What changed in this filing

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Item 1. Financial Statements

2023-10-27 compared with 2023-07-27 · 196 added, 145 removed, 629 unchanged (35% of the section changed)

2 unchanged sentences

(In millions, except share data)

September 30,

Current assets:

29 unchanged sentences

393,926,996 and

392,832,752 shares issued and outstanding at June 30, 2023 and

392,832,752 shares issued and outstanding at September 30, 2023 and

December 31, 2022

10 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Cost of revenue

4 unchanged sentences

Equity income in unconsolidated affiliates

Other expense, net

Other income (expense), net

Net income before income taxes

Provision (benefit) for income taxes

Net income attributable to noncontrolling interests

Provision for income taxes

Net income (loss) attributable to noncontrolling interests

Net income attributable to Company

6 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Currency translation adjustments

2 unchanged sentences

Comprehensive income (loss)

Comprehensive income attributable to noncontrolling interest

Comprehensive income (loss) attributable to noncontrolling interest

Comprehensive income (loss) attributable to Company

2 unchanged sentences

(In millions)

Six Months Ended

Nine Months Ended

September 30,

Cash flows from operating activities:

6 unchanged sentences

Stock-based compensation

Impairment and loss on assets held for sale

Change in operating assets and liabilities, net of acquisitions:

43 unchanged sentences

Balance at June 30, 2023

Other comprehensive income, net

Cash dividends, $ 0.05 per common share

Transactions with non-controlling interests

Stock-based compensation

Withholding taxes

Balance at September 30, 2023

Shares Issued

13 unchanged sentences

Balance at June 30, 2022

Other comprehensive loss, net

Cash dividends, $ 0.05 per common share

Stock-based compensation

Balance at September 30, 2022

See notes to unaudited consolidated financial statements.

7 unchanged sentences

In our opinion, the consolidated financial statements include all adjustments, which are of a normal recurring nature unless otherwise disclosed, necessary for a fair presentation of the results for the interim periods.

The results of operations for the three and six months ended June 30, 2023 are not necessarily indicative of the results to be expected for the full year.

The results of operations for the three and nine months ended September 30, 2023 are not necessarily indicative of the results to be expected for the full year.

The preparation of financial statements in conformity with GAAP in the United States requires management to make estimates and assumptions that affect reported and contingent amounts of assets and liabilities as of the date of the financial statements and reported amounts of revenues and expenses during the reporting period.

4 unchanged sentences

Inventories consist of (in millions):

September 30,

Raw materials and supplies

4 unchanged sentences

Accrued liabilities consist of (in millions):

September 30,

Taxes (non-income)

6 unchanged sentences

Amounts reclassified from accumulated other comprehensive

Balance at June 30, 2023

Balance at September 30, 2023

The components of amounts reclassified from accumulated other comprehensive loss are as follows (in millions):

Three Months Ended June 30,

Three Months Ended September 30,

Cost of revenue

Six Months Ended June 30,

Selling, general and administrative

Nine Months Ended September 30,

Cost of revenue

7 unchanged sentences

The movement in other comprehensive income (loss) from period to period will be the combination of:

1) changes in fair value of open derivatives of ($ 6 ) million and ($ 18 ) million during the three and six months ended June 30, 2023 ;

and, 2) the outflow of other comprehensive loss related to cumulative changes in the fair value of derivatives that have settled in the current period were $ 5 million and $ 7 million during the three and six months ended June 30, 2023 .

1) changes in fair value of open derivatives of ($ 4 ) million and ($ 22 ) million during the three and nine months ended September 30, 2023 ;

and, 2) the outflow of other comprehensive loss related to cumulative changes in the fair value of derivatives that have settled in the current period were $ 7 million and $ 14 million during the three and nine months ended September 30, 2023 .

Financial results by operating segment are as follows (in millions):

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Wellbore Technologies

2 unchanged sentences

Total revenue

Operating profit (loss):

Operating profit:

Wellbore Technologies

2 unchanged sentences

Eliminations and corporate costs

Total operating profit (loss)

Total operating profit

Sales from one segment to another generally are priced at estimated equivalent commercial selling prices;

9 unchanged sentences

The sale is subject to government approval under Russian law and other jurisdictions.

As a result of these actions, we recorded $ 41 million in impairment and other charges within costs of revenue for the six months ended June 30, 2022.

As of June 30, 2023, all our Russian assets and liabilities were classified as held for sale and reported in “Prepaid and Other Current Assets”

As a result of these actions, $ 76 million and $ 125 million in impairment and other charges were recorded for the three and nine months ended September 30, 2022, respectively, of which $ 51 million relates to accumulated foreign currency translation adjustment losses for Russia and Belarus.

The impairment and other charges are reported in “Cost of revenue”

($ 25 million and $ 74 million for the three and nine months ended September 30, 2022, respectively) and “Selling, general and administrative”

($ 51 million for both the three and nine months ended September 30, 2022) in our Consolidated Statements of Income (Loss).

Charges were $ 31 million and $ 61 million for the three and nine months ended September 30, 2022, respectively, for Wellbore Technologies, $ 22 million and $ 39 million, respectively, for Completion & Production Solutions, and $ 23 million and $ 25 million, respectively, for Rig Technologies.

As of September 30, 2023, all our Russian assets and liabilities were classified as held for sale and reported in “Prepaid and Other Current Assets”

and “Accrued Liabilities”, respectively, in our Consolidated Balance Sheet.

We expect to complete the sale of our Russian entities within the next 12 months, subject to regulatory approval.

Total other items included in operating profit for the three and six months ended June 30, 2023 , were pre-tax credits of $ 7 million and $ 11 million, respectively, primarily related to gains on sales of previously reserved inventory.

Total other items included in operating profit for the three and six months ended June 30, 2022 , were pre-tax charges for severance, facility closures, and other items of $ 14 million, net of related credits of $ 16 million, and $ 59 million, net of related credits of $ 17 million, respectively.

Other items for the six months ended June 30, 2022 included impairment and other charges associated with the Company's operations in Russia, Belarus, and Ukraine discussed above.

Total other items included in operating profit for the three months ended September 30, 2023 totaled $ 7 million, consisting of pre-tax charges for a voluntary early retirement program and other items of $ 13 million partially offset by credits related to gains on sale of previously reserved inventory of $ 6 million.

Total other items included in operating profit for the nine months ended September 30, 2023 were ($ 4 ) million, consisting of pre-tax credits related to gains on sale of previously reserved inventory of $ 17 million partially offset by charges for a voluntary early retirement program and other items of $ 13 million.

