What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2022-08-04 compared with 2022-04-29 · 289 added, 109 removed, 260 unchanged (60% of the section changed)

17 unchanged sentences

We derive most of our business from natural resource companies who are developing and producing oil sands, met coal, LNG and iron ore resources and, to a lesser extent, other hydrocarbon and mineral resources.

In the first quarter of 2022, approximately 63% of our revenue is generated by our lodges in Canada and our villages in Australia.

In the second quarter of 2022, approximately 64% of our revenue was generated by our lodges in Canada and our villages in Australia.

Where traditional accommodations and infrastructure are insufficient, inaccessible or cost ineffective, our lodge and village facilities provide comprehensive hospitality services similar to those found in an urban hotel.

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The spread of COVID-19 and the response thereto have negatively impacted the global economy.

The actions taken by governments and the private-sector to mitigate the spread of COVID-19 and the risk of infection, including government-imposed or voluntary social distancing and quarantining, reduced travel and remote work policies, evolved with the introduction of vaccination efforts in 2021, and may continue to evolve as the surfacing of virus variants has added a degree of uncertainty to the continuing global impact.

The actions taken by governments and the private-sector to mitigate the spread of COVID-19 and the risk of infection, including government-imposed or voluntary social distancing and quarantining, reduced travel and remote work policies, evolved with the introduction of vaccination efforts in 2021, and may continue to evolve as virus variants have added uncertainty to the continuing global impact.

Since the COVID-19 pandemic began, we have been impacted by increased staff costs as a result of hospitality labor shortages in Australia.

This labor shortage has been exacerbated by significantly reduced migration in and around Australia affecting labor availability, which has subsequently led to an increased reliance on more expensive temporary labor resources.

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

This labor shortage has been exacerbated by significantly reduced foreign labor availability and reduced labor mobility in Australia, which has subsequently led to an increased reliance on more expensive temporary labor resources.

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

In part due to the impact of COVID-19 on the global economy, increasing inflationary pressures are being experienced worldwide.

These price increases could negatively impact our labor and food costs, as well as consumable costs such as fuel.

The Company is managing inflation risk with service scope changes and contractual protections.

These price increases have, and are expected to continue to have, a negative impact on our labor and food costs, as well as consumable costs such as fuel.

The Company is managing inflation risk with negotiated service scope changes and contractual protections.

Global oil prices dropped to historically low levels in March and April 2020 due to severely reduced global oil demand, high global crude inventory levels, uncertainty around timing and slope of worldwide economic recovery after COVID-19 related economic shut-downs and effectiveness of production cuts by major oil producing countries, such as Saudi Arabia, Russia and the U.S.

Since this trough in early 2020, global oil prices increased later in 2020 and throughout 2021 primarily due to improved global oil demand and lagging global oil supply due to oil production discipline from publicly traded oil producers and OPEC+ countries.

These supply/demand dynamics have continued into early 2022 and have been exacerbated by the recent conflict between Russia and Ukraine and related sanctions on Russia, which decreased global fossil fuel supply even further.

These supply/demand dynamics have continued in 2022 and have been exacerbated by the recent conflict between Russia and Ukraine and related sanctions on Russia, which decreased global fossil fuel supply even further.

This has led to a significant increase in global oil prices to above $100 per barrel.

Several governments, including the U.S.

government under the Biden administration, have begun to release oil from the government controlled strategic reserves in the hopes of stemming high oil prices and the related impacts on higher heating fuels and gasoline.

In response, several governments including the U.S.

government under the Biden administration, have begun to release oil from the government controlled strategic reserves.

Alberta, Canada.

In Canada, Western Canadian Select (WCS) crude is the benchmark price for our oil sands customers.

Pricing for WCS is driven by several factors, including the underlying price for West Texas Intermediate (WTI) crude, the availability of transportation infrastructure (consisting of pipelines and crude by railcar) and governmental regulation.

Historically, WCS has traded at a discount to WTI, creating a “WCS Differential,” due to transportation costs and capacity restrictions to move Canadian heavy oil production to refineries, primarily along the U.S.

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Certain expansionary oil pipeline projects have the potential to both drive incremental demand for mobile assets and to improve take-away capacity for Canadian oil sands producers over the longer term.

The Enbridge Line 3 replacement project was completed at the end of 2021 and the Trans Mountain Pipeline (TMX) is currently under construction and approximately 50% complete.

The Enbridge Line 3 replacement project was completed at the end of 2021 and the Trans Mountain Pipeline (TMX) is currently under construction and continues to progress towards completion.

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

As a result, the TMX pipeline construction has been delayed, and there is a risk that there are more delays to come.

As a result, the TMX pipeline construction has been delayed, and there is a risk that there could be future delays.

Recent legal issues between the Canadian government and First Nation groups have been resolved for the time being and construction has resumed.

WCS prices in the first quarter of 2022 averaged $82.04 per barrel compared to an average of $46.28 in the first quarter of 2021.

The WCS Differential decreased from $14.12 per barrel at the end of the fourth quarter of 2021 to $10.78 at the end of the first quarter of 2022.

As of April 25, 2022, the WTI price was $99.54 and the WCS price was $86.62, resulting in a WCS Differential of $12.92.

WCS prices in the second quarter of 2022 averaged $92.89 per barrel compared to an average of $53.27 in the second quarter of 2021.

The WCS Differential increased from $14.12 per barrel at the end of the fourth quarter of 2021 to $18.16 at the end of the second quarter of 2022.

As of July 25, 2022, the WTI price was $99.60 and the WCS price was $76.26, resulting in a WCS Differential of $23.34.

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

Customers began increasing production activity in the fourth quarter of 2020, throughout 2021 and into the first three months of 2022.

While oil prices have recently increased to multi-year highs, there is continued uncertainty around commodity price

levels, including the impact of COVID-19 and regulatory complications on such prices, which could cause our Canadian oil sands and pipeline customers to reduce production, delay expansionary and maintenance spending and defer additional investments in their oil sands assets.

