What changed in this filing

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Item 1. Financial Statements

2022-04-29 compared with 2021-10-28 · 87 added, 242 removed, 361 unchanged (48% of the section changed)

4 unchanged sentences

Three Months Ended

September 30, Nine Months Ended

September 30,

2021 2020 2021 2020

Service and other $ 159,570 $ 121,996

8 unchanged sentences

Depreciation and amortization expense 20,127 21,269

Impairment expense — — 7,935 144,120

Other operating expense 258 71

2 unchanged sentences

Interest expense ( 2,468 ) ( 3,362 )

Loss on extinguishment of debt ( 416 ) ( 383 ) ( 416 ) ( 383 )

Interest income — — 2 20

Other (expense) income 364 4,542 6,066 17,209

Other income 1,696 4,914

Income (loss) before income taxes 3,465 ( 8,349 )

Income tax (expense) benefit ( 1,770 ) ( 180 ) ( 2,354 ) 8,509

Income tax expense ( 1,557 ) ( 1,076 )

Net income (loss) 1,908 ( 9,425 )

9 unchanged sentences

Diluted 14,219 14,211

(1) Reflects our 1-for-12 reverse share split that became effective November 19, 2020.

See Note 1 - Description of Business and Basis of Presentation to the notes to the unaudited consolidated financial statements included in Item 1 of this quarterly report for further discussion.

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

3 unchanged sentences

Three Months Ended

September 30, Nine Months Ended

September 30,

2021 2020 2021 2020

Net income (loss) $ 1,908 $ ( 9,425 )

4 unchanged sentences

Comprehensive income (loss) 9,920 ( 11,052 )

Comprehensive (loss) income attributable to noncontrolling interest 450 462 488 928

Comprehensive (loss) income attributable to Civeo Corporation $ ( 11,645 ) $ 18,092 $ ( 24,298 ) $ ( 140,513 )

Comprehensive income attributable to noncontrolling interest 538 49

Comprehensive income (loss) attributable to Civeo Corporation $ 9,382 $ ( 11,101 )

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

2 unchanged sentences

(In Thousands, Excluding Share Amounts)

September 30, 2021 December 31, 2020

March 31, 2022 December 31, 2021

Current assets:

22 unchanged sentences

Long-term debt, less current maturities 145,037 142,602

Deferred income taxes 2,494 896

Operating lease liabilities 14,911 15,429

5 unchanged sentences

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

aggregate liquidation preference of $ 96,953,917 and $ 95,514,031 as of September 30, 2021 and December 31, 2020)

aggregate liquidation preference of $ 97,925,880 and $ 97,438,687 as of March 31, 2022 and December 31, 2021)

62,428 61,941

10 unchanged sentences

Total liabilities and shareholders’ equity $ 673,094 $ 672,734

(1) Reflects our 1-for-12 reverse share split that became effective November 19, 2020.

See Note 1 - Description of Business and Basis of Presentation to the notes to the unaudited consolidated financial statements included in Item 1 of this quarterly report for further discussion.

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

13 unchanged sentences

Shareholders’

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

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

Currency translation adjustment — — — — — 11,103 28 11,131

Dividends paid — — — — — — ( 450 ) ( 450 )

Dividends attributable to Class A preferred shares 472 — — ( 472 ) — — — —

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

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

Balance, June 30, 2021 $ 60,974 $ — $ 1,580,213 $ ( 918,156 ) $ ( 8,050 ) $ ( 352,171 ) $ 595 $ 363,405

Net income (loss) — — — 544 — — 478 1,022

Currency translation adjustment — — — — — ( 12,189 ) ( 28 ) ( 12,217 )

Dividends paid — — — — — — ( 15 ) ( 15 )

Dividends attributable to Class A preferred shares 482 — — ( 482 ) — — — —

Common shares repurchased — — — ( 445 ) — — — ( 445 )

Share-based compensation — — 1,035 — — — — 1,035

Balance, September 30, 2021 $ 61,456 $ — $ 1,581,248 $ ( 918,539 ) $ ( 8,050 ) $ ( 364,360 ) $ 1,030 $ 352,785

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

4 unchanged sentences

Share-based compensation — — 1,027 — ( 1,120 ) — — ( 93 )

