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Item 1A. Risk Factors

2021-02-19 compared with 2020-03-16 · 173 added, 278 removed, 139 unchanged (76% of the section changed)

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Additional risks and uncertainties not currently known to us or that we currently deem immaterial may also materially adversely affect our financial condition, results of operations and cash flows.

Fluctuations in oil and natural gas prices, especially a substantial or extended decline, affect the level of exploration, development and production activity of our customers and the demand for our products and services, which could have a material adverse effect on our business, financial condition and results of operations.

Demand for our services and products is tied to the level of exploration, development and production activity and the corresponding capital expenditures by oil and natural gas companies, including national oil companies.

Oilfield Services Industry Risks

Our business is dependent on capital spending by our customers which is greatly affected by fluctuations in oil and natural gas prices and the availability and cost of capital;

reductions in capital spending by our customers has had, and could continue to have, an adverse effect on our business, financial condition and results of operations.

Demand for our services and products is tied to the level of exploration, development and production activity and the corresponding capital and operating spending by oil and natural gas exploration and production companies, including national oil companies.

The level of exploration, development and production activity is directly affected by fluctuations in oil and natural gas prices, which historically have been volatile and are likely to continue to be volatile in the future, especially given current geopolitical and economic conditions.

Therefore, declines in oil and natural gas prices or sustained low oil and natural gas prices or customer perceptions that oil and natural gas prices will remain depressed or will further decrease in the future could result in a continued reduction in the demand and pricing for our equipment and will likely continue at lower rates for our services.

Prices for oil and natural gas are highly volatile and fluctuate in response to relatively minor changes in the supply of and demand for oil and natural gas.

Factors that can or could cause these price fluctuations include:

excess supply of crude oil relative to demand;

domestic and international drilling activity;

global market uncertainty;

the risk of slowing economic growth or recession in the United States, China, Europe or emerging markets in Asia and the Middle East;

the ability or willingness of OPEC and other non-member nations, including Russia, to set and maintain production levels for oil;

the decision of OPEC or other non-member nations to abandon production quotas and/or member-country quota compliance within OPEC agreements;

oil and gas production levels by non-OPEC countries;

the nature and extent of governmental regulation, including environmental regulation;

technological advances affecting energy consumption;

adverse weather conditions and a variety of other economic factors that are beyond our control.

For example, in March 2020, members of OPEC and Russia considered extending their previously agreed oil production cuts and potentially making additional oil production cuts.

However, these negotiations were unsuccessful.

Saudi Arabia has announced a significant reduction in its export prices effective immediately and Russia has announced that all agreed oil production cuts between members of OPEC and Russia will expire on April 1, 2020.

Following these announcements, global oil and natural gas prices declined sharply and may continue to decline.

Any perceived or actual further reduction in oil and natural gas prices will depress the immediate levels of exploration, development and production activity and decrease spending by our customers, which could have a material adverse effect on our business, financial condition and results of operations.

Sustained lower oil and natural gas prices have led to a significant decrease in spending by our customers over the past several years, which have led to significantly decreased revenues.

Further decreases in oil and natural gas prices could lead to further cuts in spending and potential lower revenues for the company.

Several large oil and gas exploration and production companies have recently announced reductions in their previously announced planned capital expenditures during 2020 in light of declining global oil and natural gas prices.

Our customers also take into account the volatility of energy prices and other risk factors when determining whether to pursue capital projects and higher perceived risks generally mandate higher required returns.

Any of these factors have and could further affect the demand for oil and natural gas and has and could further have a material adverse effect on our business, financial condition, results of operations and cash flow.

Our business is dependent on capital spending by our customers and reductions in capital spending by our customers has had, and could continue to have, an adverse effect on our business, financial condition and results of operations.

Sustained low oil and natural gas prices have led to lower spending by our customers.

Most of our contracts can be cancelled by our customers at any time.

Low commodity prices, the short-term tenor of most of our contracts and the potential extreme financial stress experienced by our customers (some of whom may have to seek bankruptcy protection), have combined to generate demands by many of our customers for reductions in the prices of our products and services.

Further reductions in capital spending or requests for further cost reductions by our customers could, directly impact our business by reducing demand for our services and products and have a material adverse effect on our business, financial condition, results of operations and prospects.

Sustained low oil and natural gas prices and declining global demand for oil and natural gas, including reduced demand as a result of the COVID-19 pandemic, have led to our customers, including large oil and gas exploration and production companies, to greatly reduce planned future capital expenditures.

Factors affecting the prices of oil and natural gas include, but are not limited to:

(1) the level of supply and demand for oil and natural gas;

(2) the ability or willingness of the Organization of Petroleum Exporting Countries and the expanded alliance collectively known as OPEC+ to set and maintain oil production levels;

(3) the level of oil and natural gas production in the U.S.

and by other non-OPEC+ countries;

(4) oil refining capacity and shifts in end-customer preferences toward fuel efficiency and the use of natural gas;

(5) the cost of, and constraints associated with, producing and delivering oil and natural gas;

(6) governmental regulations, including the policies of governments regarding the exploration for and production and development of their oil and natural gas reserves;

(7) weather conditions, natural disasters, and health or similar issues, such as pandemics or epidemics;

(8) worldwide political, military, and economic conditions;

and (9) increased demand for alternative energy and electric vehicles, including government initiatives to promote the use of renewable energy sources and public sentiment around alternatives to oil and gas.

In addition, low commodity prices, the short-term tenor of most of our contracts and the financial stress experienced by some of our customers have combined to increase the demands by many of our customers for reductions in the prices we receive for our products and services.

Further reductions in capital spending or requests for further cost reductions by our customers could directly impact our business by reducing demand and pricing for our services and products which would have a material adverse effect on our business, financial condition, results of operations and prospects.

Spending by exploration and production companies can also be impacted by conditions in the capital markets, which have been volatile in recent years.

Limitations on the availability of capital or higher costs of capital may cause exploration and production companies

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Table of Contents Item 1A | Risk Factors

to make additional reductions to capital budgets even if oil and natural gas prices increase from current levels.

Any such cuts in spending would curtail drilling programs, as well as, discretionary spending on well services, which may result in a reduction in the demand for our services, the rates we can charge and the utilization of our assets.

Moreover, reduced discovery rates of new oil and natural gas reserves or a decrease in the development rate of reserves in our market areas, whether due to increased governmental regulation, limitations on exploration and drilling activity or other factors, could also have a material adverse impact on our business, even in a stronger oil and natural gas price environment.

With respect to national oil company customers, we are also subject to risk of policy, regime, currency and budgetary changes all of which may affect their capital expenditures.

Weakened global macro-economic conditions may adversely affect our industry, business and results of operations.

Our overall performance depends in part on worldwide macro-economic and geopolitical conditions.

The United States and other key international economies have experienced cyclical downturns from time to time in which economic activity was impacted by falling demand for a variety of goods and services, restricted credit, poor liquidity, reduced corporate profitability, volatility in credit, equity and foreign exchange markets, bankruptcies and overall uncertainty with respect to the economy.