Total other items included in operating profit for the three months ended September 30, 2022, were $ 63 million (pre-tax costs of $ 76 million for the impairment and other charges discussed above partially offset by credits of ($ 13 ) million related to gains on sales of previously reserved inventory).

Total other items included in operating profit for the nine months ended September 30, 2022, was $ 122 million (pre-tax charges of $ 125 million for the impairment and other charges discussed above, $ 23 million of severance, facility closure costs and restructure, partially offset by credits of ($ 26 ) million related to gains on sales of previously reserved inventory).

Disaggregation of Revenue

2 unchanged sentences

and Canada (in millions):

Three Months Ended June 30,

Three Months Ended September 30,

North America

International

Six Months Ended June 30,

Nine Months Ended September 30,

North America

1 unchanged sentence

Performance Obligations

Net revenue recognized from performance obligations satisfied in previous periods was $ 5 million for the three months ended June 30, 2023 primarily due to change orders.

Net revenue recognized from performance obligations satisfied in previous periods was $ 2 million for the three months ended September 30, 2023 primarily due to change orders.

Remaining performance obligations represent the transaction price of firm orders for all revenue streams for which work has not been performed on contracts with original expected duration of one year or more.

We do not disclose the remaining performance obligations of royalty contracts, service contracts for which there is a right to invoice, and short-term contracts that are expected to have a duration of one year or less.

As of June 30, 2023 , the aggregate amount of the transaction price allocated to remaining performance obligations was $ 4,210 million.

As of September 30, 2023 , the aggregate amount of the transaction price allocated to remaining performance obligations was $ 4,311 million.

The Company expects to recognize approximately $ 378 million in revenue for the remaining performance obligations in 2023 and $ 3,933 million in 2024 and thereafter.

6 unchanged sentences

Currency translation adjustments and other

Balance at June 30, 2023

Balance at September 30, 2023

Royalty Revenue

The Company recognizes royalty revenue due under various licenses for the Company's intellectual property, including for technology related to drill bits.

The Company recognized revenue for drill bit licenses of approximately $ 21 million and $ 41 million for the three and six months ended June 30, 2023, respectively, and $ 20 million and $ 40 million for the three and six months ended June 30, 2022, respectively.

The Company recognized revenue for drill bit licenses of approximately $ 21 million and $ 62 million for the three and nine months ended September 30, 2023 , respectively, and $ 20 million and $ 60 million for the three and nine months ended September 30, 2022, respectively.

As previously disclosed, the Company is currently pursuing litigation against certain non-paying licensees.

3 unchanged sentences

The Company’s customer base, mostly in the oil and gas industry, have generally similar collectability risk characteristics, although larger and state-owned customers may have lower risk than smaller independent customers.

As of June 30, 2023, the allowance for credit losses totaled $ 76 million.

As of September 30, 2023, the allowance for credit losses totaled $ 77 million.

The changes in the carrying amount of the allowance for credit losses are as follows (in millions):

2 unchanged sentences

Recoveries collected

Balance at June 30, 2023

Balance at September 30, 2023

The Company leases certain facilities and equipment to support its operations around the world.

6 unchanged sentences

Components of leases are as follows (in millions):

September 30,

Current portion of lease liabilities:

September 30,

Long-term portion of lease liabilities:

Debt consists of (in millions):

September 30,

$ 1.1 billion in Senior Notes, interest at 3.95 % payable

8 unchanged sentences

The credit facility contains a financial covenant regarding maximum debt-to-capitalization ratio of 60 %.

As of June 30, 2023 , the Company was in compliance with a debt-to-capitalization ratio of 26.4 % and had no outstanding borrowings or letters of credit issued under the facility, resulting in $ 2.0 billion of available funds.

As of September 30, 2023 , the Company was in compliance with a debt-to-capitalization ratio of 26.1 % and had no outstanding borrowings or letters of credit issued under the facility, resulting in $ 2.0 billion of available funds.

Additionally, a consolidated joint venture of the Company borrowed $ 120 million against a $ 150 million bank line of credit for the construction of a facility in Saudi Arabia.

1 unchanged sentence

The bank line of credit contains a financial covenant regarding maximum debt-to-equity ratio of 75 %.

As of June 30, 2023 , the joint venture was in compliance.

As of September 30, 2023 , the joint venture was in compliance.

The facility construction was completed in the fourth quarter of 2022, and the joint venture will not have future borrowings on the line of credit.

The line of credit repayment schedule began in December 2022 with final payment no later than June 2032 .

As of June 30, 2023 , the Company has $ 109 million in borrowings related to this line of credit.

As of September 30, 2023 , the Company has $ 109 million in borrowings related to this line of credit.

The carrying value of debt under the Company’s consolidated joint venture approximates fair value because the interest rates are variable and reflective of current market rates.

1 unchanged sentence

The Company can repay the entire outstanding facility balance without penalty at its sole discretion.

Other debt at June 30, 2023 included $ 33 million of funding provided by minority interest partners of NOV consolidated joint ventures, of which $ 3 million is due in the next twelve months.

The Company had $ 481 million of outstanding letters of credit at June 30, 2023, primarily in Norway and Netherlands, that are under various bilateral letter of credit facilities.

Other debt at September 30, 2023 included $ 33 million of funding provided by minority interest partners of NOV consolidated joint ventures, of which $ 3 million is due in the next twelve months.

The Company had $ 492 million of outstanding letters of credit at September 30, 2023, primarily in Norway and the United States, that are under various bilateral letter of credit facilities.

Letters of credit are issued as bid bonds, advanced payment bonds and performance bonds.

At June 30, 2023 and December 31, 2022, the fair value of the Company’s unsecured Senior Notes approximated $ 1,256 million and $ 1,215 million, respectively.

At September 30, 2023 and December 31, 2022, the fair value of the Company’s unsecured Senior Notes approximated $ 1,209 million and $ 1,215 million, respectively.

The fair value of the Company’s debt is estimated using Level 2 inputs in the fair value hierarchy and is based on quoted prices for those of similar instruments.

At June 30, 2023 and December 31, 2022, the carrying value of the Company’s unsecured Senior Notes approximated $ 1,585 million.

The effective tax rate for the three and six months ended June 30, 2023 was 10.8 % and 12.1 %, respectively, compared to ( 2.9 )% and 36.4 % for the same periods in 2022.

At September 30, 2023 and December 31, 2022, the carrying value of the Company’s unsecured Senior Notes approximated $ 1,585 million.

