What changed in this filing

/stocks — the workspaceLOADING

Item 9A. Controls and Procedures

2022-02-28 compared with 2021-02-26 · 286 added, 380 removed, 1068 unchanged (38% of the section changed)

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Not applicable.

Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

Not applicable.

Directors, Executive Officers and Corporate Governance

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The Board of Directors of the Company (the Board) has documented its governance practices by adopting several corporate governance policies.

These governance policies, including the Company's Corporate Governance Guidelines, Corporate Code of Business Conduct and Ethics and Financial Code of Ethics for Senior Officers, as well as the charters for the committees of the Board (Audit Committee, Compensation Committee, Finance and Investment Committee and Nominating and Corporate Governance Committee) may also be viewed at the Company's website.

These governance policies, including the Company's Corporate Governance Guidelines, Corporate Code of Business Conduct and Ethics and Financial Code of Ethics for Senior Officers, as well as the charters for the committees of the Board (Audit Committee, Compensation Committee, Finance and Investment Committee and Environmental, Social, Governance and Nominating Committee) may also be viewed at the Company's website.

The Financial Code of Ethics for Senior Officers applies to our principal executive officer, principal financial officer, principal accounting officer and certain other senior officers.

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001-36246) filed on April 2, 2018).

4.3* Description of Securities

4.3 Description of Securities (incorporated herein by reference to Exhibit 4.3 to the Annual Report on Form 10-K (File No.

001-36246) filed on February 26, 2021).

10.1† Form of Indemnification Agreement (incorporated herein by reference to Exhibit 10.1 to the Current Report on Form 8-K12B (File No.

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001-36246) filed on July 29, 2020).

10.3†* Performance Share Award Program under the 2014 Equity Participation Plan.

10.4†* Form of Performance Share Award Agreement under the 2014 Equity Participation Plan .

10.3† Performance Share Award Program under the 2014 Equity Participation Plan (incorporated herein by reference to Exhibit 10.3 to the Annual Report on Form 10-K (File No.

001-36246) filed on February 26, 2021).

10.4† Form of Performance Share Award Agreement under the 2014 Equity Participation Plan (incorporated herein by reference to Exhibit 10.

4 to the Annual Report on Form 10-K (File No.

001-36246) filed on February 26, 2021).

10.5† Form of Civeo Corporation Annual Incentive Compensation Plan (incorporated herein by reference to Exhibit 10.7 to the Registration Statement on Form 10 (File No.

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001-36246) filed on July 17, 2015).

10.15† Dual Employment Agreement (Canada) of Bradley J.

Dodson (incorporated herein by reference to Exhibit 10.4 to the Current Report on Form 8-K12B (File No.

001-36246) filed on July 17, 2015).

10.16†* Dual Employment Agreement (United States) of Bradley J.

10.15† Executive Agreement between Civeo Corporation and Peter McCann, dated August 17, 2015 (incorporated herein by reference to Exhibit 10.1 to the Current Report on Form 8-K (File No.

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10.16† Variation to Executive Services Agreement dated May 30, 2012 between Peter McCann and Civeo Pty Ltd.

( incorporated herein by reference to Exhibit 10.18 to the Annual Report on Form 10-K (File No.

001-36246) filed on February 26, 2021).

10.17† Variation to Executive Services Agreement between Civeo Pty Ltd and Peter McCann, dated August 17, 2015 (incorporated herein by reference to Exhibit 10.2 to the Current Report on Form 8-K (File No.

001-36246) filed on August 27, 2015).

10.20† Dual Employment Agreement (Canada) of Allan Schoening, dated July 16, 2015 (incorporated herein by reference to Exhibit 10.8 to the Quarterly Report on Form 10-Q (File No.

001-36246) filed on November 3, 2015).

10.21† Dual Employment Agreement (United States) of Allan Schoening, dated July 16, 2015 (incorporated herein by reference to Exhibit 10.9 to the Quarterly Report on Form 10-Q (File No.

001-36246) filed on November 3, 2015).

10.18† Executive Change of Control Severance Agreement between Civeo Corporation and Allan Schoening, dated July 13, 2015 (incorporated herein by reference to Exhibit 10.11 to the Quarterly Report on Form 10-Q (File No.

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001-36246) filed on November 3, 2015.

10.25†* Executive Change of Control Severance Agreement between Civeo Corporation and Carolyn Stone, dated May 10, 2015.

10.26 Amended and Restated Syndicated Facility Agreement, dated April 2, 2018, among Civeo Corporation and certain of its subsidiaries, as borrowers, the guarantors party thereto, the lenders named therein, Royal Bank of Canada, as Administrative Agent, and the other agents party thereto (incorporated herein by reference to Exhibit 10.1 to the Current Report on Form 8-K (File No.

001-36246) filed on April 2, 2018).

10.27 First Amendment to Amended and Restated Syndicated Facility Agreement, dated as of October 26, 2018, among Civeo Corporation and certain of its subsidiaries, as borrowers, the guarantors party thereto, the lenders named therein, Royal Bank of Canada, as Administrative Agent, and the other agents party thereto (incorporated herein by reference to Exhibit 10.1 to the Current Report on Form 8-K (File No.

001-36246) filed on October 31, 2018).

10.28 Second Amendment to Amended and Restated Syndicated Facility Agreement, dated as of September 30, 2019, among Civeo Corporation and certain of its subsidiaries, as borrowers, the guarantors party thereto, the lenders named therein, Royal Bank of Canada, as Administrative Agent, and the other agents party thereto (incorporated herein by reference to Exhibit 10.1 to the Current Report on Form 8-K (File No.

001-36246) filed on October 2, 2019).

10.29 Third Amendment to Amended and Restated Syndicated Facility Agreement, dated as of September 3, 2020, among Civeo Corporation and certain of its subsidiaries, as borrowers, the guarantors party thereto, the lenders named therein, Royal Bank of Canada, as Administrative Agent, and the other agents party thereto (incorporated herein by reference to Exhibit 10.1 to the Current Report on Form 8-K (File No.

10.21† Executive Change of Control Severance Agreement between Civeo Corporation and Carolyn Stone, dated May 10, 2015 ( incorporated herein by reference to Exhibit 10.25 to the Annual Report on Form 10-K (File No.

001-36246) filed on February 26, 2021).

10.22 Syndicated Facility Agreement, dated as of September 8, 2021, by and among Civeo Corporation, Civeo Pty Limited and Civeo Management LLC, as Borrowers, the Lenders named therein, Royal Bank of Canada, as Administrative Agent, U.S.

Collateral Agent, Canadian Administrative Agent, Canadian Collateral Agent and an Issuing Bank and RBC Europe Limited, as Australian Administrative Agent, Australian Collateral Agent and an Issuing Bank (incorporated herein by reference to Exhibit 10.1 to the Current Report on Form 8-K (File No.

001-36246) filed on September 8, 2021).

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10.24† Form of Director Deferred Share Agreement (Canada) (incorporated herein by reference to Exhibit 10.32 to the Annual Report on Form 10-K for the year ended December 31, 2018 (File No.

10.25† Cancellation of Dual Employment Agreement of Bradley Dodson, dated September 30, 2021 (incorporated herein by reference to Exhibit 10.2 to the Quarterly Report on Form 10-Q (File No.

001-36246) filed on October 28, 2021).

10.26† Cancellation of Dual Employment Agreement of Allan Schoening, dated September 30, 2021(incorporated herein by reference to Exhibit 10.3 to the Quarterly Report on Form 10-Q (File No.

001-36246) filed on October 28, 2021).

21.1* List of Significant Subsidiaries of Civeo Corporation .

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Ronald Blankenship

GREWAL Director

/s/ MARTIN A.

LAMBERT Director

/s/ MICHAEL MONTELONGO Director

Michael Montelongo

/s/ CONSTANCE B.

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INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Report of Independent Registered Public Accounting Firm on Consolidated Financial Statements

Report of Independent Registered Public Accounting Firm on Consolidated Financial Statements (PCAOB ID:

Report of Independent Registered Public Accounting Firm on Internal Control Over Financial Reporting

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Notes to Consolidated Financial Statements

CIVEO CORPORATION

Report of Independent Registered Public Accounting Firm

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We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Impairment of Long-lived Assets

Description of the Matter

As more fully described in Note 4 to the consolidated financial statements, during 2020, the Company recorded an impairment loss on certain long-lived assets groups in Canada and United States.

A severe decline in overall market conditions during the first quarter of 2020 primarily due to the COVID-19 pandemic and lower oil prices resulted in a decline in forecasted demand for the Company’s services.

As a result of these conditions, the Company evaluated long-lived assets with impairment indicators for recoverability and determined that certain asset groups were not recoverable.

As a result, the Company recognized an impairment loss of $50.5 million, which is the amount by which the carrying value exceeded the estimated fair value of these asset groups.

Auditing the Company's fixed asset impairment measurement was complex and involved a high degree of subjectivity because the estimates underlying the determination of fair value involve management’s judgments on significant assumptions.

In particular, the Company’s fair value estimate is sensitive to significant assumptions, such as occupancy levels, average daily rates, operating margin, and the weighted average cost of capital.

How We Addressed the Matter in Our Audit

We obtained an understanding, evaluated the design, and tested the operating effectiveness of controls over the Company's process used to determine the fair value of the asset groups and measure the long-lived asset impairment.

For example, we tested controls over management's review of the significant assumptions underlying the fair value determination.