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

Balance, March 31, 2021 $ 60,494 $ — $ 1,579,342 $ ( 917,689 ) $ ( 8,050 ) $ ( 350,606 ) $ 648 $ 364,139

Balance, December 31, 2021 $ 61,941 $ — $ 1,582,442 $ ( 912,951 ) $ ( 8,050 ) $ ( 361,883 ) $ 1,612 $ 363,111

Net income (loss) — — — ( 8,927 ) — — 534 ( 8,393 )

Net income — — — 1,410 — — 498 1,908

Currency translation adjustment — — — — — 7,972 40 8,012

3 unchanged sentences

Share-based compensation — — 1,032 — ( 1,013 ) — 19

Balance, September 30, 2021 $ 61,456 $ — $ 1,581,248 $ ( 918,539 ) $ ( 8,050 ) $ ( 364,360 ) $ 1,030 $ 352,785

Balance, March 31, 2022 $ 62,428 $ — $ 1,583,474 $ ( 912,037 ) $ ( 9,063 ) $ ( 353,911 ) $ 2,080 $ 372,971

Shares Common

thousands) (1)

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

1 unchanged sentence

Common shares repurchased — ( 1 )

Balance, September 30, 2021 9,042 14,308

(1) Reflects our 1-for-12 reverse share split that became effective November 19, 2020.

See Note 1 - Description of Business and Basis of Presentation to the notes to the unaudited consolidated financial statements included in Item 1 of this quarterly report for further discussion.

Balance, March 31, 2022 9,042 14,186

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

2 unchanged sentences

(In Thousands)

Nine Months Ended

September 30,

Three Months Ended

Cash flows from operating activities:

Net loss $ ( 8,393 ) $ ( 131,560 )

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

Net income (loss) $ 1,908 $ ( 9,425 )

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

Depreciation and amortization 20,127 21,269

Impairment charges 7,935 144,120

Loss on extinguishment of debt 416 383

Deferred income tax expense (benefit) 2,105 ( 8,941 )

Deferred income tax expense 1,491 1,041

Non-cash compensation charge 1,032 1,027

Gains on disposals of assets ( 1,489 ) ( 1,902 )

Provision for credit losses, net of recoveries 155 45

Provision (benefit) for credit losses, net of recoveries ( 20 ) 193

Other, net 686 716

15 unchanged sentences

Term loan repayments ( 8,003 ) ( 8,872 )

Debt issuance costs ( 4,407 ) ( 2,583 )

Repurchases of common shares ( 9 ) —

19 unchanged sentences

We operate in three principal reportable business segments – Canada, Australia and the U.S.

Reverse Share Split

On November 19, 2020, we effected a reverse share split where each twelve issued and outstanding common shares were

converted into one common share.

Our common shares began trading on a reverse share split adjusted basis on November 19, 2020.

A total of 14,215,169 common shares were issued and outstanding immediately after the reverse share split.

No fractional shares were outstanding following the reverse share split.

In lieu of any fractional share, the aggregate number of common shares that a holder was entitled to was, if the fraction was less than half a common share, rounded down to the next closest whole number of common shares, and if the fraction was at least half of a common share, rounded up to one whole common share.

The reverse share split did not affect the number of authorized or issued and outstanding shares of our preferred shares.

As a result of the reverse share split, the conversion price for the Company’s outstanding Class A Series 1 preferred shares (Series A preferred shares) was automatically increased to $ 39.60 for each Series A preferred share (previously it was $ 3.30 per Series A preferred share).

All authorized, issued and outstanding shares and per share amounts contained in the accompanying consolidated financial statements have been adjusted to reflect this reverse share split for all prior periods presented.

Basis of Presentation

8 unchanged sentences

If the underlying estimates and assumptions upon which the financial statements are based change in future periods, actual amounts may differ from those included in the accompanying consolidated financial statements.

The financial statements included in this report should be read in conjunction with our audited financial statements and accompanying notes included in our Annual Report on Form 10-K for the year ended December 31, 2021.

CIVEO CORPORATION

1 unchanged sentence

FINANCIAL STATEMENTS

RECENT ACCOUNTING PRONOUNCEMENTS

From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (the FASB), which are adopted by us as of the specified effective date.

