter of 2021 associated with long-lived assets in our Australian reporting unit.

See Note 6 - Impairment Charges to the notes to the unaudited consolidated financial statements included in Item 1 of this quarterly report for further discussion.

Depreciation and amortization expense decreased $4.5 million, or 18%, in the third quarter of 2021 compared to the third quarter of 2020.

The decrease was primarily due to certain assets and intangibles becoming fully depreciated during 2020, partially offset by a stronger Australian and Canadian dollar relative to the U.S.

dollar in the third quarter of 2021 compared to the third quarter of 2020.

Operating Income (Loss).

Consolidated operating income increased $4.0 million, or 216%, in the second quarter of 2021 compared to the second quarter of 2020, primarily due to increased activity levels in Canada, partially offset by higher impairment expense.

Consolidated operating income decreased $1.1 million, or 15%, in the third quarter of 2021 compared to the third quarter of 2020, primarily due to lower occupancy levels in Australia and higher SG&A expenses, partially offset by increased activity levels in Canada and lower depreciation and amortization expense in the third quarter of 2021 compared to the third quarter of 2020.

Interest Expense, net.

Net interest expense decreased by $0.5 million, or 12%, in the second quarter of 2021 compared to the second quarter of 2020, primarily related to lower average debt levels and lower interest rates on term loan and revolving credit facility borrowings during 2021 compared to 2020.

Net interest expense decreased by $0.4 million, or 11%, in the third quarter of 2021 compared to the third quarter of 2020, primarily related to lower average debt levels on credit facility borrowings during 2021 compared to 2020, partially offset by higher interest rates on credit facility borrowings.

Other Income.

Consolidated other income decreased $11.9 million in the second quarter of 2021 compared to the second quarter of 2020.

The second quarter of 2021 included $0.7 million related to proceeds from the Canada Emergency Wage Subsidy (CEWS).

The second quarter of 2020 included $4.7 million of other income associated with the settlement of a representations and warranties claim related to the Noralta acquisition, $6.2 million of other income related to proceeds from the CEWS and a higher gain on sale of assets compared to the second quarter of 2020.

Consolidated other income decreased $4.2 million in the third quarter of 2021 compared to the third quarter of 2020, primarily due to $3.6 million of other income related to proceeds from the Canada Emergency Wage Subsidy (CEWS) and higher gains on sale of assets in 2020 compared to 2021.

Income Tax (Expense) Benefit.

Our income tax benefit for the three months ended June 30, 2021 totaled $0.5 million, or 102.1% of pretax loss, compared to an income tax expense of $0.1 million, or 1.8% of pretax income, for the three months ended June 30, 2020.

Our effective tax rate for both the three months ended June 30, 2021 and June 30, 2020 was impacted by considering Canada and the U.S.

Our income tax expense for the three months ended September 30, 2021 totaled $1.8 million, or 63.4% of pretax income, compared to an income tax expense of $0.2 million, or 2.4% of pretax income, for the three months ended September 30, 2020.

Our effective tax rate for both the three months ended September 30, 2021 and 2020 was impacted by considering Canada and the U.S.

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

1 unchanged sentence

Other Comprehensive (Loss) Income.

Other comprehensive income decreased $31.0 million in the second quarter of 2021 compared to the second quarter of 2020, primarily as a result of foreign currency translation adjustments due to changes in the Canadian and Australian dollar exchange rates compared to the U.S.

Other comprehensive income decreased $23.3 million in the third quarter of 2021 compared to the third quarter of 2020, primarily as a result of foreign currency translation adjustments due to changes in the Canadian and Australian dollar exchange rates compared to the U.S.

The Canadian dollar exchange rate compared to the U.S.

dollar increased 1% in the second quarter of 2021 compared to a 4% decrease in the second quarter of 2020.

dollar decreased 3% in the third quarter of 2021 compared to a 2% increase in the third quarter of 2020.

The Australian dollar exchange rate compared to the U.S.

dollar decreased 1% in the second quarter of 2021 compared to a 2% decrease in the second quarter of 2020.

dollar decreased 4% in the third quarter of 2021 compared to a 4% increase in the third quarter of 2020.

Segment Results of Operations – Canadian Segment

Three Months Ended

September 30,

2021 2020 Change

25 unchanged sentences

(5) Billed rooms represents total billed days for owned assets for the periods presented.

Our Canadian segment reported revenues in the second quarter of 2021 that were $30.3 million, or 57%, higher than the second quarter of 2020.

Our Canadian segment reported revenues in the third quarter of 2021 that were $12.3 million, or 17%, higher than the third quarter of 2020.

The strengthening of the average exchange rate for the Canadian dollar relative to the U.S.

dollar by 13% in the second quarter of 2021 compared to the second quarter of 2020 resulted in a $9.6 million period-over-period increase in revenues.

Excluding the impact of the stronger Canadian exchange rate, the segment experienced a 39% increase in revenues.

This increase was driven by higher billed rooms at our oil sands lodges related to turnaround activities by a number of customers and by increased mobile asset activity from a pipeline project.

Partially offsetting these items, revenue was lower at our Sitka Lodge related to the COVID-19 pandemic and the British Columbia health order and from food services activity, as an overflow site supporting a LNG-related project in 2020 is no longer required.

Our Canadian segment cost of sales and services increased $14.9 million, or 35%, in the second quarter of 2021 compared to the second quarter of 2020.

dollar by 6% in the third quarter of 2021 compared to the third quarter of 2020 resulted in a $4.4 million period-over-period increase in revenues.