To test the Company’s impairment measurement of the asset groups, our audit procedures included, among others, assessing the valuation methodology and testing the significant assumptions discussed herein.

For example, we compared the significant assumptions used by management to current industry and economic trends as well as to the historical results related to the occupancy, average daily rates, and operating margin.

We assessed the historical accuracy of management’s estimates and performed sensitivity analyses of significant assumptions to evaluate the impact on the estimate cash flows for the asset groups that would result from changes in the significant assumptions.

We also involved our valuation specialists to assist in our evaluation of the weighted average cost of capital assumption as well as the methodology and fair value model used in the estimate.

We further tested the completeness and accuracy of the underlying data in the impairment calculations.

Asset Retirement Obligations

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that:

(1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments.

The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Realizability of Deferred Tax Assets

Description of the Matter

As more fully described in Note 14 to the consolidated financial statements, at December 31, 2020, the carrying value of the Company’s asset retirement obligations was $15.0 million.

The Company reviews the asset retirement obligations at least annually, or more often if facts and circumstances change related to the assumptions used in estimating the obligation.

Auditing the Company’s asset retirement obligation required us to make subjective auditor judgments because estimates underlying the determination of the obligation were based on assumptions unique to the assets, including assumptions about projected restoration costs and the projected timing of settlement costs used to measure the obligation.

Actual costs incurred in future periods could differ from amounts estimated.

As more fully described in Note 14 to the consolidated financial statements, at December 31, 2021, the Company had deferred tax assets related to deductible temporary differences and net loss carryforwards of $80.6 million, net of a $85.4 million valuation allowance.

Deferred tax assets are reduced by a valuation allowance if, based on the weight of all available evidence, in management’s judgment it is more likely than not that some portion, or all, of the deferred tax assets will not be realized.

Auditing management’s assessment of the realizability of its deferred tax assets was complex and involved a high degree of subjectivity because the assessment process includes scheduling the use of the applicable deferred tax assets, which includes management’s judgments on significant assumptions that may be affected by future market or economic conditions.

How We Addressed the Matter in Our Audit

We obtained an understanding, evaluated the design, and tested the operating effectiveness of controls over the Company's process used to calculate and measure the asset retirement obligations.

For example, we tested controls over the asset retirement obligation estimation process and management’s review of the significant assumptions used in the estimation of the liability, including the amount and timing of retirement costs.

To test the asset retirement obligation valuation, our audit procedures included, among others, assessing the valuation methodology, testing the significant assumptions discussed above, and testing the underlying data used by the Company in its analyses.

We verified consistency between the projected timing of the settlement costs and management’s operating plan and regulatory requirements.

We compared management’s estimated restoration costs to recently incurred retirement costs, third-party vendor estimates, or publicly available data.

In addition, we performed sensitivity analysis to evaluate the change in obligations based on changes in the underlying assumptions.

We obtained an understanding, evaluated the design, and tested the operating effectiveness of controls over the Company's process to assess the realizability of its deferred tax assets.

For example, we tested controls over management's scheduling of the future reversal of existing taxable temporary differences.

To test the Company’s assessment of the realizability of its deferred tax assets, our audit procedures included, among others, testing the completeness and accuracy of the Company’s scheduling of the reversal of existing temporary taxable differences.

With the assistance of our tax specialists, we verified the appropriateness of the projected usage of tax attributes and assessed the reasonableness of the timing of the reversal of the deferred tax liabilities into taxable income.

For example, in certain instances, we compared the projections of the future reversals to other forecasted information prepared by the Company.

/s/ Ernst & Young LLP

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588,411 676,917 576,606

Operating loss ( 147,188 ) ( 49,051 ) ( 88,055 )

Operating income (loss) 6,052 ( 147,188 ) ( 49,051 )

Interest expense ( 12,964 ) ( 16,687 ) ( 27,383 )

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Other income 13,199 20,823 7,281

Loss before income taxes ( 143,415 ) ( 69,075 ) ( 113,212 )

Income tax benefit 10,635 10,741 31,365

Net loss ( 132,780 ) ( 58,334 ) ( 81,847 )

Income (loss) before income taxes 5,873 ( 143,415 ) ( 69,075 )

Income tax (expense) benefit ( 3,376 ) 10,635 10,741

Net income (loss) 2,497 ( 132,780 ) ( 58,334 )

Net income attributable to noncontrolling interest 1,147 1,470 157

Net loss attributable to Civeo Corporation ( 134,250 ) ( 58,491 ) ( 82,243 )

Net income (loss) attributable to Civeo Corporation 1,350 ( 134,250 ) ( 58,491 )

Dividends attributable to Class A preferred shares 1,925 1,887 1,849

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2021 2020 2019

Net loss $ ( 132,780 ) $ ( 58,334 ) $ ( 81,847 )

Net income (loss) $ 2,497 $ ( 132,780 ) $ ( 58,334 )

Other comprehensive income (loss), net of taxes:

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— — — ( 699 ) — — — ( 699 )

Issuance of shares for acquisitions 6,972 — 166,882 — — — — 173,854

Dividends attributable to Class A preferred shares 1,849 — — ( 1,849 ) — — — —

Acquisition of noncontrolling interest — — — — — — 687 687

Share-based compensation — — 10,116 — ( 4,283 ) — — 5,833

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Dividends paid — — — — — — ( 1,542 ) ( 1,542 )

Cumulative effect of implementation of ASU 2016-02

— — — ( 699 ) — — — ( 699 )

Dividends attributable to Class A preferred shares 1,887 — — ( 1,887 ) — — — —

Acquisition of noncontrolling interest — — — — — — 687 687

Share-based compensation — — 6,066 — ( 1,458 ) — — 4,608

Balance, December 31, 2020 $ 60,016 $ — $ 1,578,315 $ ( 907,727 ) $ ( 6,930 ) $ ( 348,989 ) $ 672 $ 375,357

Net income (loss) — — — ( 134,250 ) — — 1,470 ( 132,780 )

Net income — — — 1,350 — — 1,147 2,497

Currency translation adjustment — — — — — ( 12,894 ) ( 42 ) ( 12,936 )

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Dividends attributable to Class A preferred shares 1,925 — — ( 1,925 ) — — — —

Common shares repurchased — — — ( 4,649 ) — — — ( 4,649 )

Share-based compensation — — 4,127 — ( 1,120 ) — — 3,007

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Balance, December 31, 2018 9,042 13,828

Issuance of shares for acquisitions 9,042 2,665

Share-based compensation — 302

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Share-based compensation — 113

Common shares repurchased — ( 217 )

Balance, December 31, 2021 9,042 14,111

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Cash flows from operating activities:

Net loss $ ( 132,780 ) $ ( 58,334 ) $ ( 81,847 )

Adjustments to reconcile net loss to net cash provided by operating activities:

Net income (loss) $ 2,497 $ ( 132,780 ) $ ( 58,334 )

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

Depreciation and amortization 83,101 96,547 123,768

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Loss on extinguishment of debt 416 383 —

Deferred income tax benefit ( 11,122 ) ( 11,713 ) ( 31,403 )

Deferred income tax expense (benefit) 3,070 ( 11,122 ) ( 11,713 )

Non-cash compensation charge 4,127 6,066 10,116

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Debt issuance costs ( 4,412 ) ( 2,583 ) ( 1,950 )

Repurchases of common shares ( 4,649 ) — —

Other, net ( 1,120 ) ( 1,458 ) ( 4,283 )

Net cash flows provided by (used in) financing activities ( 114,206 ) ( 44,631 ) 109,523

Net cash flows used in financing activities ( 86,507 ) ( 114,206 ) ( 44,631 )

Effect of exchange rate changes on cash ( 1,194 ) 1,443 ( 313 )

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Non-cash investing activities:

Value of common shares issued as consideration for acquisitions — — 119,797

Value of preferred shares issued as consideration for acquisition — — 54,821

Capital expenditure additions accrued at end of period 575 933 —

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Inventories also include food, raw materials, labor, subcontractor charges, manufacturing overhead and catering and other supplies needed for operation of our facilities.

Inventories are carried at the lower of cost or market.

Inventories are carried at the lower of cost or net realizable value.

The cost of inventories is determined on an average cost or specific-identification method.

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During the first quarter of 2020, we extended the remaining useful life of certain long-lived accommodations assets in our U.S.

During the fourth quarter of 2019, we extended the remaining useful life of certain long-lived accommodations assets in our Canada segment.

We record the fair value of a liability, which reflects the estimated present value of the amount of asset removal and site reclamation costs related to the retirement of our assets, for an asset retirement obligation (ARO) when it is incurred (typically when the asset is installed).

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In connection with the preparation of our financial statements for the three months ended March 31, 2020, we performed a quantitative goodwill impairment test as of March 31, 2020, which resulted in a reduction of the value of our goodwill in our Canadian reporting unit to zero .

Please see Note 4 – Impairment Charges for further discussion of goodwill impairments recorded in the years ended December 31, 2020 and 2019.

See Note 4 – Impairment Charges for further discussion of goodwill impairments recorded in the years ended December 31, 2020 and 2019.

We conduct our annual impairment test as of November 30 of each year.

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We have the option to bypass the qualitative assessment for any reporting unit in any period and proceed directly to performing the quantitative goodwill impairment test.

When performing our annual assessment on November 30, 2020, we performed a qualitative assessment related to goodwill at our Australia reporting unit.