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 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:

1 unchanged sentence

Three Months Ended

September 30, Nine Months Ended

September 30,

2021 2020 2021 2020

Accommodation revenues $ 67,194 $ 46,530

13 unchanged sentences

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, unless otherwise agreed to.

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.

As of September 30, 2021, for contracts that are greater than one year, the table below discloses the estimated revenues related to performance obligations that are unsatisfied (or partially unsatisfied) and when we expect to recognize the revenue.

As of March 31, 2022, for contracts that are greater than one year, the table below discloses the estimated revenues related to performance obligations that are unsatisfied (or partially unsatisfied) and when we expect to recognize the revenue.

The table only includes revenue expected to be recognized from contracts where the quantity of service is certain (in thousands):

CIVEO CORPORATION

NOTES TO UNAUDITED CONSOLIDATED

FINANCIAL STATEMENTS

For the years ending December 31,

2022 2023 2024 Thereafter Total

Revenue expected to be recognized as of September 30, 2021 $ 38,929 $ 97,897 $ 25,598 $ 7,188 $ 169,612

Revenue expected to be recognized as of March 31, 2022 $ 116,850 $ 44,930 $ 13,240 $ 10,943 $ 185,963

We applied the practical expedient and do not disclose consideration for remaining performance obligations with an original expected duration of one year or less.

4 unchanged sentences

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

As of September 30, 2021 and December 31, 2020, we believe the carrying value of our floating-rate debt outstanding under our term loans and revolving credit facilities approximates fair value because the terms include short-term interest rates and exclude penalties for prepayment.

As of March 31, 2022 and December 31, 2021, we believe the carrying value of our floating-rate debt outstanding under our term loans and revolving credit facilities approximates fair value because the terms include short-term interest rates and exclude penalties for prepayment.

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

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

Our estimates of fair value required us to use significant unobservable inputs, representative of Level 3 fair value measurements, including numerous assumptions with respect to future circumstances that might directly impact each of the relevant asset groups’ operations in the future and are therefore uncertain.

These assumptions with respect to future circumstances included future cash flows, oil, met coal and natural gas prices, anticipated spending by our customers, the cost of capital, and industry and/or local market conditions.

We estimated the fair value when conducting the goodwill impairment test primarily using an income approach.

The discount rates used to value our reporting units for the goodwill impairment test ranged between 10.5 % and 14.0 %.

During the second quarter of 2021 and the first quarter of 2020, 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.

The discount rates used to value our Canadian and U.S.

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

During the second quarter of 2021, our estimate of the fair value of undeveloped land positions in Australia that were impaired was based on appraisals from third parties.

See Note 6 – Impairment Charges for further information.

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.

CIVEO CORPORATION

NOTES TO UNAUDITED CONSOLIDATED

FINANCIAL STATEMENTS

DETAILS OF SELECTED BALANCE SHEET ACCOUNTS

Additional information regarding selected balance sheet accounts at September 30, 2021 and December 31, 2020 is presented below (in thousands):

September 30, 2021 December 31, 2020

Additional information regarding selected balance sheet accounts at March 31, 2022 and December 31, 2021 is presented below (in thousands):

March 31, 2022 December 31, 2021

Accounts receivable, net:

5 unchanged sentences

Total accounts receivable, net $ 124,484 $ 114,859

CIVEO CORPORATION

NOTES TO UNAUDITED CONSOLIDATED

FINANCIAL STATEMENTS

As of September 30, 2021 and December 31, 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.

For the three months ended September 30, 2021 and 2020, Other income related to the CEWS was zero and $ 3.6 million, respectively.

For the nine months ended September 30, 2021 and 2020, Other income related to the CEWS was $ 3.5 million and $ 9.7 million, respectively.

September 30, 2021 December 31, 2020

March 31, 2022 December 31, 2021

Finished goods and purchased products $ 5,894 $ 5,346

2 unchanged sentences

Total inventories $ 7,271 $ 6,468

(in years) September 30, 2021 December 31, 2020

(in years) March 31, 2022 December 31, 2021

Property, plant and equipment, net:

9 unchanged sentences

Total property, plant and equipment, net $ 386,022 $ 389,996

September 30, 2021 December 31, 2020

March 31, 2022 December 31, 2021

Accrued liabilities:

3 unchanged sentences

Total accrued liabilities $ 22,797 $ 33,564

IMPAIRMENT CHARGES

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.