The effective tax rate for the three and nine months ended September 30, 2023 was 30.8 % and 18.2 %, respectively, compared to 45.3 % and 42.3 % for the same periods in 2022.

The effective tax rate for 2023 was positively impacted by the utilization of previously unrealized loss carryforwards and tax credits as well as favorable adjustments related to changes in certain exchange rates, partially offset by current year losses in certain jurisdictions with no tax benefit.

The Company anticipates it will no longer be in a pre-tax three year cumulative loss position at December 31, 2023.

The Company’s year-end assessment of the carrying value of its deferred tax assets will therefore consider projections of future taxable income, which could result in the determination that a significant portion of deferred tax assets are more-likely-than-not to be realized in the future.

In the event such a determination is made, valuation allowances against deferred tax assets would be reduced, resulting in a decrease to income tax expense in the fourth quarter of 2023.

In 2022, the Company received and paid a $ 51 million transfer pricing tax assessment in Denmark.

9 unchanged sentences

Long-Term Incentive Plan (the “NOV Plan”), was approved by shareholders on May 11, 2018 and amended and restated on May 24, 2022.

The NOV Plan provides for the granting of stock options,

restricted stock, restricted stock units, performance awards, phantom shares, stock appreciation rights, stock payments and substitute awards.

The NOV Plan provides for the granting of stock options, restricted stock, restricted stock units, performance awards, phantom shares, stock appreciation rights, stock payments and substitute awards.

The number of shares authorized under the NOV Plan is 55.7 million.

The NOV Plan is also subject to a fungible ratio concept, such that the issuance of stock options and stock appreciation rights reduces the number of available shares under the NOV Plan on a 1-for-1 basis, and the issuance of other awards reduces the number of available shares under the NOV Plan on a 1.5-for-1 basis.

At June 30, 2023, approximately 12.8 million shares remained available for future grants under the NOV Plan.

At September 30, 2023, approximately 12.8 million shares remained available for future grants under the NOV Plan.

The Company also has outstanding awards under its other stock-based compensation plan known as the National Oilwell Varco, Inc.

Long-Term Incentive Plan (the “Plan”), however the Company is no longer granting new awards under the Plan.

On May 17, 2023, the Company granted 84,000 restricted stock units with a fair value of $ 15.00 per share.

The awards were granted to non-employee members of the board of directors and vest on the first anniversary of the grant date.

Total expense for all stock-based compensation arrangements was $ 17 million and $ 32 million for the three and six months ended June 30, 2023, respectively and $ 17 million and $ 33 million for the three and six months ended June 30, 2022, respectively.

There was no income tax benefit recognized in the Consolidated Statements of Income for stock-based compensation arrangements under the NOV Plan for each of the three and six months ended June 30, 2023 and 2022 .

Total expense for all stock-based compensation arrangements was $ 17 million and $ 49 million for the three and nine months ended September 30, 2023, respectively and $ 17 million and $ 50 million for the three and nine months ended September 30, 2022, respectively.

There was no income tax benefit recognized in the Consolidated Statements of Income for stock-based compensation arrangements under the NOV Plan for each of the three and nine months ended September 30, 2023 and 2022 .

Derivative Financial Instruments

4 unchanged sentences

Currency Denomination

September 30,

Foreign Currency

Colombian Peso

South Korean Won

1 unchanged sentence

Brazilian Real

South African Rand

Singapore Dollar

South African Rand

British Pound Sterling

Canadian Dollar

Cash Flow Hedging Strategy

7 unchanged sentences

The gain or loss on the derivative instrument is recognized in earnings in other income (expense), together with the changes in the hedged nonfunctional monetary accounts.

The amount of gain (loss) recognized in other income (expense), net was ($ 5 ) million and ($ 10 ) million for the three and six months ended June 30, 2023 , respectively, and ($ 11 ) million and ($ 14 ) million for the three and six months ended June 30, 2022, respectively.

The amount of gain (loss) recognized in other income (expense), net was ($ 7 ) million and ($ 17 ) million for the three and nine months ended September 30, 2023 , respectively, and ($ 8 ) million and ($ 22 ) million for the three and nine months ended September 30, 2022, respectively.

The Company has the following fair values of its derivative instruments and their balance sheet classifications (in millions):

2 unchanged sentences

Balance Sheet

September 30,

Balance Sheet

September 30,

Derivatives designated as hedging instruments

22 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Net income attributable to Company

7 unchanged sentences

The two-class method requires a portion of net income attributable to Company to be allocated to participating securities, which are unvested awards of share-based payments with non-forfeitable rights to receive dividends or dividend equivalents if declared.

Net income attributable to the Company allocated to these participating securities was immaterial for each of the three and six months ended June 30, 2023 and 2022 , respectively.

The Company had stock options outstanding that were anti-dilutive totaling 23 million and 22 million shares for the three and six months ended June 30, 2023 , respectively, compared to 20 million and 21 million shares for the three and six months ended June 30, 2022 , respectively.

Net income attributable to the Company allocated to these participating securities was immaterial for each of the three and nine months ended September 30, 2023 and 2022 , respectively.

The Company had stock options outstanding that were anti-dilutive totaling 19 million shares for both the three and nine months ended September 30, 2023 , compared to 22 million and 20 million shares for the three and nine months ended September 30, 2022 , respectively.

Cash Dividends

Cash dividends were $ 20 million and $ 40 million for the three and six months ended June 30, 2023 compared to $ 19 million and $ 39 million for the three and six months ended June 30, 2022 .

Cash dividends were $ 20 million and $ 60 million for the three and nine months ended September 30, 2023 compared to $ 20 million and $ 59 million for the three and nine months ended September 30, 2022 .

The declaration and payment of future dividends is at the discretion of the Company’s Board of Directors and will be dependent upon the Company’s results of operations, financial condition, capital requirements and other factors deemed relevant by the Company’s Board of Directors.

10 unchanged sentences

The Company believes, and the Company’s experience has been, that such insurance has been sufficient to cover any such material risks.

The Company is also a party to claims, threatened and actual litigation, arbitration, internal investigations of potential regulatory and compliance matters which arise both from legacy businesses that the Company has acquired over many years and from the Company’s current ordinary day-to-day business activities.