When performing our annual assessment on November 30, 2021 and 2020, we performed a qualitative assessment related to goodwill at our Australia reporting unit.

Qualitative factors that we considered as part of our assessment included industry and market conditions, macroeconomic conditions and the financial performance of our Australian business.

We also noted that, based on the interim quantitative testing performed as of March 31, 2020, the estimated fair value of the Australia reporting unit exceeded its carrying value by more than 125 %.

After assessing these events and circumstances, we determined that it was more likely than not that the fair value of the Australia reporting unit was greater than its carrying value.

After assessing these events and circumstances, we determined that, as of November 30, 2021, it was more likely than not that the fair value of the Australia reporting unit was greater than its carrying value.

In performing the quantitative goodwill impairment test, we compare each reporting unit’s carrying amount, including goodwill, to the fair value of the reporting unit.

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We evaluate the credit-worthiness of our significant, new and existing customers’ financial condition and, generally, we do not require collateral from our customers.

For the year ended December 31, 2021, each of Suncor Energy, Imperial Oil and Fortescue Metals Group Ltd accounted for more than 10 % of our revenues.

For the year ended December 31, 2020, each of Fortescue Metals Group Ltd and Imperial Oil accounted for more than 10 % of our revenues.

For the year ended December 31, 2019, each of Imperial Oil and Fort Hills Energy LP accounted for more than 10 % of our revenues.

For the year ended December 31, 2018, each of Imperial Oil, Fort Hills Energy LP and Suncor Energy Inc.

accounted for more than 10 % of our revenues.

Asset Retirement Obligations

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We also grant performance share awards.

These awards are earned in amounts between 0 % and 200 % of the participant’s target performance share award, based on the payout percentage associated with Civeo’s relative total shareholder return rank among a peer group of other companies.

The fair value of the performance share is estimated using option-pricing models at the grant date.

The resulting cost is recognized over the period during which an employee is required to provide service in exchange for the awards, usually the vesting period.

For awards granted in 2021, awards are earned in amounts between 0 % and 200 % of the participant’s target performance share award, based on (1) the payout percentage associated with Civeo’s relative total shareholder return (TSR) rank among a peer group of other companies and (2) the payout percentage associated with Civeo's cumulative free cash flow over the performance period relative to a preset target.

Performance share awards granted prior to 2021 are earned in amounts between 0 % and 200 % of the participant’s target performance share award, based on the payout percentage associated with Civeo’s relative TSR rank among a peer group of other companies.

The fair value of the TSR portion of each performance share is estimated using option-pricing models at the grant date.

The fair value of the free cash flow portion of each performance share is based on the closing market price of our common shares on the date of grant and adjusted throughout the performance period based on our estimate of the most probable outcome.

The resulting costs for each portion of the award is recognized over the period during which an employee is required to provide service in exchange for the awards, usually the vesting period.

Additionally, we grant phantom shares.

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Substantially all of our Canadian and U.S.

subsidiaries are guarantors under our Amended Credit Agreement.

subsidiaries are guarantors under our Credit Agreement.

See Note 11 – Debt.

During the ordinary course of business, we also provide standby letters of credit or other guarantee instruments to certain parties as required for certain transactions initiated by us or our subsidiaries.

As of December 31, 2020, the maximum potential amount of future payments that we could be required to make under these guarantee agreements (letters of credit) was approximately $ 5.1 million.

As of December 31, 2021, the maximum potential amount of future payments that we could be required to make under these guarantee agreements (letters of credit) was

approximately $ 2.0 million.

We have not recorded any liability in connection with these guarantee arrangements.

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The preparation of consolidated financial statements in conformity with U.S.

GAAP requires the use of estimates and assumptions by management in determining the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period.

generally accepted accounting principles requires the use of estimates and assumptions by management in determining the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period.

Examples of a few such estimates include revenue and income recognized on the cost-based input method, estimates of the amount and timing of costs to be incurred for AROs, any valuation allowance recorded on net deferred tax assets, warranty claims, long-lived asset and goodwill impairments and allowance for credit losses.

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Unless otherwise discussed, management believes that the impact of recently issued standards or other guidance updates, which are not yet effective, will not have a material impact on our consolidated financial statements upon adoption.

In June 2016, the FASB issued ASU 2016-13, “Financial Instruments – Credit Losses” (ASU 2016-13).

This new standard changes how companies measure credit losses for most financial assets and certain other instruments that are not measured at fair value through net income.

ASU 2016-13 is effective for financial statements issued for reporting periods beginning after December 15, 2019 and interim periods within the reporting periods.

We adopted ASU 2016-13 as of January 1, 2020.

The adoption of this new standard did not have a material impact on our consolidated financial statements.

In December 2019, the FASB issued Accounting Standards Update (ASU) 2019-12, Income Taxes (Topic 740):

Simplifying the Accounting for Income Taxes.

The amendments in ASU 2019-12 remove certain exceptions to the general principles in Accounting Standards Codification (ASC) Topic 740.

The amendments also clarify and amend existing guidance to improve consistent application.

The amendments are effective for financial statements issued for reporting periods beginning after December 15, 2020 and interim periods within the reporting periods.

The transition method (retrospective, modified retrospective or prospective basis) related to the amendments depends on the applicable guidance, and all amendments for which there is no transition guidance specified are to be applied on a prospective basis.

We adopted ASU 2019-12 on January 1, 2021 and have applied the prospective basis.

The adoption of this new standard did not have an impact on our consolidated financial statements.

The following table disaggregates our revenue by our three reportable segments:

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The term between invoicing and when our performance obligations are satisfied is not significant.

Payment terms are generally within 30 days and do not extend beyond 60 days.

Payment terms are generally within 30 days and in most cases do not extend beyond 60 days.

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

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Canada Australia U.S.

Quarter ended June 30, 2021

Long-lived assets $ — $ 7,935 $ — $ 7,935

Total $ — $ 7,935 $ — $ 7,935

Quarter ended June 30, 2021 .

During the second quarter of 2021, we recorded impairment expense of $ 7.9 million related to various undeveloped land positions and related permitting costs in Australia.

At June 30, 2021, we identified an impairment trigger related to certain of these properties due to the cancellation of a significant thermal coal project in Australia and our negative expectations related to other possible Australian thermal coal projects becoming viable in the near term.

Accordingly, the assets were written down to their estimated fair value of $ 2.4 million.

As of June 30, 2021, we concluded certain of the undeveloped land positions met the criteria to be classified as held for sale.

2020 Impairment Charges

The following summarizes pre-tax impairment charges recorded during 2020, which are included in Impairment expense in our consolidated statements of operations (in thousands):

Canada Australia U.S.

Quarter ended March 31, 2020

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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.

segment to determine if an indicator of impairment had occurred that would indicate that the carrying values of the asset groups in the segment might not be recoverable.

segment to determine if an indicator of impairment had occurred that would indicate that

the carrying values of the asset groups in the segment might not be recoverable.

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 the U.S.

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(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.

2018 Impairment Charges

The following summarizes pre-tax impairment charges recorded during 2019, which are included in Impairment expense in our consolidated statements of operations (in thousands):

Canada Australia U.S.

Quarter ended March 31, 2018

Long-lived assets $ 28,661 $ — $ — $ 28,661

Total $ 28,661 $ — $ — $ 28,661

Quarter ended March 31, 2018 .

During the first quarter of 2018, we identified an indicator that certain long-lived assets used in the Canadian oil sands may be impaired due to market developments, including expected customer commitments, occurring in the first quarter of 2018.

For purposes of our impairment assessment, we separated two lodges that were previously treated as a single asset group due to the lodges no longer being used together to generate joint cash flows.

We assessed the carrying value of the asset group to determine if it continued to be recoverable based on estimated future cash flows.

Based on the assessment, the carrying value was determined to not be fully recoverable, and we proceeded to compare the estimated fair value of the asset group to its respective carrying value.

Accordingly, the value of one of the lodges was written down to its estimated fair value of zero .

As a result of the analysis described above, we recorded an impairment expense of $ 28.7 million.

FAIR VALUE MEASUREMENTS

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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.

In addition, the estimated fair value of our assets held for sale is based upon Level 2 fair value measurements, which include appraisals and previous negotiations with third parties.

During the first quarter of 2020 and the fourth quarter of 2019, we recorded goodwill impairment charges related to one of our reporting units.

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The discount rates used to value our reporting units for the first quarter of 2020 and the fourth quarter of 2019 for the goodwill impairment test ranged between 10.5 % and 14.0 %.

During the first quarter of 2020, the fourth and second quarters of 2019 and the first quarter of 2018, we wrote down certain long-lived assets to fair value.

During the first quarter of 2020 and 2018, we estimated the fair value when conducting the long-lived asset impairment tests primarily using an income approach.

During the second quarter of 2021, the first quarter of 2020 and the fourth and second quarters of 2019, we wrote down certain long-lived assets to fair value.

During the first quarter of 2020, we estimated the fair value when conducting the long-lived asset impairment tests primarily using an income approach.

We used a variety of unobservable inputs and underlying assumptions consistent with those discussed above for purposes of our goodwill impairment test.

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segments long-lived asset impairment analysis ranged between 11.0 % and 14.0 %.

During the fourth quarter of 2019, our estimate of fair value of corporate office space in Canada and during the second quarter of 2019, our estimate of fair value of land in Australia, were based on appraisals from third parties.