Customers began increasing production activity in the fourth quarter of 2020, throughout 2021 and into the first half of 2022.

While oil prices have recently increased to multi-year highs, there is continued uncertainty around commodity price levels, including the impact of COVID-19, inflationary pressures and regulatory implications on such prices, which could cause our Canadian oil sands and pipeline customers to reduce production, delay expansionary and maintenance spending and defer additional investments in their oil sands assets.

British Columbia, Canada.

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LNG Canada (LNGC), a joint venture among Shell Canada Energy, an affiliate of Royal Dutch Shell plc (40 percent), and affiliates of PETRONAS, through its wholly-owned entity, North Montney LNG Limited Partnership (25 percent), PetroChina (15 percent), Mitsubishi Corporation (15 percent) and Korea Gas Corporation (5 percent), is currently constructing a liquefaction and export facility in Kitimat, British Columbia (Kitimat LNG Facility).

British Columbia LNG activity and related pipeline projects are a material driver of activity for our Sitka Lodge, as well as for our mobile assets, which are contracted to serve several portions of the related pipeline construction activity.

British Columbia LNG activity and related pipeline projects are a material driver of activity for our Sitka Lodge, as well as for our mobile assets, which are contracted to serve designated portions of the related pipeline construction activity.

The actual timing of when revenue is realized from the Coastal GasLink (CGL) pipeline and Sitka Lodge contracts could be impacted by any delays in the construction of the Kitimat LNG Facility or the pipeline, such as protest blockades or COVID-19.

Our current expectation is that our contracted commitments associated with the CGL pipeline project will be completed in the second half of 2022 or early 2023.

Our current expectation is that our contracted commitments associated with the CGL pipeline project will be completed in late 2022 or early 2023.

Any new delays in facility or pipeline construction may result in extensions to these dates.

In late March 2020, LNGC announced steps being taken to reduce the spread of COVID-19, including reduction of the workforce at the project site to essential personnel only.

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

Met coal pricing and production growth in the Bowen Basin region is predominantly influenced by the levels of global steel production, which decreased by 6.8% during the first three months of 2022 compared to the same period of 2021 but remained at high levels.

As of April 25, 2022, met coal spot prices were $480 per metric tonne.

Met coal pricing and production growth in the Bowen Basin region is predominantly influenced by the levels of global steel production, which decreased by 5.5% through June 2022 compared to the same period of 2021.

Analysts forecast steel production for 2022 to be subdued for the full year 2022 compared to 2021 with reduced residential construction activity offsetting stronger global infrastructure activity.

As of July 25, 2022, met coal spot prices were $230 per metric tonne.

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

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

The Chinese embargo on Australian coal continues.

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

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With the backdrop of continuing strong steel demand and met coal supply constraints, the spot price for met coal surged to record highs through the second half of 2021 into early 2022.

While met coal prices have receded from their all-time highs, they still remain over $400 per tonne.

Analysts expect elevated met coal prices to persist in the short-term but to moderate and decline further over the medium term if supply and demand issues are resolved.

If the trade impasse with China remains unresolved and the Ukraine conflict continues, there remains a possibility of further volatility in the short to medium term.

Since the historic highs in early 2022, prices have retreated to approximately $230 per tonne with a weakening in steel demand coupled with Chinese lockdowns and concerns about a global economic slowdown.

Analysts expect prices to remain stagnant, with some volatility in prices in the near term, recovering to near $300 per tonne in the second half of 2022.

As the trade impasse with China remains unresolved and as the Ukraine conflict continues, there remains volatility in both the short and medium term.

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

Iron ore prices experienced strong support through the first half of 2021, with prices reaching in excess of $200 US per metric tonne by mid year due to high demand for steel used for infrastructure and increased manufacturing activity in China.

Through the second half of 2021, with forced cuts in Chinese steel production along with weaker demand, prices retreated.

As of April 25, 2022, iron ore spot prices were $126.38 per metric tonne, which reflects a sustained improvement in prices early in 2022 with tighter supply and strong demand.

Higher iron production is expected to continue through 2022 and along with constrained supply, analysts are forecasting an average iron ore price of $135-$150 per metric tonne for 2022.

Despite some constraint in supply, Australian iron ore exports in 2022 are forecast to exceed both 2020 and 2021 volumes.

Through the second half of 2021, with forced cuts in Chinese steel production along with weaker demand, prices retreated from the peaks experienced in mid-2021.

Iron ore prices have remained relatively stable in the first half of 2022, albeit with a decrease in early July.

As of July 22, 2022, iron ore spot prices were $92.51 per metric tonne, which reflects a softening in prices since early 2022 as new COVID restrictions in China and weaker steel production impact demand.

While there is anticipation of infrastructure-related construction activity improving in China, this factor will be tempered with a slowdown in

residential activity and COVID-19 impacts.

Accordingly, iron ore prices are expected to moderate above current levels during the second half of 2022.

Australian iron ore exports in 2022 are forecast to exceed both 2020 and 2021 volumes and continue to grow over the medium term through to 2024.

business supports oil shale drilling and completion activity and is primarily tied to WTI oil prices in the U.S.

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

With the recovery of oil prices, oil rig count and drilling activity have recovered substantially, with 531 oil rigs active at the end of the first quarter 2022.

With the recovery of oil prices, oil rig count and drilling activity have recovered substantially, with 594 oil rigs active at the end of the second quarter 2022.

The Permian Basin remains the most active U.S.

unconventional play, representing 60% of the oil rigs active in the U.S.

at the end of the first quarter of 2022.

unconventional play, representing approximately 60% of the oil rigs active in the U.S.

at the end of the second quarter of 2022.

The increase in the U.S.

rig count and oil prices has only resulted in slight increases to U.S.

oil production from an average of 11.3 million barrels per day in 2021 to an average of 11.4 million barrels per day at the end of January 2022.