These regulatory matters and disputes involve private parties and/or government authorities, which assert claims against the Company for a broad spectrum of potential claims including:

employment law claims, collective actions or class action claims under employment laws, intellectual property claims, (such as alleged patent infringement, and/or misappropriation of trade secrets by the company), premises liability claims, environmental claims, product liability claims, warranty claims, personal injury claims arising from exposure to or use of allegedly defective products, alleged regulatory violations, alleged violations of anti-corruption and anti-bribery laws and other commercial and/or regulatory claims seeking recovery for alleged actual or exemplary damages or fines and penalties.

The Company is also a party to claims, threatened and actual litigation, arbitration, and internal investigations of potential regulatory and compliance matters which arise both from legacy businesses that the Company has acquired over many years and from the Company’s current ordinary day-to-day business activities.

These regulatory matters and disputes involve private parties and/or government authorities who may assert a broad spectrum of potential claims against the Company including:

employment law claims, collective actions or class action claims under employment laws, intellectual property claims, (such as alleged patent infringement, and/or misappropriation of trade secrets by the company), premises liability claims, environmental claims, product liability claims, warranty claims, personal injury claims arising from exposure to or use of allegedly defective products or from activities of the Company, alleged regulatory violations, alleged violations of anti-corruption and anti-bribery, trade, customs or other laws and other commercial and/or regulatory claims seeking recovery for alleged actual or exemplary damages or fines and penalties.

Such claims involve various theories of liability which include:

2 unchanged sentences

In such instances, settlement or other resolution of such claims, individually or collectively, could have a material financial or reputational impact on the Company.

As of June 30, 2023, the Company recorded reserves in an amount believed to be sufficient, given the range of potential outcomes, for contingent liabilities representing all contingencies believed to be probable.

As of September 30, 2023, the Company recorded reserves in an amount believed to be sufficient, given the estimated range of potential outcomes, for contingent liabilities believed to be probable.

These reserves include costs currently and reasonably estimated to be incurred for reclamation of a closed barite mine and product liability claims, as well as other circumstances involving material claims.

The Company has assessed the potential for additional losses above the amounts accrued as well as potential losses for matters that are believed to be not probable, but are reasonably possible.

The Company has assessed the potential for additional losses above the amounts accrued as well as potential losses for matters that are believed to be not probable, but which are reasonably possible.

The Company sets accruals in accordance with GAAP based on its best judgment about the probable results of disputed claims, regulatory enforcement actions, tax and other governmental audits, and other contingencies.

4 unchanged sentences

These estimated liabilities are based on the Company’s assessment of the nature of these matters, their progress toward resolution, the advice of legal counsel and outside experts as well as management’s experience.

Because of uncertainty and risk inherent to litigation,

arbitration, audits, governmental investigations, enforcement actions, and similar matters, the Company’s actual liabilities incurred may materially exceed our estimated liabilities and reserves, which could have a material financial or reputational impact on the Company.

Because of uncertainty and risk inherent to litigation, arbitration, audits, governmental investigations, enforcement actions, and similar matters, the Company’s actual liabilities incurred may materially exceed our estimated liabilities and reserves, which could have a material financial or reputational impact on the Company.

In many instances, the Company’s products and services embody or incorporate trade secrets or patented inventions.

3 unchanged sentences

The Company is currently pursuing litigation against several companies involving royalties due under licenses for technology related to drill bits.

This technology resulted in a portfolio of patents related to leaching technology, a revolutionary technology owned by the Company that dramatically improves the performance of drill bits and other products utilizing certain synthetic diamond parts.

This technology resulted in a portfolio of patents related to leaching technology, a revolutionary technology owned by the Company that improves the performance of drill bits and other products utilizing certain synthetic diamond parts.

The Company previously sued several drill bit manufacturers for patent infringement and those lawsuits were resolved by a series of licensing agreements with various drill bit manufacturers.

To settle and end litigation or to avoid litigation, the licensees were provided access to the portfolio of leaching patents owned by the Company in exchange for a royalty payment, as defined in the license agreement.

The license agreements each provide that they terminate on the date of the last to expire of the patents in the licensed portfolio.

Having obtained the benefit of these licenses for more than a decade, some of the licensees unilaterally stopped making royalty payments even though all of the patents in the portfolio have not expired.

Having obtained the benefit of these licenses for more than a decade, all of the drill bit manufacturer licensees unilaterally stopped making royalty payments even though all of the patents in the portfolio have not expired.

These companies have asserted, among other reasons, that they are entitled to stop making these payments because they have not elected to manufacture products covered by the unexpired patents.

The Company contends this is a breach of the license agreements at issue.

Some of these companies stopped making payments after the expiration of what are allegedly the patents in the portfolio that they elected to use.

Others paid for some period of time after that date but have since stopped payment.

The Company believes that failure to pay the royalties is a breach of the license agreements at issue.

The Company is in litigation with most of the Licensees seeking a judicial determination that it is entitled to be paid royalties pursuant to the terms of the licenses.

The parties’

filings to date can be found in two cases currently pending in the United States District Court for the Southern District of Texas:

legal filings to date can be found in two cases currently pending in the United States District Court for the Southern District of Texas:

Grant Prideco, Inc., et al.

4 unchanged sentences

4:23-cv-01789.

The Company continues to accrue accounts receivable for the unpaid royalties and accrued an incremental $ 10 million during the second quarter, bringing the total amount accrued to $ 52 million.

This amount is likely to increase over time until resolution of ongoing litigation.

The Company continues to accrue accounts receivable for the unpaid royalties and accrued an incremental $ 21 million during the third quarter, bringing the total amount accrued to $ 82 million.

This amount is likely to increase over time until resolution of the ongoing litigation.

While the Company strongly believes that the royalties for which it has sued are due and owing pursuant to the terms of the licensing agreement, there is inherent risk with the related litigation and the Company makes no assurances as to the outcome of such litigation.

The protection of intellectual property is important to the Company’s performance, and as such, an adverse result in the above dispute or any future dispute related to any of our intellectual property could result in materially adverse financial consequences such as a decline in sales of products protected by patents, which could materially and adversely impact our financial performance.

In addition to intellectual property matters, from time to time consumers of our products and services or members of the supply chain become involved in governmental investigations, internal investigations, political or other enforcement matters.

In such circumstances, such investigations may adversely impact the ability of consumers of our products, entities providing financial support to such consumers or entities in the supply chain to timely perform their business plans or to timely perform under agreements with us.

We may, from time to time, become involved in these investigations, at substantial cost to the Company.

We also are subject to trade regulations, supply chain regulations, and other regulatory compliance in which the laws and regulations of different jurisdictions conflict or these regulations may conflict with contractual terms.

In such circumstances, our compliance with U.S.

laws and regulations may subject us to risk of fines, penalties, or contractual liability in other jurisdictions.

Our efforts to actively manage such risks may not always be successful which could lead to negative impacts on revenue or earnings.

From time-to-time consumers of our products and services or members of our supply chain become involved in litigation, governmental investigations, internal investigations, political or other enforcement matters, or other dispute proceedings.

In such circumstances, such proceedings may adversely impact the ability of consumers of our products, entities providing financial support to such consumers or entities in the supply chain to timely perform their business plans or to timely perform under agreements with us.

We may, from time to time, become involved in these proceedings, at substantial cost to the Company.

The Company is exposed to customs and trade regulation risk in the countries in which we do business and countries from which or to which we import or export goods.

2 unchanged sentences

The Company may face increased tariffs and trade costs, loss of revenue, loss of customers, fines, penalties, increased costs, the need for renegotiation of agreements, and other business disruptions.

Trade regulations, supply chain regulations, and other regulatory compliance in which the laws and regulations of different jurisdictions conflict or these regulations may conflict with contractual terms with various counter-parties.

In such circumstances, our compliance with U.S.

laws and regulations may subject us to risk of fines, penalties, or contractual liability in other jurisdictions.

Our efforts to actively manage such risks may not always be successful which could lead to negative impacts on revenue or earnings.

In addition, trade regulations, export controls, and other laws adversely impact our ability to do business in certain countries, e.g., Iran, Syria, Russia, China and Venezuela.

4 unchanged sentences

We may incur additional costs as a result of conditions in Russia if we are unable to complete the transaction to sell our Russian business on the terms of the agreements.

The geopolitical response to the COVID-19 pandemic continues to have lingering supply chain impacts and to affect how business is being done in countries around the world.

The Company’s ability to manufacture equipment and perform services could be impaired

from such disruptions and the Company could be exposed to liabilities resulting from additional interruption or delay in its ability to perform due to materials shortages, inflationary pressures, and limited manpower.

The overall situation related to COVID-19 has improved, but the Company continues to see operational delays resulting from impacts on availability of materials and work force, the lack of predictability of vendor delivery dates and other operational disruptions.

We may face loss of workers, labor shortages, litigation, fines and/or other adverse consequences resulting from ongoing labor impacts or COVID-19 regulations.

The geopolitical response to the COVID-19 pandemic continues to have lingering supply chain impacts.

The Company’s ability to manufacture equipment and perform services could be impaired from such disruptions and the Company could be exposed to liabilities resulting from additional interruption or delay in its ability to perform due to materials shortages, inflationary pressures, and limited manpower.

The Company continues to see operational delays resulting from impacts on availability of materials and work force, the lack of predictability of vendor delivery dates and other operational disruptions.

We may face loss of workers, labor shortages, litigation, fines and/or other adverse consequences resulting from ongoing labor impacts.

The combined impact of supply chain and labor market disruptions along with the inflationary impacts of pandemic monetary and regulatory policies could have material adverse impacts on our financial results.

16 unchanged sentences

The adoption of this optional relief did no t have a material impact on the consolidated financial statements.

Subsequent Event

In an effort to drive further operational and financial efficiencies, the Company announced plans to consolidate its operational structure into two segments, Energy Equipment and Energy Products and Services.

NOV’s new operational structure will be effective January 1, 2024.

The Company plans to begin reporting the new segment information beginning in the first quarter of 2024.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

61 unchanged sentences

EXECUTIVE SUMMARY

For the second quarter ended June 30, 2023, the Company generated revenues of $2.09 billion, an increase of 7 percent compared to the first quarter of 2023 and an increase of 21 percent compared to the second quarter of 2022.

Net income for the second quarter of 2023 was $155 million, or 7.4 percent of sales, which included $7 million of credits in Other Items.

For the third quarter ended September 30, 2023, the Company generated revenues of $2.19 billion, an increase of 4 percent compared to the second quarter of 2023 and an increase of 16 percent compared to the third quarter of 2022.

Net income for the third quarter of 2023 was $114 million, or 5.2 percent of sales, which included $7 million of Other Items.

Adjusted EBITDA (operating profit excluding depreciation, amortization, gains and losses on sales of fixed assets and, when applicable, Other Items) increased sequentially to $267 million, or 12.2 percent of sales.

In an effort to drive further operational and financial efficiencies, the Company announced a consolidation of its operational structure into two segments, Energy Equipment and Energy Products and Services.

NOV’s new operational structure will be effective January 1, 2024, and, when fully implemented, is expected to contribute to the Company’s ongoing cost reduction initiatives.

As a result of the reorganization, the Company expects to recognize certain charges in the fourth quarter of 2023 and first half of 2024.

The actual amount of the charges will depend on various factors and may impact any forward-looking statements.

The Company plans to begin reporting the new segment information beginning in the first quarter of 2024.

Segment Performance

Wellbore Technologies

Wellbore Technologies generated revenues of $804 million in the second quarter of 2023, an increase of 8 percent from the first quarter of 2023 and an increase of 21 percent from the second quarter of 2022.

Operating profit was $128 million, or 15.9 percent of sales, and included a credit of $1 million in Other Items.

Wellbore Technologies generated revenues of $799 million in the third quarter of 2023, a decrease of one percent from the second quarter of 2023 and an increase of 8 percent from the third quarter of 2022.

Operating profit was $123 million, or 15.4 percent of sales, and included $3 million in Other Items.

Adjusted EBITDA increased $2 million sequentially and increased $21 million from the prior year to $166 million, or 20.8 percent of sales.

Significantly improved manufacturing throughput from the segment’s drill pipe operations, market share gains and improving demand from international and offshore markets offset activity declines in North America to drive improved results.

The revenue decline was driven by lower North American drilling activity and lower drill pipe shipments during the quarter, which were mostly offset by improvements in the international and offshore markets.

Completion & Production Solutions

Completion & Production Solutions generated revenues of $753 million in the second quarter of 2023, an increase of 5 percent from the first quarter of 2023 and an increase of 18 percent from the second quarter of 2022.

Operating profit was $53 million, or 7.0 percent of sales.

Adjusted EBITDA increased $15 million sequentially and increased $37 million from the prior year to $69 million, or 9.2 percent of sales.

Results reflect improving execution on a higher margin mix of international and offshore projects, partially offset by softening demand for completion equipment and aftermarket services in North America.

Completion & Production Solutions generated revenues of $760 million in the third quarter of 2023, an increase of one percent from the second quarter of 2023 and an increase of 12 percent from the third quarter of 2022.