Additionally, during the first quarter of 2020, our estimate of fair value of a property in the U.S.

was taken from an appraisal, which referenced available market information, such as listing agreements, offers, and pending and closed sales.

During the fourth quarter of 2019, our estimate of fair value of corporate office space in Canada and during the second quarter of 2021 and 2019, our estimate of fair value of land positions in Australia that were impaired, were based on appraisals from third parties.

See Note 2 – Summary of Significant Accounting Policies – Impairment of Long-Lived Assets and Note 2 – Summary of Significant Accounting Policies – Goodwill and Other Intangible Assets for further discussion of the significant judgments and assumptions used in calculating their fair value.

During 2019 and 2018, we acquired certain assets and businesses and recorded them at fair value.

Determining the fair value of assets acquired and liabilities assumed required the exercise of significant judgment, including the amount and timing of expected future cash flows, long-term growth rates and discount rates.

The cash flows employed in the valuation are based on our best estimates of future sales, earnings and cash flows after considering factors such as general market conditions, expected future customer orders, contracts with suppliers, labor costs, changes in working capital, long-term business plans and recent operating performance.

See Note 7 – Acquisitions for further information.

EARNINGS PER SHARE

We calculate basic and diluted earnings per share by applying the two-class method because we have participating securities in the form of Preferred Shares.

Participating securities are allocated a proportional share of net income determined by dividing total weighted average participating securities by the sum of total weighted average common shares and participating securities.

We also apply the treasury stock method with respect to certain share based awards in the calculation of diluted earnings per share, if dilutive.

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

2021 2020 2019

Net loss attributable to Civeo common shareholders $ ( 575 ) $ ( 136,137 ) $ ( 60,340 )

income allocated to participating securities — — —

Basic net loss attributable to Civeo Corporation common shareholders $ ( 575 ) $ ( 136,137 ) $ ( 60,340 )

undistributed income attributable to participating securities — — —

undistributed income reallocated to participating securities — — —

Diluted net loss attributable to Civeo Corporation common shareholders $ ( 575 ) $ ( 136,137 ) $ ( 60,340 )

Weighted average shares outstanding - basic 14,232 14,129 13,921

Dilutive shares - share based awards — — —

Weighted average shares outstanding - diluted 14,232 14,129 13,921

Basic net loss per share attributable to Civeo Corporation common shareholders (1)

$ ( 0.04 ) $ ( 9.64 ) $ ( 4.33 )

Diluted net loss per share attributable to Civeo Corporation common shareholders (1)

$ ( 0.04 ) $ ( 9.64 ) $ ( 4.33 )

(1) Computations may reflect rounding adjustments.

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 years ended December 31, 2021, 2020 and 2019, we excluded from the

computation of diluted loss per share 0.2 million, 0.4 million and 0.5 million share-based awards, respectively, since the effect would have been anti-dilutive.

Additionally, for the years ended December 31, 2021, 2020 and 2019, we excluded from the calculation the impact of converting the Preferred Shares into 2.5 million, 2.4 million and 2.4 million common shares, respectively, since the effect would have been anti-dilutive.

DETAILS OF SELECTED BALANCE SHEET ACCOUNTS

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$ 114,859 $ 89,782

(1) As of December 31, 2020, Other accounts receivable includes a $ 1.1 million receivable related to the Canada Emergency Wage Subsidy (CEWS), a subsidy implemented by the Canadian government in response to the COVID-19 pandemic.

Income related to the CEWS for the year ended December 31, 2020 was $ 13.0 million and is included in Other income on the accompanying consolidated statement of operations.

(1) As of December 31, 2021 and 2020, Other accounts receivable included zero and $ 1.1 million, respectively, related to the Canada Emergency Wage Subsidy (CEWS), a subsidy implemented by the Canadian government in response to the COVID-19 pandemic.

Income related to the CEWS for the year ended December 31, 2021 and 2020 was $ 3.5 million and $ 13.0 million, respectively, and is included in Other income on the accompanying consolidated statement of operations.

December 31, 2021 December 31, 2020

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Total property, plant and equipment, net $ 389,996 $ 486,930

As of December 31, 2020, assets held for sale includes $ 3.9 million related to our modular construction and manufacturing plant near Edmonton, Alberta, Canada.

December 31, 2021 December 31, 2020

5 unchanged sentences

$ 33,564 $ 27,349

As previously disclosed in Note 1 - Description of Business and Basis of Presentation, a 1-for-12 reverse share split became effective on November 19, 2020 for all authorized, issued and outstanding shares of Civeo common shares.

Accordingly, all share amounts have been adjusted to reflect this reverse stock split for all prior periods presented.

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

We funded the purchase price of $ 16.9 million in cash through a combination of cash on hand and borrowings under our revolving credit facility.

Action's operations are reported as part of our Australia reporting business segment beginning on July 1, 2019, the date of acquisition.

This acquisition was accounted for in accordance with the acquisition method of accounting for business combinations, which required us to record the assets acquired and the liabilities assumed at their fair values at July 1, 2019.

Our estimates of the fair value for such assets and liabilities required significant assumptions and judgment.

Based on the final purchase price allocation, intangible assets acquired totaled $ 8.4 million and consisted primarily of customer contracts and a trade name.

In addition, we recognized goodwill of $ 7.9 million.

Description of Transaction .

On April 2, 2018, we acquired the equity of Noralta.

As a result of the Noralta Acquisition, we expanded our existing accommodations business in the Canadian oil sands market.

The total consideration, which is subject to adjustment in accordance with the terms of the definitive agreement, included (i) C$ 207.7 million (or approximately US$ 161.2 million) in cash, subject to customary post-closing adjustments for working capital, indebtedness and transactions expenses, (ii) 2.7 million of our common shares, of which 1.1 million shares are held in escrow and will be released based on certain conditions related to Noralta customer contracts remaining in place, and (iii) 9,679 Class A Series 1 Preferred Shares (the Preferred Shares) with an initial liquidation preference of $ 96.8 million and initially convertible into 2.4 million of our common shares.

We funded the cash consideration with cash on hand and borrowings under our revolving credit facility.

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 on the accompanying consolidated statement of operations for the year ended December 31, 2020.

During the first quarter of 2019, $ 2.1 million in cash was released to us from escrow to cover certain agreed upon indemnification claims.

During the fourth quarter of 2018, $ 10.4 million in cash, 0.2 million common shares and 637 Preferred Shares were released to us, and $ 1.2 million in cash, 15 thousand common shares and 55 Preferred Shares were released to the sellers, from escrow to cover purchase price adjustments related to employee compensation cost increases.

During the third quarter of 2018, $ 3.6 million in cash was released to us from escrow to cover purchase price adjustments related to a working capital shortfall at closing.

The Noralta Acquisition was accounted for in accordance with the acquisition method of accounting for business combinations, and accordingly, the results of operations of Noralta were reported in our financial statements as part of our Canada reporting business segment beginning on April 2, 2018, the date of acquisition.

During the year ended December 31, 2018, we recorded approximately $ 85.8 million of revenue and $ 31.5 million of gross margin in the accompanying consolidated statements of operations related to the Noralta Acquisition.

Calculation of Purchase Consideration .

The total purchase consideration received by the Noralta shareholders was based on the cash consideration and fair value of our common shares and Preferred Shares issued on April 2, 2018.

The purchase consideration below reflects the fair value of common shares issued, which is based on the closing price on March 29, 2018 (the last business day prior to April 2, 2018) of our common shares of $ 45.24 per share and the estimated fair value of Preferred Shares issued, which are valued at 61 % of the initial liquidation preference of the Preferred Shares of $ 96.8 million.

A portion of the consideration paid, $ 11.6 million cash, 0.2 million common shares and 692 Preferred Shares, was initially held in escrow to support certain obligations of the sellers to compensate us for certain increased employee compensation costs expected to be incurred as a result of the union certification of certain classes of Noralta employees.

As of April 2, 2018, we expected the escrowed amounts to be released to us within 12 months, and therefore, a receivable of $ 11.6 million related to the cash expected to be released was established.

Additionally, no fair value has been allocated to such common shares or Preferred Shares portion of the consideration.

As the $ 10.4 million of cash released to us during the fourth quarter of 2018 was less than the cash expected to be released as of April 2, 2018, we recognized a loss equal to the difference, adjusted for exchange rate changes, totaling $ 0.8 million.

The loss is included in Other income in the accompanying consolidated statement of operations.

The purchase consideration and estimated fair value of Noralta’s net assets acquired as of April 2, 2018 is presented as follows:

(In thousands, except per share data)

Common shares issued 2,733

Common share price as of March 29, 2018 $ 45.24

Common share consideration $ 123,622

Cash consideration (1)

Preferred Share consideration 59,042

Total purchase consideration $ 340,203

Common shares held in escrow ( 8,825 )

Cash held in escrow ( 11,607 )

Preferred Shares held in escrow ( 4,221 )

Total purchase consideration $ 315,550

(1) Net of $ 3.6 million in cash released to us to cover purchase price adjustments related to a working capital shortfall at closing.

Supplemental Pro Forma Financial Information (Unaudited).

The following unaudited pro forma supplemental financial information presents the consolidated results of operations of the Company and Noralta as if the Noralta Acquisition had occurred on January 1, 2017.

We have adjusted historical financial information to give effect to pro forma items that are directly attributable to the Noralta Acquisition and are expected to have a continuing impact on the consolidated results.