As of April 22, 2022, there were 549 active oil rigs in the U.S.

oil production from an average of 11.3 million barrels per day in 2021 to an average of 11.6 million barrels per day at the end of April 2022.

As of July 22, 2022, there were 599 active oil rigs in the U.S.

(as measured by Bakerhughes.com).

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(per tonne) Iron

Second Quarter through April 25, 2022

Third Quarter through July 25, 2022

$ 100.61 $ 78.70 $ 261.31 $ 100.47

4 unchanged sentences

6/30/2021 66.19 53.27 136.44 195.97

3/31/2021 58.13 46.28 127.95 159.83

WTI crude prices are from U.S.

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Three Months Ended

2022 2021 Change Percentage

June 30, Six Months Ended

2022 2021 Change Percentage 2022 2021 Change Percentage

Average Canadian dollar to U.S.

2 unchanged sentences

dollar $0.715 $0.770 ($0.06) (7.2)% $0.719 $0.772 ($0.05) (6.8)%

March 31, 2022 December 31, 2021 Change Percentage

June 30, 2022 December 31, 2021 Change Percentage

Canadian dollar to U.S.

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Capital Expenditures.

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

We currently expect that our 2022 capital expenditures will be in the range of approximately $20 million to $25 million, compared to 2021 capital expenditures of $15.6 million.

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

We currently expect that our 2022 capital expenditures, including the capital expenditures associated with our recently announced 12-year contract renewal for our Wapasu Lodge in the Canadian oil sands, will be in the range of approximately $24 million to $29 million, compared to 2021 capital expenditures of $15.6 million.

We may adjust our capital expenditure plans in the future as we continue to monitor customer activity.

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Results of Operations

Unless otherwise indicated, discussion of results for the three months ended March 31, 2022, is based on a comparison to the corresponding period of 2021.

Results of Operations – Three Months Ended March 31, 2022 Compared to Three Months Ended March 31, 2021

Unless otherwise indicated, discussion of results for the three and six months ended June 30, 2022, is based on a comparison to the corresponding periods of 2021.

Results of Operations – Three Months Ended June 30, 2022 Compared to Three Months Ended June 30, 2021

Three Months Ended

13 unchanged sentences

Depreciation and amortization expense 23,083 21,377 1,706

Impairment expense — 7,935 (7,935)

Other operating (income) expense (106) 30 (136)

Total costs and expenses 170,712 152,047 18,665

Operating income 14,242 2,129 12,113

Interest expense, net (2,606) (3,399) 793

Other income 415 788 (373)

Income (loss) before income taxes 12,051 (482) 12,533

Income tax (expense) benefit (1,821) 492 (2,313)

Net income 10,230 10 10,220

Net income (loss) attributable to noncontrolling interest 662 (3) 665

Net income attributable to Civeo Corporation 9,568 13 9,555

Dividends attributable to preferred shares 490 480 10

Net income (loss) attributable to Civeo common shareholders $ 9,078 $ (467) $ 9,545

We reported net income attributable to Civeo for the quarter ended June 30, 2022 of $9.1 million, or $0.54 per diluted share compared to net loss attributable to Civeo for the quarter ended June 30, 2021 of $0.5 million, or $0.03 per diluted share.

As further discussed below, net loss for the quarter ended June 30, 2021 included a $7.9 million pre-tax loss resulting from the impairment of fixed assets included in Impairment expense.

Consolidated revenues increased $30.8 million, or 20%, in the second quarter of 2022 compared to the second quarter of 2021.

This increase was primarily due to (i) higher billed rooms at our Canadian lodges as occupancy in the second quarter of 2021 was negatively impacted by the COVID-19 pandemic, (ii) higher average daily rate at our Canadian lodges largely due to occupancy mix, (iii) increased mobile asset activity from pipeline projects in Canada, (iv) increased activity at our Australian integrated services villages in Western Australia and (v) increased activity at our Australian Bowen Basin owned villages.

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

dollar in the second quarter of 2022 compared to the second quarter of 2021.

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

Cost of Sales and Services.

Our consolidated cost of sales and services increased $22.1 million, or 20%, in the second quarter of 2022 compared to the second quarter of 2021.

This increase was primarily due to (i) higher billed rooms at our Canadian lodges, (ii) increased mobile asset activity from pipeline projects in Canada, (iii) increased activity at our Australian integrated services villages, (iv) increased activity at our Australian Bowen Basin owned villages and (v) increased cost of

temporary labor due to ongoing labor shortages in Australia.

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

dollar in the second quarter of 2022 compared to the second quarter of 2021.

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

Selling, General and Administrative Expenses.

SG&A expense increased $3.0 million, or 20%, in the second quarter of 2022 compared to the second quarter of 2021.

This increase was primarily due to higher share-based compensation expense, travel and entertainment expense and information technology expense.

The increase in share-based compensation expense was due to a relative increase in our stock price during the second quarter of 2022 compared to the second quarter of 2021.

The increase in travel and entertainment expenses was largely a result of a return to more normalized travel expenses with the lifting of travel restrictions associated with COVID-19.

This increase in information technology expense was related to implementation costs incurred in a cloud computing arrangement for our newly implemented human capital management system, which are being amortized through SG&A expense instead of depreciation and amortization expense.

Depreciation and Amortization Expense.

Depreciation and amortization expense increased $1.7 million, or 8%, in the second quarter of 2022 compared to the second quarter of 2021.

The increase was primarily due to shortening the lives on certain assets in Canada, partially offset by certain assets in Canada becoming fully depreciated during 2021 and the disposal of our West Permian Lodge in the U.S.

Impairment Expense.

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

See Note 3 - Impairment Charges to the notes to the unaudited consolidated financial statements included in Item 1 of this quarterly report for further discussion.

Operating Income.