Excluding the impact of the stronger Canadian exchange rate, the segment experienced an 11% increase in revenues.

This increase was driven by higher billed rooms at our oil sands lodges related to turnaround activities by a number of customers and by increased mobile asset activity from pipeline projects.

Partially offsetting these items, revenue was lower from food services activity, as an overflow site supporting a LNG-related project in 2020 is no longer required.

Our Canadian segment cost of sales and services increased $7.8 million, or 15%, in the third quarter of 2021 compared to the third quarter of 2020.

The strengthening of the average exchange rate for the Canadian dollar relative to the U.S.

dollar by 13% in the second quarter of 2021 compared to the second quarter of 2020 resulted in a $6.5 million period-over-period increase in cost of sales and services.

Excluding the impact of the stronger Canadian exchange rate, the increased cost of sales and services was driven by increased occupancy at our oil sands lodges related to turnaround activities by a number of customers and by increased mobile asset activity from a pipeline project.

Partially offsetting these items, cost of sales and services decreased at our Sitka Lodge related to the COVID-19 pandemic and the British Columbia health order and from food services activity, as an overflow site supporting a LNG-related project in 2020 is no longer required.

Our Canadian segment gross margin as a percentage of revenues increased from 19.9% in the second quarter of 2020 to 31.1% in the second quarter of 2021.

This was primarily driven by increased operating efficiencies at our oil sands lodges due to higher occupancy and from our increased mobile asset activity.

dollar by 6% in the third quarter of 2021 compared to the third quarter of 2020 resulted in a $3.2 million period-over-period increase in cost of sales and services.

Partially offsetting these items, cost of sales and services decreased from food services activity, as an overflow site supporting a LNG-related project in 2020 is no longer required.

Our Canadian segment gross margin as a percentage of revenues increased from 28.4% in the third quarter of 2020 to 29.6% in the third quarter of 2021.

This was primarily driven by increased mobile asset activity and related operating efficiencies.

Segment Results of Operations – Australian Segment

Three Months Ended

September 30,

2021 2020 Change

21 unchanged sentences

(4) Billed rooms represent total billed days for owned assets for the periods presented.

Our Australian segment reported revenues in the second quarter of 2021 that were $6.9 million, or 12%, higher than the second quarter of 2020.

Our Australian segment reported revenues in the third quarter of 2021 that were $0.4 million, or 1%, higher than the third quarter of 2020.

The strengthening of the average exchange rate for Australian dollars relative to the U.S.

dollar by 17% in the second quarter of 2021 compared to the second quarter of 2020 resulted in a $9.4 million period-over-period increase in revenues.

Accordingly, the increase in the average daily rate is entirely attributable to the strengthening of the Australia dollar.

Excluding the impact of the stronger Australian exchange rate, the Australian segment experienced a 4% decrease in revenues largely due to decreased activity at our Bowen Basin villages and Western Australia villages, partially offset by increased occupancy at our integrated services villages.

Our Australian segment cost of sales and services increased $10.0 million, or 29%, in the second quarter of 2021 compared to the second quarter of 2020.

dollar by 3% in the third quarter of 2021 compared to the third quarter of 2020 resulted in a $1.6 million period-over-period increase in revenues.

Excluding the impact of the stronger Australian exchange rate, the Australian segment experienced decreased activity at our Bowen Basin villages and Gunnedah Basin villages, partially offset by increased occupancy at our integrated services villages.

Our Australian segment cost of sales and services increased $7.8 million, or 20%, in the third quarter of 2021 compared to the third quarter of 2020.

The strengthening of the average exchange rate for Australian dollars relative to the U.S.

dollar by 17% in the second quarter of 2021 compared to the second quarter of 2020 resulted in a $6.6 million period-over-period increase in cost of sales and services.

Excluding the impact of the stronger Australian exchange rate, the increase in cost of sales and services was largely driven by the increased occupancy at our integrated services villages and increased costs of temporary labor due to ongoing labor shortages.

Our Australian segment gross margin as a percentage of revenues decreased to 29.9% in the second quarter of 2021 from 38.8% in the second quarter of 2020.

dollar by 3% in the third quarter of 2021 compared to the third quarter of 2020 resulted in a $1.2 million period-over-period increase in cost of sales and services.

Excluding the impact of the stronger Australian exchange rate, the increase in cost of sales and services was largely driven by increased occupancy at our integrated services villages and increased costs of temporary labor due to ongoing labor shortages.

Our Australian segment gross margin as a percentage of revenues decreased to 28.8% in the third quarter of 2021 from 40.4% in the third quarter of 2020.

This was primarily driven by our integrated services business, which has a service-only business model, and therefore results in lower overall gross margins than the accommodation business.

Reduced occupancy at the Bowen Basin villages and Western Australia villages has also impacted our Australian gross margin.

The integrated services business gross margin decrease was further exacerbated as two key client contracts transferred from construction phase to operational phase with inherently lower margins.

Reduced occupancy at the Bowen Basin villages and Western Australia villages further impacted gross margin as efficiencies were unable to be realized with a fixed cost structure at lower occupancy levels.

Segment gross margin has also been negatively impacted by increased staff costs as a result of a hospitality labor shortage in Australia which has been exacerbated by state and international border closures due to COVID-19.

2 unchanged sentences

Three Months Ended

September 30,

2021 2020 Change

2 unchanged sentences

Gross margin as a % of revenues 0.8 % (17.6) % 18.4 %

segment reported revenues in the second quarter of 2021 that were $2.2 million, or 48%, higher than the second quarter of 2020.