Quarter ended March 31, 2020 .

During the first quarter of 2020, we recorded impairment expense related to goodwill and long-lived assets.

The spread of the COVID-19 coronavirus (COVID-19) and the response thereto during the first quarter of 2020 negatively impacted the global economy.

The resulting unprecedented decline in oil demand, coupled with disagreements between Saudi Arabia and Russia about production limits, resulted in a collapse of global oil prices in March 2020, thereby creating unprecedented downward pressure on stock prices in the energy industry, particularly small-cap companies with operations in the U.S.

and Canada, such as Civeo.

As a result, we experienced a sustained reduction of our share price during the first quarter of 2020.

Our market capitalization implied an enterprise value which was significantly less than the sum of the estimated fair values of our reporting units, and we determined that an indicator of a goodwill impairment was present as of March 31, 2020.

Accordingly, we performed an interim goodwill impairment test as of March 31, 2020, and the carrying

ASSETS HELD FOR SALE

As of March 31, 2022 and December 31, 2021, assets held for sale included certain assets in our U.S.

business segment and various undeveloped land holdings in our Australia business segment.

These assets were recorded at the estimated fair value less costs to sell, which exceeded their carry values.

CIVEO CORPORATION

1 unchanged sentence

FINANCIAL STATEMENTS

amount of our Canadian reporting unit exceeded the reporting unit's fair value.

Based on the results of the impairment test, we reduced the value of our goodwill in our Canadian reporting unit to zero and recognized impairment expense in the first quarter of 2020 of $ 93.6 million.

Furthermore, as a result of the decline in global oil prices and forecasts for a potentially protracted period of lower prices, as well as the goodwill impairment in our Canadian segment, we determined all asset groups within this segment had experienced a trigger that indicated that the carrying values might not be recoverable.

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

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

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

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

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.

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

Based on the assessment, the carrying values of certain of our U.S.

asset groups were determined to not be recoverable, and we proceeded to compare the estimated fair values of the asset groups to their respective carrying values.

Accordingly, these assets were written down to their estimated fair values of $ 12.5 million.

We recorded impairment expense of $ 12.4 million during the first quarter of 2020 related to our U.S.

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.

Their estimated fair values less the costs to sell exceeded their carrying values as of September 30, 2021.

In addition, as of September 30, 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 of approximately $ 2.1 million.

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, the manufacturing facility was sold.

The following table summarizes the carrying amount as of September 30, 2021 and December 31, 2020 of the assets classified as held for sale (in thousands):

September 30, 2021 December 31, 2020

The following table summarizes the carrying amount as of March 31, 2022 and December 31, 2021 of the assets classified as held for sale (in thousands):

March 31, 2022 December 31, 2021

Assets held for sale:

2 unchanged sentences

EARNINGS PER SHARE

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 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 Class A preferred shares.

1 unchanged sentence

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

CIVEO CORPORATION

NOTES TO UNAUDITED CONSOLIDATED

FINANCIAL STATEMENTS

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

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

2021 2020 2021 2020

Three Months Ended March 31,

Net income (loss) attributable to Civeo common shareholders $ 923 $ ( 9,962 )

12 unchanged sentences

(1) Computations may reflect rounding adjustments.

For the three months ended September 30, 2021 and 2020, we excluded 0.1 million and 0.2 million share-based awards, respectively, from the computation of diluted earnings per share because their effect was anti-dilutive.

For the three months ended March 31, 2022, we excluded 0.1 million share-based awards from the computation of diluted earnings per share because their effect was anti-dilutive.

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

For the nine months ended September 30, 2021 and 2020, we excluded from the computation of diluted loss per share 0.2 million and 0.4 million share-based awards, respectively, since the effect would have been anti-dilutive.

Additionally, for the three and nine months ended September 30, 2021 and 2020, we excluded from the computation the impact of converting the Preferred Shares into 2.4 million and 2.4 million common shares, respectively, since the effect would have been anti-dilutive.