Consolidated operating income increased $12.1 million, or 569%, in the second quarter of 2022 compared to the second quarter of 2021, primarily due to higher activity levels in Canada in the second quarter of 2022 compared to the second quarter of 2021 and lower impairment expense in Australia in the second quarter of 2022 compared to the second quarter of 2021.

Interest Expense, net.

Net interest expense decreased by $0.8 million, or 23%, in the second quarter of 2022 compared to the second quarter of 2021, primarily related to lower average debt levels on credit facility borrowings during 2022 compared to 2021, partially offset by higher interest rates on credit facility borrowings.

Income Tax (Expense) Benefit.

Our income tax expense for the three months ended June 30, 2022 totaled $1.8 million, or 15.1% of pretax income, compared to an income tax benefit of $0.5 million, or 102.1% of pretax loss, for the three months ended June 30, 2021.

Our effective tax rate for both the three months ended June 30, 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.

Additionally, under Accounting Standards Codification 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.

Other Comprehensive (Loss) Income.

Other comprehensive loss increased $18.5 million in the second quarter of 2022 compared to the second quarter of 2021, primarily as a result of foreign currency translation adjustments due to changes in the Canadian and Australian dollar exchange rates compared to the U.S.

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

dollar decreased 3% in the second quarter of 2022 compared to a 1% increase in the second quarter of 2021.

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

dollar decreased 8% in the second quarter of 2022 compared to a 2% decrease in the second quarter of 2021.

Segment Results of Operations – Canadian Segment

Three Months Ended

2022 2021 Change

Revenues ($ in thousands)

Accommodation revenue (1)

$ 79,431 $ 69,759 $ 9,672

Mobile facility rental revenue (2)

24,058 8,666 15,392

Food service and other services revenue (3)

5,534 4,856 678

Total revenues $ 109,023 $ 83,281 $ 25,742

Cost of sales and services ($ in thousands)

Accommodation cost $ 53,108 $ 44,992 $ 8,116

Mobile facility rental cost 14,458 5,644 8,814

Food service and other services cost 4,976 4,455 521

Indirect other costs 2,467 2,251 216

Total cost of sales and services $ 75,009 $ 57,342 $ 17,667

Gross margin as a % of revenues 31.2 % 31.1 % 0.1 %

Average daily rate for lodges (4)

$ 103 $ 96 $ 7

Total billed rooms for lodges (5)

771,267 723,324 47,943

Average Canadian dollar to U.S.

dollar $ 0.784 $ 0.815 $ (0.031)

(1) Includes revenues related to lodge rooms and hospitality services for owned rooms for the periods presented.

(2) Includes revenues related to mobile assets for the periods presented.

(3) Includes revenues related to food services, laundry and water and wastewater treatment services for the periods presented.

(4) Average daily rate is based on billed rooms and accommodation revenue.

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

Our Canadian segment reported revenues in the second quarter of 2022 that were $25.7 million, or 31%, higher than the second quarter of 2021.

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

dollar by 4% in the second quarter of 2022 compared to the second quarter of 2021 resulted in a $4.4 million period-over-period decrease in revenues.

Excluding the impact of the weaker Canadian exchange rate, the increase was driven by (i) higher billed rooms at our lodges as occupancy in the second quarter of 2021 was negatively impacted by the COVID-19 pandemic, (ii) a higher average daily rate at our lodges largely due to occupancy mix and (iii) increased mobile asset activity from pipeline projects.

Our Canadian segment cost of sales and services increased $17.7 million, or 31%, in the second quarter of 2022 compared to the second quarter of 2021.

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

dollar by 4% in the second quarter of 2022 compared to the second quarter of 2021 resulted in a $3.0 million period-over-period decrease in cost of sales and services.

Excluding the impact of the weaker Canadian exchange rate, the increase in cost of sales and services was driven by increased occupancy at our lodges and by increased mobile asset activity from pipeline projects.

Our Canadian segment gross margin as a percentage of revenues was largely unchanged, increasing from 31.1% in the second quarter of 2021 to 31.2% in the second quarter of 2022.

Accommodation gross margin as a percentage of revenues decreased from 35.5% in the second quarter of 2021 to 33.1% in the second quarter of 2022, as 2021 benefited more significantly from billed rooms that were unused by clients under take-or-pay arrangements.

Mobile facility gross margin as a percentage of revenues increased from 34.9% in the second quarter of 2021 to 39.9% in the second quarter of 2022, due to increased mobile asset activity and related operating efficiencies.

Segment Results of Operations – Australian Segment

Three Months Ended

2022 2021 Change

Revenues ($ in thousands)

Accommodation revenue (1)

$ 39,052 $ 37,780 $ 1,272

Food service and other services revenue (2)

28,768 26,239 2,529

Total revenues $ 67,820 $ 64,019 $ 3,801

Cost of sales and services ($ in thousands)

Accommodation cost $ 18,840 $ 18,082 $ 758

Food service and other services cost 27,008 25,154 1,854

Indirect other cost 1,844 1,659 185

Total cost of sales and services $ 47,692 $ 44,895 $ 2,797

Gross margin as a % of revenues 29.7 % 29.9 % (0.2) %

Average daily rate for villages (3)

$ 77 $ 81 $ (4)

Total billed rooms for villages (4)

505,310 466,298 39,012

Australian dollar to U.S.

dollar $ 0.715 $ 0.770 $ (0.056)

(1) Includes revenues related to village rooms and hospitality services for owned rooms for the periods presented.

(2) Includes revenues related to food services and other services, including facilities management for the periods presented.

(3) Average daily rate is based on billed rooms and accommodation revenue.

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

Our Australian segment reported revenues in the second quarter of 2022 that were $3.8 million, or 6%, higher than the second quarter of 2021.

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

dollar by 7% in the second quarter of 2022 compared to the second quarter of 2021 resulted in a $5.3 million period-over-period decrease in revenues.

On a constant currency basis, the Australian segment experienced a 14% period-over-period increase in revenues.