These global macro-economic conditions can suddenly arise and the full impact of such conditions can remain uncertain.

In addition, geopolitical developments, such as existing and potential trade wars and other events beyond our control, such as the COVID-19 pandemic, can increase levels of political and economic unpredictability globally and increase the volatility of global financial markets.

Public health threats could have a material adverse effect on our business and results of operations.

Public health threats, such as severe influenza, COVID-19 and other highly communicable viruses or diseases, outbreaks of which have already occurred in various parts of the world in which we operate, could adversely impact our operations, the operations of our customers and the global economy, including the worldwide demand for oil and natural gas and the level of demand for our services.

The quarantine of personnel or inability to access our offices or customer facilities could adversely affect our operations.

Travel operational, or logistical restrictions in any part of the world in which we operate, or any reduction in the demand for our products and services caused by public health threats in the future, may materially impact our operations and have an adverse effect on our results of operations.

Our long-term liquidity requirements and the adequacy of our capital resources are difficult to predict at this time.

We face uncertainty regarding the adequacy of our liquidity and capital resources and have extremely limited, if any, access to additional financing beyond the ABL Credit Agreement and LC Credit Agreement.

In addition to the cash requirements necessary to fund ongoing operations, we have incurred, and will continue to incur, significant professional fees and other costs following the Cases and our emergence from bankruptcy.

We cannot assure you that cash on hand, cash flow from operations and any financing we are able to obtain through the ABL Credit Agreement and LC Credit Agreement will be sufficient to continue to fund our operations and allow us to satisfy our obligations.

Our liquidity, including our ability to meet our ongoing operational obligations, is dependent upon, among other things:

(i) our ability to maintain adequate cash on hand;

(ii) our ability to generate cash flow from operations;

(iii) changes in market conditions that negatively impact our revenue, and (iv) the professional fees and cost related to the Cases and our emergence from bankruptcy.

The credit risks of our concentrated customer base in the energy industry could result in operating losses and negatively impact liquidity.

The concentration of our customer base in the energy industry may impact our overall exposure to credit risk as our customers may be similarly affected by prolonged changes in economic and industry conditions.

Some of our customers are experiencing financial distress as a result of continued low commodity prices and may be forced to seek protection under applicable bankruptcy laws.

Furthermore, countries that rely heavily upon income from hydrocarbon exports have been negatively and significantly affected by low oil prices, which could affect our ability to collect from our customers in these countries, particularly national oil companies.

Laws in some jurisdictions in which we operate could make collection difficult or time consuming.

We perform on-going credit evaluations of our customers and do not generally require collateral in support of our trade receivables.

While we maintain reserves for potential credit losses, we cannot assure such reserves will be sufficient to meet write-offs of uncollectible receivables or that our losses from such receivables will be consistent with our expectations.

Additionally, in the event of a bankruptcy of any of our customers, we may be treated as an unsecured creditor and may collect substantially less, or none, of the amounts owed to us by such customer.

Limitations on the availability of capital or higher costs of capital may cause exploration and production companies to make additional reductions to capital budgets even if oil and natural gas prices increase from current levels.

Any such cuts in spending would curtail drilling programs, as well as discretionary spending on well services, which may result in a reduction in the demand for our services, the rates we can charge and the utilization of our assets which could have a material adverse effect on our business, financial condition, results of operations and cash flow.

Climate change, environmental, social and governance (“ESG”) and “sustainability” initiatives may result in significant operational changes and expenditures, reduced demand for our products and adversely affect our business, results of operations, stock price or access to capital markets.

Climate change, ESG and sustainability are a growing global movement.

Continuing political and social attention to these issues has resulted in both existing and pending international agreements and national, regional or local legislation and regulatory measures, as well as society pressure in some areas, to limit greenhouse gas emissions and has been stated in the U.S.

to be a priority of the new Biden Administration, as well as other initiatives.

These agreements and measures, including the Paris Climate Accord, may require, or could result in future legislation and regulatory measures that require, significant equipment modifications, operational changes, taxes, or purchase of emission credits to reduce emission of greenhouse gases from our operations, which may result in substantial capital expenditures and compliance, operating, maintenance and remediation costs.

As a result of heightened public awareness and attention to these issues as well as continued regulatory initiatives to reduce the

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Table of Contents Item 1A | Risk Factors

We utilize letters of credit and performance and bid bonds to provide credit support to our customers.

If the beneficiaries were to call the letters of credit under our committed facilities, our available liquidity would be reduced by the amount called and it could have an adverse impact on our business, operations, and financial condition.

As of December 31, 2019 , we had $399 million of letters of credit and performance and bid bonds outstanding, consisting of $ 141 million of letters of credit under the ABL Credit Agreement, $105 million of letters of credit under the LC Credit Agreement and $153 million of letters of credit under various uncommitted facilities.

At December 31, 2019, we had cash collateral of $152 million supporting letters of credit under our various uncommitted facilities.

The cash is included in “Restricted Cash” in the accompanying Consolidated Balance Sheets .

In Latin America we utilize surety bonds as part of our customary business practice.

These obligations could be called by the beneficiaries should we breach certain contractual or performance obligations.

If the beneficiaries were to call the letters of credit under our committed facilities or the surety bonds, our available liquidity would be reduced by the amount called and it could have an adverse impact on our business, operations and financial condition.

Severe or unseasonable weather could adversely affect our business and results of operations.

Variation from normal weather patterns, such as cooler or warmer summers and winters, can have a significant impact on demand.

Many experts believe global climate change could increase the frequency and severity of extreme weather conditions.

Adverse weather conditions, such as hurricanes in the Gulf of Mexico or extreme winter conditions in Canada, Russia and the North Sea, may interrupt or curtail our operations, or our customers’ operations, cause supply disruptions or loss of productivity or result in a loss of revenue or damage to our equipment and facilities, which may or may not be insured.

Any of these outcomes could have a material adverse effect on our business, financial condition and results of operations.

Not responding timely to changes in the market and customer requirements in the highly competitive oilfield services business may adversely affect our ability to succeed.

Additionally, the impact of consolidation and acquisitions of our competitors is difficult to predict.

Our business is highly competitive, particularly with respect to marketing our products and services to our customers and securing equipment and trained personnel.

Currently the oilfield service industry has excess capacity relative to customer demand, and, in most cases, multiple sources of comparable oilfield services are available from a number of different competitors.

This competitive environment could impact our ability to maintain market share, defend, maintain or increase pricing for our products and services and negotiate acceptable contract terms with our customers and suppliers.

In order to remain competitive, we must continue to add value for our customers by providing, relative to our peers, new technologies, reliable products and services and competent personnel.

The anticipated timing and cost of the development of competitive technology and new product introductions, could impact our financial results, particularly if one of our competitors were to develop competing technology that accelerates the obsolescence of any of our products or services.

Additionally, we may be disadvantaged competitively and financially by a significant movement of exploration and production operations to areas of the world in which we are not currently active, particularly if one or more of our competitors is already operating in that area of the world.

Mergers, combinations and consolidations in our industry could result in existing competitors increasing their market share and may result in stronger competitors, which in turn, could have a material adverse effect on our business, financial condition and results of operations.

We may not be able to compete successfully in an increasingly consolidated industry and cannot predict with certainty how industry consolidation will affect our other competitors or us.

use of oil and gas, demand hydrocarbons may be reduced, which would have an adverse effect on our business and results of operations.

The imposition and enforcement of stringent greenhouse gas emissions reduction requirements could severely and adversely impact the oil and gas industry and therefore significantly reduce the value of our business.

Certain financial institutions, institutional investors and other sources of capital have begun to limit or eliminate their investment in oil and gas activities due to concerns about climate change, which could make it more difficult to finance our business.

Increasing attention to climate change, ESG and sustainability has resulted in governmental investigations, and public and private litigation, which could increase our costs or otherwise adversely affect our business or results of operations.

In addition, organizations that provide information to investors on corporate governance and related matters have developed ratings processes for evaluating companies on their approach to ESG matters.

Such ratings are used by some investors to inform their investment and voting decisions.

Unfavorable ESG ratings may lead to increased negative investor sentiment toward us and our industry and to the diversion of investment to other industries, which could have a negative impact on our stock price and our access to and costs of capital.

Severe weather, including extreme weather conditions associated with global climate change, has in the past and could in the future adversely affect our business and results of operations.

Our business has been, and in the future will be, affected by severe weather in areas where we operate, which could materially affect our operations and financial results.

In addition, impacts of climate change could increase the frequency and severity of extreme weather conditions.

Any such extreme weather-related events could have a material adverse effect on our business, financial condition and results of operations.

Liability claims resulting from catastrophic incidents could have a material adverse effect on our business, financial condition and results of operations

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Typically, we provide products and services at a well site where our personnel and equipment are located together with personnel and equipment of our customer and third parties, such as other service providers.

At many sites, we depend on other companies and personnel to conduct drilling operations in accordance with appropriate safety standards.

At many sites, we depend on other companies and personnel to conduct drilling and other operations in accordance with appropriate safety standards.

From time to time, personnel are injured or equipment or property is damaged or destroyed, as a result of accidents, failed equipment, faulty products or services, failure of safety measures, uncontained formation pressures or other dangers inherent in drilling for oil and natural gas.

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With increasing frequency, our products and services are deployed on more challenging prospects both onshore and offshore, where the occurrence of the types of events mentioned above can have an even more catastrophic impact on people, equipment and the environment.

Such events may expose us to significant potential losses.

Such events may expose us to significant potential losses which could have a material adverse effect on our business, financial condition and results of operations.

Business and Operational Risks

The COVID-19 pandemic has significantly weakened demand for our products and services, and has had a substantial negative impact on our financial condition, results of operations and cash flows.

The effects of the COVID-19 pandemic, including actions taken by businesses and governments to contain the spread of the virus, have resulted in a significant and swift reduction in international and U.S.

economic activity.

These effects materially adversely affected the demand for oil and natural gas, as well as for our services and products.

The collapse in the demand for oil in March 2020 caused in large part by this unprecedented global health and economic crisis, and the corresponding decline in our customers’ demand for our services and products has had a substantial negative impact on our financial condition, results of operations and cash flows in 2020.

The COVID-19 pandemic impacts severely impacted our business and our industry.

These effects included, and may continue to include, adverse revenue and net income effects;

disruptions to our operations;

customer shutdowns of oil and gas exploration and production;

employee impacts from illness, school closures and other community response measures;

and temporary closures of our facilities or the facilities of our customers and suppliers.

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Table of Contents Item 1A | Risk Factors

The extent to which our operating and financial results are affected by the COVID-19 pandemic will depend on various factors and consequences beyond our control, such as the duration and scope of the pandemic;

additional actions by businesses and governments in response to the pandemic;

and the speed and effectiveness of responses to combat the virus, including vaccine development and distribution.

The COVID-19 pandemic, and the volatile regional and global economic conditions stemming from the pandemic, exacerbated, and could continue to exacerbate, the potential negative impact from many of our risk factors.

The COVID-19 pandemic may also have a considerable and detrimental effect on our operating and financial results in a manner that is not currently known to us or that we do not currently consider as significant risks to our operations.

Given the nature and significance of the events described above, we are not able to enumerate all potential risks to our business;

however, we believe that in addition to the impacts described above, other current and potential impacts of these recent events include, but are not limited to:

• Structural shift in the global economy and its demand for oil and natural gas as a result of changes in the way people work, travel and interact, or in connection with a global recession or depression;

• Reduction of our global workforce to adjust to market conditions, including severance payments, retention issues, and an inability to hire employees when market conditions improve;

• Infections and quarantining of our employees and the personnel of our customers, suppliers and other third parties in areas in which we operate;

• Our insurance policies may not cover losses associated with pandemics like COVID-19 or similar global health threats;

• Litigation risk and possible loss contingencies related to COVID-19 and its impact, including with respect to commercial contracts, employment matters, personal injury and insurance arrangements;

• Cybersecurity issues, as digital technologies may become more vulnerable and experience a higher rate of cyberattacks in the current environment of remote connectivity due to stay-at-home orders.

Given the dynamic nature of these events, we cannot reasonably estimate the period of time that the COVID-19 pandemic and related market conditions will persist, the full extent of the impact they will have on our business, financial condition, results of operations or cash flows or the pace or extent of any subsequent recovery.

Our operational and financial growth is dependent on our liquidity requirements and the adequacy of our capital resources.

Our liquidity, including our ability to meet our ongoing operational obligations, is dependent upon, among other things:

(i) our ability to maintain adequate cash on hand;

(ii) our ability to generate cash flow from operations;

(iii) and changes in market conditions that negatively impact our revenue.

The energy industry faces negative sentiment in the capital markets which has impacted the ability of participants to access appropriate amounts of capital under suitable terms.

This negative sentiment in the energy industry has not only impacted our customers in North America, it is also affecting the availability and the pricing for most credit lines extended to participants in the industry.

We utilize letters of credit and performance and bid bonds to provide credit support to our customers.

If the beneficiaries were to call the letters of credit issued under our committed and or uncommitted facilities, our available cash balance may be reduced by the amount called and it could have an adverse impact on our business, operations, and financial condition.

As of December 31, 2020, we had $338 million of letters of credit outstanding, consisting of $167 million under the LC Credit Agreement and $171 million under various uncommitted facilities (of which there was $164 million in cash collateral held and recorded in “Restricted Cash” on the Consolidated Balance Sheets).

In Latin America we utilize surety bonds as part of our customary business practice.

As of December 31, 2020, we had surety bonds outstanding of $326 million, primarily in Latin America.

Any of our outstanding letters of credit or surety bonds could be called by the beneficiaries should we breach certain contractual or performance obligations.

If the beneficiaries were to call the letters of credit under the LC Credit Agreement or the surety bonds, our available liquidity would be reduced by the amount called.

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Table of Contents Item 1A | Risk Factors

We may not be fully indemnified against financial losses in all circumstances where damage to or loss of property, personal injury, death or environmental harm occur.

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For example, our indemnity arrangements may be held to be overly broad in some courts and/or contrary to public policy in some jurisdictions, and to that extent may be unenforceable.

Additionally, some jurisdictions which permit indemnification nonetheless limit its scope by statute.

Additionally, some jurisdictions which permit indemnification nonetheless limit its scope by applicable law, rule, order or statute.

We may be subject to claims brought by third parties or government agencies with respect to which we are not indemnified.

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The lack of enforceable indemnification could expose us to significant potential losses.

Further, our assets generally are not insured against loss from political violence such as war, terrorism or civil commotion.

Further, our assets generally are not insured against loss from political violence such as war, terrorism or civil unrest.

If any of our assets are damaged or destroyed as a result of an uninsured cause, we could recognize a loss of those assets.

We may not be able to generate sufficient cash flows to service our indebtedness and may be forced to take actions in order to satisfy our obligations under our indebtedness.

If we are required to take such actions, and such actions are not successful, our indebtedness and liabilities could expose us to risks that could adversely affect our business, financial condition and results of operations and impair our ability to satisfy our financial obligations.

As of December 31, 2019 , we had approximately $2.2 billion of long-term debt with $2.1 billion in aggregate principal amount of our senior notes maturing on December 1, 2024.

Pursuant to the terms of our senior notes, we expect to have interest payments of approximately $231 million annually until the maturity of our senior notes.

We also have a senior secured asset-based revolving credit agreement in an aggregate amount of $450 million (the “ABL Credit Agreement”), which was entered into pursuant to the Plan.

As of December 31, 2019, we had no borrowings under the ABL Credit Agreement.

Our level of indebtedness could have significant negative consequences for our business, financial condition and results of operations, including:

increasing our vulnerability to adverse economic and industry conditions;

limiting our ability to obtain additional financing;

requiring the dedication of a substantial portion of our cash flow from operations to service our indebtedness, thereby reducing the amount of our cash flow available for other purposes;

Our indebtedness and liabilities could limit cash flow available for our operations, expose us to risks that could adversely affect our business, financial condition and results of operations and impair our ability to satisfy our financial obligations.

As of December 31, 2020, we had approximately $2.6 billion of long-term debt with $2.1 billion in aggregate principal amount of our 11.0% Senior Notes maturing on December 1, 2024 (“Exit Notes”) and $500 million in aggregate principal amount of our 8.75% Senior Secured Notes maturing on September 1, 2024 (“Senior Secured Notes”).

Pursuant to the terms of our Exit Notes and Senior Secured Notes, we expect to have interest payments of approximately $275 million annually until maturity.

Our level of indebtedness has negative consequences for our business, financial condition and results of operations, including:

• limiting our ability to obtain additional financing on terms that are commercially acceptable;

• requiring the dedication of a substantial portion of our cash flow from operations to service our indebtedness, thereby reducing our free cash flow and the amount of our cash flow available for other purposes;

• limiting our flexibility in planning for, or reacting to, changes in our business;

limiting our access to the inventory and services needed to operate our business;

requiring us to secure additional sources of liquidity, which may or may not be available to us;

• placing us at a possible competitive disadvantage with less leveraged competitors or competitors that may have better access to capital resources;

Our ability to make scheduled payments on, or to refinance, our debt obligations will depend on our financial and operating performance, which is subject to prevailing economic and competitive conditions and certain financial, business and other factors beyond our control.

• increasing our vulnerability to adverse economic and industry conditions;

Our ability to make scheduled payments on or to refinance if desired before maturity, our debt obligations will depend on our financial and operating performance, which is subject to prevailing economic and competitive conditions and certain financial, business and other factors beyond our control.

Lower commodity prices and in turn lower demand for our products and services have negatively impacted our revenues, earnings and cash flows, and sustained low oil and natural gas prices could have an adverse effect on our liquidity position.

Any refinancing of our debt could be at higher interest rates and may require us to comply with more onerous covenants, which could further restrict our business and operations.

If we continue to experience operating losses and we are not able to generate additional liquidity through the mechanisms described above or through some combination of other actions, including our potential strategic divestitures and other business operations, then our liquidity needs may exceed availability under our Exit Credit Agreements (as defined herein) and other facilities that we may enter into in the future, and we might need to secure additional sources of funds, which may or may not be available to us.

If we are unable to secure such additional funds, we may not be able to meet our future obligations as they become due.

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Table of Contents Item 1A | Risk Factors

Any harm to our business and operations resulting from our current or future level of indebtedness could adversely affect our ability to pay amounts due to our lenders and noteholders.

Our business may be exposed to uninsured claims and, as a result, litigation might result in significant potential losses.

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We maintain liability insurance, which includes insurance against damage to people, property and the environment, up to maximum limits of $350 million, subject to self-insured retentions and deductibles.

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Table of Contents Item 1A | Risk Factors

Our insurance policies are subject to exclusions, limitations and other conditions and may not apply in all cases, for example where willful wrongdoing on our part is alleged.

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As a result, we may not be able to continue to obtain insurance on commercially reasonable terms.

Any of these events would have an adverse impact on our financial performance.

Our operations are subject to numerous laws and regulations, including environmental laws and regulations, treaties and international agreements related to greenhouse gases, climate change and alternate energy sources that may expose us to significant liabilities, result in additional compliance costs and could reduce our business opportunities and revenues.

We are subject to various laws and regulations relating to the energy industry in general and the environment in particular.

These laws are often complex and may not always be applied consistently in emerging markets.

These laws and regulations often change and can cover broad subject matters, including tax, trade, customs (import/export), the environment, greenhouse gases, climate change and alternate energy sources.

In the case of environmental regulations, an environmental claim could arise with respect to one or more of our current businesses, products or services, or a business or property that one of our predecessors owned or used, and such claims could involve material expenditures.

Generally, environmental laws have in recent years become more stringent and have sought to impose greater liability on a larger number of potentially responsible parties and have increased the costs associated with complying with the more stringent laws and regulations.

The scope of regulation of our industry and our products and services may increase further, including possible increases in liabilities or funding requirements imposed by governmental agencies.

For example, state, national and international governments and agencies in areas in which we conduct business continue to evaluate, and in some instances adopt, climate-related legislation and other regulatory initiatives that would restrict emissions of greenhouse gases.

We also cannot ensure that our future business in the deepwater Gulf of Mexico, if any, will be profitable in light of regulations that have been, and may continue to be, promulgated and in light of the current risk environment and insurance markets.

Additional regulations on deepwater drilling elsewhere in the world could be imposed, and those regulations could limit our business where they are imposed.

In addition, members of the U.S.

Congress, the U.S.

Environmental Protection Agency and various agencies of several states within the U.S.

frequently review, consider and propose more stringent regulation of hydraulic fracturing, a stimulation treatment routinely performed on oil and gas wells in low-permeability reservoirs.

We previously provided (and may, in the future, resume providing) fracturing services to customers and regulators are investigating whether any chemicals used in the fracturing process might adversely affect groundwater or whether the fracturing processes could lead to other unintended effects or damages.

For example, in December 2016, the EPA released its final report regarding the potential impacts of hydraulic fracturing on drinking water resources, concluding that water cycle activities associated with hydraulic fracturing may impact drinking water resources under certain circumstances.

In recent years, several cities and states within the U.S.

passed new laws and regulations concerning or banning hydraulic fracturing.

A significant portion of North American service activity today is directed at prospects that require hydraulic fracturing in order to produce hydrocarbons.

Therefore, additional regulation could increase the costs of conducting our business by subjecting fracturing to more stringent regulation.

Such regulation, among other things, may change construction standards for wells intended for hydraulic fracturing, require additional certifications concerning the conduct of hydraulic fracturing operations, change requirements pertaining to the management of water used in hydraulic fracturing operations, require other measures intended to prevent operational hazards or ban hydraulic fracturing completely.

Any such federal, state, local or foreign legislation could increase our costs of providing services or could materially reduce our business opportunities and revenues if our customers decrease their levels of activity in response to such regulation or if we are not able to pass along any cost increases to our customers.

We are unable to predict whether changes in laws or regulations or any other governmental proposals or responses

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Table of Contents Item 1A | Risk Factors

will ultimately occur, and accordingly, we are unable to assess the potential financial or operational impact they may have on our business.

Finally, in December 2015, the U.S.

joined the international community at the 21st Conference of the Parties of the United Nations Framework Convention on Climate Change in Paris, France (the “Paris Agreement”) that requires member countries to review and “represent a progression” in their intended nationally determined contributions, which set greenhouse gas (“GHG”) emission reduction goals every five years beginning in 2020.

The agreement entered into was in full force in November 2016.

On June 1, 2017, the President of the U.S.

announced that the U.S.

planned to withdraw from the Paris Agreement and to seek negotiations either to reenter the Paris Agreement on different terms or establish a new framework agreement.

The Paris Agreement provides for a four-year exit process beginning when it took effect in November 2016, which would result in an effective exit date of November 2020.

The United States’ adherence to the exit process is uncertain and/or the terms on which the United States may reenter the Paris Agreement or a separately negotiated agreement are unclear at this time.

The implementation of this treaty and other efforts to reduce GHG emissions in the U.S.

and other countries could materially affect our customers by reducing demand for oil and natural gas, thereby potentially materially affecting demand for our services.

If our long-lived assets, goodwill, intangible assets and other assets are impaired, we may be required to record significant non-cash charges to our earnings.

We recognize impairments of goodwill when the fair value of any of our reporting units becomes less than its carrying value.

Our estimates of fair value are based on assumptions about future cash flows of each reporting unit, discount rates applied to these cash flows and current market estimates of value.

Based on the uncertainty of future revenue growth rates, gross profit performance, and other assumptions used to estimate our reporting units’ fair value, future reductions in our expected cash flows could cause a material non-cash impairment charge of goodwill, which could have a material adverse effect on our results of operations and financial condition.

A significant portion of our revenue is derived from our non-United States operations, which exposes us to risks inherent in doing business in each of the over 80 countries in which we operate.

Our non-United States operations accounted for $3.9 billion of our combined consolidated revenue in 2019, $4.1 billion in 2018 and $4.1 billion in 2017.

Any of these events could have an adverse impact on our business, financial condition and results of operations.

A significant portion of our revenue is derived from our operations outside the United States, which exposes us to risks inherent in doing business in each of the over 75 countries in which we operate.

Our non-United States operations accounted for 80% of our consolidated revenue in 2020.

Operations in countries other than the United States are subject to various risks, including:

volatility in political, social and economic conditions;

exposure to expropriation of our assets or other governmental actions;

• volatility in political, social and economic conditions including currency exchange controls, inflation, and currency exchange rate fluctuations and devaluations;

• exposure to expropriation of our assets, deprivation of contract rights or other governmental actions;

• social unrest, acts of terrorism, war or other armed conflict;

• varying international laws and regulations;

• confiscatory taxation or other adverse tax policies;

deprivation of contract rights;

• trade and economic sanctions or other restrictions imposed by the European Union, the United States or other countries;

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• restrictions on the repatriation of income or capital.

currency exchange controls;

currency exchange rate fluctuations and devaluations.

Our ability to retain or attract skilled employees, including executive officers and other key personnel, could have a material adverse effect on our business.

Our business is dependent on our ability to attract, develop, and retain qualified employees, including executive officers and other key personnel.

Our operations require highly skilled personnel to operate and provide technical support and services.

Our ability to meet such employment needs is subject to external and internal factors such as the current and future prices of oil and natural gas, the demand for employees by companies in our industry, our reputation within the labor market (particularly in our highly competitive industry), as well as our employees’ perception of opportunities with us as compared to our peers (including as to our financial performance and incentives related thereto).

Furthermore, these internal and external factors may also be impacted by our recent emergence from bankruptcy, the uncertainties currently facing us and the business environment and changes we may make to the organizational structure to adjust to changing circumstances.

If we are unable to attract and retain adequate numbers and an appropriate mix of qualified employees, the quality of products and services we provide to our customers may decrease and our financial performance may be adversely affected.

Further, we depend on the contributions of key personnel for our future success.

Departures of key employees can cause disruptions to, and

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uncertainty in, our business and operations.

Future departures of key employees, including changes in our senior management, could disrupt our business and have a material and adverse effect on our financial condition and results of operations.

If we are unable to comply with the restrictions and covenants in the agreements governing our indebtedness, including the Exit Credit Agreements and the indenture governing our Exit Notes, there could be a default under the terms of these agreements, which could result in an acceleration of payment of funds that we have borrowed and would affect our ability to make principal and interest payments on our indebtedness.

Any default under the agreements governing our indebtedness that is not cured or waived by the required lenders or holders, and the remedies sought by the holders of any such indebtedness, could make us unable to pay principal and interest our indebtedness and, in the case of our Exit Notes, substantially decrease the market value of such indebtedness.

If we are unable to generate sufficient cash flow and are otherwise unable to obtain funds necessary to meet required payments of principal and interest on our indebtedness, or if we otherwise fail to comply with the various covenants, including financial and operating covenants, in the agreements governing our indebtedness (including covenants in the Exit Credit Agreements and the indenture governing our Exit Notes), we could be in default under the terms of such agreements.

In the event of such default:

the holders of such indebtedness could elect to declare all the funds borrowed thereunder to be due and payable, together with accrued and unpaid interest;

the lenders under such agreements could elect to terminate their commitment thereunder and cease making further loans;

we could be forced into bankruptcy or liquidation.

If our operating performance declines, we may in the future need to obtain waivers under the Exit Credit Agreements, the indenture governing our Exit Notes or agreements governing any other outstanding indebtedness.

If we breach our covenants under the Exit Credit Agreements, the indenture governing our Exit Notes or the agreements governing any other outstanding indebtedness, and seek a waiver, we may not be able to obtain a waiver from the required lenders or holders, as applicable.

If this occurs, we would be in default under such agreements, the lenders, holders or trustee, as applicable, could exercise their rights or remedies, as described above, and we could be forced into bankruptcy or liquidation.

Our actual financial results after emergence from bankruptcy are not comparable to our historical financial information as a result of the implementation of the Plan and the transactions contemplated thereby and the implementation of fresh start accounting.

In connection with the disclosure statement we filed with the Bankruptcy Court, and the hearing to consider confirmation of the Plan, we prepared projected financial information to demonstrate to the Bankruptcy Court the feasibility of the Plan and our ability to continue operations upon our emergence from bankruptcy.

Those projections were prepared solely for the purpose of the bankruptcy proceedings and have not been, and will not be, updated on an ongoing basis and should not be relied upon by investors.

At the time they were prepared, the projections reflected numerous assumptions concerning our anticipated future performance with respect to prevailing and anticipated market and economic conditions that were and remain beyond our control and that may not materialize.

Projections are inherently subject to substantial and numerous uncertainties and to a wide variety of significant business, economic and competitive risks and the assumptions underlying the projections and/or valuation estimates may prove to be wrong in material respects.

Actual results will likely vary significantly from those contemplated by the projections.

The failure of any such results, or any other developments contemplated by the Plan, to materialize, or of any such results or developments to have the anticipated effect on us and our subsidiaries or our business or operations, could materially adversely our business and prospects as a post-emergence company.

In addition, upon our emergence from bankruptcy, we adopted fresh start accounting and adjusted our assets and liabilities to fair values and our accumulated deficit was restated to zero.

Fresh start accounting results in the Company becoming a new entity for financial reporting purposes on December 13, 2019, the effective date of the Plan.

Accordingly, our financial condition and results of operations following our emergence from bankruptcy will not be comparable to the financial condition and results of operations reflected in our historical financial statements.

Implementation of the Plan and the transactions contemplated thereby may materially change the amounts and classifications reported in our consolidated historical financial statements.

The lack of comparable historical financial information may discourage investors from purchasing our ordinary shares.

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Upon our emergence from bankruptcy, we adopted fresh start accounting and adjusted our assets and liabilities to fair values and our accumulated deficit was restated to zero as of December 13, 2019, which resulted in the Company becoming a new entity for financial reporting purposes.

Implementation of the Plan and the transactions contemplated thereby materially changed the amounts and classifications reported in our consolidated historical financial statements.

The lack of recent comparable historical financial information may discourage investors from purchasing our ordinary shares.

There may be circumstances in which the interests of our significant shareholders could be in conflict with the interests of our other shareholders.

In the aggregate, certain funds associated with our largest eight shareholders currently own in excess of 80% of our outstanding ordinary shares.

Circumstances may arise in which this shareholder may have an interest in pursuing or preventing acquisitions, divestitures or other transactions, including the issuance of additional equity or debt, that, in their judgment, could enhance their investment in us or another company in which they invest.

Circumstances may arise in which these shareholders may have an interest in pursuing or preventing acquisitions, divestitures or other transactions, including the issuance of additional equity or debt, that, in their judgment, could enhance their investment in us or another company in which they invest.

Such transactions might adversely affect us or other holders of our ordinary shares.

In addition, our significant concentration of share ownership post-emergence may adversely affect the trading price of our ordinary shares because investors may perceive disadvantages in owning shares in companies with significant shareholders.

An active trading market for our ordinary shares may not develop.

During bankruptcy, our old ordinary shares were traded on the OTC Pink Marketplace.

Immediately following emergence from bankruptcy, our New Ordinary Shares (as defined herein) were not initially listed on any national or regional securities exchange or quoted on any over-the-counter market.

Subsequent to emergence our ordinary shares began quotation on the OTC Pink Marketplace.

However, we cannot predict the extent to which investor interest in us will lead to the development of an active trading market or how liquid that market might become.

In addition, no assurances can be given regarding when, and if, we will resume our listing on a national exchange, including whether or not we will be able to meet applicable listing standards for any such exchange.

If an active trading market does not develop, holders of our shares may have difficulty selling any of our ordinary shares that may now be owned or may purchase later.

In addition, until we are able resume our listing on a national exchange, the number of investors willing to hold or acquire our ordinary shares may be reduced, we may receive decreased news and analyst coverage and we may be limited in our ability issue additional securities or obtain additional financing in the future.

The price and trading volume of our ordinary shares may fluctuate significantly.

In addition, our significant concentration of share ownership may adversely affect the trading price of our ordinary shares because investors may perceive disadvantages in owning shares in companies with significant shareholders.

An active trading market for our ordinary shares may not develop and the price and trading volume of our ordinary shares may fluctuate significantly.

Our ordinary shares are listed for quotation on the OTC Pink Marketplace.

We cannot predict the extent to which investor interest in us will lead to the development of an active trading market or how liquid that market might become.

In addition, no

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assurances can be given regarding when, and if, we will resume our listing on a national exchange, including whether or not we will be able to meet applicable listing standards for any such exchange.

If an active trading market does not develop, holders of our shares may have difficulty selling any of our ordinary shares that may now be owned or may be purchased later.

In addition, until we are able resume our listing on a national exchange, the number of investors willing to hold or acquire our ordinary shares may be reduced, we may receive decreased news and analyst coverage and we may be limited in our ability to issue additional securities or obtain additional financing in the future on terms acceptable to us, or at all.

Even if an active trading market develops for our ordinary shares, the market price of our ordinary shares may be highly volatile and could be subject to wide fluctuations.

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Volatility in the market price of our ordinary shares may prevent one from being able to sell shares at or above the ordinary share issuance price or above the price one paid to acquire the ordinary shares.

The market price for our ordinary shares could fluctuate significantly for various reasons, including:

our new capital structure as a result of the Plan transactions;

our limited trading history subsequent to our emergence from bankruptcy;

our limited trading volume;

the concentration of holdings of our ordinary shares;

the lack of comparable historical financial information due to our adoption of fresh start accounting;

actual or anticipated variations in our operating results and cash flow;

the nature and content of our earnings releases, announcements or events that impact our products, customers, competitors or markets;

business conditions in our markets and the general state of the securities markets and the market for energy-related stocks, as well as general economic and market conditions.

If credit rating agencies lower our credit ratings in the future, capital financing may not be available to us at attractive economic rates.

On December 16, 2019, after emergence from Chapter 11, S&P Global Ratings assigned us an issuer credit rating of B-, with a negative outlook.

S&P assigned a B- for our newly issued Exit Notes and a B+ for our Exit Credit Agreements.

Moody’s Investors Service withdrew our credit ratings following the filing of the Plan in Bankruptcy Court in the third quarter of 2019 and resumed rating services after emergence.

Upon emergence, Moody’s assigned us an issuer credit rating of B1, with a stable outlook.

Moody’s assigned a B2 for our newly issued Exit Notes and a Ba2 for our Exit Credit Agreements.

Our credit ratings were subject to multiple downgrades by the credit rating agencies prior to our bankruptcy and could be subject to downgrade again in the future.

Moreover, our non-investment grade status may limit our ability to refinance our existing debt, could cause us to refinance or issue debt with less favorable and more restrictive terms and conditions, and could increase certain fees and interest rates of

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our borrowings.

Suppliers and financial institutions may lower or eliminate the level of credit provided through payment terms or intraday funding when dealing with us thereby increasing the need for higher levels of cash on hand, which would decrease our ability to repay debt balances, negatively affect our cash flow and impact our access to the inventory and services needed to operate our business.

Credit and equity markets have been highly volatile recently, the cost to obtain capital financing has increased, and some markets may not be available at certain times.

Credit and equity market conditions and the potential impact on liquidity of major financial institutions may have an adverse effect on our ability to fund operational needs or other activities through borrowings under either existing or newly created instruments in the public or private markets on terms we believe to be reasonable.

In addition, our ability to raise capital through equity financing may be limited by the number of ordinary shares authorized but unissued or reserved for issuance.

If we are unable to enhance our borrowings via debt offerings or our credit facilities, or to obtain additional equity financing, we could experience a reduction of liquidity and may result in difficulty funding our operations, repayment of short-term borrowings, payments of interest and other obligations.

This could be detrimental to our business and have a material adverse effect on our liquidity, consolidated results of operations and financial condition.

The terms of our indebtedness restrict our current and future operations, particularly our ability to respond to changes or to pursue our business strategies.

The Exit Credit Agreements and indenture governing our senior notes contain, and agreements governing our future indebtedness may contain, restrictive covenants that could impose significant operating and financial restrictions on us and may limit our ability to engage in acts that may be in our long-term best interest, including restrictions on our ability to:

The LC Credit Agreement and the indentures governing our Exit Notes and Senior Secured Notes contain restrictive covenants that could impose significant operating and financial restrictions on us and may limit our ability to engage in acts that we may believe to be in our long-term best interest, including restrictions on our ability to:

• incur additional indebtedness;

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• sell assets and incur liens.

enter into transactions with affiliates;

enter into agreements restricting our subsidiaries’ ability to pay dividends;

consolidate, merge or sell all or substantially all of our assets.

As a result of these restrictions, we may be:

limited in how we conduct our business;

unable to raise additional debt or equity financing to operate during general economic or business downturns;

unable to compete effectively, execute our growth strategy or take advantage of new business opportunities.

In addition, the restrictive covenants in our Exit Credit Agreements require us to maintain specified financial ratios and/or liquidity thresholds under certain circumstances.

Our ability to meet those financial ratios or maintain such liquidity thresholds can be affected by events beyond our control.

A breach of the covenants under the Exit Credit Agreements, the indenture governing our senior notes or our other indebtedness could result in an event of default thereunder.

These covenants and other restrictions may limit our ability to effectively operate our business, and to execute our growth strategy or take advantage of new business opportunities.

These covenants and restrictions include minimum liquidity covenants, certain financial ratios, which may apply in certain circumstances, and other restrictions.

Our ability to meet the liquidity thresholds and those financial ratios can be affected by events beyond our control.

A breach of the covenants and other restrictions under the LC Credit Agreement, the indentures governing our Senior Secured Notes and Exit Notes or our other indebtedness could result in an event of default thereunder.

Such a default may allow the lenders, holders or the trustee, as applicable, to accelerate the related indebtedness and may result in the acceleration of any other indebtedness to which a cross-acceleration or cross-default provision applies.

In addition, an event of default under Exit Credit Agreements would permit the lenders thereunder to terminate all commitments.

In the event our lenders accelerate the repayment of our borrowings, we and our subsidiaries may not have sufficient assets to repay that indebtedness.

If we do not repay our debt out of cash on hand, we could attempt to (i) restructure or refinance such debt, (ii) sell assets or (iii) repay such debt with the proceeds from an equity offering.

We cannot assure you that we will be able to generate sufficient cash flows from operating activities to pay the interest on our debt or that future borrowings, equity financings or proceeds from the sale of assets will be available to pay or refinance such debt.

The terms of our debt, including our bank credit facility, may also prohibit us from taking such actions.

Factors that will affect our ability to raise cash through offerings of our capital stock, a refinancing of our debt or a sale of assets include financial market conditions and our market value and operating performance at the time of such offerings, refinancing or sale of assets.

We cannot assure you that any such offerings, restructuring, refinancing or sale of assets will be successfully completed.

In addition, an event of default under LC Credit Agreements would permit the lenders thereunder to terminate all commitments.

Legal, Tax and Regulatory Risks

We are subject to various laws and regulations related to the energy industry specifically, and the environment in particular.

The scope of regulation of our industry and our products and services may increase further, including possible increases in liabilities or funding requirements imposed by governmental agencies.

Additional regulations on deepwater drilling in the Gulf of Mexico and elsewhere in the world could be imposed, and those regulations could limit our business where they are imposed.

In addition, members of the U.S.

Congress, the U.S.

Environmental Protection Agency and various agencies of several states within the U.S.

frequently review, consider and propose more stringent regulation of hydraulic fracturing, a stimulation treatment routinely performed on oil and gas wells in low-permeability reservoirs.

We previously provided (and may, in the future, resume providing) fracturing services to customers.

Regulators are investigating whether any chemicals used in the hydraulic fracturing

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If another party claims that we have infringed its intellectual property rights, we may be subject to litigation or we may need to take remedial steps to eliminate or mitigate liability.

A third-party may claim that we sell equipment or perform services that infringes upon the third-party’s patent rights or unlawfully uses the third-party’s trade secrets.

Addressing such claims of patent infringement or trade secret misappropriation could result in significant legal and other costs and may adversely impact our business.

To resolve such claims, we may be required to enter into license agreements that require us to make royalty payments to continue selling equipment or providing of services.

Alternatively, the development of non-infringing technologies would increase our costs.

If an allegation of patent infringement or trade secret misappropriation cannot be resolved through a license agreement, we might not be able to continue selling particular equipment or providing particular services, which could adversely affect our financial condition, results of operations, and cash flow.

Our business could be negatively affected by cybersecurity incidents and other technology disruptions.

We rely heavily on information systems to conduct and protect our business.

These information systems are increasingly subject to sophisticated cybersecurity incidents such as unauthorized access to data and systems, loss or destruction of data (including confidential customer, supplier and employee information), computer viruses, or other malicious code, phishing and cyber-attacks, and other similar events.

These incidents arise from numerous sources, not all of which are within our control, including fraud or malice on the part of third parties, accidental technological failure, electrical or telecommunication outages, failures of computer servers or other damage to our property or assets, human error, complications encountered as existing systems are maintained, repaired, replaced, or upgraded or outbreaks of hostilities or terrorist acts.

Given the rapidly evolving nature of cyber incidents, there can be no assurance that the systems we have designed and implemented to prevent or limit the effects of cyber incidents or attacks will be sufficient in preventing all such incidents or attacks, or be able to avoid a material impact to our systems should such incidents or attacks occur.

A cybersecurity incident or attack, could result in the disclosure of confidential or proprietary customer, supplier or employee information, theft or loss of intellectual property, damage to our reputation with our customers, suppliers and the market, failure to meet customer requirements or customer dissatisfaction, theft or exposure to litigation, damage to equipment (which could cause environmental or safety issues) and other financial costs and losses.

Moreover, we have no control over the information technology systems of our customers, suppliers and others with which our systems may connect and communicate.

As a result, the occurrence of a cyber-incident could go unnoticed for a period time.

As cybersecurity incidents continue to evolve, we may also be required to devote additional resources to continue to enhance our protective measures or to investigate or remediate any cybersecurity vulnerabilities.

We do not presently maintain insurance coverage to protect against cybersecurity risks.

If we procure such coverage in the future, we cannot ensure that it will be sufficient to cover any particular losses we may experience as a result of such cyber-attack or other incident.

Any cybersecurity incident could have a material adverse effect on our business, financial condition and results of operations.

process might adversely affect groundwater or whether the fracturing processes could lead to other unintended effects or damages.

In recent years, local and national governments (including several cities and states within the U.S.) passed new laws and regulations concerning or banning hydraulic fracturing.

A significant portion of North American service activity today is directed at prospects that require hydraulic fracturing in order to produce hydrocarbons.

Therefore, additional regulation could increase the costs of conducting our business by subjecting fracturing to more stringent regulation.

Regulation of hydraulic fracturing could increase our cost of providing services or materially reduce our business opportunities and revenues if customers decrease their levels of activity or we cannot pass along cost to customers.

We are unable to predict whether changes in laws or regulations or any other governmental proposals or responses will ultimately occur, and accordingly, we are unable to assess the potential financial or operational impact they may have on our business.

Adverse changes in tax laws both in the United States and abroad, changes in tax rates or exposure to additional income tax liabilities could have a material adverse effect on our results of operations.

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Internal Revenue Service and other taxing jurisdictions, acting in unison or separately.

The inability to reduce our tax expense could have a material impact on our financial statements.

The Organization of Economic Cooperation and Development (“OECD”), which represents a coalition of member countries, has issued various white papers addressing Tax Base Erosion and Jurisdictional Profit Shifting.

The inability to reduce our tax expense could have a material impact on our consolidated financial statements.

The Organization of Economic Cooperation and Development (“OECD”), which represents a coalition of member countries, issued various white papers addressing Tax Base Erosion and Jurisdictional Profit Shifting.

The recommendations in these white papers are generally aimed at combating what they believe is tax avoidance.

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Our effective tax rate has fluctuated in the past and may fluctuate in the future.

Future effective tax rates could be affected by changes in the composition of earnings in countries in which we operate with differing tax rates, changes in tax laws, or changes in deferred tax assets and liabilities.

We assess our deferred tax assets on a quarterly basis to determine whether a valuation

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allowance may be required.

We have recorded a valuation allowance on substantially all of our current and future deferred tax assets.

A prolonged downturn could result in us not being able to benefit future losses, which would negatively impact our financial results.

Future effective tax rates could be affected by changes in the composition of earnings in countries in which we operate with differing tax rates, non-income-based taxes, changes in tax laws, or changes in deferred tax assets and liabilities.

We assess our deferred tax assets on a quarterly basis to determine whether a valuation allowance may be required.

We have recorded a valuation allowance on substantially all of our deferred tax assets.

If a United States person is treated as owning at least 10% of our shares, such holder may be subject to adverse U.S.

federal income tax consequences.

As a result of the TCJA, many of our non-U.S.

As a result of the Tax Cuts and Jobs Act of 2017 (“TCJA”), many of our non-U.S.

subsidiaries are now classified as “controlled foreign corporations” for U.S.

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United States investors should consult their own advisors regarding the potential application of these rules to their investments in us.

The risk of being subject to increased taxation may deter our current shareholders from increasing their investment in us and others from investing in us, which could impact the demand for, and value of, our shares.

The risk of being subject to increased taxation

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may deter our current shareholders from increasing their investment in us and others from investing in us, which could impact the demand for, and value of, our shares.

The United States could treat Weatherford International PLC (parent corporation) as a US taxpayer under IRC Section 7874.

Following the emergence from bankruptcy, Weatherford continues to operate under Weatherford International PLC (PLC), an Irish tax resident.

Following the emergence from bankruptcy on December 13, 2019, Weatherford continues to operate under Weatherford International PLC (PLC), an Irish tax resident.

The IRS may, however, assert that PLC should be treated as a U.S.

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acquired corporation (the “Section 7874 Percentage”), and (iii) the foreign corporation’s “expanded affiliated group” does not have substantial business activities in the foreign corporation’s country of organization or incorporation relative to such expanded affiliated group’s worldwide activities.

Although it is not free from doubt, we believe that as a result of the implementation of the plan of reorganization, PLC should not be treated as acquiring directly or indirectly substantially all of the properties of a U.S.

Although it is not free from doubt, we believe that as a result of the implementation of the plan of reorganization in 2019, PLC should not be treated as acquiring directly or indirectly substantially all of the properties of a U.S.

corporation and, as a result, PLC is not expected to be treated as a U.S.

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tax purposes.

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The rights of our shareholders are governed by Irish law;

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Any judgment obtained in contravention of the rules of natural justice or that is irreconcilable with an earlier foreign judgment would not be enforced in Ireland.

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Similarly, judgments might not be enforceable in countries other than the United States where we have assets.

General Risks

If our long-lived assets and other assets are impaired, we may be required to record significant non-cash charges to our earnings.

We recognize impairments of long-lived assets when we determine the carrying amount of certain long-lived asset groups exceed their respective fair values.

Our impairment assessment includes analysis of the undiscounted cash flow of our asset groups, which include property, plant and equipment, definite-lived intangible assets, and right of use assets.

Based on the uncertainty of forecasted revenue, forecasted operating margins, and discount rate assumptions used to estimate our asset groups’ fair value, future reductions in our expected cash flows could cause a material non-cash impairment charge of long-lived assets, which could have a material adverse effect on our results of operations and financial condition.

Our business could be negatively affected by cybersecurity incidents and other technology disruptions.

We rely heavily on information systems to conduct and protect our business.

Given the rapidly evolving nature of cybersecurity incidents, there can be no assurance that the systems we have designed and implemented to prevent or limit the effects of cybersecurity incidents or attacks will be sufficient in preventing all such incidents or attacks, or be able to avoid a material impact to our systems should such incidents or attacks occur.

Moreover, although Weatherford implements stringent controls on third party connectivity to our systems, we have limited control in ensuring their systems consistently enforce strong cybersecurity controls.

As a result, the occurrence of a cybersecurity incident or attack could go unnoticed for a period time.

As cybersecurity incidents and attacks continue to evolve, we may also be required to devote additional resources to continue to enhance our protective measures or to investigate or remediate any cybersecurity vulnerabilities.

Beginning in 2021, we maintain insurance coverage to protect against certain cybersecurity risks.

However, we cannot ensure that it will be sufficient to cover any particular losses we may experience as a result of such cybersecurity incident or attack.

Any cybersecurity incident or attack could have a material adverse effect on our business, financial condition and results of operations.

Unresolved Staff Comments

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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-K

Item 1A. Risk Factors