This increase was due to increased occupancy at our West Permian, Killdeer and Acadian Acres lodges and increased activity in our offshore business from fabrication and unit sales, partially offset by reduced U.S.

drilling activity affecting our wellsite business.

segment cost of sales and services slightly increased in the second quarter of 2021 compared to the second quarter of 2020.

This increase was due to greater activity in our offshore business, partially offset by reduced costs in our wellsite business attributable to its reduced activity.

segment gross margin as a percentage of revenues increased from (23.9)% in the second quarter of 2020 to 16.2% in the second quarter of 2021 primarily due to increased occupancy at our West Permian, Killdeer and Acadian Acres lodges and in our offshore business from product sales, partially offset by reduced operating efficiencies at lower activity levels in our wellsite business.

Results of Operations – Six Months Ended June 30, 2021 Compared to Six Months Ended June 30, 2020

Six Months Ended

segment reported revenues in the third quarter of 2021 that were $0.5 million, or 8%, lower than the third quarter of 2020.

This decrease was due to reduced activity in our offshore fabrication business, as two fabrication projects were completed in the third quarter of 2020, that did not recur to the same extent in 2021.

This decrease was partially offset by increased occupancy at our West Permian, Killdeer and Acadian Acres lodges.

segment cost of sales and services decreased in the third quarter of 2021 compared to the third quarter of 2020.

This decrease was due to reduced activity in our offshore fabrication business, as two fabrication projects were completed in the third quarter of 2020, that did not recur to the same extent in 2021.

segment gross margin as a percentage of revenues increased from (17.6)% in the third quarter of 2020 to 0.8% in the third quarter of 2021 primarily due to increased occupancy at our West Permian, Killdeer and Acadian Acres lodges and related operating efficiencies.

Results of Operations – Nine Months Ended September 30, 2021 Compared to Nine Months Ended September 30, 2020

Nine Months Ended

September 30,

2021 2020 Change

13 unchanged sentences

Impairment expense 7,935 144,120 (136,185)

Other operating income 101 704 (603)

Other operating expense 122 755 (633)

Total costs and expenses 436,431 540,171 (103,740)

9 unchanged sentences

Net loss attributable to Civeo common shareholders $ (10,367) $ (133,885) $ 123,518

We reported net loss attributable to Civeo for the six months ended June 30, 2021 of $10.4 million, or $0.73 per diluted share.

We reported net loss attributable to Civeo for the nine months ended September 30, 2021 of $10.4 million, or $0.73 per diluted share.

As further discussed below, net loss included a $7.9 million pre-tax loss resulting from the impairment of fixed assets included in Impairment expense.

We reported net loss attributable to Civeo for the six months ended June 30, 2020 of $140.4 million, or $9.96 per diluted share.

We reported net loss attributable to Civeo for the nine months ended September 30, 2020 of $133.9 million, or $9.48 per diluted share.

As further discussed below, net loss included (i) a $93.6 million pre-tax loss resulting from the impairment of goodwill in our Canada segment included in Impairment expense, (ii) a $38.1 million pre-tax loss resulting from the impairment of long-lived assets in our Canada segment included in Impairment expense and (iii) a $12.4 million pre-tax loss resulting from the impairment of long-lived assets in our U.S.

1 unchanged sentence

Net loss was partially offset by $4.7 million of income associated with the settlement of a representations and warranties claim related to the Noralta acquisition included in Other income.

Consolidated revenues increased $26.1 million, or 10%, in the six months ended June 30, 2021 compared to the six months ended June 30, 2020.

This increase was primarily due to (i) increased mobile asset activity from a pipeline project in Canada, (ii) increased occupancy at our Australian integrated services villages and (iii) a stronger Australian and Canadian dollar relative to the U.S.

dollar in the six months ended June 30, 2021 compared to the six months ended June 30, 2020.

These items were partially offset by (i) reduced food service activity, as an overflow site supporting a LNG-related project in 2020 is no longer required, (ii) decreased activity at our Bowen Basin villages and Western Australia villages and (iii) decreased activity at our U.S.

wellsite business.

Consolidated revenues increased $38.3 million, or 10%, in the nine months ended September 30, 2021 compared to the nine months ended September 30, 2020.

This increase was primarily due to (i) higher billed rooms at our Canadian oil sands lodges related to turnaround activities by a number of customers, (ii) increased mobile asset activity from pipeline projects in Canada, (iii) increased occupancy at our Australian integrated services villages and (iv) a stronger Australian and Canadian dollar relative to the U.S.

dollar in the nine months ended September 30, 2021 compared to the nine months ended September 30, 2020.

These items were partially offset by (i) lower revenue at our Sitka Lodge related to the COVID-19 pandemic and the British Columbia health order affecting activity in the first half of the year, (ii) reduced food service activity in Canada, as an overflow site supporting a LNG-related project in 2020 is no longer required, (iii) decreased activity at our Bowen Basin villages and Western Australia villages and (iv) decreased activity at our U.S.

wellsite and offshore businesses.

See the discussion of segment results of operations below for further information.

Cost of Sales and Services.

Our consolidated cost of sales and services increased $21.4 million million, or 11%, in the six months ended June 30, 2021 compared to the six months ended June 30, 2020.

This increase was primarily due to (i) increased mobile asset activity from a pipeline project in Canada, (ii) increased occupancy at our Australian integrated services villages and increased cost of temporary labor due to ongoing labor shortages in Australia and (iii) a stronger Australian and Canadian dollar relative to the U.S.

dollar in the six months ended June 30, 2021 compared to the six months ended June 30, 2020.