Excluding the impact of the weaker Australian exchange rate, the increase in the Australian segment was driven by increased activity at our integrated services villages in Western Australia and Civeo owned villages in the Bowen Basin.

Our Australian segment cost of sales and services increased $2.8 million, or 6%, in the second quarter of 2022 compared to the second quarter of 2021.

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

dollar by 7% in the second quarter of 2022 compared to the second quarter of 2021 resulted in a $3.7 million period-over-period decrease in cost of sales and services.

Excluding the impact of the weaker Australian exchange rate, the increase in cost of sales and services was largely driven by (i) increased activity at our integrated services villages in Western Australia, (ii) increased activity our Civeo owned villages in the Bowen Basin and, to a lesser extent, (iii) increased costs of temporary labor due to ongoing labor shortages.

Our Australian segment gross margin as a percentage of revenues decreased to 29.7% in the second quarter of 2022 from 29.9% in the second quarter of 2021.

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

Segment Results of Operations – U.S.

Three Months Ended

2022 2021 Change

Revenues ($ in thousands) $ 8,111 $ 6,876 $ 1,235

Cost of sales and services ($ in thousands) $ 7,352 $ 5,765 $ 1,587

Gross margin as a % of revenues 9.4 % 16.2 % (6.8) %

segment reported revenues in the second quarter of 2022 that were $1.2 million, or 18%, higher than the second quarter of 2021.

This increase was due to greater U.S.

drilling activity positively impacting our wellsite business.

This increase was partially offset by reduced revenue from our former West Permian Lodge, which operated in the second quarter of 2021 and was sold in the fourth quarter of 2021, and reduced activity in our offshore business as certain projects were completed in the second quarter of 2021 that did not recur to the same extent in 2022.

segment cost of sales and services increased $1.6 million, or 28%, in the second quarter of 2022 compared to the second quarter of 2021.

This increase was due to greater U.S.

drilling activity positively impacting our wellsite business, partially offset by lower costs in our offshore business as certain projects were completed in the second quarter of 2021 that did not recur to the same extent in 2022.

segment gross margin as a percentage of revenues decreased from 16.2% in the second quarter of 2021 to 9.4% in the second quarter of 2022 primarily due to our former West Permian Lodge, which operated in the second quarter of 2021 and was sold in the fourth quarter of 2021, and reduced margins from our offshore business as the second quarter of 2021 was positively impacted by higher margins from product sales.

These were partially offset by improved margins in our wellsite business due to operating efficiencies at higher activity levels.

Results of Operations – Six Months Ended June 30, 2022 Compared to Six Months Ended June 30, 2021

Six Months Ended

2022 2021 Change

($ in thousands)

Canada $ 204,975 $ 145,166 $ 59,809

Australia 131,349 123,656 7,693

and other 14,308 10,784 3,524

Total revenues 350,632 279,606 71,026

Costs and expenses

Cost of sales and services

Canada 150,215 109,227 40,988

Australia 92,206 87,798 4,408

and other 13,475 10,787 2,688

Total cost of sales and services 255,896 207,812 48,084

Selling, general and administrative expenses 32,895 28,884 4,011

Depreciation and amortization expense 43,210 42,646 564

Impairment expense — 7,935 (7,935)

Other operating expense 152 101 51

10 unchanged sentences

Net income (loss) attributable to Civeo common shareholders $ 10,001 $ (10,429) $ 20,430

We reported net income attributable to Civeo for the quarter ended March 31, 2022 of $0.9 million, or $0.06 per diluted share compared to net loss attributable to Civeo for the quarter ended March 31, 2021 of $10.0 million, or $0.70 per diluted share.

Consolidated revenues increased $40.2 million, or 32%, in the first quarter of 2022 compared to the first quarter of 2021.

This increase was primarily due to (i) higher billed rooms at our Canadian lodges as occupancy in the first quarter of 2021 was negatively impacted by the COVID-19 pandemic, particularly at our Sitka Lodge, (ii) higher average daily rate at our Canadian lodges due to mix, (iii) increased mobile asset activity from pipeline projects in Canada, (iv) increased occupancy at our Australian Civeo owned villages and (v) increased activity in our U.S.

offshore and wellsite business.

These items were partially offset by a weaker Australian dollar relative to the U.S.

dollar in the first quarter of 2022 compared to the first quarter of 2021.

We reported net income attributable to Civeo for the six months ended June 30, 2022 of $10.0 million, or $0.60 per diluted share compared to net loss attributable to Civeo for the six months ended June 30, 2021 of $10.4 million, or $0.73 per diluted share.

As further discussed below, net loss for the six months ended June 30, 2021 included a $7.9 million pre-tax loss resulting from the impairment of fixed assets included in Impairment expense.

Consolidated revenues increased $71.0 million, or 25%, in the six months ended June 30, 2022 compared to the six months ended June 30, 2021.

This increase was primarily driven by (i) higher billed rooms at our Canadian lodges as occupancy in the first half of 2021 was negatively impacted by the COVID-19 pandemic, (ii) higher average daily rate at our Canadian lodges largely due to occupancy mix, (iii) increased mobile asset activity from pipeline projects in Canada, (iv) increased activity at our Australian Civeo owned villages in the Bowen Basin and (v) increased activity at our integrated services villages in Western Australia.

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

dollar in the six months ended June 30, 2022 compared to the six months ended June 30, 2021.

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

Cost of Sales and Services.

Our consolidated cost of sales and services increased $26.0 million, or 26%, in the first quarter of 2022 compared to the first quarter of 2021.

This increase was primarily due to (i) higher billed rooms at our Canadian lodges, (ii) increased mobile asset activity from pipeline projects in Canada, (iii) increased occupancy at our Australian Civeo owned villages and the increased cost of temporary labor due to ongoing labor shortages in Australia and (vi) increased activity in our U.S.

offshore business and wellsite business.

These items were partially offset by a weaker Australian dollar relative to the U.S.

dollar in the first quarter of 2022 compared to the first quarter of 2021.