As a result of the net loss for the three months ended March 31, 2021, we excluded from the computation of diluted loss per share 0.2 million share based awards since the effect would have been anti-dilutive.

Additionally, for the three months ended March 31, 2022 and 2021, we excluded from the computation the impact of converting the Preferred Shares into 2.5 million and 2.4 million common shares, respectively, since the effect would have been anti-dilutive.

CIVEO CORPORATION

1 unchanged sentence

FINANCIAL STATEMENTS

As of September 30, 2021 and December 31, 2020, long-term debt consisted of the following (in thousands):

September 30, 2021 December 31, 2020

As of March 31, 2022 and December 31, 2021, long-term debt consisted of the following (in thousands):

March 31, 2022 December 31, 2021

Canadian term loan;

weighted average interest rate of 4.2 % for the nine month period ended September 30, 2021

weighted average interest rate of 3.9 % for the three month period ended March 31, 2022

$ 56,021 $ 63,104

revolving credit facility;

weighted average interest rate of 5.8 % for the nine month period ended September 30, 2021

weighted average interest rate of 5.5 % for the three month period ended March 31, 2022

Canadian revolving credit facility;

weighted average interest rate of 4.5 % for the nine month period ended September 30, 2021

weighted average interest rate of 4.1 % for the three month period ended March 31, 2022

113,643 111,300

Australian revolving credit facility;

weighted average interest rate of 3.6 % for the nine month period ended September 30, 2021

10,786 17,767

weighted average interest rate of 3.2 % for the three month period ended March 31, 2022

177,907 175,130

3 unchanged sentences

Long-term debt, less current maturities $ 145,037 $ 142,602

Amended and Restated Credit Agreement

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

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

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

subsidiaries, as borrowers;

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

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

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

New Syndicated Facility Agreement

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

• provided for 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:

Credit Agreement

As of March 31, 2022, our Credit Agreement (as then amended to date, the Credit Agreement) provided for:

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

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

1 unchanged sentence

(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;

CIVEO CORPORATION

NOTES TO UNAUDITED CONSOLIDATED

FINANCIAL STATEMENTS

• 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 Amended and Restated Credit Agreement, which is included in Loss on extinguishment of debt on the unaudited consolidated statements of operations.

The remaining $ 3.0 million of unamortized debt issuance costs from the Amended and Restated Credit Agreement was not recognized as a loss as we concluded a significant portion of the Credit Agreement was a modification of the Amended and Restated 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).

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

and (ii) a C$ 100.0 million term loan facility scheduled to be fully repaid on December 31, 2023 in favor of Civeo.

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 net 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.

10 unchanged sentences

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

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.

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 3.25 to 1.00 for the quarter ended March 31, 2022 and

CIVEO CORPORATION

NOTES TO UNAUDITED CONSOLIDATED

FINANCIAL STATEMENTS

3.00 to 1.00 for each quarter thereafter.

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.

1 unchanged sentence

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 September 30, 2021.

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

We were in compliance with our covenants as of March 31, 2022.

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 September 30, 2021, we had seven lenders that were parties to the Credit Agreement, with total commitments (including both revolving commitments and term commitments) ranging from $ 22.50 million to $ 52.0 million.

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

As of March 31, 2022, 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 March 31, 2022, 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.

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

CIVEO CORPORATION

NOTES TO UNAUDITED CONSOLIDATED

FINANCIAL STATEMENTS

September 30, 2021 and 2020, Canada and the U.S.

As of March 31, 2022 and 2021, Canada and the U.S.

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

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

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

Our income tax expense for the three months ended March 31, 2022 totaled $ 1.6 million, or 44.9 % of pretax income, compared to tax expense of $ 1.1 million, or ( 12.9 )% of pretax loss, for the three months ended March 31, 2021.

Our effective tax rate for both the three months ended March 31, 2022 and 2021 was impacted by considering Canada and the U.S.

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

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

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

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

loss jurisdictions.

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

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

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

COMMITMENTS AND CONTINGENCIES

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ACCUMULATED OTHER COMPREHENSIVE LOSS

Our accumulated other comprehensive loss increased $ 15.4 million from $ 349.0 million at December 31, 2020 to $ 364.4 million at September 30, 2021, as a result of foreign currency exchange rate fluctuations.

Changes in other comprehensive loss during the first nine months of 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$ 176 million and A$ 267 million, respectively, at September 30, 2021.

Our accumulated other comprehensive loss decreased $ 8.0 million from $ 361.9 million at December 31, 2021 to $ 353.9 million at March 31, 2022, as a result of foreign currency exchange rate fluctuations.

Changes in other comprehensive loss during the first three months of 2022 were primarily driven by the Australian dollar and 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$ 200 million and A$ 251 million, respectively, at March 31, 2022.

SHARE REPURCHASE PROGRAM

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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 three months ended September 30, 2021, we repurchased an aggregate of 20,105 of our common shares outstanding at a weighted average price of $ 22.08 per share, for a total of approximately $ 0.4 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 Unaudited Consolidated Statements of Changes in Shareholders’ Equity in the period the payment is made.

CIVEO CORPORATION

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FINANCIAL STATEMENTS

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

Pursuant to our common share repurchase program, during the three months ended March 31, 2022, we repurchased an aggregate of 500 of our common shares outstanding at a weighted average price of $ 18.47 per share, for a total of approximately $ 9.2 thousand.

SHARE-BASED COMPENSATION

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

On May 19, 2021, we granted 45,762 restricted share awards to our non-employee directors, which vest in their entirety on May 19, 2022.

Compensation expense associated with restricted share awards, restricted share units and deferred share awards recognized in the three months ended September 30, 2021 and 2020 totaled $ 0.4 million and $ 0.7 million, respectively.

Compensation expense associated with restricted share awards, restricted share units and deferred share awards recognized in the nine months ended September 30, 2021 and 2020 totaled $ 1.2 million and $ 2.7 million, respectively.

The total fair value of restricted share awards, restricted share units and deferred share awards that vested during the three months ended September 30, 2021 and 2020 was zero and less than $ 0.1 million, respectively.

The total fair value of restricted share awards, restricted share units and deferred share awards that vested during the nine months ended September 30, 2021 and 2020 was $ 1.5 million and $ 2.6 million, respectively.

At September 30, 2021, unrecognized compensation cost related to restricted share awards, restricted share units and deferred share awards was $ 1.0 million, which is expected to be recognized over a weighted average period of 0.6 years.

Compensation expense associated with restricted share awards, restricted share units and deferred share awards recognized in the three months ended March 31, 2022 and 2021 totaled $ 0.4 million and $ 0.5 million, respectively.

The total fair value of restricted share awards, restricted share units and deferred share awards that vested during the three months ended March 31, 2022 and 2021 was $ 0.6 million and $ 1.5 million, respectively.

At March 31, 2022, unrecognized compensation cost related to restricted share awards, restricted share units and deferred share awards was $ 0.1 million, which is expected to be recognized over a weighted average period of 0.1 years.

Phantom Share Awards.

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We also granted 77,574 phantom share awards under the Canadian Long-Term Incentive Plan, which vest in three equal annual installments beginning on February 25, 2023.

During the three months ended September 30, 2021 and 2020, we recognized compensation expense associated with phantom shares totaling $ 2.1 million and $ 0.4 million, respectively.

During the nine months ended September 30, 2021 and 2020, we recognized compensation expense associated with phantom shares totaling $ 5.0 million and $ 1.1 million, respectively.

At September 30, 2021, unrecognized compensation cost related to phantom shares was $ 10.3 million, as remeasured at September 30, 2021, which is expected to be recognized over a weighted average period of 2.0 years.

Phantom share awards are settled in cash upon vesting.

During the three months ended March 31, 2022 and 2021, we recognized compensation expense associated with phantom shares totaling $ 2.4 million and $ 1.4 million, respectively.

At March 31, 2022, unrecognized compensation cost related to phantom shares was $ 15.3 million, as remeasured at March 31, 2022, which is expected to be recognized over a weighted average period of 2.2 years.

Performance Awards.

On February 22, 2021, we granted 129,754 performance awards under the Civeo Plan, which cliff vest in three years on February 22, 2024.

These awards 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 total shareholder return 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.

On February 25, 2022, we granted 122,555 performance awards under the Civeo Plan, which cliff vest in three years on February 25, 2025 subject to attainment of applicable performance criteria.

These awards 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 total shareholder return rank among a peer group that includes 17 other companies and (2) the payout percentage associated with Civeo's cumulative operating cash flow over the performance period relative to a preset target.

The portion of the performance awards tied to cumulative operating 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.

During the three months ended September 30, 2021 and 2020, we recognized compensation expense associated with performance awards totaling $ 0.6 million and $ 0.6 million, respectively.

During the nine months ended September 30, 2021 and 2020, we recognized compensation expense associated with performance awards totaling $ 1.7 million and $ 2.1 million, respectively.

The total fair value of performance share awards that vested during the three months ended September 30, 2021 and 2020 was zero .

The total fair value of performance share awards that vested during the nine months ended September 30, 2021 and 2020 was $ 1.9 million and $ 1.9 million, respectively.

At September 30, 2021, unrecognized compensation cost related to performance shares was $ 3.3 million, which is expected to be recognized over a weighted average period of 2.1 years.

The ultimate payout of the cumulative operating cash flow component of the award can vary from 0 % to 100 % based on actual results.

During the three months ended March 31, 2022 and 2021, we recognized compensation expense associated with performance awards totaling $ 0.6 million and $ 0.5 million, respectively.

The total fair value of performance share awards that vested during the three months ended March 31, 2022 and 2021 was $ 2.4 million and $ 1.9 million, respectively.

At March 31, 2022, unrecognized compensation cost related to performance shares was $ 6.4 million, which is expected to be recognized over a weighted average period of 2.5 years.

CIVEO CORPORATION

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

Financial information by business segment for each of the three and nine months ended September 30, 2021 and 2020 is summarized in the following table (in thousands):

Financial information by business segment for each of the three months ended March 31, 2022 and 2021 is summarized in the following table (in thousands):

revenues Depreciation

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(loss) Capital

Three months ended September 30, 2021

Three months ended March 31, 2022

Canada $ 95,952 $ 11,597 $ 4,038 $ 2,006 $ 773,257

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Total $ 165,678 $ 20,127 $ 4,237 $ 3,592 $ 673,094

Three months ended September 30, 2020

Three months ended March 31, 2021

Canada $ 61,885 $ 12,087 $ ( 7,659 ) $ 1,180 $ 721,841

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Total $ 125,430 $ 21,269 $ ( 9,901 ) $ 3,372 $ 710,178

Nine months ended September 30, 2021

Canada $ 229,223 $ 35,750 $ 5,924 $ 3,667 $ 754,223

Australia 188,774 25,004 5,073 4,348 231,427

United States 16,672 1,675 ( 5,831 ) 1,187 26,699

Corporate and eliminations — 499 ( 6,928 ) 443 ( 328,307 )

Total $ 434,669 $ 62,928 $ ( 1,762 ) $ 9,645 $ 684,042

Nine months ended September 30, 2020

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

Australia 170,869 29,767 24,245 3,036 266,591

United States 21,363 2,525 ( 19,954 ) 1,468 27,017

Corporate and eliminations — 423 ( 5,768 ) 537 ( 252,306 )

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

Cautionary Statement Regarding Forward-Looking Statements

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The forward-looking statements can be identified by the use of forward-looking terminology including “may,” “expect,” “anticipate,” “estimate,” “continue,” “believe” or other similar words.

The forward-looking statements in this report include, but are not limited to, the statements in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” relating to our expectations about the macroeconomic environment and industry conditions, including the impact of COVID-19 and the response thereto and the volatility in the price of and demand for oil, as well as our expectations about capital expenditures in 2021 and beliefs with respect to liquidity needs.

The forward-looking statements in this report include, but are not limited to, the statements in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” relating to our expectations about the macroeconomic environment and industry conditions, including the impact of COVID-19 and the response thereto and the volatility in the price of and demand for commodities, as well as our expectations about capital expenditures in 2022 and beliefs with respect to liquidity needs.

Actual results could differ materially from those projected in the forward-looking statements as a result of a number of important factors.

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

What changed 10-Q

Item 1. Financial Statements