Our consolidated cost of sales and services increased $35.4 million, or 12%, in the nine months ended September 30, 2021 compared to the nine months ended September 30, 2020.

This increase was primarily due to (i) greater activity at our Canadian oil sands lodges related to turnaround activities by a number of customers, (ii) increased mobile asset activity from pipeline projects in Canada, (iii) increased occupancy at our Australian integrated services villages and increased cost of temporary labor due to ongoing labor shortages in Australia and (iv) a stronger Australian and Canadian dollar relative to the U.S.

dollar in the nine months ended September 30, 2021 compared to the nine months ended September 30, 2020.

These items were partially offset by (i) reduced activity at our Sitka Lodge related to the COVID-19 pandemic and the British Columbia health order affecting activity in the first half of the year, (ii) reduced food service activity in Canada, as an overflow site supporting a LNG-related project in 2020 is no longer required, (iii) decreased activity at our Bowen Basin villages and Western Australia villages and (iv) lower activity at our U.S.

wellsite and offshore businesses.

See the discussion of segment results of operations below for further information.

Selling, General and Administrative Expenses.

SG&A expense increased $3.5 million, or 14%, in the six months ended June 30, 2021 compared to the six months ended June 30, 2020.

SG&A expense increased $7.3 million, or 19%, in the nine months ended September 30, 2021 compared to the nine months ended September 30, 2020.

This increase was primarily due to higher incentive compensation costs, share-based compensation expense and compensation expense, partially offset by lower professional fees.

In addition, SG&A expense increased approximately $2.2 million due to a stronger Australian and Canadian dollar relative to the U.S.

dollar in the nine months ended September 30, 2021 compared to the nine months ended September 30, 2020.

The increase in share-based compensation was due to an increase in our stock price during 2021 compared to 2020.

Depreciation and Amortization Expense.

Depreciation and amortization expense decreased $5.1 million, or 11%, in the six months ended June 30, 2021 compared to the six months ended June 30, 2020.

Depreciation and amortization expense decreased $9.6 million, or 13%, in the nine months ended September 30, 2021 compared to the nine months ended September 30, 2020.

The decrease was primarily due to (i) certain assets and intangibles becoming fully depreciated during 2020, (ii) the impairment of certain long-lived assets in Canada and the U.S.

during the first quarter of 2020 and (iii) the extension of the remaining life of certain long-lived assets in the U.S.

during the second quarter of 2020.

during the third quarter of 2020.

These items were partially offset by a stronger Australian and Canadian dollar relative to the U.S.

dollar in the six months ended June 30, 2021 compared to the six months ended June 30, 2020.

dollar in the nine months ended September 30, 2021 compared to the nine months ended September 30, 2020.

Impairment Expense.

We recorded pre-tax impairment expense of $7.9 million in the six months ended June 30, 2021 associated with long-lived assets in our Australian reporting unit.

Impairment expense of $144.1 million in the six months ended June 30, 2020 included the following items:

We recorded pre-tax impairment expense of $7.9 million in the nine months ended September 30, 2021 associated with long-lived assets in our Australian reporting unit.

Impairment expense of $144.1 million in the nine months ended September 30, 2020 included the following items:

• Pre-tax impairment expense of $93.6 million related to the impairment of goodwill in our Canadian reporting unit.

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Operating Loss.

Consolidated operating loss decreased $143.1 million, or 95%, in the six months ended June 30, 2021 compared to the six months ended June 30, 2020, primarily due to impairment expense of goodwill and long-lived assets in 2020.

Consolidated operating loss decreased $142.1 million, or 99%, in the nine months ended September 30, 2021 compared to the nine months ended September 30, 2020, primarily due to impairment expense of goodwill and long-lived assets in 2020.

Interest Expense, net.

Net interest expense decreased by $2.7 million, or 28%, in the six months ended June 30, 2021 compared to the six months ended June 30, 2020, primarily related to lower average debt levels and lower interest rates on term loan and revolving credit facility borrowings during 2021 compared to 2020.

Net interest expense decreased by $3.1 million, or 23%, in the nine months ended September 30, 2021 compared to the nine months ended September 30, 2020, primarily related to lower average debt levels on term loan and revolving credit facility borrowings during 2021 compared to 2020.

Other Income.

Consolidated other income decreased $7.0 million in the six months ended June 30, 2021 compared to the six months ended June 30, 2020.

The six months ended June 30, 2021 included $3.5 million related to proceeds from the CEWS and a higher gain on the sale of assets primarily related to the sale of a manufacturing facility and mobile assets in Canada.

The six months ended June 30, 2020 included $4.7 million of other income associated with the settlement of a representations and warranties claim related to the Noralta acquisition, $6.2 million of other income related to proceeds from the CEWS and a gain on sale of assets related to unutilized lodge assets in Canada.

Consolidated other income decreased $11.1 million in the nine months ended September 30, 2021 compared to the nine months ended September 30, 2020.

The nine months ended September 30, 2021 included $3.5 million of other income related to proceeds from the CEWS.

The nine months ended September 30, 2020 included $9.7 million of other income related to proceeds from the CEWS and $4.7 million of other income associated with the settlement of a representations and warranties claim related to the Noralta acquisition.

In addition, 2020 included a higher gain on sale of assets compared to 2021.

Income Tax (Expense) Benefit.

Our income tax expense for the six months ended June 30, 2021 totaled $0.6 million, or (6.6)% of pretax loss, compared to an income tax benefit of $8.7 million, or 5.9% of pretax loss, for the six months ended June 30, 2020.

Our effective tax rate for both the six months ended June 30, 2021 and June 30, 2020 was impacted by considering Canada and the U.S.

Our income tax expense for the nine months ended September 30, 2021 totaled $2.4 million, or (39.0)% of pretax loss, compared to an income tax benefit of $8.5 million, or 6.1% of pretax loss, for the nine months ended September 30, 2020.

Our effective tax rate for both the nine months ended September 30, 2021 and 2020 was

impacted by considering Canada and the U.S.

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

Additionally, our effective tax rate for the six months ended June 30, 2020 was impacted by a deferred tax benefit of $9.6 million offset by an increase of $0.7 million in the valuation allowance in Canada.

Our effective tax rate for the nine months ended September 30, 2021 was impacted by an increase in the valuation allowance related to the impairment of land in Australia.

Our effective tax rate for the nine months ended September 30, 2020 was impacted by a deferred tax benefit of $9.0 million, offset by a valuation allowance of $0.1 million, against the Canadian net deferred tax assets.

Other Comprehensive Loss.

Other comprehensive loss decreased $16.0 million in the six months ended June 30, 2021 compared to the six months ended June 30, 2020, primarily as a result of foreign currency translation adjustments due to

changes in the Canadian and Australian dollar exchange rates compared to the U.S.

Other comprehensive loss increased $7.4 million in the nine months ended September 30, 2021 compared to the nine months ended September 30, 2020, primarily as a result of foreign currency translation adjustments due to changes in the Canadian and Australian dollar exchange rates compared to the U.S.

The Canadian dollar exchange rate compared to the U.S.

dollar increased 3% in the six months ended June 30, 2021 compared to a 5% decrease in the six months ended June 30, 2020.

dollar was flat in the nine months ended September 30, 2021 compared to a 3% decrease in the nine months ended September 30, 2020.

The Australian dollar exchange rate compared to the U.S.

dollar decreased 3% in the six months ended June 30, 2021 compared to a 2% decrease in the six months ended June 30, 2020.

dollar decreased 7% in the nine months ended September 30, 2021 compared to a 2% increase in the nine months ended September 30, 2020.

Segment Results of Operations – Canadian Segment

Six Months Ended

Nine Months Ended

September 30,

2021 2020 Change

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(5) Billed rooms represents total billed days for owned assets for the periods presented.

Our Canadian segment reported revenues in the six months ended June 30, 2021 that were $12.8 million, or 10%, higher than the six months ended June 30, 2020.

Our Canadian segment reported revenues in the nine months ended September 30, 2021 that were $25.1 million, or 12%, higher than the nine months ended September 30, 2020.

The strengthening of the average exchange rate for the Canadian dollar relative to the U.S.

dollar by 9% in the six months ended June 30, 2021 compared to the six months ended June 30, 2020 resulted in a $13.3 million period-over-period increase in revenues.

Excluding the impact of the stronger Canadian exchange rate, revenue remained relatively flat;

however, it was positively impacted by higher billed rooms at our oil sands lodges related to turnaround activities by a number of customers and by increased mobile asset activity from a pipeline project.

Partially offsetting these increases were reduced billed rooms at our Sitka Lodge related to the COVID-19 pandemic and the British Columbia health order and reduced food services activity, as an overflow site supporting a LNG-related project in 2020 is no longer required.

Our Canadian segment cost of sales and services increased $2.5 million, or 2%, in the six months ended June 30, 2021 compared to the six months ended June 30, 2020.

dollar by 8% in the nine months ended September 30, 2021 compared to the nine months ended September 30, 2020 resulted in a $17.7 million period-over-period increase in revenues.

Excluding the impact of the stronger Canadian exchange rate, the revenue increase was due to higher billed rooms at our oil sands lodges related to turnaround activities by a number of customers and by increased mobile asset activity from pipeline projects.

Partially offsetting these items, revenue was lower at our Sitka Lodge related to the COVID-19 pandemic and the British Columbia health order affecting activity in the first half of the year and from reduced food services activity, as an overflow site supporting a LNG-related project in 2020 is no longer required.

Our Canadian segment cost of sales and services increased $10.3 million, or 7%, in the nine months ended September 30, 2021 compared to the nine months ended September 30, 2020.

The strengthening of the average exchange rate for the Canadian dollar relative to the U.S.

dollar by 9% in the six months ended June 30, 2021 compared to the six months ended June 30, 2020 resulted in a $9.6 million period-over-period increase in cost of sales and services.

Excluding the impact of the stronger Canadian exchange rate, the decreased cost of sales and services was driven by reduced food services activity, as an overflow site supporting a LNG-related project in 2020 is no longer required and reduced activity at our Sitka Lodge related to the COVID-19 pandemic and British Columbia health order.

Partially offsetting these decreases were increased mobile asset activity from a pipeline project and increased activity at our oil sands lodges related to turnaround activities by a number of customers.

Our Canadian segment gross margin as a percentage of revenues increased from 19.3% in the six months ended June 30, 2020 to 24.8% in the six months ended June 30, 2021.

dollar by 8% in the nine months ended September 30, 2021 compared to the nine months ended

September 30, 2020 resulted in a $12.7 million period-over-period increase in cost of sales and services.

Excluding the impact of the stronger Canadian exchange rate, the decreased cost of sales and services was driven by reduced activity at our Sitka Lodge related to the COVID-19 pandemic and reduced food services activity, as an overflow site supporting a LNG related project in 2020 is no longer required.

Partially offsetting these items, cost of sales and services increased due to greater activity at our oil sands lodges related to turnaround activities by a number of customers and by increased mobile asset activity from pipeline projects.

Our Canadian segment gross margin as a percentage of revenues increased from 22.5% in the nine months ended September 30, 2020 to 26.5% in the nine months ended September 30, 2021.

This was primarily driven by increased mobile asset activity and related operating efficiencies.

Accommodation gross margins were maintained at 28% with an increase in margins at our oil sands lodges related to turnaround activities by a number of customers and related operating efficiencies at these higher levels, offset by a reduction in margins at our Sitka Lodge related to reduced operating efficiencies at the lower occupancy levels experienced due to the COVID-19 pandemic and the British Columbia health order.

Segment Results of Operations – Australian Segment

Six Months Ended

Nine Months Ended

September 30,

2021 2020 Change

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(4) Billed rooms represent total billed days for owned assets for the periods presented.

Our Australian segment reported revenues in the six months ended June 30, 2021 that were $17.5 million, or 17%, higher than the six months ended June 30, 2020.

Our Australian segment reported revenues in the nine months ended September 30, 2021 that were $17.9 million, or 10%, higher than the nine months ended September 30, 2020.

The strengthening of the average exchange rate for Australian dollars relative to the U.S.

dollar by 17% in the six months ended June 30, 2021 compared to the six months ended June 30, 2020 resulted in a $18.3 million period-over-period increase in revenues.

Accordingly, the increase in the average daily rate is entirely attributable to the strengthening of the Australia dollar.

Excluding the impact of the stronger Australian exchange rate, the Australian segment experienced a 1% decrease in revenues largely due to decreased activity at our Bowen Basin villages and Western Australia villages, partially offset by increased occupancy at our integrated services villages.

Our Australian segment cost of sales and services increased $23.3 million, or 36%, in the six months ended June 30, 2021 compared to the six months ended June 30, 2020.

dollar by 12% in the nine months ended September 30, 2021 compared to the nine months ended September 30, 2020 resulted in a $20.0 million period-over-period increase in revenues.

Excluding the impact of the stronger Australian exchange rate, the Australian segment experienced reduced revenue due to decreased activity at our Bowen Basin villages and Western Australia villages, partially offset by increased occupancy at our integrated services villages.

Our Australian segment cost of sales and services increased $31.2 million, or 30%, in the nine months ended September 30, 2021 compared to the nine months ended September 30, 2020.

The strengthening of the average exchange rate for Australian dollars relative to the U.S.

dollar by 17% in the six months ended June 30, 2021 compared to the six months ended June 30, 2020 resulted in a $13.0 million period-over-period increase in cost of sales and services.

dollar by 12% in the nine months ended September 30, 2021 compared to the nine months ended September 30, 2020 resulted in a $14.2 million period-over-period increase in cost of sales and services.

Our Australian segment gross margin as a percentage of revenues decreased to 29% in the six months ended June 30, 2021 from 39.3% in the six months ended June 30, 2020.

This was primarily driven by our integrated services business, which has a service-only business model, and therefore results in lower overall gross margins than the accommodation business.

Reduced occupancy at the Bowen Basin villages and Western Australia villages has also impacted our Australian segment gross margin.

Our Australian segment gross margin as a percentage of revenues decreased to 28.9% in the nine months ended September 30, 2021 from 39.7% in the nine months ended September 30, 2020.

This decrease was primarily driven by our integrated services business, which has a service-only business model, and therefore results in lower overall gross margins than

the accommodation business.

The integrated services business gross margin decrease was further exacerbated as two key client contracts transferred from construction phase to operational phase with inherently lower margins.

Reduced occupancy at the Bowen Basin villages and Western Australia villages, further impacted gross margin as efficiencies were unable to be realized with a fixed cost structure at lower occupancy levels.

international border closures have affected the number of staff available which has subsequently led to an increased reliance on more expensive temporary labor hire resources and has placed upward pressure on wages for permanent staff as competitors compete for a small pool of labor.

State and international border closures have affected the number of staff available which has subsequently led to an increased reliance on more expensive temporary labor hire resources and has placed upward pressure on wages for permanent staff as competitors compete for a small pool of labor.

Segment Results of Operations – U.S.

Six Months Ended

Nine Months Ended

September 30,

2021 2020 Change

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Gross margin as a % of revenues 0.3 % (6.5) % 6.8 %

segment reported revenues in the six months ended June 30, 2021 that were $4.2 million, or 28%, lower than the six months ended June 30, 2020.

segment reported revenues in the nine months ended September 30, 2021 that were $4.7 million, or 22%, lower than the nine months ended September 30, 2020.

This decrease was due to reduced U.S.

drilling activity affecting our wellsite business and reduced activity in our offshore fabrication business as a project was completed in the first half of 2020 that did not recur to the same extent in 2021.

These decreases were partially offset by increased activity at our Acadian Acres lodge related to a client’s turnaround activity.

segment cost of sales and services decreased $4.5 million, or 29%, in the six months ended June 30, 2021 compared to the six months ended June 30, 2020.

drilling activity affecting our wellsite business and reduced activity in our offshore fabrication business as a number of projects were completed in 2020 that did not recur to the same extent in 2021.

These decreases were partially offset by increased activity at our West Permian, Killdeer and Acadian Acres lodges.

segment cost of sales and services decreased $6.1 million, or 27%, in the nine months ended September 30, 2021 compared to the nine months ended September 30, 2020.

This decrease was due to reduced U.S.

drilling activity affecting our wellsite business, reduced activity in our offshore fabrication business as a project was completed in the first half of 2020 that did not recur to the same extent in 2021 and reduced costs at our West Permian lodge under a new customer contract.

segment gross margin as a percentage of revenues increased 1.8% from the six months ended June 30, 2020 to the six months ended June 30, 2021, primarily due to improved margins at our West Permian lodge under a new customer contract and in our offshore business from product sales, partially offset by reduced operating efficiencies at lower activity levels in our wellsite business.

drilling activity affecting our wellsite business, reduced activity in our offshore fabrication business as a number of projects were completed in 2020 that did not recur to the same extent in 2021 and reduced costs at our West Permian lodge under a new customer contract.

segment gross margin as a percentage of revenues increased 6.8% from the nine months ended September 30, 2020 to the nine months ended September 30, 2021, primarily due to improved margins at our West Permian lodge under a new customer contract and in our offshore business from product sales, partially offset by reduced operating efficiencies at lower activity levels in our wellsite business.

Liquidity and Capital Resources

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In the future, we may seek to access the debt and equity capital markets from time to time to raise additional capital, increase liquidity, fund acquisitions, refinance debt or retire preferred shares.

The following table summarizes our consolidated liquidity position as of June 30, 2021 and December 31, 2020 (in thousands):

June 30, 2021 December 31, 2020

The following table summarizes our consolidated liquidity position as of September 30, 2021 and December 31, 2020 (in thousands):

September 30, 2021 December 31, 2020

Lender commitments $ 200,000 $ 167,300

$ 167,300 $ 167,300

Borrowings against revolving credit capacity (124,595) (63,556)

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Total available liquidity $ 78,212 $ 105,412

(1) As of June 30, 2021, we had one bank guarantee facility totaling A$1.0 million.

As of December 31, 2020, we had two bank guarantee facilities totaling $3.0 million.

We had bank guarantees of A$0.8 million outstanding under the facilities as of both June 30, 2021 and December 31, 2020.

Cash totaling $29.4 million was provided by operations during the six months ended June 30, 2021, compared to $45.3 million provided by operations during the six months ended June 30, 2020.

During the six months ended June 30, 2021 and

2020, $13.8 million was used in working capital and $2.9 million was provided by working capital, respectively.

The decrease in cash provided by working capital in 2021 compared to 2020 is largely due to increased accounts receivable balances in Canada.

Cash was provided by investing activities during the six months ended June 30, 2021 in the amount of $0.5 million, compared to cash provided by investing activities during the six months ended June 30, 2020 in the amount of $2.7 million.

The decrease in cash provided by investing activities was primarily due to $4.7 million of other income associated with the settlement of a representations and warranties claim related to the Noralta acquisition and lower capital expenditures during the six months ended June 30, 2020, partially offset by higher proceeds from the sale of our manufacturing facility and mobile assets in Canada during the six months ended June 30, 2021.

Capital expenditures totaled $6.5 million and $3.8 million during the six months ended June 30, 2021 and 2020, respectively.

Cash totaling $63.2 million was provided by operations during the nine months ended September 30, 2021, compared to $80.7 million provided by operations during the nine months ended September 30, 2020.

During the nine months ended September 30, 2021 and 2020, $5.0 million was used in working capital and $4.6 million was provided by working capital, respectively.

The decrease in cash provided by working capital in 2021 compared to 2020 is largely due to increased accounts receivable balances, partially offset by increased accounts payable and accrual balances.

Cash was used in investing activities during the nine months ended September 30, 2021 in the amount of $2.1 million, compared to cash provided by investing activities during the nine months ended September 30, 2020 in the amount of $1.7 million.

The decrease in cash provided by investing activities was primarily due to $4.7 million of other income associated with the settlement of a representations and warranties claim related to the Noralta acquisition and lower capital expenditures during the nine months ended September 30, 2020, partially offset by higher proceeds from the sale of our manufacturing facility and mobile assets in Canada during the nine months ended September 30, 2021.

Capital expenditures totaled $9.6 million and $6.2 million during the nine months ended September 30, 2021 and 2020, respectively.

We expect our capital expenditures for 2021, exclusive of any business acquisitions or any growth capital expenditures, to be approximately $20 million, which excludes any unannounced and uncommitted projects, the spending for which is contingent on obtaining customer contracts.

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We continue to monitor the COVID-19 global pandemic and the responses thereto, the global economy, the prices of and demand for crude oil, met coal and iron ore and the resultant impact on the capital spending plans of our customers in order to plan our business activities, and we may adjust our capital expenditure plans in the future.

Net cash of $31.1 million was used in financing activities during the six months ended June 30, 2021 primarily due to net repayments under our revolving credit facilities of $12.1 million, repayments of term loan borrowings of $17.9 million and $1.1 million used to settle tax obligations on vested shares under our share-based compensation plans.

Net cash of $43.6 million was used in financing activities during the six months ended June 30, 2020 primarily due to net repayments under our revolving credit facilities of $25.6 million, repayments of term loan borrowings of $16.5 million and $1.5 million used to settle tax obligations on vested shares under our share-based compensation plans.

The following table summarizes the changes in debt outstanding during the six months ended June 30, 2021 (in thousands):

Net cash of $61.1 million was used in financing activities during the nine months ended September 30, 2021 primarily due to repayments of term loan borrowings of $117.6 million, $1.1 million used to settle tax obligations on vested shares under our share-based compensation plans, debt issuance costs of $4.4 million and $0.4 million used to repurchase our common shares, partially offset by net borrowings under our revolving credit facilities of $62.5 million.

Net cash of $79.6 million was used in financing activities during the nine months ended September 30, 2020 primarily due to net repayments under our revolving credit facilities of $44.5 million, repayments of term loan borrowings of $31.1 million, $1.5 million used to settle tax obligations on vested shares under our share-based compensation plans and debt issuance costs of $2.6 million.

The following table summarizes the changes in debt outstanding during the nine months ended September 30, 2021 (in thousands):

Balance at December 31, 2020 $ 251,086

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Translation (728)

Balance at June 30, 2021 $ 226,833

Balance at September 30, 2021 $ 195,237

We believe that cash on hand and cash flow from operations will be sufficient to meet our anticipated liquidity needs in the coming 12 months.

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Capital availability will be affected by prevailing conditions in our industry, the global economy, the global financial markets and other factors, many of which are beyond our control.

In addition, any additional debt service requirements we take on could be based on higher interest rates and shorter maturities and could impose a significant burden on our results of operations and financial condition, and the issuance of additional equity securities could result in significant dilution to shareholders.

Credit Agreement

As of June 30, 2021, our Credit Agreement (as then amended to date, the Credit Agreement) provided for:

In addition, any additional debt service requirements we take on could be based on higher interest rates and shorter maturities and could impose a significant

burden on our results of operations and financial condition, and the issuance of additional equity securities could result in significant dilution to shareholders.

Amended and Restated Credit Agreement

As of December 31, 2020, our Amended and Restated Credit Agreement provided for:

(i) a $167.3 million revolving credit facility scheduled to mature on May 30, 2023, allocated as follows:

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(B) a $122.3 million senior secured revolving credit facility in favor of Civeo and certain of our Canadian subsidiaries, as borrowers;

(C) a $35.0 million senior secured revolving credit facility in favor of one of our Australian subsidiaries, as borrower;

and (D) a $194.8 million term loan facility scheduled to mature on May 30, 2023 for certain lenders in favor of Civeo.

New Syndicated Facility Agreement

On September 8, 2021, we entered into a new Syndicated Facility Agreement (Credit Agreement), which, among other things, as compared to the Amended and Restated Credit Agreement outstanding prior to the effectiveness of the Credit Agreement provided for:

(i) a $200.0 million revolving credit facility scheduled to mature on September 8, 2025, allocated as follows:

(A) a $10.0 million senior secured revolving credit facility in favor of one of our U.S.

subsidiaries, as borrower;

(B) a $155.0 million senior secured revolving credit facility in favor of Civeo, as borrower;

and (C) a $35.0 million senior secured revolving credit facility in favor of one of our Australian subsidiaries, as borrower.

and (ii) a $194.8 million term loan facility scheduled to mature on May 30, 2023 for certain lenders in favor of Civeo.

As of June 30, 2021, we had outstanding letters of credit of $0.9 million under the U.S.

In addition, it provided for a C$100.0 million term loan facility scheduled to be fully repaid on December 31, 2023 for certain lenders in favor of Civeo.

As of September 30, 2021, we had outstanding letters of credit of $0.9 million under the U.S.

facility, zero under the Australian facility and $1.2 million under the Canadian facility.

As of June 30, 2021, we had one bank guarantee facility totaling A$1.0 million.

We had bank guarantees of A$0.8 million outstanding under the facility as of June 30, 2021.

We also had outstanding bank guarantees of A$0.8 million under the Australian facility.

See Note 9 – Debt to the notes to the unaudited consolidated financial statements included in Item 1 of this quarterly report for further discussion.

The declaration and amount of all potential future dividends will be at the discretion of our Board of Directors and will depend upon many factors, including our financial condition, results of operations, cash flows, prospects, industry conditions, capital requirements of our business, covenants associated with certain debt obligations, legal requirements, regulatory constraints, industry practice and other factors the Board of Directors deems relevant.

The declaration and amount of all potential future dividends will be at the discretion of our Board and will depend upon many factors, including our financial condition, results of operations, cash flows, prospects, industry conditions, capital requirements of our business, covenants associated with certain debt obligations, legal requirements, regulatory constraints, industry practice and other factors the Board deems relevant.

In addition, our ability to pay cash dividends on common or preferred shares is limited by covenants in the Credit Agreement.

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The preferred shares we issued in the Noralta acquisition are entitled to receive a 2% annual dividend on the liquidation preference (initially $10,000 per share), paid quarterly in cash or, at our option, by increasing the preferred shares’ liquidation preference, or any combination thereof.

Quarterly dividends were paid in-kind on June 30, 2021, thereby increasing the liquidation preference to $10,669 per share as of June 30, 2021.

Quarterly dividends were paid in-kind on September 30, 2021, thereby increasing the liquidation preference to $10,723 per share as of September 30, 2021.

We currently expect to pay dividends on the preferred shares for the foreseeable future through an increase in liquidation preference rather than cash.

Off-Balance Sheet Arrangements

As of June 30, 2021, we had no off-balance sheet arrangements as defined in Item 303(a)(4)(ii) of Regulation S-K.

As of September 30, 2021, we had no off-balance sheet arrangements as defined in Item 303(a)(4)(ii) of Regulation S-K.

Contractual Obligations

For additional information about our contractual obligations, refer to “Liquidity and Capital Resources—Contractual Obligations” in our Annual Report on Form 10-K for the year ended December 31, 2020.

As of June 30, 2021, except for net repayments under our revolving credit facilities, there were no material changes to the disclosure regarding our contractual obligations made in our Annual Report on Form 10-K for the year ended December 31, 2020.

As of September 30, 2021, except for

net repayments under our revolving credit facilities, there were no material changes to the disclosure regarding our contractual obligations made in our Annual Report on Form 10-K for the year ended December 31, 2020.

Critical Accounting Policies

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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 2. Management’s Discussion and Analysis