Our consolidated cost of sales and services increased $48.1 million, or 23%, in the six months ended June 30, 2022 compared to the six months ended June 30, 2021.

This increase was primarily due to (i) higher billed rooms at our Canadian lodges, (ii) increased mobile asset activity from pipeline projects in Canada, (iii) increased activity at our Australian Civeo owned villages in the Bowen Basin, (iv) increased activity at our integrated services villages in Western Australia and (v) increased cost of temporary labor due to ongoing labor shortages in Australia.

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

dollar in the six months ended June 30, 2022 compared to the six months ended June 30, 2021.

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

Selling, General and Administrative Expenses .

SG&A expense increased $1.0 million, or 7%, in the first quarter of 2022 compared to the first quarter of 2021.

This increase was primarily due to higher share-based compensation expense and information technology expense related to our newly implemented human capital management system.

The increase in share-based compensation expense was due to an increase in our stock price during the first quarter of 2022 compared to the first quarter of 2021.

SG&A expense increased $4.0 million, or 14%, in the six months ended June 30, 2022 compared to the six months ended June 30, 2021.

This increase was primarily due to higher share-based compensation expense, travel and entertainment expense and information technology expense.

The increase in share-based compensation expense was due to a relative increase in our stock price during the six months ended June 30, 2022 compared to the six months ended June 30, 2021.

The increase in travel and entertainment expenses was largely a result of a return to more normalized travel expenses with the lifting of travel restrictions associated with COVID-19.

The increase in information technology expense was related to implementation costs incurred in a cloud computing arrangement for our newly implemented human capital management system, which are being amortized through SG&A expense instead of depreciation and amortization expense.

Depreciation and Amortization Expense.

Depreciation and amortization expense decreased $1.1 million, or 5%, in the first quarter of 2022 compared to the first quarter of 2021.

The decrease was primarily due to certain assets in Canada becoming fully depreciated during 2021 and the disposal of our West Permian Lodge during 2021 in the U.S.

Depreciation and amortization expense increased $0.6 million, or 1%, in the six months ended June 30, 2022 compared to the six months ended June 30, 2021.

The increase was primarily due to shortening the lives on certain assets in Canada, partially offset by assets in Canada becoming fully depreciated during 2021 and the disposal of our West Permian Lodge in the U.S.

Impairment Expense.

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

See Note 3 - Impairment Charges to the notes to the unaudited consolidated financial statements included in Item 1 of this quarterly report for further discussion.

Operating Income (Loss).

Consolidated operating income increased $14.1 million, or 143%, in the first quarter of 2022 compared to the first quarter of 2021, primarily due to higher activity levels in Canada and Australia in the first quarter of 2022 compared to the first quarter of 2021.

Consolidated operating income increased $26.3 million, or 338%, in the six months ended June 30, 2022 compared to the six months ended June 30, 2021, primarily due to higher activity levels in Canada and Australia in the six months ended June 30, 2022 compared to the six months ended June 30, 2021 and lower impairment expense in Australia in the six months ended June 30, 2022 compared to the six months ended June 30, 2021.

Interest Expense, net.

Net interest expense decreased by $0.9 million, or 27%, in the first quarter of 2022 compared to the first quarter of 2021, primarily related to lower average debt levels on credit facility borrowings during 2022 compared to 2021 and lower interest rates on credit facility borrowings.

Net interest expense decreased by $1.7 million, or 25%, in the six months ended June 30, 2022 compared to the six months ended June 30, 2021, primarily related to lower average debt levels on credit facility borrowings during 2022 compared to 2021.

Other Income.

Consolidated other income decreased $3.2 million in the first quarter of 2022 compared to the first quarter of 2021, primarily due to $2.8 million of other income in 2021 related to proceeds from the Canada Emergency Wage Subsidy (CEWS) and higher gains on sale of assets in 2021 compared to 2022.

Consolidated other income decreased $3.6 million in the six months ended June 30, 2022 compared to the six months ended June 30, 2021.

The six months ended June 30, 2022 included lower gain on the sale of assets primarily related to various mobile assets across Canada, Australia and the U.S.

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

Income Tax (Expense) Benefit.

Our income tax expense for the three months ended March 31, 2022 totaled $1.6 million, or 44.9% of pretax income, compared to an income 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.

Our income tax expense for the six months ended June 30, 2022 totaled $3.4 million, or 21.8% of pretax income, compared to an income tax expense of $0.6 million, or (6.6)% of pretax loss, for the six months ended June 30, 2021.

Our effective tax rate for both the six months ended June 30, 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.

Other Comprehensive (Loss) Income.

Other comprehensive income increased $9.6 million in the first quarter of 2022 compared to the first quarter of 2021, primarily as a result of foreign currency translation adjustments due to changes in the Canadian and Australian dollar exchange rates compared to the U.S.

Other comprehensive loss increased $8.8 million in the six months ended June 30, 2022 compared to the six months ended June 30, 2021, primarily as a result of foreign currency translation adjustments due to changes in the Canadian and Australian dollar exchange rates compared to the U.S.

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

dollar increased 1% in the first quarter of 2022 compared to a 1% increase in the first quarter of 2021.

dollar decreased 2% in the six months ended June 30, 2022 compared to a 3% increase in the six months ended June 30, 2021.

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

dollar increased 3% in the first quarter of 2022 compared to a 2% decrease in the first quarter of 2021.

dollar decreased 5% in the six months ended June 30, 2022 compared to a 3% decrease in the six months ended June 30, 2021.

Segment Results of Operations – Canadian Segment

Three Months Ended

Six Months Ended

2022 2021 Change

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

Our Canadian segment reported revenues in the first quarter of 2022 that were $34.1 million, or 55%, higher than the first quarter of 2021.

This increase was driven by higher billed rooms at our lodges as occupancy in the first quarter of 2021 was negatively impacted by the COVID-19 pandemic, particularly at our Sitka Lodge, higher average daily rate at our lodges largely due to mix and by increased mobile asset activity from pipeline projects.