Operating profit was $47 million, or 6.2 percent of sales, and included $2 million in Other Items.

Adjusted EBITDA decreased $2 million sequentially and increased $11 million from the prior year to $67 million, or 8.8 percent of sales.

Results reflect lower deliveries of equipment in North America, more than offset by improving progress on offshore projects.

New orders booked during the quarter increased 18% and totaled $530 million, representing a book-to-bill of 114 percent when compared to the $466 million of orders shipped from backlog.

As of June 30, 2023, backlog for capital equipment orders for Completion & Production Solutions was $1,586 million, a decrease of $15 million from the first quarter of 2023 and an increase of $144 million from the second quarter of 2022.

As of September 30, 2023, backlog for capital equipment orders for Completion & Production Solutions was $1,626 million, an increase of $40 million from the second quarter of 2023 and an increase of $148 million from the third quarter of 2022.

Rig Technologies

Rig Technologies generated revenues of $606 million in the second quarter of 2023, an increase of 10 percent from the first quarter of 2023, and an increase of 31 percent from the second quarter of 2022.

Rig Technologies generated revenues of $686 million in the third quarter of 2023, an increase of 13 percent from the second quarter of 2023, and an increase of 34 percent from the third quarter of 2022.

Operating profit was $86 million, or 12.5 percent of sales, and included a credit of $3 million of Other Items.

Adjusted EBITDA increased $29 million sequentially and increased $48 million from the prior year to $100 million, or 14.6 percent of sales.

Steadily improving demand drove the segment’s sequential revenue growth.

Incremental margins were limited by a lower margin sales mix and sequentially higher costs related to a wind tower startup operation.

Results were driven primarily by improved execution and spare part shipments from the Company’s aftermarket operations.

New capital equipment orders booked during the quarter totaled $178 million, representing a book-to-bill of 72 percent when compared to the $248 million of orders shipped from backlog.

As of June 30, 2023, backlog for capital equipment orders for Rig Technologies

was $2,893 million, an increase of $17 million from the first quarter of 2023 and an increase of $54 million from the second quarter of 2022.

The segment also recorded a positive $145 million adjustment to backlog, primarily related to contractual inflationary price index adjustments.

As of September 30, 2023, backlog for capital equipment orders for Rig Technologies was $2,968 million, an increase of $75 million from the second quarter of 2023 and an increase of $187 million from the third quarter of 2022.

Oil & Gas Equipment and Services Market and Outlook

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Improving economic activity, driven by pent-up consumer and industrial demand combined with government economic stimulus, drove higher consumption of commodities, pulled significant volumes of oil and gas out of global inventories, and exposed diminished productive capacity resulting from years of underinvestment in the oil and gas industry.

Tightening of government fiscal policies, concerns regarding a global recession, ongoing global supply chain disruptions, and rising inflationary costs may drive volatility and could pressure commodity prices near-term;

Tightening of government fiscal policies, concerns regarding a global recession, and rising inflationary costs may drive volatility and could pressure commodity prices near-term;

however, management believes diminished global oil and gas production capacity, along with rising energy security risks, will continue to spur increased oilfield activity and demand for the Company’s equipment and technology.

NOV remains committed to improving organizational efficiencies while focusing on the development and commercialization of innovative products and services, including technologies to reduce environmental impact of oil and gas operations and technologies to accelerate the energy transition that are responsive to the longer-term needs of NOV’s customers.

NOV remains committed to improving organizational efficiencies while focusing on the development and commercialization of innovative products and services, including technologies to reduce the environmental impact of oil and gas operations and technologies to accelerate the energy transition that are responsive to the longer-term needs of NOV’s customers.

We believe this strategy will further advance the Company’s competitive position in all market conditions.

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The Company’s results are dependent on, among other things, the level of worldwide oil and gas drilling, well remediation activity, the prices of crude oil and natural gas, capital spending by other oilfield service companies and drilling contractors, and worldwide oil and gas inventory levels.

Key industry indicators for the second quarter of 2023 and 2022, and the first quarter of 2023 include the following:

Key industry indicators for the third quarter of 2023 and 2022, and the second quarter of 2023 include the following:

Active Drilling Rigs:

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Management expects to see continued growth in these areas as low carbon power becomes a larger portion of the global energy supply.

The following table details the U.S., Canadian, and international rig activity and West Texas Intermediate Crude Oil prices for the past nine quarters ended June 30, 2023, on a quarterly basis:

The following table details the U.S., Canadian, and international rig activity and West Texas Intermediate Crude Oil prices for the past nine quarters ended September 30, 2023, on a quarterly basis:

.Industry Tr..ends Rig Counts and Oil Prices Total Number of Rigs 4,000 3,500 3,000 2,500 2,000 1,500 1,000 500 $140.00 $120.00 $100.00 $80.00 $60.00 $40.00 $20.00 $ West Texas Int.

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Department of Energy, Energy Information Administration (www.eia.doe.gov).

The worldwide quarterly average rig count decreased 5 percent (from 1,899 to 1,797), and the U.S.

decreased 5 percent (from 761 to 722), in the second quarter of 2023 compared to the first quarter of 2023.

The average per barrel price of West Texas Intermediate Crude Oil decreased 3 percent (from $76.08 per barrel to $73.76 per barrel) and natural gas prices decreased 18 percent (from $2.65 per mmbtu to $2.16 per mmbtu) in the second quarter of 2023 compared to the first quarter of 2023.

At July 14, 2023, there were 862 rigs actively drilling in North America, which increased 3 percent from the second quarter average of 837 rigs.

The price for West Texas Intermediate Crude Oil was $75.42 per barrel at July 14, 2023, an increase of 2 percent from the second quarter of 2023 average.

The price for natural gas was $2.53 per mmbtu at July 14, 2023, an increase of 17 percent from the second quarter of 2023 average.

The worldwide quarterly average rig count remained relatively consistent (from 1,797 to 1,790), and the U.S.

decreased 10 percent (from 722 to 651), in the third quarter of 2023 compared to the second quarter of 2023.

The average per barrel price of West Texas Intermediate Crude Oil increased 12 percent (from $73.76 per barrel to $82.30 per barrel) and natural gas prices increased 20 percent (from $2.16 per mmbtu to $2.59 per mmbtu) in the third quarter of 2023 compared to the second quarter of 2023.

At October 13, 2023, there were 815 rigs actively drilling in North America, which decreased 3 percent from the third quarter average of 839 rigs.

The price for West Texas Intermediate Crude Oil was $87.69 per barrel at October 13, 2023, an increase of 7 percent from the third quarter of 2023 average.

The price for natural gas was $3.24 per mmbtu at October 13, 2023, an increase of 25 percent from the third quarter of 2023 average.

Results of Operations

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Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Wellbore Technologies

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Total revenue

Operating profit (loss):

Operating profit:

Wellbore Technologies

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Eliminations and corporate costs

Total operating profit (loss)

Total operating profit

Wellbore Technologies

Three and six months ended June 30, 2023 and 2022.

Revenue from Wellbore Technologies was $804 million for the three months ended June 30, 2023, compared to $666 million for the three months ended June 30, 2022, an increase of $138 million or 21 percent.

For the six months ended June 30, 2023, revenue from Wellbore Technologies was $1,549 million compared to $1,274 million for the six months ending June 30, 2022, an increase of $275 million or 22 percent.

Operating profit from Wellbore Technologies was $128 million for the three months ended June 30, 2023 compared to an operating profit of $81 million for the three months ended June 30, 2022, an increase of $47 million.

For the six months ended June 30, 2023, operating profit from Wellbore Technologies was $224 million compared to operating profit of $120 million for the six months ending June 30, 2022, an increase of $104 million.

t hree and nine months ended September 30, 2023 and 2022.

Revenue from Wellbore Technologies was $799 million for the three months ended September 30, 2023, compared to $741 million for the three months ended September 30, 2022, an increase of $58 million or 8 percent.

For the nine months ended September 30, 2023, revenue from Wellbore Technologies was $2,348 million compared to $2,015 million for the nine months ending September 30, 2022, an increase of $333 million or 17 percent.

Operating profit from Wellbore Technologies was $123 million for the three months ended September 30, 2023 compared to an operating profit of $74 million for the three months ended September 30, 2022, an increase of $49 million.

For the nine months ended September 30, 2023, operating profit from Wellbore Technologies was $347 million compared to operating profit of $194 million for the nine months ending September 30, 2022, an increase of $153 million.

Completion & Production Solutions

Three and six months ended June 30, 2023 and 2022.

Revenue from Completion & Production Solutions was $753 million for the three months ended June 30, 2023, compared to $639 million for the three months ended June 30, 2022, an increase of $114 million or 18 percent.

For the six months ending June 30, 2023, revenue from Completion & Production Solutions was $1,471 million compared to $1,169 million for the six months ending June 30, 2022, an increase of $302 million or 26 percent.

Operating profit from Completion & Production Solutions was $53 million for the three months ended June 30, 2023 compared to an operating profit of $20 million for the three months ended June 30, 2022, an increase of $33 million.

For the six months ended June 30, 2023, operating profit from Completion & Production Solutions was $97 million compared to operating loss of $2 million for the six months ending June 30, 2022, an increase of $99 million.

t hree and nine months ended September 30, 2023 and 2022.

Revenue from Completion & Production Solutions was $760 million for the three months ended September 30, 2023, compared to $681 million for the three months ended September 30, 2022, an increase of $79 million or 12 percent.

For the nine months ending September 30, 2023, revenue from Completion & Production Solutions was $2,231 million compared to $1,850 million for the nine months ending September 30, 2022, an increase of $381 million or 21 percent.

Operating profit from Completion & Production Solutions was $47 million for the three months ended September 30, 2023 compared to an operating profit of $21 million for the three months ended September 30, 2022, an increase of $26 million.

For the nine months ended September 30, 2023, operating profit from Completion & Production Solutions was $144 million compared to operating profit of $19 million for the nine months ending September 30, 2022, an increase of $125 million.

The Completion & Productions Solutions segment monitors its capital equipment backlog to plan its business.

New orders are added to backlog only when the Company receives a firm written order for major completion and production components or a contract related to a construction project.

The capital equipment backlog was $1,586 million at June 30, 2023, an increase of $144 million from backlog of $1,442 million at June 30, 2022.

The capital equipment backlog was $1,626 million at September 30, 2023, an increase of $148 million from backlog of $1,478 million at September 30, 2022.

Although numerous factors can affect the timing of revenue out of backlog (including, but not limited to, customer change orders and supplier accelerations or delays), the Company reasonably expects approximately 29 percent of backlog to become revenue during the rest of 2023 and the remainder thereafter.

At June 30, 2023, approximately 58 percent of the capital equipment backlog was for offshore products and approximately 75 percent of the capital equipment backlog was destined for international markets.

At September 30, 2023, approximately 61 percent of the capital equipment backlog was for offshore products and approximately 76 percent of the capital equipment backlog was destined for international markets.

Rig Technologies

Three and six months ended June 30, 2023 and 2022 .

Revenue from Rig Technologies was $606 million for the three months ended June 30, 2023, compared to $462 million for the three months ended June 30, 2022, an increase of $144 million or 31 percent.

For the six months ended June 30, 2023, revenue from Rig Technologies was $1,156 million compared to $903 million for the six months ending June 30, 2022, an increase of $253 million or 28 percent.

Operating profit from Rig Technologies was $64 million for the three months ended June 30, 2023 compared to $31 million for the three months ended June 30, 2022, an increase of $33 million.

For the six months ended June 30, 2023, operating profit from Rig Technologies was $117 million compared to $42 million for the six months ending June 30, 2022, an increase of $75 million.

t hree and nine months ended September 30, 2023 and 2022 .

Revenue from Rig Technologies was $686 million for the three months ended September 30, 2023, compared to $511 million for the three months ended September 30, 2022, an increase of $175 million or 34 percent.

For the nine months ended September 30, 2023, revenue from Rig Technologies was $1,842 million compared to $1,414 million for the nine months ending September 30, 2022, an increase of $428 million or 30 percent.

Operating profit from Rig Technologies was $86 million for the three months ended September 30, 2023 compared to $22 million for the three months ended September 30, 2022, an increase of $64 million.

For the nine months ended September 30, 2023, operating profit from Rig Technologies was $203 million compared to $64 million for the nine months ending September 30, 2022, an increase of $139 million.

The Rig Technologies segment monitors its capital equipment backlog to plan its business.

New orders are added to backlog only when the Company receives a firm written order for major drilling rig components or a signed contract related to a construction project.

The capital equipment backlog was $2,893 million at June 30, 2023, an increase of $54 million from backlog of $2,839 million at June 30, 2022.

The capital equipment backlog was $2,968 million at September 30, 2023, an increase of $187 million from backlog of $2,781 million at September 30, 2022.

Although numerous factors can affect the timing of revenue out of backlog (including, but not limited to, customer change orders and supplier accelerations or delays), the Company reasonably expects approximately 9 percent of backlog to become revenue during the rest of 2023 and the remainder thereafter.

At June 30, 2023, approximately 30 percent of the capital equipment backlog was for offshore products and approximately 95 percent of the capital equipment backlog was destined for international markets.

At September 30, 2023, approximately 28 percent of the capital equipment backlog was for offshore products and approximately 95 percent of the capital equipment backlog was destined for international markets.

Eliminations and corporate costs

Eliminations and corporate costs were $64 million and $131 million for the three and six months ended June 30, 2023, compared to $64 million and $113 million for the three and six months ended June 30, 2022.

Eliminations and corporate costs were $73 million and $204 million for the three and nine months ended September 30, 2023, compared to $62 million and $175 million for the three and nine months ended September 30, 2022.

Sales from one segment to another generally are priced at estimated equivalent commercial selling prices;

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Other expense, net

Other expense, net was $29 million and $45 million for the three and six months ended June 30, 2023, compared to expenses of zero and $2 million for the three and six months ended June 30, 2022, respectively.

Other expense, net was $25 million and $70 million for the three and nine months ended September 30, 2023, compared to expenses of $10 million and $8 million for the three and nine months ended September 30, 2022, respectively.

The change in income was primarily due to fluctuations in foreign currencies.

Provision for income taxes

The effective tax rate for the three and six months ended June 30, 2023 was 10.8% and 12.1%, respectively, compared to (2.9)% and 36.4% for the same period in 2022.

The effective tax rate for the three and nine months ended September 30, 2023 was 30.8% and 18.2%, respectively, compared to 45.3% and 42.3% for the same period in 2022.

The Company anticipates it will no longer be in a pre-tax three year cumulative loss position at December 31, 2023.

In the event such a determination is made, valuation allowances against deferred tax assets would be reduced, resulting in a decrease to income tax expense in the fourth quarter of 2023.

Non-GAAP Financial Measures and Reconciliations

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Three Months Ended

Six Months Ended

Operating profit (loss):

Nine Months Ended

September 30,

Operating profit:

Wellbore Technologies

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Eliminations and corporate costs

Total operating profit (loss)

Total operating profit

Other items, net:

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Equity income in unconsolidated affiliates

Other expense, net

Other (income) expense, net

(Gain)/Loss on Sales of Fixed Assets

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Liquidity and Capital Resources

At June 30, 2023, the Company had cash and cash equivalents of $592 million and total debt of $1,728 million.

At September 30, 2023, the Company had cash and cash equivalents of $513 million and total debt of $1,729 million.

At December 31, 2022, cash and cash equivalents were $1,069 million and total debt was $1,730 million.

As of June 30, 2023, approximately $522 million of the $592 million of cash and cash equivalents was held by our foreign subsidiaries and the earnings associated with this cash could be

subject to foreign withholding taxes and incremental U.S.

As of September 30, 2023, approximately $462 million of the $513 million of cash and cash equivalents was held by our foreign subsidiaries and the earnings associated with this cash could be subject to foreign withholding taxes and incremental U.S.

taxation if transferred among countries or repatriated to the U.S.

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The credit facility contains a financial covenant regarding maximum debt-to-capitalization ratio of 60%.

As of June 30, 2023, the Company was in compliance with a debt-to-capitalization ratio of 26.4% and had no outstanding letters of credit issued under the facility, resulting in $2.0 billion of available funds.

As of September 30, 2023, the Company was in compliance with a debt-to-capitalization ratio of 26.1% and had no outstanding letters of credit issued under the facility, resulting in $2.0 billion of available funds.

A consolidated joint venture of the Company borrowed $120 million against a $150 million bank line of credit for the construction of a facility in Saudi Arabia.

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The bank line of credit contains a financial covenant regarding maximum debt-to-equity ratio of 75%.

As of June 30, 2023, the joint venture was in compliance.

As of September 30, 2023, the joint venture was in compliance.

The facility construction was completed in the fourth quarter of 2022, and the joint venture will not have future borrowings on the line of credit.

The line of credit repayment schedule began in December 2022 with final payment no later than June 2032.

As of June 30, 2023, the Company had $109 million in borrowings related to this line of credit.

As of September 30, 2023, the Company had $109 million in borrowings related to this line of credit.

The Company has $10 million in payments related to this line of credit due in the next twelve months.

The Company’s outstanding debt at June 30, 2023 consisted primarily of $1,090 million in 3.95% Senior Notes, $495 million in 3.60% Senior Notes, and other debt of $143 million.

The Company was in compliance with all covenants at June 30, 2023.

Long-term lease liabilities totaled $568 million at June 30, 2023.

The Company had $481 million of outstanding letters of credit at June 30, 2023, primarily in Norway and the Netherlands, that are under various bilateral letter of credit facilities.

The Company’s outstanding debt at September 30, 2023 consisted primarily of $1,090 million in 3.95% Senior Notes, $495 million in 3.60% Senior Notes, and other debt of $144 million.

The Company was in compliance with all covenants at September 30, 2023.

Long-term lease liabilities totaled $559 million at September 30, 2023.

The Company had $492 million of outstanding letters of credit at September 30, 2023, primarily in Norway and the United States, that are under various bilateral letter of credit facilities.

Letters of credit are issued as bid bonds, advanced payment bonds and performance bonds.

The following table summarizes our net cash used in continuing operating activities, continuing investing activities and continuing financing activities for the periods presented (in millions):

Six Months Ended

Nine Months Ended

September 30,

Net cash used in operating activities

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Net cash used in financing activities

Significant uses of cash during the first six months of 2023

Significant uses of cash during the first nine months of 2023

Cash flows used in operating activities were $234 million, primarily driven by changes in the primary components of our working capital (receivables, inventories, accounts payable, and accrued liabilities).

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We paid $60 million in dividends to shareholders.

The effect of the change in exchange rates on cash flows was a decrease of $2 million for the first six months of 2023, and a decrease of $5 million for the first six months of 2022.

The effect of the change in exchange rates on cash flows was a decrease of $5 million for the first nine months of 2023, and a decrease of $15 million for the first nine months of 2022.

We believe that cash on hand, cash generated from operations and amounts available under our credit facilities and from other sources of debt will be sufficient to fund operations, lease payments, working capital needs, capital expenditure requirements, dividends and financing obligations.

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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