These items include adjustments to record the incremental amortization and depreciation expense related to the increase in fair values of the acquired assets, interest expense related to borrowings under the Credit Agreement to fund the Noralta Acquisition and to reclassify certain items to conform to our financial reporting presentation.

However, pro forma results do not include any anticipated cost savings or other effects of the planned integration of Noralta.

The unaudited pro forma results do not purport to be indicative of the results of operations had the transaction occurred on the date indicated or of future results for the combined entities (in thousands, except per share data):

Year Ended December 31, (Unaudited)

Revenues $ 501,275

Net loss attributable to Civeo Corporation common shareholders ( 129,900 )

Basic net loss per share attributable to Civeo Corporation common shareholders $ ( 9.96 )

Diluted net loss per share attributable to Civeo Corporation common shareholders $ ( 9.96 )

Included in the pro forma results above are certain adjustments due to the following:

(i) increases in depreciation and amortization expense due to acquired intangibles and the increased recorded value of property, plant and equipment, (ii) increases in interest expense due to additional credit facility borrowings to fund the Noralta Acquisition, and (iii) decreases due to the exclusion of transaction costs.

Transaction Costs.

During the year ended December 31, 2018, we recognized $ 9.1 million of costs in connection with the Noralta Acquisition that are included in Service and other costs ($ 1.0 million), Selling, general and administrative expenses ($ 7.2 million) and Other income ($ 0.9 million).

EARNINGS PER SHARE

Accordingly, all share and per share amounts have been adjusted to reflect this reverse stock split for all prior periods presented.

We calculate basic and diluted earnings per share by applying the two-class method because we have participating securities in the form of Preferred Shares.

We also apply the treasury stock method with respect to certain share based awards in the calculation of diluted earnings per share, if dilutive.

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

2020 2019 2018

Net loss attributable to Civeo common shareholders $ ( 136,137 ) $ ( 60,340 ) $ ( 131,832 )

income allocated to participating securities — — —

Basic net income loss attributable to Civeo Corporation common shareholders $ ( 136,137 ) $ ( 60,340 ) $ ( 131,832 )

undistributed income attributable to participating securities — — —

undistributed income reallocated to participating securities — — —

Diluted net loss attributable to Civeo Corporation common shareholders $ ( 136,137 ) $ ( 60,340 ) $ ( 131,832 )

Weighted average shares outstanding - basic 14,129 13,921 13,103

Dilutive shares - share based awards — — —

Weighted average shares outstanding - diluted 14,129 13,921 13,103

Basic net loss per share attributable to Civeo Corporation common shareholders (1)

$ ( 9.64 ) $ ( 4.33 ) $ ( 10.06 )

Diluted net loss per share attributable to Civeo Corporation common shareholders (1)

$ ( 9.64 ) $ ( 4.33 ) $ ( 10.06 )

(1) Computations may reflect rounding adjustments.

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 years ended December 31, 2020, 2019 and 2018, we excluded from the computation of diluted loss per share 0.4 million, 0.5 million and 0.8 million share-based awards, respectively, since the effect would have been anti-dilutive.

Additionally, for the years ended December 31, 2020, 2019 and 2018, we excluded from the calculation the impact of converting the Preferred Shares into 2.4 million, 2.4 million and 2.5 million common shares, respectively, since the effect would have been anti-dilutive.

SUPPLEMENTAL CASH FLOW INFORMATION

Cash paid during the years ended December 31, 2020, 2019 and 2018 for interest and income taxes was as follows (in thousands):

2020 2019 2018

Interest (net of amounts capitalized) $ 12,597 $ 23,882 $ 23,098

Net income taxes paid (refunds received) 600 1,045 ( 5,271 )

ASSETS HELD FOR SALE

During the third quarter of 2021, we committed to a plan to dispose of certain assets in our U.S.

business segment, due to the risks associated with changing geographic and market needs.

Accordingly, the assets met the criteria of held for sale and we have discontinued depreciation of the assets.

During the fourth quarter of 2021, we received $ 6.2 million in proceeds for the sale of one of the two asset groups.

The remaining asset group's estimated fair value less the costs to sell exceeded its carrying value as of December 31, 2021.

In addition, as of December 31, 2021, assets held for sale included various non-operational land holdings in Australia.

These assets were recorded at the estimated fair value less costs to sell, which exceeded their carrying values, as of December 31, 2021.

As of December 31, 2020, assets held for sale included $ 3.9 million related to our modular construction and manufacturing plant near Edmonton, Alberta, Canada.

During the first quarter 2021, we received $ 5.2 million in proceeds for the sale of the manufacturing facility.

The following table summarizes the carrying amount as of December 31, 2021 and 2020 of the assets classified as held for sale (in thousands):

December 31, 2021 December 31, 2020

Assets held for sale:

Property, plant and equipment, net $ 11,762 $ 3,910

Total assets held for sale $ 11,762 $ 3,910

GOODWILL AND OTHER INTANGIBLE ASSETS

1 unchanged sentence

Canada Australia U.S.

Goodwill as of December 31, 2018 $ 114,207 $ — $ — $ 114,207

Action acquisition (1)

— 7,923 — 7,923

Measurement period adjustments for prior year acquisition (2)

Goodwill, net of $ 19.9 million accumulated impairment loss as of December 31, 2019

$ 102,238 $ 7,935 $ — $ 110,173

5 unchanged sentences

Foreign currency translation — ( 525 ) — ( 525 )

Goodwill impairment (3)

( 93,606 ) — — ( 93,606 )

Goodwill, net of $ 113.5 million accumulated impairment loss as of December 31, 2021

$ — $ 8,204 $ — $ 8,204

(1) See Note 7 – Acquisitions for further information.

(2) The measurement period adjustment related to the Noralta Acquisition was a result of the first quarter 2019 finalization of our purchase price allocation and valuation related to intangible assets acquired.

(1) See Note 4 – Impairment Charges for further information.

18 unchanged sentences

Total $ 93,612

We have operating leases covering certain land locations and various office facilities and equipment in our three reportable business segments.

Our leases have remaining lease terms of one year to six years , some of which include options to extend the leases for up to 10 years, and some of which include options to terminate the leases within 90 days.

In addition, we do not recognize right-of-use assets or lease liabilities for leases with terms shorter than twelve months.

The components of lease expense were $ 5.9 million, $ 6.8 million and $ 6.8 million under operating leases for the years ended December 31, 2021, 2020 and 2019, respectively.

Included in the measurement of lease liabilities, we paid $ 6.0 million in cash related to operating leases during the year ended December 31, 2021.

Right-of-use assets obtained in exchange for new lease obligations related to operating leases during the year ended December 31, 2021 were $ 0.6 million.

Supplemental balance sheet information related to leases were as follows (in thousands):

December 31, 2021 December 31, 2020

Operating leases

Operating lease right-of-use assets $ 18,327 $ 22,606

Other current liabilities $ 4,244 $ 4,437

Operating lease liabilities 15,429 19,834

Total operating lease liabilities $ 19,673 $ 24,271

Weighted average remaining lease term

Operating leases 5.1 years 5.7 years

Weighted average discount rate

Operating leases 5.1 % 5.4 %

Maturities of operating lease liabilities at December 31, 2021, were as follows (in thousands):

For the years ending December 31,

Thereafter 3,319

Total lease payments 23,036

Less imputed interest 3,363

Total $ 19,673

As of December 31, 2021 and 2020, long-term debt consisted of the following (in thousands):

December 31, 2021 December 31, 2020

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

3.125 % of principal amounts set forth in September 3, 2020 amendment repayable per quarter;

Canadian term loan;

weighted average interest rate of 4.0 % for the twelve-month period ended December 31, 2021

63,104 187,530

revolving credit facility, which matures on May 30, 2023;

revolving credit facility;

weighted average interest rate of 5.7 % for the twelve-month period ended December 31, 2021

Canadian revolving credit facility, which matures on May 30, 2023;

Canadian revolving credit facility;

weighted average interest rate of 4.4 % for the twelve-month period ended December 31, 2021

111,300 45,789

Australian revolving credit facility, which matures on May 30, 2023;

Australian revolving credit facility;

weighted average interest rate of 3.5 % for the twelve-month period ended December 31, 2021

5 unchanged sentences

Scheduled maturities of long-term debt as of December 31, 2021 are as follows (in thousands):

Credit Agreement

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

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

(A) a $ 20.0 million senior secured revolving credit facility in favor of certain of our U.S.

subsidiaries, as borrowers;

(B) a $ 183.5 million senior secured revolving credit facility in favor of Civeo and certain of our Canadian subsidiaries, as borrowers;

and (C) a $ 60.0 million senior secured revolving credit facility in favor of one of our Australian subsidiaries, as borrower;

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

In September 2020, we entered into an amendment to our Credit Agreement, which reduced total lender commitments by $ 96.2 million.

Amended Credit Agreement

As of December 31, 2020, our Credit Agreement (as so amended, the Amended Credit Agreement), provided for:

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

Amended and Restated Credit Agreement

As of December 31, 2020, our credit agreement provided for a $ 167.3 million revolving credit facility scheduled to mature on May 30, 2023, allocated as follows:

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

1 unchanged sentence

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

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.