Our Canadian segment cost of sales and services increased $23.3 million, or 45%, in the first quarter of 2022 compared to the first quarter of 2021.

The increased cost of sales and services was driven by increased occupancy at our lodges and by increased mobile asset activity from pipeline projects.

Our Canadian segment gross margin as a percentage of revenues increased from 16.2% in the first quarter of 2021 to 21.6% in the first quarter of 2022.

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

Our Canadian segment reported revenues in the six months ended June 30, 2022 that were $59.8 million, or 41%, higher than the six months ended June 30, 2021.

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

dollar by 2% in the six months ended June 30, 2022 compared to the six months ended June 30, 2021 resulted in a $4.5 million period-over-period decrease in revenues.

Excluding the impact of the weaker Canadian exchange rate, the increase was driven by (i) higher billed rooms at our lodges as occupancy in the first half of 2021 was negatively impacted by the COVID-19 pandemic, (ii) a higher average daily rate at our lodges largely due to occupancy mix and (iii) increased mobile asset activity from pipeline projects.

Our Canadian segment cost of sales and services increased $41.0 million, or 38%, in the six months ended June 30, 2022 compared to the six months ended June 30, 2021.

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

dollar by 2% in the six months ended June 30, 2022 compared to the six months ended June 30, 2021 resulted in a $3.0 million period-over-period decrease in cost of sales and services.

Excluding the impact of the weaker Canadian exchange rate, the increase in cost of sales and services was driven by increased occupancy at our lodges and increased mobile asset activity from pipeline projects.

Our Canadian segment gross margin as a percentage of revenues increased from 24.8% in the six months ended June 30, 2021 to 26.7% in the six months ended June 30, 2022.

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

Segment Results of Operations – Australian Segment

Three Months Ended

Six Months Ended

2022 2021 Change

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

Our Australian segment reported revenues in the first quarter of 2022 that were $3.9 million, or 7%, higher than the first quarter of 2021.

Our Australian segment reported revenues in the six months ended June 30, 2022 that were $7.7 million, or 6%, higher than the six months ended June 30, 2021.

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

dollar by 6% in the first quarter of 2022 compared to the first quarter of 2021 resulted in a $4.2 million period-over-period decrease in revenues.

Excluding the impact of the weaker Australian exchange rate, the Australian segment experienced increased activity at Civeo owned villages in the Bowen Basin.

Our Australian segment cost of sales and services increased $1.6 million, or 4%, in the first quarter of 2022 compared to the first quarter of 2021.

dollar by 7% in the six months ended June 30, 2022 compared to the six months ended June 30, 2021 resulted in a $9.5 million period-over-period decrease in revenues.

Excluding the impact of the weaker Australian exchange rate, the increase in the Australian segment was driven by increased activity at our Civeo owned villages in the Bowen Basin and our integrated services villages in Western Australia.

Our Australian segment cost of sales and services increased $4.4 million, or 5%, in the six months ended June 30, 2022 compared to the six months ended June 30, 2021.

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

dollar by 6% in the first quarter of 2022 compared to the first quarter of 2021 resulted in a $3.0 million period-over-period decrease in cost of sales and services.

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

Our Australian segment gross margin as a percentage of revenues increased to 29.9% in the first quarter of 2022 from 28.1% in the first quarter of 2021.

dollar by 7% in the six months ended June 30, 2022 compared to the six months ended June 30, 2021 resulted in a $6.7 million period-over-period decrease in cost of sales and services.

Excluding the impact of the weaker Australian exchange rate, the increase in cost of sales and services was largely driven by (i) increased activity at our Bowen Basin villages, (ii) increased activity at our integrated services villages in Western Australia and (iii) increased costs of temporary labor due to ongoing labor shortages.

Our Australian segment gross margin as a percentage of revenues increased to 29.8% in the six months ended June 30, 2022 from 29.0% in the six months ended June 30, 2021.

This was primarily driven by improved margins at Civeo owned villages in the Bowen Basin as a result of increased occupancy.

Segment Results of Operations – U.S.

Three Months Ended

Six Months Ended

2022 2021 Change

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Gross margin as a % of revenues 5.8 % — % 5.8 %

segment reported revenues in the first quarter of 2022 that were $2.3 million, or 59%, higher than the first quarter of 2021.

This increase was due to increased activity in our offshore rental and fabrication businesses and increased U.S.

drilling activity positively impacting our wellsite business.

segment cost of sales and services increased in the first quarter of 2022 compared to the first quarter of 2021.

This increase was due to increased activity in our offshore rental and fabrication businesses and increased U.S.

drilling activity positively impacting our wellsite business.

These increases were partially offset by reduced costs from our former West Permian lodge, which operated in the first quarter of 2021 and was sold in the fourth quarter of 2021.

segment gross margin as a percentage of revenues increased from (28.5)% in the first quarter of 2021 to 1.2% in the first quarter of 2022 primarily due to improved operating efficiencies in our offshore and wellsite businesses at higher activity levels.

segment reported revenues in the six months ended June 30, 2022 that were $3.5 million, or 33%, higher than the six months ended June 30, 2021.

This increase was due to greater U.S.

drilling activity positively impacting our wellsite business, partially offset by reduced revenue from our former West Permian Lodge, which operated in the second quarter of 2021 and was sold in the fourth quarter of 2021.

segment cost of sales and services increased $2.7 million, or 25%, in the six months ended June 30, 2022 compared to the six months ended June 30, 2021.

This increase was due to greater U.S.

drilling activity positively impacting our wellsite business, partially offset by reduced costs from our former West Permian Lodge, which operated in the second quarter of 2021 and was sold in the fourth quarter of 2021.

segment gross margin as a percentage of revenues increased 5.8% from the six months ended June 30, 2021 to the six months ended June 30, 2022 primarily due to improved margins in our wellsite business due to operating efficiencies at higher activity levels, partially offset by our former West Permian Lodge, which operated in the second quarter of 2021 and was sold in the fourth quarter of 2021.