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:

(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 prior credit agreement outstanding prior to the effectiveness of the Credit Agreement:

• provided for the increase by $ 32.7 million of the aggregate revolving loan commitments under the Credit Agreement, to a maximum principal amount of $ 200.0 million, 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, scheduled to mature on September 8, 2025;

• provided for a C$ 100.0 million term loan facility scheduled to be fully repaid on December 31, 2023 in favor of Civeo;

• adjusted the maximum leverage ratio to a maximum total net leverage ratio, and adjusted the level of the ratio to (i) 3.50 to 1.00 for the fiscal quarter ending September 30, 2021, 3.25 to 1.00 for the fiscal quarters ending December 31, 2021 and March 31, 2022 and 3.00 to 1.00 for each fiscal quarter ending thereafter and (ii) following a qualified offering of indebtedness, 3.50 to 1.00 for each fiscal quarter;

• decreased amortization payments on the term loan facility from C$ 11.2 million per quarter to C$ 10.0 million per quarter beginning September 30, 2021;

• provided for other technical changes and amendments.

As a result of entering into the Credit Agreement, we recognized a debt extinguishment loss during the third quarter of 2021 of approximately $ 0.4 million related to certain unamortized debt issuance costs from the prior credit agreement, which is included in Loss on extinguishment of debt on the consolidated statements of operations.

The remaining $ 3.0 million of unamortized debt issuance costs from the prior credit agreement was not recognized as a loss as we concluded a significant portion of the Credit Agreement was a modification of the prior credit agreement under ASC 740, Debt.

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 3.00 % to 4.00 %, or a base rate plus 2.00 % 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 amounts outstanding bear interest at a variable rate equal to a Bankers' Acceptance Discount Rate (as defined in the Credit Agreement) based on the Canadian Dollar Offered Rate (CDOR) plus a margin of 3.00 % to 4.00 %, or a Canadian Prime rate plus a margin of 2.00 % 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 3.00 % 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 are addressed in the Credit Agreement and at such time the transition from (i) LIBOR takes place, an alternate benchmark will be established based on the first alternative of the following, plus a benchmark replacement adjustment, Term SOFR, Daily Simple SOFR and an alternative benchmark selected by the administrative agent and the applicable borrowers giving due consideration to any selection or recommendation by a government body or any evolving or then-prevailing market convention for determining a benchmark rate as a replacement for the then-current Benchmark for U.S.

dollar-denominated syndicated credit facilities at such time or (ii) CDOR takes place, we will endeavor with the administrative agent to establish an alternate rate of interest to CDOR that gives due consideration to 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:

(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 3.00 to 1.00 and a maximum leverage ratio, defined as the ratio of total debt to consolidated EBITDA, of no greater than 3.50 to 1.00.

Following a qualified offering of indebtedness with gross proceeds in excess of $ 150.0 million, we will be required to maintain a maximum leverage ratio of no greater than 4.00 to 1.00 and a maximum senior secured ratio less than 2.50 to 1.00.

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

In addition, we must maintain a minimum interest coverage ratio, defined as the ratio of consolidated EBITDA to consolidated interest expense, of at least 3.00 to 1.00 and our maximum net leverage ratio, defined as the ratio of total net debt to consolidated EBITDA, of no greater than the levels set forth above.

Following a qualified offering of indebtedness, we will be required to maintain a maximum leverage ratio of no greater than 3.50 to 1.00 and a maximum senior secured ratio less than 2.00 to 1.00.

Each of the factors considered in the calculations of these ratios are defined in the 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 December 31, 2021.

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

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

As of December 31, 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 December 31, 2020, we had outstanding letters of credit of $ 1.2 million under the U.S facility, $ 0.6 million under the Australian facility and $ 2.7 million under the Canadian facility.

In addition to the Amended Credit Agreement, we have two bank guarantee facilities totaling $ 3.0 million which mature March 31, 2021.

There were bank guarantees of A$ 0.8 million under these facilities outstanding as of December 31, 2020.

We have operating leases covering certain land locations and various office facilities and equipment in our three reportable business segments.

Our leases have remaining lease terms of one year to seven years , some of which include options to extend the leases for up to 10 years, and some of which include options to terminate the leases within 90 days.

In addition, we do not recognize right-of-use assets or lease liabilities for leases with terms shorter than twelve months.

The components of lease expense were $ 6.8 million, $ 6.8 million and $ 6.8 million under operating leases for the years ended December 31, 2020, 2019 and 2018, respectively.

Included in the measurement of lease liabilities, we paid $ 6.9 million in cash related to operating leases during the year ended December 31, 2020.

Right-of-use assets obtained in exchange for new lease obligations related to operating leases during the year ended December 31, 2020 were $ 2.0 million.

Supplemental balance sheet information related to leases were as follows (in thousands):

December 31, 2020 December 31, 2019

Operating leases

Operating lease right-of-use assets $ 22,606 $ 24,876

Other current liabilities $ 4,437 $ 5,543

Operating lease liabilities 19,834 21,231

Total operating lease liabilities $ 24,271 $ 26,774

Weighted average remaining lease term

Operating leases 5.7 years 6.2 years

Weighted average discount rate

Operating leases 5.4 % 5.9 %

Maturities of operating lease liabilities at December 31, 2020, were as follows (in thousands):

For the years ending December 31,

Thereafter 5,811

Total lease payments 28,344

Less imputed interest 4,073

Total $ 24,271

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

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

As of December 31, 2021, we had seven lenders that were parties to the Credit Agreement, with total commitments (including both revolving commitments and term commitments) ranging from $ 22.5 million to $ 52.0 million.

As of December 31, 2021, we had outstanding letters of credit of $ 0.3 million under the U.S facility, zero under the Australian facility and $ 1.2 million under the Canadian facility.

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

ASSET RETIREMENT OBLIGATIONS

AROs at December 31, 2021 and 2020 were (in thousands):

Asset retirement obligations $ 13,745 $ 14,993

Asset retirement obligations due within one year (1)

Long-term asset retirement obligations $ 13,181 $ 13,671

Classified as a current liability on the consolidated balance sheets, under the caption “Other current liabilities.” Balance at December 31, 2021 related to remediation work planned for 2022.

Total accretion expense related to AROs was $ 1.4 million, $ 1.5 million and $ 1.5 million during the years ended December 31, 2021, 2020 and 2019, respectively.

During the years ended December 31, 2021, 2020 and 2019, our ARO changed as follows (in thousands):

2021 2020 2019

Balance as of January 1 $ 14,993 $ 18,796 $ 18,381

Accretion of discount 1,429 1,526 1,538

New obligations — — 497

Change in estimates of existing obligations ( 763 ) ( 3,961 ) ( 1,989 )

Settlement of obligations ( 1,943 ) ( 1,771 ) ( 462 )

Foreign currency translation 29 403 831

Balance as of December 31 $ 13,745 $ 14,993 $ 18,796

RETIREMENT PLANS

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Our matching contributions vest at a rate of 40 % after two years of service and 20 % per year for each of the employee’s next three years of service and are fully vested thereafter.

ASSET RETIREMENT OBLIGATIONS

AROs at December 31, 2020 and 2019 were (in thousands):

Asset retirement obligations $ 14,993 $ 18,796

Asset retirement obligations due within one year (1)

Long-term asset retirement obligations $ 13,671 $ 15,599

Classified as a current liability on the consolidated balance sheets, under the caption “Other current liabilities.” Balance at December 31, 2020 related to remediation work planned for 2021.

Total accretion expense related to AROs was $ 1.5 million, $ 1.5 million and $ 1.7 million during the years ended December 31, 2020, 2019 and 2018, respectively.

During the years ended December 31, 2020, 2019 and 2018, our ARO changed as follows (in thousands):

2020 2019 2018

Balance as of January 1 $ 18,796 $ 18,381 $ 17,185

Accretion of discount 1,526 1,538 1,689

New obligations — 497 6,629

Change in estimates of existing obligations ( 3,961 ) ( 1,989 ) ( 4,336 )

Settlement of obligations ( 1,771 ) ( 462 ) ( 1,013 )

Foreign currency translation 403 831 ( 1,773 )

Balance as of December 31 $ 14,993 $ 18,796 $ 18,381

The Company’s operations are conducted through various subsidiaries in a number of countries throughout the world.

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

Income tax benefit.

Pre-tax loss for the years ended December 31, 2020, 2019 and 2018 consisted of the following (in thousands):

Income tax expense ( benefit).

Pre-tax income (loss) for the years ended December 31, 2021, 2020 and 2019 consisted of the following (in thousands):

2021 2020 2019

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Total $ 3,070 $ ( 11,122 ) $ ( 11,713 )

Net income tax benefit $ ( 10,635 ) $ ( 10,741 ) $ ( 31,365 )

The net income tax benefit differs from an amount computed at Canadian statutory rates as follows for the years ended December 31, 2020, 2019 and 2018 (in thousands):

Net income tax expense (benefit) $ 3,376 $ ( 10,635 ) $ ( 10,741 )

The net income tax expense (benefit) differs from an amount computed at Canadian statutory rates as follows for the years ended December 31, 2021, 2020 and 2019 (in thousands):

2021 2020 2019

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Other, net 347 5.9 % 556 ( 0.4 ) % 477 ( 0.7 ) %

Net income tax benefit $ ( 10,635 ) 7.4 % $ ( 10,741 ) 15.5 % $ ( 31,365 ) 27.7 %

Net income tax expense (benefit) $ 3,376 57.5 % $ ( 10,635 ) 7.4 % $ ( 10,741 ) 15.5 %

Canadian Rate Change.

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As of each reporting date, management considers new evidence, both positive and negative, that could affect our view of the future realization of deferred tax assets.

As of December 31, 2020, in part because in the current year we achieved three years of cumulative pre-tax income in the Australian federal tax jurisdiction, management determined that there is sufficient positive evidence to conclude that it is more likely than not that additional deferred tax assets of $ 9.1 million are realizable.

As of December 31, 2020, in part because during the year we achieved three years of cumulative pre-tax income in the Australian federal tax jurisdiction, management determined that there is sufficient positive evidence to conclude that it is more likely than not that additional deferred tax assets of $ 9.1 million are realizable.

We therefore reduced the valuation allowance accordingly in this jurisdiction.

As of December 31, 2021, management determined that there is not sufficient evidence to conclude that it is more likely than not that the Canadian and U.S.

deferred tax assets are realizable, therefore we have maintained the valuation allowance in both of these jurisdictions.

Indefinite Reinvestment of Earnings.

At December 31, 2021 and 2020, we had no undistributed earnings of foreign subsidiaries subject to income tax in Canada.

We continue to make an assertion to indefinitely reinvest the unrepatriated earnings, if any, of any foreign subsidiary.

As of December 31, 2021, we did not provide for deferred taxes on earnings of our foreign subsidiaries that are indefinitely reinvested.

If we were to make a distribution from the unremitted earnings of these subsidiaries, we could be subject to taxes in various jurisdictions.

However, it is not practical to estimate the amount of tax that could ultimately be due if such earnings were remitted.

Unrecognized Tax Benefits.

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Our Australian subsidiary’s federal income tax returns subsequent to 2017 are open for review by the Australian Taxation Office.

subsidiary’s federal tax returns subsequent to 2017 are subject to audit by the US Internal Revenue Service.

subsidiary’s federal tax returns subsequent to 2018 are subject to audit by the U.S.

Internal Revenue Service.

The total amount of unrecognized tax benefits as of December 31, 2021, 2020 and 2019 was zero .

Unrecognized tax benefits, if recognized, would affect the effective tax rate.

We accrue interest and penalties related to unrecognized tax benefits as a component of our provision for income taxes.

We accrue interest and penalties, if applicable, related to unrecognized tax benefits as a component of our provision for income taxes.

As of December 31, 2021, 2020 and 2019, we had accrued zero of interest expense and penalties.

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Although we can give no assurance about the outcome of pending legal and administrative proceedings and the effect such outcomes may have on us, management believes that any ultimate liability resulting from the outcome of such proceedings, to the extent not otherwise provided for or covered by insurance, will not have a material adverse effect on our consolidated financial position, results of operations or liquidity.

PREFERRED SHARES

As further discussed in Note 21 – Acquisitions, on April 2, 2018, we issued 9,679 Preferred Shares as part of the Noralta Acquisition.

The Preferred Shares had an initial liquidation preference of $ 10,000 per share.

Holders of the Preferred Shares are entitled to receive a 2 % annual dividend on the liquidation preference paid quarterly in cash or, at our option, by increasing the Preferred Shares’ liquidation preference or any combination thereof.

As of December 31, 2021, 9,042 Preferred Shares were outstanding.

The decrease in Preferred Shares outstanding since the close of the Noralta Acquisition was due to the release of 637 Preferred Shares initially held in escrow to support certain obligations of the Noralta Acquisition.

The Preferred Shares are convertible into our common shares at a conversion price of $ 39.60 per Preferred Share, subject to certain anti-dilution adjustments (the Conversion Price).

We have the right to elect to convert the Preferred Shares into our common shares if the 15-day volume weighted average price of our common shares is equal to or exceeds the Conversion Price.

Holders of the Preferred Shares will have the right to convert the Preferred Shares into our common shares at any time after 2 years from the date of issuance, and the Preferred Shares mandatorily convert after 5 years from the date of issuance.

The Preferred Shares also convert automatically into our common shares upon a change of control of Civeo.

We may, at any time and from time to time, redeem any or all of the Preferred Shares for cash at the liquidation preference, plus accrued and unpaid dividends.

The Preferred Shares do not have voting rights, except as statutorily required.

During the years ended December 31, 2021, 2020 and 2019, we recognized preferred dividends on the Preferred Shares as follows (in thousands):

2021 2020 2019

In-kind dividends $ 1,925 $ 1,887 $ 1,849

Total preferred dividends $ 1,925 $ 1,887 $ 1,849

The Board of Directors elected to pay the dividends for each quarterly period beginning June 30, 2019 through December 31, 2021 through an increase in the liquidation preference rather than in cash.

The paid-in-kind dividend of $ 1.9 million, $ 1.9 million and $ 1.8 million is included in Preferred dividends on the accompanying consolidated statements of operations for the years ended December 31, 2021, 2020 and 2019, respectively.

SHARE REPURCHASE PROGRAM

In August 2021, our Board of Directors (Board) authorized a common share repurchase program to repurchase up to 5.0 % of our total common shares which are issued and outstanding, or approximately 715,000 common shares, over a twelve month period.

The common share repurchase program commenced in September 2021 and will terminate no later than twelve months from date of commencement.

The repurchase authorization allows repurchases from time to time in open market transactions, including pursuant to trading plans adopted in accordance with Rule 10b5-1 of the Securities Exchange Act of 1934.

We intend to fund repurchases through cash on hand and cash generated from operations.

Pursuant to our common share repurchase program, during the six months ended December 31, 2021, we repurchased an aggregate of 217,179 of our common shares outstanding at a weighted average price of $ 21.38 per share, for a total of approximately $ 4.6 million.

The common shares repurchased under the program are cancelled in the periods they are acquired and the payment is accounted for as an increase to Accumulated deficit in our consolidated statements of changes in shareholders’ equity in the period the payment is made.

ACCUMULATED OTHER COMPREHENSIVE LOSS

Our accumulated other comprehensive loss decreased $ 14.2 million from $ 363.2 million at December 31, 2019 to $ 349.0 million at December 31, 2020, as a result of foreign currency exchange rate fluctuations.

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

Our accumulated other comprehensive loss increased $ 12.9 million from $ 349.0 million at December 31, 2020 to $ 361.9 million at December 31, 2021, as a result of foreign currency exchange rate fluctuations.

Changes in other comprehensive loss during 2021 were primarily driven by the Australian dollar decreasing in value compared to the U.S.

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

Excluding intercompany balances, our Canadian dollar and Australian dollar functional currency net assets totaled approximately C$ 189 million and A$ 268 million, respectively, at December 31, 2021.

SHARE-BASED COMPENSATION

Accordingly, all share and per share amounts have been adjusted to reflect this reverse stock split for all prior periods presented.

Certain key employees and non-employee directors participate in the Amended and Restated 2014 Equity Participation Plan of Civeo Corporation (the Civeo Plan).

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

No more than 2.4 million Civeo common shares may be issued under the Civeo Plan.

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

No more than 2.4 million Civeo common shares are authorized to be issued under the Civeo Plan.

Share-based compensation expense recognized in the years ended December 31, 2021, 2020 and 2019 totaled $ 9.9 million, $ 8.4 million and $ 13.9 million, respectively.

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Outstanding Options at December 31, 2019 12,143 $ 215.59 2.3 $ —

Forfeited / Expired ( 1,817 ) 197.16

Outstanding Options at December 31, 2020 10,326 $ 218.83 1.4 $ —

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1,912 1.2 $ 227.85 1,912 $ 227.85

10,326 1.45 $ 218.83 10,326 $ 218.83

Restricted Share Awards/ Restricted Share Units/ Deferred Share Awards

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The total fair value of restricted share awards, restricted share units and deferred share awards vested during 2021, 2020 and 2019 was $ 1.5 million, $ 2.6 million and $ 4.0 million, respectively.

At December 31, 2020, unrecognized compensation cost related to restricted share awards, restricted share units and deferred share awards was $ 1.3 million, which is expected to be recognized over a weighted average period of 1.0 year.

At December 31, 2021, unrecognized compensation cost related to restricted share awards, restricted share units and deferred share awards was $ 0.5 million, which is expected to be recognized over a weighted average period of 0.3 years.

Phantom Share Awards

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Nonvested shares at December 31, 2018 188,883

Granted 117,943

Vested ( 171,641 )

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At December 31, 2021, unrecognized compensation cost related to phantom shares was $ 7.5 million, as remeasured at December 31, 2021, which is expected to be recognized over a weighted average period of 1.8 years.

The weighted average grant date fair value per share of phantom shares granted during the years ended December 31, 2020, 2019 and 2018 was $ 15.84 , $ 30.36 and zero , respectively.

The weighted average grant date fair value per share of phantom shares granted during the years ended December 31, 2021, 2020 and 2019 was $ 19.80 , $ 15.84 and $ 30.36 , respectively.

Performance Share Awards

We grant performance awards, which cliff vest in three years subject to attainment of applicable performance criteria.

The resulting cost is recognized over the period during which an employee is required to provide service in exchange for the awards, usually the vesting period.

The fair value of each performance share award was estimated using a Monte Carlo simulation pricing model that uses the assumptions noted in the following table.

Awards granted in 2021 will be earned in amounts between 0 % and 200 % of the participant’s target performance share award, based on (1) the payout percentage associated with Civeo’s relative TSR rank among a peer group that includes 17 other companies and (2) the payout percentage associated with Civeo's cumulative free cash flow over the performance period relative to a preset target.

The portion of the performance awards tied to cumulative free cash flow includes a performance-based vesting requirement.

The fair value of these awards is based on the closing market price of our common shares on the date of grant.

We evaluate the probability of achieving the performance criteria throughout the performance period and will adjust share-based compensation expense based on the number of shares expected to vest based on our estimate of the most probable performance outcome.

The ultimate payout of the cumulative free cash flow component of the award can vary from 0 % to 60 % based on actual results.

The fair value of the TSR portion of each performance share award was estimated using a Monte Carlo simulation pricing model that uses the assumptions noted in the following table.

The risk-free interest rate is based on the U.S.

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Granted 98,717 44.76

Performance adjustment (1)

160,156 35.20

Vested ( 320,312 ) 35.20

Forfeited — —

Nonvested shares at December 31, 2019 232,256 $ 55.27

Granted 98,717 44.76

Performance adjustment (2)

160,156 35.20

Vested ( 109,904 ) 62.40

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Nonvested shares at December 31, 2020 152,312 $ 52.86

Granted 129,754 26.86

Performance adjustment (3)

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(2) Related to 2017 performance share awards that vested in 2020, which were paid out at 175 % based on Civeo's TSR rank.

(3) Related to 2018 performance share awards that vested in 2021, which were paid out at 150 % based on Civeo's TSR rank.

During the years ended December 31, 2021, 2020 and 2019, we recognized compensation expense associated with performance share awards totaling $ 2.4 million, $ 2.7 million and $ 4.3 million, respectively.

At December 31, 2020, unrecognized compensation cost related to performance share awards was $ 1.6 million, which is expected to be recognized over a weighted average period of 1.0 year.

PREFERRED SHARES

As further discussed in Note 7 – Acquisitions, on April 2, 2018, we issued 9,679 Preferred Shares as part of the Noralta Acquisition.

The Preferred Shares had an initial liquidation preference of $ 10,000 per share.

As of December 31, 2020, 9,042 Preferred Shares were outstanding.

The Preferred Shares are convertible into our common shares at a conversion price of $ 39.60 per Preferred Share, subject to certain anti-dilution adjustments (the Conversion Price).

We have the right to elect to convert the Preferred Shares into our common shares if the 15-day volume weighted average price of our common shares is equal to or exceeds the Conversion Price.

The Preferred Shares also convert automatically into our common shares upon a change of control of Civeo.

We may, at any time and from time to time, redeem any or all of the Preferred Shares for cash at the liquidation preference, plus accrued and unpaid dividends.

The Preferred Shares do not have voting rights, except as statutorily required.

During the years ended December 31, 2020, 2019 and 2018, we recognized preferred dividends on the Preferred Shares as follows (in thousands):

At December 31, 2021, unrecognized compensation cost related to performance share awards was $ 2.9 million, which is expected to be recognized over a weighted average period of 2.0 years.

SUPPLEMENTAL CASH FLOW INFORMATION

Cash paid during the years ended December 31, 2021, 2020 and 2019 for interest and income taxes was as follows (in thousands):

2021 2020 2019

Deemed dividend on beneficial conversion feature at April 2, 2018 $ — $ — $ 47,849

In-kind dividends 1,887 1,849 1,459

Deemed dividend on beneficial conversion feature related to in-kind dividend — — 281

Total preferred dividends $ 1,887 $ 1,849 $ 49,589

At the time the Preferred Shares were issued, we determined that a beneficial conversion feature existed as the fair value of the securities into which the Preferred Shares were convertible was greater than the effective conversion price on the issuance date.

Accordingly, we recorded a beneficial conversion feature of $ 47.8 million.

As the Preferred Shares do not have a stated redemption date, the discount is required to be recognized as a dividend over the minimum period from the date of issuance through the date of earliest conversion.

Because the 15-day volume weighted average price of our common shares was greater than $ 39.60 on April 2, 2018, the earliest conversion date was determined to be April 2, 2018.

Accordingly, we recorded a deemed dividend on April 2, 2018 totaling the discount of $ 47.8 million.

The Board of Directors elected to pay the dividends for each quarterly period beginning June 30, 2018 through December 31, 2020 through an increase in the liquidation preference rather than in cash.

The paid-in-kind dividend of $ 1.9 million, $ 1.8 million and $ 1.5 million is included in Preferred dividends on the accompanying consolidated statements of operations for the years ended December 31, 2020, 2019 and 2018, respectively.

Interest (net of amounts capitalized) $ 9,991 $ 12,597 $ 23,882

Net income taxes paid, net of refunds received 334 600 1,045

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

We funded the purchase price of $ 16.9 million in cash through a combination of cash on hand and borrowings under our revolving credit facility.

Action's operations are reported as part of our Australia reporting business segment beginning on July 1, 2019, the date of acquisition.

On April 2, 2018, we acquired the equity of Noralta.

As a result of the Noralta Acquisition, we expanded our existing accommodations business in the Canadian oil sands market.

We funded the cash consideration with cash on hand and borrowings under our revolving credit facility.

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 on the accompanying consolidated statement of operations for the year ended December 31, 2020.

During the first quarter of 2019, $ 2.1 million in cash was released to us from escrow to cover certain agreed upon indemnification claims.

SEGMENT AND RELATED INFORMATION

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Valuation allowance for deferred tax assets 82,833 2,257 ( 499 ) ( 88 ) 84,503

QUARTERLY FINANCIAL INFORMATION (UNAUDITED)

The following table summarizes quarterly financial information for 2020 and 2019 (in thousands, except per share amounts):

$ 138,792 $ 114,702 $ 142,857 $ 133,378

Gross profit (1)

35,479 31,569 45,423 35,170

Net (loss) income attributable to Civeo

( 146,538 ) 6,136 6,517 ( 2,252 )

Basic (loss) income per share (2)

( 10.43 ) 0.37 0.39 ( 0.16 )

Diluted (loss) income per share (2)

( 10.43 ) 0.37 0.39 ( 0.16 )

$ 108,550 $ 122,153 $ 148,163 $ 148,689

Gross profit (1)

28,920 36,913 48,683 46,225

Net (loss) income attributable to Civeo ( 17,498 ) ( 15,310 ) 4,532 ( 32,064 )

Basic (loss) income per share (2)

( 1.27 ) ( 1.10 ) 0.28 ( 2.30 )

Diluted (loss) income per share (2)

( 1.27 ) ( 1.10 ) 0.28 ( 2.30 )

(1) Represents "revenues" less "product costs" and "service and other costs" included in our consolidated statements of operations.

(2) Per-share computations reflect the impact of our 1-for-12 reverse share split effective November 19, 2020.

See Note 1 - Description of Business and Basis of Presentation for further discussion.

(3) In the first quarter of 2020, we recognized the following items:

• Goodwill impairment loss of $ 93.6 million ($ 93.6 million after-tax, or $ 6.67 per diluted share) related to our Canada reporting unit.

The charge is included in Impairment expense on the accompanying consolidated statements of operations.

• A charge of $ 38.1 million ($ 38.1 million after-tax, or $ 2.71 per diluted share), related to assets in our Canada segment.

The charge is included in Impairment expense on the accompanying consolidated statements of operations.

• A charge of $ 12.4 million ($ 12.4 million after-tax, or $ 0.89 per diluted share), related to assets in our U.S segment.

The charge is included in Impairment expense on the accompanying consolidated statements of operations.

In the first quarter of 2019, there were no significant items recognized.

(4) In the second quarter of 2020, we recognized the following items:

• Income of $ 4.7 million ($ 4.7 million after-tax, or $ 0.33 per diluted share) associated with the settlement of a representations and warranties claim related to the Noralta Acquisition included in Other income.

In the second quarter of 2019, we recognized the following items:

• A charge of $ 4.5 million ($ 4.5 million after-tax, or $ 0.32 per diluted share), related to assets in our Australian segment.

The charge is included in Impairment expense on the accompanying consolidated statements of operations.

• We identified a liability related to an 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 2020.

Specifically, we recorded:

(5) In the third quarter of 2020, there were no significant items recognized.

In the third quarter of 2019, we recognized the following items:

• A gain on sale of assets related to the sale of a village in Australia and related $ 2.2 million release of an ARO liability assumed by the buyer.

• Costs associated with the Action acquisition of $ 0.2 million ($ 0.2 million after-tax, or $ 0.02 per diluted share), included primarily in Selling, general and administrative expenses on the accompanying consolidated statements of operations.

(6) In the fourth quarter of 2020, there were no significant items recognized.

In the fourth quarter of 2019, we recognized the following items:

• Goodwill impairment loss of $ 19.9 million ($ 19.9 million after-tax, or $ 1.42 per diluted share) related to our Canada reporting unit.

The charge is included in Impairment expense on the accompanying consolidated statements of operations.

• A charge of $ 0.7 million ($ 0.5 million after-tax, or $ 0.04 per diluted share), related to assets in our Canada segment.

The charge is included in Impairment expense on the accompanying consolidated statements of operations.

• Costs associated with the Action acquisition of $ 0.2 million ($ 0.2 million after-tax, or $ 0.01 per diluted share), included primarily in Selling, general and administrative expenses on the accompanying consolidated statements of operations.

Amounts are calculated independently for each of the quarters presented.

Therefore, the sum of the quarterly amounts may not equal the total calculated for the year.

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-K

Item 9A. Controls and Procedures