Liquidity and Capital Resources

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In addition, capital has been used to repay debt, repurchase our common shares and fund strategic business acquisitions.

In the future, capital may be required to move lodges from one site to another.

Historically, our primary sources of funds have been available cash, cash flow from operations, borrowings under our Credit Agreement and proceeds from equity issuances.

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

The following table summarizes our consolidated liquidity position as of March 31, 2022 and December 31, 2021 (in thousands):

March 31, 2022 December 31, 2021

The following table summarizes our consolidated liquidity position as of June 30, 2022 and December 31, 2021 (in thousands):

June 30, 2022 December 31, 2021

Lender commitments $ 200,000 $ 200,000

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Total available liquidity $ 95,284 $ 92,817

Cash totaling $2.0 million was provided by operations during the three months ended March 31, 2022, compared to $12.8 million provided by operations during the three months ended March 31, 2021.

During the three months ended March 31, 2022 and 2021, $21.8 million and $0.1 million was used in working capital, respectively.

The increase in cash used in working capital in 2022 compared to 2021 is largely due to increased accounts receivable balances resulting from increased activity in our Canadian and Australian businesses during the three months ended March 31, 2022 compared to the three months ended March 31, 2021 and decreased accounts payable and accrual balances largely due to timing of payments.

Cash was used in investing activities during the three months ended March 31, 2022 in the amount of $1.0 million, compared to cash provided by investing activities during the three months ended March 31, 2021 in the amount of $3.3 million.

The decrease in cash provided by investing activities was primarily due to proceeds from the sale of our manufacturing facility and mobile assets in Canada during the three months ended March 31, 2021.

Capital expenditures totaled $3.6 million and $3.4 million during the three months ended March 31, 2022 and 2021, respectively.

Cash totaling $23.6 million was provided by operations during the six months ended June 30, 2022, compared to $29.4 million provided by operations during the six months ended June 30, 2021.

During the six months ended June 30, 2022 and 2021, $36.6 million and $13.8 million was used in working capital, respectively.

The increase in cash used in working capital in 2022 compared to 2021 is largely due to the timing of customer payments and revenue recognition as it relates to mobile asset activity in Canada and decreased accounts payable and accrual balances, substantially due to timing of payments during the six months ended June 30, 2022 compared to the six months ended June 30, 2021.

Cash was used in investing activities during the six months ended June 30, 2022 in the amount of $5.2 million, compared to cash provided by investing activities during the six months ended June 30, 2021 in the amount of $0.5 million.

The decrease in cash provided by investing activities was primarily due to the receipt of proceeds from the sale of our manufacturing facility

and mobile assets in Canada during the six months ended June 30, 2021.

Capital expenditures totaled $8.6 million and $6.5 million during the six months ended June 30, 2022 and 2021, respectively.

Capital expenditures in both periods were primarily maintenance related.

We expect our capital expenditures for 2022 to be in the range of $24 million to $29 million, which excludes any unannounced and uncommitted projects, the spending for which is contingent on obtaining customer contracts or commitments.

Our 2022 capital expenditures estimate includes the capital expenditures associated with our recently announced 12-year contract renewal for our Wapasu Lodge in the Canadian oil sands.

Whether planned expenditures will actually be spent in 2022 depends on industry conditions, project approvals and schedules, customer room commitments and project and construction timing.

We expect to fund these capital expenditures with available cash, cash flow from operations and revolving credit borrowings under our Credit Agreement.

The foregoing capital expenditure forecast does not include any funds for strategic acquisitions, which we could pursue should the transaction economics be attractive enough to us compared to the current capital allocation priorities of debt reduction.

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

Net cash of $1.3 million was used in financing activities during the three months ended March 31, 2022 primarily due to term loan repayments of $8.0 million and $1.0 million used to settle tax obligations on vested shares under our share-based compensation plans, partially offset by net borrowings under our revolving credit facilities of $7.7 million.

Net cash of $16.7 million was used in financing activities during the three months ended March 31, 2021 primarily due to net repayments under our revolving credit facilities of $6.7 million, repayments of term loan borrowings of $8.9 million and $1.1 million used to settle tax obligations on vested shares under our share-based compensation plans.

The following table summarizes the changes in debt outstanding during the three months ended March 31, 2022 (in thousands):

Net cash of $19.9 million was used in financing activities during the six months ended June 30, 2022 primarily due to net repayments under our revolving credit facilities of $2.6 million, term loan repayments of $15.8 million, $0.5 million used to repurchase our common shares and $1.0 million used to settle tax obligations on vested shares under our share-based compensation plans.

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

The following table summarizes the changes in debt outstanding during the six months ended June 30, 2022 (in thousands):

Balance at December 31, 2021 $ 175,130

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Translation (2,153)

Balance at March 31, 2022 $ 177,907

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

Balance at June 30, 2022 $ 154,638

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

If our plans or assumptions change, including as a result of the impact of COVID-19 or changes in price of and demand for oil, or are inaccurate, or if we make acquisitions, we may need to raise additional capital.

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Credit Agreement

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

As of June 30, 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:

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

As of March 31, 2022, we had outstanding letters of credit of $0.3 million under the U.S.

As of June 30, 2022, we had outstanding letters of credit of $0.3 million under the U.S.

facility, zero under the Australian facility and $1.1 million under the Canadian facility.

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

Quarterly dividends were paid in-kind on March 31, 2022, thereby increasing the liquidation preference to $10,830 per share as of March 31, 2022.

Quarterly dividends were paid in-kind on June 30, 2022, thereby increasing the liquidation preference to $10,884 per share as of June 30, 2022.

We currently expect to pay dividends on the preferred shares through an increase in liquidation preference rather than cash until they mandatorily convert to Civeo common shares in April 2023.

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis